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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

For the fiscal year ended December 31, 2003

OR

For the transition period from                      to                     

Commission file number: 333-104141

REMINGTON ARMS COMPANY, INC.

(Exact name of registrant as specified in its charter)

870 Remington Drive

P.O. Box 700

Madison, North Carolina 27025-0700

(Address of principal executive offices)

(Zip Code)

(336) 548-8700

(Registrant’s telephone number, including area code)

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

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

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

Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. x

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

Yes ¨ No x

As of March 30, 2004, the registrant had outstanding 1,000 shares of Class A Common Stock, par value $.01 per share and 0 shares of Class B Common Stock, par value $.01 per share.

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TABLE OF CONTENTS

TABLE OF CONTENTS TO FORM 10-K

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PART I

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

Company Overview

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

Our hunting and shooting sports product lines consist of shotguns, rifles and ammunition, as well as hunting and gun care accessories and clay targets. In 2002, 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 2002, we estimate that 94% of our domestic 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, 2003, we had consolidated sales of $360.7 million and net loss of $3.2 million.

Recent Developments

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 has been 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 on February 9, 2004, we applied the $43.0 million in cash proceeds to pay down our then outstanding revolver balance in connection with the sale of the fishing line business. We expect to make required tax payments resulting from the sale during the year. Our after tax proceeds from the sale are estimated to be 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 are expected to be completed during 2004. The divestiture of the fishing line business is consistent with Remington’s focus on its core businesses of hunting and shooting sports, as well as the law enforcement and military markets. Management believes that the Stren transaction provides Remington with additional flexibility to pursue various strategic alternatives in these markets.

Recapitalization

On February 12, 2003, we completed transactions related to the recapitalization of Holding, including the issuance and sale by Holding, for consideration of $30.8 million, of 140,044 shares of common stock of Holding to Bruckmann, Rosser, Sherrill & Co. II, L.P. (the “BRS Fund”) and others. As part of the re-capitalization of Holding, 15,970 deferred shares of Holding were distributed as 15,970 shares of common stock of Holding, 722,981 of the outstanding shares of common stock of Holding were repurchased and 64,144 options were accelerated and cancelled in respect of common stock of Holding, in an aggregate amount of approximately $163.7 million, consisting of $130.8 million in cash and $32.9 million aggregate principal amount of senior notes of Holding, or (the “Holding Notes”). The Clayton & Dubilier Private Equity Fund IV Limited Partnership holds (“C&D Fund IV”) all of the Holding Notes.

In January 2003, in connection with the Recapitalization, we completed transactions pursuant to which we refinanced Remington’s old senior secured credit facilities (the “Old Credit Facility”) and 9½% Senior Subordinated Notes due 2003 (the “Refinanced Notes”) with borrowings under the Credit Facility and the issuance and sale of $200.0 million of 10½% Senior Notes due 2011 of Remington (the “Notes”). A portion of the initial borrowings under the Credit Facility and the proceeds of the issuance of the Notes was used to pay an approximately $100 million dividend from Remington to Holding in connection with the Recapitalization. The foregoing

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transactions are referred to in this report as the “Refinancing” and, together with the Recapitalization, are referred to in this report as the “Transactions.”

Segment Overview

We evaluate our business as three separate reporting segments: (1) Firearms, which designs, manufactures 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 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:

See note 21 to the consolidated financial statements of Remington, appearing elsewhere in the report.

Hunting and Shooting Sports

Overview

According to the American Sports Data, Inc. (“ASDI”), approximately 28 million people in the United States enjoy shooting sports. We believe that the hunting and shooting sports industry is stable and mature. According to the NSGA, total U.S. consumer expenditures for the shooting sports industry in 2002 were approximately $1.7 billion, comprised of expenditures on shotguns (approximately $400 million), rifles (approximately $500 million) and ammunition (approximately $800 million).

Firearms. According to the NSGA, we had the #1 market share position in the U.S. retail market for both rifles and shotguns in 2002. Based on sales volume, our U.S. market share was approximately 23% and 34% in rifles and shotguns, respectively, with our nearest competitor holding a U.S. market share of approximately 12% and 13% in rifles and shotguns, respectively.

Ammunition. According to the SMRG, we had the #1 market share position in the U.S. ammunition market in 2002. Based on sales volume, our market share was approximately 34%, with our nearest competitor holding a market share of approximately 27%.

Products

Our firearms and ammunition product offerings include a comprehensive line of sporting shotguns and rifles, sporting ammunition and ammunition reloading components, marketed predominantly under the Remington brand name. In firearms, 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. In ammunition, 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.

Firearms. Our most popular shotguns are the Model 870^™ pump-action shotgun, and the Model 1100^™ and Model 11-87^™ auto-loading shotguns. Remington shotguns are offered in versions that are marketed to both novices and experienced gun owners. Specialty shotguns focus on the deer, turkey and other specialized hunting markets, recreational and competitive clay target shooting, and various law enforcement and military applications. Retail list prices for our most popular shotguns range up to $800.

Our most popular rifles are the Model 700^™, Model Seven^™, Model 7400^™, Model 7600^™,, and Model 710^™ centerfire rifles and the family of Model 597^™ rimfire rifles. To appeal to a broad range of gun owners, we manufacture these rifles in a wide variety of chamberings, configurations and finishes. We presently manufacture three types of centerfire and rimfire rifles: bolt-action, pump-action and auto-loading. Retail list prices for our most popular rifles range up to $850.

Ammunition. We design, manufacture and market a complete line of sporting ammunition products under the brand names Remington, Peters^® and UMC^®, including shotgun shells, centerfire ammunition for use in rifles and handguns, and .22

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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. In general, Remington branded products compete in both the middle and high performance categories, while the UMC and Peters brands are used for promotionally priced ammunition.

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 their reloadability.

Product Introductions We focus our product development efforts on introducing new products that satisfy the need for specialized, high-performance firearms and ammunition. In 2003, the Model 673^™ Guide Gun, a short-action bolt-action rifle, was introduced along with various short-action ultra mag calibers in the Model 700 line and the Model 597^™ 17 HMR. In 2004 to date, we introduced the Model 504^™ bolt action rimfire rifle, the Model 700^™ CDL, a classic styled line extension of our famous Model 700 line and a number of rifle and shotgun niche products to address growing specialty end use markets.

Recent ammunition product introductions have focused on developing exclusive or proprietary technology with application to performance oriented hunting segments. In 2003, we introduced the BuckHammer Shotshell deer slug, and the 17HMR Magnum rimfire cartridge, which is used in both hunting and target shooting. We expanded the Core-Lokt Ultra Deer slug line as well as adding a number of new specifications to our Hevi-Shot Turkey line. We also introduced a new line of Managed Recoil ammunition in shotshell and centerfire rifle configurations, which reduce recoil versus standard ammunition.

Competition

Each of the markets in which we operate is highly competitive. Our competitors vary according to product line. 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.

Firearms. Product image, performance, quality and innovation are the primary competitive factors in the firearms industry, with price and customer service also being factors. Our shotgun products compete with products offered by O. F. Mossberg & Sons, Inc., USRAC (which produces Winchester firearms), Browning, and Beretta. Our rifles compete with products offered by Marlin Firearms Co., Sturm, Ruger & Co., Inc., USRAC, Savage Arms, Inc. and Browning.

Ammunition. Price, service, quality and product innovation are the primary competitive factors in the ammunition industry. In the ammunition market, we compete with the Winchester unit 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.

Manufacturing

We currently manufacture our hunting and shooting sports products at five plants located within the United States.

Firearms. Our facility in Ilion, New York manufactures shotguns, rifles, powder metal parts and accessories such as extra barrels, 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.

Ammunition. 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.

Clay Targets. Our clay targets are manufactured at two facilities located at Ada, Oklahoma and Findlay, Ohio.

Supply of Raw Materials

To manufacture our various products, we utilize numerous raw materials, including steel, lead, brass, powder, plastics and wood, as well as manufactured parts purchased from independent manufacturers. For a number of our raw materials, we

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rely on one or a few suppliers. For example, our requirements for brass strip and walnut gun stock blanks are each currently being met by a single vendor, and our requirements for smokeless powder (an indispensable component of our ammunition) are met by three suppliers, who are the only sources of smokeless powder in the United States and Canada. We also purchase a number of stamped parts from a single vendor. Generally, we have had satisfactory, long-term relationships with these suppliers. We have written purchase contracts with some, but not all, of these 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, many of which are foreign, 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 raw materials are affected by a wide variety of interrelated economic and other factors, including alternative uses of materials and their components, changes in production capacity, energy prices and governmental regulations. Industry competition and the timing of price increases by suppliers limits to some extent 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”.

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 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, $3.2 million, and $2.9 million in 2003, 2002, and 2001, respectively.

Market Trends

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

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. We also provide substantial amounts of information regarding our products, their safe use and handling, and general shooting and outdoors information on our website, at www.remington.com. 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 market Hevi-Shot, a non- lead shot pellet material, to both waterfowl and turkey hunters. These shotshells reduce the amount of lead being introduced into the environment and appeal not only to the shooter legally required to use non-toxic shot, but also to the environmentally concerned hunter or shooter.

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

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

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.

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Other Product Lines

We also market hunting and shooting accessories (including safety and security products, parts, gun care and cleaning products, clips 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. See “—Licensing”.

We produce a complete line of clay targets for use in trap, skeet and sporting clays shooting activities, marketed under the Blue Rock^™ and STS^™ brand names. Targets are manufactured from a mixture of limestone and petroleum pitch.

We also market commercial powder metal parts for the automotive, sporting goods, office equipment, and hardware industries.

Marketing and Distribution

Our products are distributed throughout the United States and in over 60 other countries. In the United States, Remington products are distributed primarily through a network of wholesalers and retailers who purchase the product directly from us for resale to gun dealers and end users, respectively. The end users include sportsmen, hunters, target shooters, gun collectors, and law enforcement and other government organizations.

Our products are marketed and sold primarily through manufacturer’s sales representatives. In 2003, approximately 69% of our sales consisted of sales made through our five manufacturer’s sales representative groups, who market and sell principally to wholesalers, dealers and regional chains. These sales representatives are prohibited from selling competing goods from other manufacturers and are paid variable commissions based on the type of products that are sold. The customers to which the sales representatives market and sell our products are authorized to carry specified types of Remington products for a non-exclusive one-year term, though not all carry the full range of products. These customers generally carry broader lines of merchandise than do the mass merchants and are less seasonal in sales.

Our in-house sales force markets our product lines directly to national accounts (consisting primarily of mass merchandisers) and to federal, state and local government agencies. Approximately 19% of our total 2003 sales consisted of sales made to one national account, 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 6% for 2003 and 2002, and 5% for 2001, respectively, of our total sales. Our sales personnel and manufacturer’s sales representatives market to foreign distributors generally on a nonexclusive basis and for a one-year term.

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. We also offer extended payment terms on select ammunition categories as a competitive measure. For further discussion of seasonality and related matters, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Purchasing Patterns; Seasonality”. The backlog of unfilled total orders was approximately $88.7 million as of February 29, 2004, compared to $97.2 million as of February 28, 2003.

Research and Development

We maintain an ongoing research and development program, with approximately 46 employees engaged in these efforts as of February 29, 2004. New products and improvements to existing products are developed based upon the perceived needs and demands of consumers, as well as successful products introduced to the market by our competitors. Our research and development program involves an in-house team of engineers and technicians working with operations personnel using tools such as computer-assisted design. Research and plant technical staff then collaborate to produce an experimental prototype, ensuring that products and manufacturing processes are concurrently designed. Following a successful prototype, a pilot run is commenced to ensure that plant personnel and equipment can manufacture the product

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efficiently. We continue to introduce new products employing innovations in design, manufacturing and safety in both firearms and ammunition.

In 2003, the Model 673^™ Guide Gun, a short-action bolt-action rifle, was introduced, along with various short-action ultra mag calibers in the Model 700 line. The Model 597^™ 17 HMR was also introduced. In ammunition in 2003, we introduced the BuckHammer Shotshell deer slug, and the 17HMR Magnum rimfire cartridge, which is used in both hunting and target shooting.

Research and development expenditures for our continuing operations for the years ended December 31, 2003, 2002, and 2001 amounted to approximately $6.1 million, $6.1 million, and $5.7 million, respectively.

Patents and Trademarks

Our operations are not dependent upon any single trademark other than the Remington word mark and the Remington logo mark. Some of the other trademarks that we use, however, are nonetheless identified with and important to the sale of our products. 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.

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. We believe that we have adequate policies and procedures in place to protect our intellectual property.

While we own the Remington marks (and registrations thereof) for use in our firearms and ammunition product lines and certain related products associated with hunting, wildlife and the outdoors, Remington Products Company LLC, an unrelated company, claims rights to the mark with respect to certain other product areas, particularly personal care products (including electric razors). Pursuant to a Trademark Settlement Agreement, dated December 5, 1986, between us and Remington Products, we agreed with Remington Products as follows:

Licensing

We license the Remington marks to companies that manufacture and market products that we believe 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 above.

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

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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 1994, a federal law with a ten-year term was enacted that generally prohibits 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. This law expressly exempts 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 existing federal or state law. Various bills have been introduced in Congress in recent years to repeal bans on semi-automatic assault weapons and large-capacity ammunition feeding devices; the likelihood of their passage is uncertain, as are the prospects that the “assault weapon” ban will be renewed (or otherwise modified) when its provisions expire in September 2004. 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 Remington rifles, 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 hunting safety issues may affect sales of firearms, ammunition and other shooting-related products. In the northeastern United States, for example, some communities permit deer hunters to use only shotguns (which have a shorter average range than rifles) to minimize the possibility of shooting accidents in more densely populated areas. We market specialized ammunition, our Premier^® Copper Solid^™ sabot slug, intended for use in a shotgun, which is designed to give hunters the accuracy and effectiveness of a rifle.

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.

Employees

As of February 29, 2004, we employed approximately 2,184 full-time employees of whom nearly 1,957 were engaged in manufacturing, approximately 181 in sales and general administration and approximately 46 in research and development. An additional work force of temporary employees is engaged during peak production schedules at certain of our manufacturing facilities.

The United Mine Workers of America (“UMWA”) represents approximately 900 hourly employees at our plant in Ilion, New York. The collective bargaining agreement with UMWA was renegotiated effective October 2002 with the contract expiring in September 2007. We also have a labor agreement with Local 2021 of the United Automobile, Aircraft

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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.

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.

On March 5, 2001, we received a request for information relating to any use of the Agriculture Street Landfill, a Superfund site in New Orleans, LA. The remediation of the site is complete, and the first 5-year review was completed last June. Neither Remington nor DuPont was ever formally identified as a potentially responsible party.

On February 21, 2002, we received a request for information regarding the Peters Cartridge Company/ Kings Mills Technical Center Superfund Site, in Warren County, Ohio. While Peters Cartridge Company was owned by DuPont, the only assets relating to Peters Cartridge Company transferred to Remington as part of the Acquisition was the Peters trademark. This site was formally nominated for EPA’s National Priority List in April 2003. DuPont has formally accepted responsibility for this site, and has been actively working with the EPA to negotiate an Administrative Consent Order to conduct the Remedial Investigation. See “—Certain Indemnities”.

On September 30, 2003, we received a General Notice of Potential Liability and Information Request from the EPA regarding the Kings Mills School District site in Warren County, Ohio. This site is across the river from the Peters Cartridge Company site, and the EPA alleges that contamination may be attributable to Peters Cartridge Company sponsored activities at a gun club. DuPont has accepted any potential responsibility for the site under terms of the Purchase Agreement, and has responded to the EPA. DuPont has determined that neither corporate entity ever owned the land involved, nor operated the facility allegedly involved, and hence has denied responsibility for the site to EPA.

On September 29, 2003, we received a Special Notice for Negotiations for Remedial Design from the EPA regarding the Maryland Sand, Stone, and Gravel Superfund Site in Elkton, Maryland. The EPA had been conducting removal actions and remediation at the site for several years. DuPont has accepted responsibility for the site under terms of the Purchase Agreement, and has been cooperating with the EPA on development of an administrative consent order for additional work.

We are currently conducting groundwater monitoring at our facilities in Ilion, New York for remediation projects for which DuPont has accepted financial responsibility under the terms of our agreement with DuPont. Remington and DuPont are nearing completion of a remediation project at the Lonoke, Arkansas facility. Upon completion of the final remediation report in the spring of 2004, Remington will be awarded a certificate of reuse from the EPA and the Arkansas Department of Environmental Quality for that portion of the Lonoke, Arkansas facility that was subject to remediation.

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.

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

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

Our headquarters and related operations are conducted in an office building that we own in Madison, North Carolina. Research and development is conducted at a facility that we own in Elizabethtown, Kentucky. All of the real property owned by us has been mortgaged to secure our obligations under our credit agreement. We also lease or contract for distribution services with our major third party logistics contractors.

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

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

Product Liability Litigation

Since December 1, 1993, we have maintained insurance coverage for product liability claims subject to certain self-insured retentions on a per-occurrence basis for personal injury or property damage relating to occurrences arising after the Acquisition. We believe that our current product liability insurance coverage for personal injury and property damage is adequate for our needs. Our current product liability insurance policy runs from December 1, 2003 through November 30, 2004 and provides for a self-insured retention of $0.5 million per occurrence. The current policy has a batch clause endorsement, which in general provides that if a batch of our products were to be defective, our liability for product liability expenses and damages related to the entire batch would be capped at the amount of self-insured retention for a single occurrence. The policy excludes from coverage any pollution-related liability. Based in part on the nature of our products, and the continued impact on the insurance market of the events of September 11, 2001, there can be no assurance that we will be able to obtain adequate product liability insurance coverage upon the expiration of the current policy. Certain of our current excess insurance coverage expressly excludes actions brought by municipalities as described below.

As a result of contractual arrangements, we manage the joint defense of product liability litigation involving Remington brand firearms and our ammunition products for both Remington and the sellers. As of December 31, 2003, approximately 24 individual bodily injury cases and claims were pending, primarily alleging defective product design, defective manufacture and/or failure to provide adequate warnings; some of these cases seek punitive as well as compensatory damages. We have previously disposed of a number of other cases involving post-Acquisition occurrences by settlement. Of the individual cases and claims pending as of December 31, 2003, approximately four involve matters for which the sellers retained liability and are required to indemnify us. The remaining approximately 20 pending cases involve post-Acquisition occurrences for which we bear responsibility under the Purchase Agreement; the sellers have some responsibility for the costs of approximately one of these cases involving certain shotguns.

The relief sought in individual cases includes compensatory and, sometimes, punitive damages. Not all complaints or demand letters expressly state the amount of damages sought. As a general matter, when specific amounts are provided, compensatory damages sought range from less than $75,000 to more than $10 million, while demands for punitive damages may range from less than $500,000, to as much as $100 million. Of the 20 individual post-Acquisition claims pending as of December 31, 2003, claimants purport to seek approximately $25 million in compensatory and an unspecified amount of punitive damages. In the Company’s experience, initial demands do not generally bear a reasonable relationship to the facts and circumstances of a particular matter, and in any event, are typically reduced significantly as a case proceeds. The Company believes that its accruals for product liability cases and claims, as described below, are a superior quantitative measure of the cost to it of product liability cases and claims.

At December 31, 2003, our accrual for product liability cases and claims was approximately $9.7 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. 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

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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 or results of operations. 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 or results of operations. 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 or results of operations 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.

Municipality 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.

In City of Boston, first filed in 1999, an order granting plaintiff’s March 27, 2002 request to dismiss the case with prejudice as to all defendants was entered on April 1, 2002.

In City of New York, the New York City Health and Hospitals Corp., and certain city officials filed an Amended Complaint, dated September 1, 2000, in the U.S. District Court for the Eastern District of New York naming Remington and other entities. In August 2001, the City indicated its intention to file a second amended complaint. However, in part as a result of the events of September 11, the court in December 2001 granted the City’s request that the case be put on hold pending the appeal by the State of New York of the dismissal of its separate lawsuit against handgun manufacturers (in which we were not a defendant). The City’s appeal was denied by the state appellate courts in 2003, and in January 2004, the federal district court granted the City’s motion to lift the stay and file an amendment complaint, which no longer names Remington or other defendants who manufacture only long guns.

In City of St. Louis, a First Amended Complaint naming Remington and other entities, and seeking unspecified amounts of compensatory and punitive damages from all defendants, was filed on August 15, 2000, in Circuit Court of the City of St. Louis. The case was removed on November 29, 2000, to the U.S. District Court for the Eastern District of Missouri by a third-party defendant and on September 25, 2001, the federal court remanded the case to state court. On March 1, 2002, the St. Louis City court granted the defendants’ motion to transfer venue to the Circuit Court for St. Louis County, and defendants’ motion to dismiss in this new venue was argued on February 28, 2003. On October 15, 2003, the court granted defendants’ motions to dismiss, which the City has appealed.

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To date, 12 municipal lawsuits (including City of Boston) have been dismissed and are no longer subject to appeal. Four more dismissals, including that involving local California governments, are on appeal, and three more have been dismissed, with no appeals pending. 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. The Missouri legislature approved a preemption bill over a veto by the governor, which should apply to the St. Louis lawsuit. 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, the House of Representatives approved legislation that would limit lawsuits against firearms manufacturers based on the criminal or unlawful acts of third parties. Similar legislation was pending in the Senate, and if enacted, would have prohibited litigation of the type filed by the municipalities. The bill was recently defeated, and it is not certain whether it will be resubmitted this term.

In the spring of 2000, the Federal Trade Commission and the attorneys general of several states instituted investigations into allegations of anticompetitive retaliation against Smith & Wesson by other participants in the firearms industry. In 2000 and 2001, Remington received and replied to civil investigative demands and subpoenae duces tecum and other discovery requests from the State of Connecticut and the Federal Trade Commission (which in 2003, closed its inquiry without taking any action.) Remington, which makes only long guns, does not compete with Smith & Wesson, which makes handguns.

Heritage Fund

In recognition of and support of certain legal and legislative initiatives, the firearms industry established the Hunting and Shooting Sports Heritage Fund of which the Company is a member The Company has historically made annual contributions to the Heritage Fund ranging from 0.5% to 1% of the Company’s annual revenues since becoming a member. Due to a combination of factors, including the general state of the economy, the Company did not make a contribution to the Heritage Fund in 2003. Contributions in 2002 and 2001 were $0.8 million and $1.7 million, respectively.

Certain Indemnities

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

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

The sellers’ overall liability in respect of their representations, covenants and the Excluded Liabilities under the Purchase Agreement, excluding environmental liabilities and product liability matters relating to events occurring prior to the purchase but not disclosed, or relating to discontinued products, is limited to $324.8 million. With a few exceptions, the sellers’ representations under the Purchase Agreement have expired. We made claims for indemnification involving product liability issues prior to such expiration. See “—Legal Proceedings”.

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

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No matter was submitted to a vote of the Company’s shareholders during the fourth quarter of 2003.

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PART II

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

In February 2003, in connection with the Recapitalization, (1) 15,970 shares of common stock of Holding were distributed in respect of 15,970 deferred shares of Holding; (2) Holding issued and sold for $30.8 million 140,044 shares of common stock to the BRS Fund and others; (3) Holding repurchased 722,981 of the outstanding shares of common stock of Holding, in an aggregated amount of $163.7 million, consisting of $130.8 million in cash and $32.9 million aggregated principal amount of senior notes of Holding, or the Holding Notes. C&D Fund IV holds all of the Holding Notes.

As of February 29, 2004, there were 31 holders of the outstanding common stock of Holding. The only holder of Remington’s common stock is Holding.

During 2002 Holding paid dividends of $19.54 per share or an aggregate amount of $15.1 million to all shareholders of record. Holding also declared a special payment to holders of all stock options and deferred shares of Holding of $19.54 per share, in an aggregate amount of $1.8 million. Holding did not pay any dividends during 2003. In connection with funding the repurchase of Holding’s common stock, Remington paid a $100.0 million dividend to Holding. The dividends paid to Holding were used to repurchase common stock (see description above). Remington also paid dividends to Holding in an aggregate amount of $3.3 million during 2003 to fund interest payments on the Holding Notes. As Holding has no separate operations, its ability to pay dividends is dependent upon the extent to which it receives dividends or other funds from Remington. The declaration and payment of future dividends, if any, will be at the sole discretion of the Board of Directors of the respective company, subject to the restrictions set forth in the Credit Agreement, dated as of January 24, 2003, as amended through February 9, 2004, among Remington, Wachovia Bank, N.A., Fleet Capital Corporation, National City Commercial Finance, Inc. and certain other lenders (the “Credit Agreement”), and the indenture (the “Indenture”) for the Notes, which currently limit the payment of cash dividends to shareholders, as well as restrictions, if any, imposed by other indebtedness outstanding from time to time. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources” and Note 12 to our consolidated financial statements for the year ended December 31, 2003 appearing elsewhere in this report.

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The following table sets forth certain selected financial information derived from our consolidated financial statements as audited by our independent accountants, PricewaterhouseCoopers LLP, for each of the years in the five-year period ended December 31, 2003 which reflects the reclassification of certain amounts as discontinued operations for all periods presented for the sale of our fishing line business on February 9, 2004. 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.

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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:

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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.

Executive Overview

The following discussion and analysis discusses the financial condition and results of operations of Remington and its subsidiaries, RBC Holding, Inc. (merged into Remington in December 2003), RA Brands, L.L.C. and RA Factors, Inc. on a consolidated basis, unless otherwise indicated.

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. 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 EBITDA results from two core segments, firearms and ammunition, with support from our other operating segments, accessories and clay targets. As part of this evaluation, we focus on aggressively managing working capital including inventory levels, expense control, and cash management. We focus our strategies and initiatives on growth opportunities primarily 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 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.

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 slows, confidence and discretionary spending by consumers declines.

Beginning in the fourth quarter of 2002, we have experienced a downturn in demand that we believe is attributable to, among other factors, slow economic growth, geopolitical uncertainty and the resulting negative impact on consumer confidence. Management believes that such conditions have caused customers (dealers, chains and wholesalers) to defer or decrease purchases of our products and to utilize lower inventory levels than during prior periods. This downturn in demand continues to date, and there can be no assurance that such trends will not continue.

Management’s near-term strategy in light of this demand environment and what appear to be modest sales growth opportunities has been to contain costs, manage inventory levels and to preserve liquidity. As part of our efforts to contain costs and to manage inventories, we lowered production and took unscheduled shutdown periods at our manufacturing facilities during 2003 to keep inventories in line with sales levels. We have 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.

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

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Our revenues are derived primarily from sales of firearms and ammunition products. Firearms and ammunition accounted for approximately 94% of our sales in 2003 and 93% of our sales in each of 2002 and 2001. We are the only domestic manufacturer of both firearms and ammunition. Our other product lines include firearm-related accessories, clay targets and powdered metal parts. Our sales are seasonal due to the need to meet customer requirements for hunting/shooting sports products during the primary hunting season. Sales in the third quarter are generally higher than sales in other quarters.

Recent Developments and Highlights

In February 2004, we sold specified assets related to our fishline business, including fixed assets, inventories, and intellectual property for $44.0 million in cash, $1.0 million of which has been placed into escrow as security for certain post-closing obligations. 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 additional flexibility to pursue various strategic alternatives.

A private offering of $200.0 million principal amount of 10½% Senior Notes due 2011 of the Company (the “Notes”), was 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.

The refinancing by Remington of substantially all of its existing indebtedness through (i) the repayment of all amounts outstanding under 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 million, plus accrued and unpaid interest and (iii) the closing by Remington of a new Credit Facility, under which up to $125.0 million of revolving credit commitments are available, subject to borrowing base and other limitations. The refinancing occurred in January 2003.

On February 12, 2003, we completed transactions related to the recapitalization of Holding, including the issuance and sale by Holding, for consideration of $30.8 million, of 140,044 shares of common stock of Holding to Bruckmann, Rosser, Sherrill & Co. II, L.P. (the “BRS Fund”) and others. As part of the re-capitalization of Holding, 15,970 deferred shares of Holding were distributed as 15,970 shares of common stock of Holding, 722,981 of the outstanding shares of common stock of Holding were repurchased and 64,144 options were accelerated and cancelled in respect of common stock of Holding, in an aggregate amount of approximately $163.7 million, consisting of $130.8 million in cash and $32.9 million aggregate principal amount of senior notes of Holding, or (the “Holding Notes”). The Clayton & Dubilier Private Equity Fund IV Limited Partnership holds (“C&D Fund IV”) all of the Holding Notes.

Seasonality

We produce and market a broad range of firearms and ammunition products used in various shooting sports. Several models of our shotguns and several types of ammunition are intended for target shooting that generally occurs in the “off season.” The majority of our firearms and ammunition products, however, are manufactured for hunting use. As a result, sales of our products are seasonal and concentrated toward the fall and winter hunting seasons. 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 the 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. Discounts for firearms and ammunition amounting to $5.5 million, $6.3 million, and $7.0 million were given in 2003, 2002, and 2001, 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 the middle of a year, until our extended accounts receivable were 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 point during the early winter.

Outlook

Management believes that the demand for firearms and ammunition products depends on a number of factors, including the general state of the economy, which in turn may be impacted by geopolitical or other world events. The volatile nature of the current economic and geopolitical environment makes it difficult to forecast whether this trend will continue. Management currently does not expect any significant improvement in general conditions in the markets in which we operate, and believes that the softness in demand for our products that we experienced beginning in the fourth quarter of 2002 and throughout 2003 may continue into 2004.

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

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

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

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

Long-lived assets. We periodically review our property, plant and equipment and intangible assets for possible impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable. Assumptions and estimates used in the evaluation of impairment may affect the carrying value of long-lived assets which could result in impairment charges in future periods. We adopted the provisions of SFAS 142, “Goodwill and Other Intangible Assets”, effective January 1, 2002. Adoption of this new standard also requires a review of the carrying amount of our goodwill. Adoption of the standard, while requiring a non-cash charge, did not have a significant impact on our financial condition. A decline in the future performance of certain business units in comparison to the related goodwill of such business units could result in future non-cash charges. In addition, our depreciation and amortization policies reflect judgments on the estimated useful lives of assets.

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. Product liabilities are not recorded net of recoveries that are probable of realization. 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

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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, 2003, we had $7.4 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. Management sets the discount rate based on the yield of high quality fixed income investments expected to be available in the future when cash flows are paid. The rate of increase in compensation levels is established based on management’s expectations of current and foreseeable future increases in compensation. In addition, management also consults with independent actuaries in determining these assumptions. See Note 11 for more information.

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.

Results of Operations

The following table shows, for the periods indicated, the percentage relationships to sales of selected financial data. Our management’s discussion and analysis of our results of operations compares results for the year ended December 31, 2003 to the year ended December 31, 2002 and the year ended December 31, 2002 to the year ended December 31, 2001.

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

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

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.

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The decrease in net sales in the All Other segment, including accessories, targets, and powder 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:

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.

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

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redemption of the Refinanced Notes, and $1.5 million expensed for unamortized debt issuance costs related to the Old Credit Facility, partially offset by the special payment of $1.8 million that occurred in 2002.

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

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

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, $1.0 million of which has been placed into escrow as security for certain post-closing obligations to procure certain materials for the Purchasers. The assets sold had a net book value of approximately $17.9 million and we retained net working capital of $2.5 million of accounts receivable and accounts payable. The net gain that will be recorded during the first quarter 2004 on the disposal of discontinued operations is approximately $13.6 million, net of income taxes.

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

In the transaction described above, certain specified assets of $18.0 million and $16.4 million at December 31,2003 and 2002, respectively, were reclassified to assets held for sale in the consolidated balance sheet. Additionally, amounts related to the operations for the years ended December 31, 2002 and 2001 have been reclassified in the accompanying statement of operations as discontinued operations.

Year Ended December 31, 2002 as Compared to the Year Ended December 31, 2001

Net Sales. The following table compares sales by reporting segment for the years ended December 31, 2002 and 2001:

Management believes that a portion of the increase in sales in the firearms and ammunition segments for 2002 can be attributed to the lower shipment levels in the first three quarters of 2001. This lower level of shipments was due in part to a decrease in demand for firearms and ammunition in such period, which management believes was related to the economic

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slowdown in 2001. We experienced an increased demand for our firearms and ammunition products in the fourth quarter of 2001, which continued to have an impact through the first nine months of 2002.

The increase in Firearms net sales from 2001 to 2002 resulted primarily from higher sales volumes in shotguns and centerfire rifles, mainly the 870 Express series of shotguns, the Model 700, the Model 710 centerfire rifles and the M-24 military rifle system, combined with higher pricing in both the centerfire and shotgun product lines.

The increase in Ammunition sales from 2001 to 2002 was primarily attributable to higher sales volumes across all product categories, especially the new Hevi–Shot products and rimfire ammunition.

The increase in the sales in the all other segment is primarily resulting from higher sales volumes of targets and powdered metal products.

Cost of Goods Sold. The table below depicts the cost of goods sold by reporting segment for the years ended December 31, 2002 and 2001:

The increase in the cost of goods sold for firearms and as a percentage of sales from 2001 to 2002 was due to higher retiree benefits costs and workers compensation expense of $4.4 million, partially offset by a combination of higher sales volumes of high margin products including centerfire rifles such as the M-24 and the Model 700, and a decrease of $2.0 million in depreciation expense.

The decrease in the cost of goods sold in the ammunition segment and as a percentage of sales from 2001 to 2002 was due to a decrease of approximately $8.4 million in manufacturing costs associated with higher production levels and a reduction in shutdown time at the ammunition facility, and a decrease of $1.9 million in depreciation expense, partially offset by higher overall sales volumes of ammunition and higher retiree benefits of $0.1 million.

The decrease in the cost of goods sold for the all other segment and as a percentage of sales was primarily due to higher sales volumes of high margin accessory products, consisting primarily of gun parts.

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

The increase in selling, general and administrative expense from the prior year period was primarily attributable to increases in variable administrative expense and insurance premiums of approximately $6.4 million, offset by a reduction in distribution and bad debt expense of $2.1 million and an increase of $0.7 million in licensing income.

The increase in other expense from 2001 to 2002 was due to a special payment made to holders of options and deferred stock of Holding during the third quarter of approximately $1.8 million, and marking deferred shares of Holding to market during the fourth quarter as part of the Transaction of approximately $0.3 million, partially offset by the elimination of the amortization of certain intangibles under SFAS 142 of approximately $1.2 million.

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Interest Expense. The decrease in interest expense resulted from a decrease in interest rates combined with a decrease in average outstanding debt under our old credit agreement. See “—Liquidity and Capital Resources”.

Change in Accounting Principle. Effective January 1, 2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. The Company recognized an impairment loss, net of tax, of $1.4 million, in two businesses in the All Other reporting segment for possible impairment. The Company continues to monitor one of the business units in the All Other reporting segment for possible impairment. The assessment of the relevant facts and circumstances is ongoing, and a triggering event may occur in future periods in which case non-cash impairment charges may be necessary.

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, with working capital needs being satisfied from time to time with borrowings under our senior secured credit facility. We believe that we will be able to meet our debt service obligations and fund our operating requirements in the future with cash flow from operations and borrowings under our Credit Facility prior to the maturity of the Credit Facility, although no assurance can be given in this regard. We continue to focus on working capital management, including the collection of accounts receivable, managing inventory levels to keep them in line with sales projections and management of accounts payable.

Contractual Obligations and Commercial Commitments

We have various purchase commitments for services incidental to the ordinary conduct of business, including for services relating to our Information Systems maintenance contracts and our NASCAR sponsorship. Such commitments are not at prices in excess of current market prices. We have 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 our financial condition, results of operations, or cash flows during the reporting period.

In recognition of and support of certain legal and legislative initiatives, the firearms industry established the Hunting and Shooting Sports Heritage Fund of which the Company is a member. The Company has historically made annual contributions to the Heritage Fund ranging from 0.5% to 1% of the Company’s annual revenues since becoming a member. Due to a combination of factors, including the general state of the economy, the Company did not make a contribution to the Heritage Fund in 2003. Contributions in 2002 and 2001 were $0.8 million and $1.7 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. 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, 2003:

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Liquidity

As of December 31, 2003, we had outstanding approximately $230.5 million of indebtedness, consisting of approximately $200.0 million aggregate principal amount of the notes, $28.3 million in borrowings under the new working capital facility, $1.3 million in capital lease obligations and a $0.9 million note payable to Holding. As of December 31, 2003, we also had aggregate letters of credit outstanding of $3.7 million. In connection with the Transactions on January 24, 2003 and as discussed in Note 12 to our financial statements, all of our indebtedness under our 9½% Senior Subordinated Notes due 2003 and under our old credit agreement was refinanced and Remington distributed a dividend to Holding of approximately $100 million with the net proceeds from the offering of the old notes and borrowings under our new working capital facility. As a result of the Transactions, we expect to experience higher levels of interest expense, which may result in lower net income.

Our Credit Facility provides for aggregate borrowings of up to $125.0 million, subject to borrowing base and other limitations, under a revolving credit facility through January 23, 2008. As of December 31, 2003 we had approximately $16.5 million available for borrowing as determined pursuant to the Credit Facility, as amended.

On June 30, 2003, and November 30, 2003, we declared and paid dividends of $1.2 million and $2.1 million to Holding. We expect to make future dividend payments to Holding based on available cash flows as permitted by the Credit Facility and the indenture for the Notes.

As a result of plan performance, we will be required to make contributions of approximately $6.4 million to plan assets under its defined benefit pension plan which will be made in several installments throughout 2004. We made contributions of approximately $5.2 million to plan assets under its defined-benefits pension plan during 2003.

As a result of the sale of our fishing line business on February 9, 2004, we applied $43.0 million against our outstanding revolver balance at the time. We expect to make required tax payments during the year. Our after tax proceeds from the sale are estimated to be approximately $29.0 million.

10½% 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. Pursuant to the registration rights agreement entered into with the initial purchasers of the Notes, additional interest of approximately $0.1 million accrued on the Notes from June to August 2003 and was paid in 2003. The additional interest was as a result of a failure to cause the required registration statement with respect to the Note, to be declared effective by the required deadline and as a result of a failure to consummate the required exchange offer with respect to the Notes by the required deadline. The exchange offer has been consummated and all accruals of additional interest have ceased. As of December 31, 2003, $200.0 million aggregate principal amount of Notes was outstanding.

Credit Facility

Our Credit Facility, as amended, provides $125.0 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.

Effective on June 30, 2003, Remington and the requisite lenders under the Credit Facility entered into an amendment to the Credit Facility. Under the terms of the amendment, the leverage ratio that the Company was required to maintain was changed to 5.25 to 1.00 from 5.00 to 1.00 for the fiscal quarter ended June 30, 2003 and the period from July 1, 2003 through September 29, 2003. The Company paid an amendment fee of $0.1 million in connection with the amendment, which was amortized over the three month period covered by the amendment.

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On October 31, 2003, we entered into a second amendment to the Credit Facility. Under the terms of the Credit Facility, as amended through the second amendment, from the date of the second amendment through the earlier of (i) March 30, 2006 and (ii) subject to meeting specified financial conditions, such date as we may determine (such period, the “Availability Test Period”). In addition, the second amendment provided a waiver for failure to comply with the financial covenants under the Credit Facility from September 30, 2003 through December 30, 2003. Remington paid an amendment fee of $0.2 million in connection with the second amendment, which is being amortized over the Availability Test Period.

Under the terms of the Credit Facility, as amended through the second amendment:

On February 9, 2004, we entered into a third amendment to the Credit Facility. Under the terms of the third amendment, the lenders under the Credit Agreement consented to Remington and RA Brands’ sale of specified assets pursuant to the Stren Asset Purchase Agreement, the release of liens against such assets, and the retention of the proceeds of such sale, subject to a requirement to use such proceeds to invest in productive assets or permanently pay down amounts outstanding under the Credit Agreement within one year of such sale. Pursuant to the amendment, further modifications were made to certain required financial levels under the Credit Facility:

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Remington paid an amendment fee of $0.1 million in connection with the third amendment, which will be included as part of the cost of the sale. We expect to be in compliance with the financial covenants under the Credit Facility, as amended. As of December 31, 2003, the Company was in compliance with financial covenants; however, there can be no assurance that we will continue to be in compliance.

Capital & Operating Leases and Other Long-term Obligations

We maintain capital leases mainly for computer equipment. We have two contracts that extend beyond five years, the lease for our Memphis warehouse, which extends to 2010 and a steam purchase contract, which extends to 2012 and contains an option to cancel with 3 years notice. We also maintain contracts for Information Systems and for sponsorship of NASCAR racing team, which is cancelable upon certain conditions, including death and injury to the driver.

Cash Flows and Working Capital

Net cash used in operating activities was $7.3 million for the year ended December 31, 2003 and net cash provided from operating activities was $21.7 million for the year ended December 31, 2002. The $29.0 million increase in cash used in operating activities resulted primarily from a decrease in earnings combined with lower other accrued and long-term liabilities. Other accrued and long-term liabilities decreased $8.2 million from December 31, 2002, primarily as a result of lower accruals for worker’s compensation, incentive compensation, excise taxes, and rebates. Accounts receivable increased $8.5 million from December 31, 2002 to $67.1 million at December 31, 2003 primarily as a result of approximately $33.3 million of firearms and ammunition sales on extended terms. Consistent with prior years, some of these terms provide cash discount incentives and require payment by April and May 2004 for firearms and by September 2004 for both firearms and ammunition. Inventories increased $0.3 million from December 31, 2002 to $85.9 million at December 31, 2003.

Net cash used in investing activities for the year ended December 31, 2003 and 2002 was $6.9 million and $7.5 million, respectively. The $6.9 million of expenditures for the year ended December 31, 2003 consisted primarily of capital expenditures for new equipment related to the manufacture of firearms, as well as replacement equipment and improvement projects concentrated on enhancing and maintaining operating efficiency throughout existing facilities.

Net cash provided by financing activities for the year ended December 31, 2003 was $14.2 million and net cash used in financing activities for the year ended December 31, 2002 was $27.2 million. The $41.4 million increase in cash provided by financing activities primarily resulted from approximately $31.3 million of higher borrowings under the revolving credit facility paired with the issuance of $200.0 million of Notes and capital contributions from Holding of $4.5 million offset by the redemption of the $86.9 million in outstanding notes, increased dividend payments of $88.2 up to $103.3 million, a decrease in book overdraft of $7.1 million and payment of debt issuance costs of $12.4 million.

Dividend Policy

The declaration and payment of future dividends, if any, will be at the sole discretion of the Board of Directors of the respective company, subject to the restrictions set forth in the Credit Agreement and the Indenture, which currently restrict the payment of cash dividends to shareholders.

Capital Expenditures

Capital expenditures for the year ended December 31, 2003 were $6.9 million, primarily for new equipment related to the manufacture of firearms, as well as replacement equipment and improvement projects concentrated on enhancing and maintaining operating efficiency throughout existing facilities. We expect total capital expenditures to be approximately $8.1 million in 2004 which will be used for equipment associated with new product introductions, replacement and maintaining operating efficiency.

Financial Instruments

We have only limited involvement with financial instruments and do not use them for trading purposes. Financial instruments, which are a type of financial derivative instrument, are used to manage well-defined interest rate and commodity price risks. The criteria to qualify for hedge accounting are that the instrument must be related to an asset, liability, firm commitment or anticipated transaction that is probable and whose characteristics and terms have been identified. In addition, the investment must reduce the risks of commodity price movements or change the character of the interest rate.

We have employed various strategies, including call options, zero cost collars and futures to hedge the price risk related to firm commitments and anticipated purchases of lead and copper to be used in the manufacturing process. We buy call

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options for an up front fee for the right to purchase a specified amount of metal at a pre-determined price and date. Hedging gains and losses are offset against purchase price variances on physical purchases of the commodities. The amounts of premiums paid for commodity contracts outstanding at December 31, 2003, 2002, and 2001 were $0.7 million, $0.6 million, and $0.4 million, respectively. At December 31, 2003, 2002 and 2001, the market value of our outstanding contracts relating to firm commitments and anticipated purchases up to one year from the respective date was $2.8 million, $0.2 million, and $0.2 million, respectively. Such market values have been determined with the assistance of an independent broker. During 2003, commodity prices increased which resulted in higher market values of our existing hedging contracts. Net losses of $0.3 million, $0.2 million and $0.3 million on derivative instruments were reclassified to cost of sales from accumulated other comprehensive income (loss), during the years ended December 31, 2003, 2002 and 2001, respectively. See Note 20 to our consolidated financial statements for the year ended December 31.

We were not a party to any interest rate cap, hedging or other protection arrangements with respect to our variable rate indebtedness as of December 31, 2003, December 31, 2002, and December 31, 2001.

The estimated value of our debt at December 31, 2003 was $240.5 million compared to a carrying value of $230.5 million. Both the estimated value and carrying value of our debt at December 31, 2002 was $101.1 million. All fixed rate indebtedness was valued based on current market quotes. All variable rate indebtedness is assumed at market.

Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends SFAS 133 “Accounting for Derivative Instruments and Hedging Activities” and SFAS No. 138 “Accounting for Certain Derivative Instruments and Certain Hedging Activities” and is related to certain derivatives embedded in other contracts and for hedging activities under SFAS 133. SFAS No. 149 is effective for contracts entered into or modified after June 30, 2003 and is to be applied prospectively. SFAS No. 149 has not had an impact on our financial position, results of operations or cash flows.

The FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity” certain provisions of which became effective July 1, 2003. The standard specifies that instruments within its scope, which include mandatorily redeemable financial instruments, obligations to repurchase the issuer’s equity shares by transferring assets, and certain obligations to issue a variable number of shares, represent obligations of the issuer and, therefore, the issuer must classify them as liabilities. In November 2003, the FASB deferred indefinitely certain provisions of the standard surrounding the treatment of mandatorily redeemable non-controlling interests in finite lived entities. Adoption of the provisions of this standard on July 1, 2003 had no impact on our consolidated financial position or results of operations and we do not have any mandatorily redeemable non-controlling interests in finite-lived entities.

In December 2003, the FASB issued SFAS No. 132R, “Employers’ Disclosures about Pension and Other Postretirement Benefits, an update of FASB Statements No. 87, 88, and 106”. SFAS No. 132R revises disclosures requirements for pension plans and other postretirement plans to provide additional information in both interim and annual financial statements regarding the type of plan assets, investment strategy, expected future cash flows and the general approach in developing plan assumptions. We have adopted the provisions of this statement as of December 31, 2003.

In January 2004, the FASB issued Financial Staff Position (FSP) SFAS No. 106-1 “Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Act”)”. FSP SFAS No. 106-1 introduces accounting guidance for the Act’s subsidy provisions given to health care plan sponsors who provide specified levels of postretirement healthcare benefits. We have not accounted for the subsidy provisions of the Act as of December 31, 2003 as allowed under FSP SFAS No. 106-1.

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

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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 “—Liquidity and Capital Resources—Capital Expenditures” that we anticipate year 2004 capital expenditures of $8.1 million for equipment that will improve manufacturing operating efficiencies; (viii) 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; (ix) 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 2003, 2002 and 2001 and the time period during which the amount of our self insured retention will be paid out; (x) the statement in “Quantitative and Qualitative Disclosures About Market Risk” that we believe that a near-term change in commodity prices will not materially impact our consolidated financial position, results of operations, future earnings, fair value or cash flows (xi) 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;” (xii) 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 (xiii) 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—Hunting/Shooting Sports,” “—Marketing and Distribution,” “—Patents and Trademarks” and “—Environmental Matters” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Overview,” “—Taxes,” “—Liquidity and Capital Resources,” “—Product Liability,” 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.

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While we periodically reassess material trends and uncertainties affecting the operations and financial condition in connection with its preparation of Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our quarterly and annual reports we do not intend to review or revise any particular forward-looking statement referenced in this report in light of future events.

Product Liability

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

While it is difficult to forecast the outcome of litigation, we do not believe, in light of relevant circumstances (including the current availability of insurance for personal injury and property damage with respect to cases and claims involving occurrences arising after the Acquisition, our accruals for the uninsured costs of such cases and claims and the sellers’ agreement to bear partial responsibility for certain post-Acquisition shotgun-related product liability costs, as well as the type of firearms products we make), that the outcome of all pending product liability cases and claims will be likely to have a material adverse effect upon our financial condition, results of operations, or cash flows. However, in part because of the uncertainty as to the nature and extent of manufacturer responsibility for product liability allegations, especially as to firearms, as well as the potential nature of firearms-related injuries, there can be no assurance that our resources will be adequate to cover both pending and future product liability occurrences, cases or claims, in the aggregate, or that such a material adverse effect will not result therefrom. Because of the nature of our products, we anticipate that we will continue to be involved in product liability cases and claims in the future.

Since December 1, 1993, we have maintained insurance coverage for product liability claims for personal injury or property damage relating to occurrences after the Acquisition, subject to certain self-insured retentions on a per-occurrence basis. The current insurance policy extends through November 30, 2004. Certain of our current excess insurance coverage expressly excludes actions brought by municipalities as described in “Business—Legal Proceedings”. We paid $3.2 million, $4.4 million, and $2.1 million in connection with product liability cases and claims in the years ended December 31, 2003, 2002 and 2001, respectively. At December 31, 2003, our accrual for product liability cases and claims was approximately $9.7 million. The amount of our accrual for product liability cases and claims is based upon estimates developed as follows.

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Certain of our financial instruments are subject to market risks, including interest rate risk. We were not a party to any interest rate cap or other protection arrangements with respect to our variable rate indebtedness as of December 31, 2003. A one percentage point change in the variable rate would increase or decrease interest expense by $0.5 million. We use commodity options contracts to hedge against the risk of increased prices for lead and copper to be used in the manufacture of our products. At December 31, 2003, the market value of our outstanding contracts relating to firm commitments and anticipated purchases up to one year from the respective balance sheet date was $2.8 million, which represents approximately 366% increase over the market value during third quarter. With the volatility of pricing we have experienced, we believe that a near term change in commodity prices could have a material impact on our consolidated financial position, results of operations, future earnings, fair value or cash flows. We believe that we do not have a material exposure to fluctuations in foreign currencies. We do not hold or issue financial instruments for trading purposes. See “—Liquidity & Capital Resources—Financial Instruments.”

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Report of Independent Auditors

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. (the “Company”) at December 31, 2003 and December 31, 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 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) present 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 schedules based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 8 to the consolidated financial statements, the Company changed its accounting policy for goodwill amortization in 2002.

PricewaterhouseCoopers LLP

Greensboro, North Carolina

March 2, 2004

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REMINGTON ARMS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions, Except Share Amounts)