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

FORM 10-Q


(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended:

	March 31, 2009

	OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
	OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from _____ to _____

	Commission file number: 033-74194-01



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


Delaware		51-0350935
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

870 Remington Drive

P.O. Box 700

Madison, North Carolina 27025-0700

(Address of principal executive offices) (Zip Code)

(336) 548-8700

(Registrant’s telephone number, including area code)

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


	Yes o No x

Note: Although the registrant is not subject to the filing requirements of Section 13 or 15(d), it has filed all Exchange Act reports that would be required to be so filed during the preceding 12 months.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):


	Large accelerated filer o		Accelerated filer o
	Non-accelerated filer x		Smaller reporting company o
	(do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

At May 7, 2009, the number of shares outstanding of each of the issuer’s classes of common stock is as follows: 1,000 shares of Class A Common Stock, par value $.01 per share.

REMINGTON ARMS COMPANY, INC.

FORM 10-Q

March 31, 2009

INDEX


		Page No.


Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Consolidated Financial Statements	1

	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	33

Item 4T.	Controls and Procedures	34

Part II.	OTHER INFORMATION

Item 1.	Legal Proceedings	35

Item 1A.	Risk Factors	38

Item 6.	Exhibits	39

SIGNATURE		40

EXHIBIT INDEX		41

Remington Arms Company, Inc.

Consolidated Balance Sheets

(Dollars in Millions, Except Per Share Data)


	Unaudited						Unaudited

	March 31, 2009			December 31, 2008			March 31, 2008

ASSETS
Current Assets
Cash and Cash Equivalents	$	76.5		$	66.7		$	0.4
Accounts Receivable Trade - net		104.8			93.1			95.1
Inventories - net		99.5			102.0			147.7
Supply Inventory		6.2			6.5			6.2
Prepaid Expenses and Other Current Assets		16.2			17.8			23.7
Assets Held for Sale		1.9			1.9			—
Deferred Tax Assets		7.3			9.9			6.3

Total Current Assets		312.4			297.9			279.4

Property, Plant and Equipment - net		114.8			117.0			116.2
Goodwill and Intangibles - net		100.4			101.0			148.9
Debt Issuance Costs - net		2.7			3.1			4.3
Noncurrent Deferred Tax Assets		—			—			0.1
Other Noncurrent Assets		15.0			15.1			19.5

Total Assets	$	545.3		$	534.1		$	568.4

LIABILITIES AND STOCKHOLDER’S EQUITY
Current Liabilities
Accounts Payable	$	42.3		$	35.3		$	36.9
Book Overdraft		—			—			3.3
Short-Term Debt		2.1			3.2			3.3
Current Portion of Long-Term Debt		6.7			6.7			6.3
Current Portion of Product Liability		2.8			2.8			3.3
Income Taxes Payable		1.4			—			0.3
Other Accrued Liabilities		47.1			46.6			42.5

Total Current Liabilities		102.4			94.6			95.9

Long-Term Debt, net of Current Portion		267.7			269.1			251.9
Retiree Benefits, net of Current Portion		84.7			85.0			46.8
Product Liability, net of Current Portion		11.1			10.6			9.7
Deferred Tax Liabilities		9.8			9.7			31.4
Other Long-Term Liabilities		10.1			13.0			7.8

Total Liabilities		485.8			482.0			443.5


Commitments and Contingencies

Stockholder’s Equity
Class A Common Stock, par value $.01; 1,000 shares authorized and outstanding at March 31, 2009, December 31, 2008 and March 31, 2008, respectively		—			—			—
Paid in Capital		143.7			143.6			142.4
Accumulated Other Comprehensive Loss		(39.7	)		(41.6	)		(5.6	)
Accumulated Deficit		(44.4	)		(49.9	)		(11.9	)

Total Parent’s Equity		59.6			52.1			124.9
Deficit in Noncontrolling Interest		(0.1	)		—			—

Total Stockholder’s Equity		59.5			52.1			124.9

Total Liabilities and Stockholder’s Equity	$	545.3		$	534.1		$	568.4

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

Remington Arms Company, Inc.

Consolidated Statements of Operations

(Dollars in Millions)

(Unaudited)


	Year-to-Date March 31,

	2009			2008

Net Sales	$	145.2		$	122.1

Cost of Goods Sold		104.7			93.2


Gross Profit		40.5			28.9

Selling, General and Administrative Expenses		25.7			23.9

Research and Development Expenses		2.1			1.8

Other Income		(1.9	)		(0.6	)


Operating Profit		14.6			3.8

Interest Expense		6.0			6.0


Income (Loss) from Operations before Income Taxes		8.6			(2.2	)

Income Tax Provision (Benefit)		3.2			(0.8	)


Net Income (Loss)		5.4			(1.4	)


Add: Net Loss Attributable to Noncontrolling Interest		0.1			—


Net Income (Loss) Attributable to Controlling Interest		5.5		$	(1.4	)

(1) Sales are presented net of Federal Excise taxes of $11.7 and $8.3 for the year-to-date periods ended March 31, 2009 and 2008, respectively.

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

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


	Year-to-Date March 31,

	2009			2008

Operating Activities
Net Income (Loss) Attributable to Controlling Interest	$	5.5		$	(1.4	)
Net Income (Loss) Attributable to Noncontrolling Interest		(0.1	)		—
Adjustments to reconcile Net Income (Loss) to Net Cash used in Operating Activities:
Depreciation and Amortization		4.7			4.7
Pension Plan Contributions		(1.9	)		(2.8	)
Pension Plan Expense		1.1			(0.1	)
Provision (Benefit) for Deferred Income Taxes, net		1.5			(0.9	)
Other Non-cash Charges		0.3			3.2
Changes in Operating Assets and Liabilities:
Accounts Receivable Trade - net		(11.7	)		(12.7	)
Inventories		2.5			(8.9	)
Prepaid Expenses and Other Current Assets		3.9			(13.8	)
Other Noncurrent Assets		0.1			(1.1	)
Accounts Payable		7.0			3.3
Income Taxes Payable		1.4			0.2
Other Liabilities		(0.3	)		12.0

Net Cash provided by (used in) Operating Activities		14.0			(18.3	)


Investing Activities
Purchase of Property, Plant and Equipment		(3.1	)		(3.0	)
Payment for purchase of Marlin Firearms, net of cash acquired		—			(46.6	)

Net Cash used in Investing Activities		(3.1	)		(49.6	)


Financing Activities
Proceeds from Revolving Credit Facility		—			49.1
Payments on Revolving Credit Facility		—			(20.3	)
Payments on Long-Term Debt		(1.1	)		(0.1	)
Cash Contributions from FGI		—			18.2
Change in Book Overdraft		—			(2.0	)

Net Cash (used in) provided by Financing Activities		(1.1	)		44.9

Change in Cash and Cash Equivalents		9.8			(23.0	)
Cash and Cash Equivalents at Beginning of Period		66.7			23.4

Cash and Cash Equivalents at End of Period	$	76.5		$	0.4


Supplemental Cash Flow Information
Cash Paid for:
Interest	$	0.5		$	0.7
Income Taxes	$	—		$	—
Previously accrued Capital Expenditures	$	1.2		$	0.9
Noncash Investing and Financing Activities:
Financing of insurance policies	$	2.1		$	3.3

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

Remington Arms Company, Inc.
Consolidated Statement of Stockholder’s Equity and Comprehensive Income (Loss)
(Dollars in Millions)
(Unaudited)


	Paid-in Capital		Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Parent’s Equity		Non- Controlling Interest			Total Stockholder’s Equity


Balance, December 31, 2008	$	143.6	$	(41.6	)	$	(49.9	)	$	52.1	$	—		$	52.1


Comprehensive Income (Loss):
Net Income (Loss)		—		—			5.5			5.5		(0.1	)		5.4
Other comprehensive income:
Net derivative gains, net of tax effect of $0.4		—		0.7			—			0.7		—			0.7
Net derivative losses reclassified as earnings, net of tax effect of $0.7		—		1.2			—			1.2		—			1.2

Total Comprehensive Income										7.4		(0.1	)		7.3

SFAS 123R Share Based Compensation		0.1		—			—			0.1		—			0.1


Balance, March 31, 2009	$	143.7	$	(39.7	)	$	(44.4	)	$	59.6	$	(0.1	)	$	59.5

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

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Note 1 - Basis of Presentation

The accompanying unaudited interim consolidated financial statements of Remington Arms Company, Inc. (“Remington”) includes the financial results of The Marlin Firearms Company (“Marlin”) and its subsidiary, H&R 1871, LLC (“H&R”), as well as the accounts of Remington’s other wholly owned subsidiaries, RA Brands, L.L.C. (“RA Brands”) and Remington Steam, LLC (“Remington Steam”), Remington’s consolidated joint venture EOTAC, LLC (“EOTAC”) and Remington’s unconsolidated 27.1% membership interest in INTC USA, LLC (“INTC USA”) (collectively with Remington, the “Company”) unless the context otherwise requires.

All significant intercompany accounts and transactions have been eliminated. The accounts of the Company’s parent, RACI Holding, Inc. (“Holding”), which owns 100% of the 1,000 shares authorized, issued and outstanding of Remington’s Class A common stock (par value $0.01 per share), and those of Freedom Group, Inc. (“FGI”), an affiliate of Cerberus Capital Management, L.P. (“CCM”, and along with CCM’s affiliates other than operating portfolio companies, collectively “Cerberus”) and the 100% owner of Holding, are not presented herein. Significant transactions between the Company, Holding and FGI and the related balances are reflected in the unaudited interim consolidated financial statements and related disclosures.

On January 28, 2008, 100% of the shares of Marlin were purchased by Remington (the “Marlin Acquisition”). The Marlin Acquisition includes Marlin’s 100% ownership interest in H&R. Although the Marlin Acquisition closed on January 28, 2008, based on the accounting policies adopted by Marlin and in place prior to the Marlin Acquisition, full financial statements were not available for the resulting stub period January 28-31, 2008 (the “Stub Period”). In addition, it was determined by the Company that it would require significant effort and time to generate financial statements for the Stub Period. Based on materiality tests performed using guidance from Staff Accounting Bulletin (“SAB”) Topic 1 (M1), the Marlin Stub Period was deemed immaterial to the unaudited interim consolidated financial statements and thus, Remington began reporting consolidated financial statements with Marlin financial data beginning February 1, 2008.

The accompanying unaudited interim consolidated financial statements of Remington have been prepared by the Company in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and accordingly, do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of items of a normal recurring nature) considered necessary for a fair presentation of the unaudited interim consolidated financial statements have been included. Operating results for the three month period ended March 31, 2009 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2009. The year-end balance sheet information for 2008 was derived from the audited consolidated financial statements for the year ended December 31, 2008, but does not include all disclosures required by U.S. generally accepted accounting principles (“U.S. GAAP”).

These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Remington and subsidiaries as of and for the year ended December 31, 2008, and any Current Reports on Form 8-K filed subsequent to December 31, 2008.

Note 2 – Acquisition

Remington completed its acquisition of all of the outstanding shares of Class A and Class B Common Stock (collectively, the “Shares”) of Marlin on January 28, 2008 (the “Marlin Closing Date”), from the shareholders of Marlin (collectively, the “Marlin Sellers”) pursuant to a stock purchase agreement (the “Marlin Stock Purchase Agreement”) dated as of December 21, 2007 by and among Marlin, Remington, the Marlin Sellers party thereto, and Frank Kenna, III, solely in his capacity as the Shareholders’ Representative. The Marlin Acquisition includes Marlin’s 100% ownership interest in H&R. Remington completed the Marlin Acquisition in an effort to grow its leadership position in shotguns and rifles in the United States, to further develop market presence internationally and to benefit from operational improvements and integrating certain selling, marketing and administrative functions.

The Marlin Acquisition was accounted for as a business combination using the purchase method of accounting, in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 141, Business

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Combinations (“SFAS 141”), whereby the preliminary purchase price (including assumed liabilities) is allocated and pushed down to the assets acquired based on their estimated fair market values at the date of the Marlin Acquisition.

The total acquisition cost for the Marlin Acquisition was approximately $48.1 (the “Acquisition Cost”).

In conjunction with the Marlin Acquisition, the Acquisition Cost was allocated to reflect the fair value of the assets acquired and liabilities assumed as of the Marlin Closing Date in accordance with SFAS 141. The preliminary allocation for the Marlin Acquisition is listed below along with subsequent adjustments.


	Preliminary Allocation		Net Adjustments			Final Allocation


Inventory	$	25.0	$	(0.4	)	$	24.6
Other Current Assets		11.6		3.4			15.0
Property, Plant and Equipment		15.6		(2.9	)		12.7
Goodwill		6.0		3.1			9.1
Trade Names and Trademarks		8.7		—			8.7
Customer Relationships		2.2		—			2.2
Other Long-Term Assets		5.9		—			5.9

Total Assets Acquired		75.0		3.2			78.2


Current Liabilities		14.3		3.1			17.4
Pension & OPEB		7.1		—			7.1
Other Non-Current Liabilities		5.2		0.4			5.6

Total Liabilities Assumed		26.6		3.5			30.1


Acquisition Cost	$	48.4	$	(0.3	)	$	48.1

On April 7, 2008, the Company announced a strategic manufacturing consolidation decision that resulted in the closure of its manufacturing facility in Gardner, Massachusetts in October 2008. The Company notified affected employees of this decision on April 7, 2008.

In connection with the closing, management recorded a $1.2 liability in the purchase price allocation in accordance with EITF 95-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring). As of March 31, 2009, approximately $1.1 of the $1.2 liability had been spent. In addition, $2.9 had been spent on the transfer of equipment, planning and site preparation, and purchases of new equipment as of March 31, 2009.

In March 2009, the Company recognized a $2.0 gain from the release of a federal excise tax liability as a result of an audit settlement. Since the settlement was reached outside the one year window for purchase price accounting, the amount was recognized as a gain in the statement of operations rather than an adjustment to goodwill.

Pro Forma Financial Information

The following unaudited pro forma results of operations assume that the Marlin Acquisition occurred at the beginning of 2008. The results have been adjusted for the impact of certain Marlin Acquisition-related items, such as additional sales; depreciation expense of property, plant and equipment; additional amortization expense of identified intangible assets; recognition of write-up in cost of sales as inventory is sold and the related income tax effects. Income taxes are provided at the estimated effective rate. This unaudited pro forma information as of March 31, 2008, should not be relied upon as necessarily being indicative of historical results that would have been obtained if the Marlin Acquisition had actually occurred on those dates, nor the results that may be obtained in the future. The March 31, 2009 information below represents the actual unaudited results for the period.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited


Unaudited Pro Forma Financial Results	For the Three Months Ended


	March 31, 2009		March 31, 2008

Net Sales	$	145.2	$	127.0
Operating Income		14.6		3.9
Net Income (Loss)		5.5		(1.3	)

Note 3 – Fair Value Measurements

The Company adopted SFAS No. 157, Fair Value Measurements (“SFAS 157”), and SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”), on January 1, 2008. SFAS 157 (1) creates a single definition of fair value, (2) establishes a framework for measuring fair value, and (3) expands disclosure requirements about items measured at fair value. SFAS 157 applies to both items recognized and reported at fair value in the financial statements and items disclosed at fair value in the notes to the financial statements. SFAS 157 does not change existing accounting rules governing what can or what must be recognized and reported at fair value in the Company’s financial statements, or disclosed at fair value in the Company’s notes to the financial statements. Additionally, SFAS 157 does not eliminate practicability exceptions that exist in accounting pronouncements amended by SFAS 157 when measuring fair value. As a result, the Company will not be required to recognize any new assets or liabilities at fair value.

Prior to SFAS 157, certain measurements of fair value were based on the price that would be paid to acquire an asset, or received to assume a liability (an entry price). SFAS 157 clarifies the definition of fair value as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date (that is, an exit price). The exit price is based on the amount that the holder of the asset or liability would receive or need to pay in an actual transaction (or in a hypothetical transaction if an actual transaction does not exist) at the measurement date. In some circumstances, the entry and exit price may be the same; however, they are conceptually different.

Fair value is generally determined based on quoted market prices in active markets for identical assets or liabilities. If quoted market prices are not available, the Company uses valuation techniques that place greater reliance on observable inputs and less reliance on unobservable inputs. In measuring fair value, the Company may make adjustments for risks and uncertainties, if a market participant would include such an adjustment in its pricing.

SFAS 157 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and the Company’s assumptions (unobservable inputs). Determining where an asset or liability falls within that hierarchy depends on the lowest level input that is significant to the fair value measurement as a whole. An adjustment to the pricing method used within either level 1 or level 2 inputs could generate a fair value measurement that effectively falls in a lower level in the hierarchy. The hierarchy consists of three broad levels as follows:


	Level 1 – Quoted market prices in active markets for identical assets or liabilities;

	Level 2 – Inputs other than level 1 inputs that are either directly or indirectly observable; and

	Level 3 – Unobservable inputs developed using the Company’s estimates and assumptions, which reflect those that market participants would use.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

The following table presents information about assets and liabilities measured at fair value on a recurring basis:


	Fair value measurements at March 31, 2009 using:

	Quoted prices in active markets for identical assets	Significant other observable inputs	Significant unobservable inputs

	Level 1	Level 2	Level 3	Total

Assets:
Commodity Contract Derivatives	Not applicable	$2.7	Not applicable	$2.7
Life Insurance Policies	$0.1	Not applicable	Not applicable	$0.1
Liabilities:
None	Not applicable	Not applicable	Not applicable	Not applicable

As shown above, commodity contract derivatives valued based on fair values provided by the Company’s counterparties are classified within level 2 of the fair value hierarchy. Life insurance policies valued by using cash surrender values, net of related policy loans, are classified within level 1 of the fair value hierarchy. The determination of where an asset or liability falls in the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter based on various factors and it is possible that an asset or liability may be classified differently from quarter to quarter. However, the Company expects that changes in classifications between different levels will be rare.

Most derivative contracts are not listed on an exchange and require the use of valuation models. Consistent with SFAS 157, the Company attempts to maximize the use of observable market inputs in its models. When observable inputs are not available, the Company defaults to unobservable inputs. Derivatives valued based on models with significant unobservable inputs and that are not actively traded, or trade activity is one way, are classified within level 3 of the fair value hierarchy.

The Financial Accounting Standards Board (“FASB”) issued FSP SFAS 157-2 (“FSP SFAS 157-2”) on February 12, 2008 to provide a one-year deferral of the effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities, except those that are recognized or disclosed in financial statements at fair value on a recurring basis (that is, at least annually). As the deferral period under the previously adopted FSP SFAS 157-2 has expired, the Company has fully adopted SFAS 157 as of January 1, 2009, noting no significant impact on its operations or financial position.

In February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and Financial Liabilities (“SFAS 159”). SFAS 159 provides the Company with an option to elect fair value as the initial and subsequent measurement attribute for most financial assets and liabilities and certain other items. The fair value option election is applied on an instrument-by-instrument basis (with some exceptions), is irrevocable, and is applied to an entire instrument. The election may be made as of the date of initial adoption for existing eligible items. Subsequent to initial adoption, the Company may elect the fair value option at initial recognition of eligible items, on entering into an eligible firm commitment, or when certain specified reconsideration events occur. Unrealized gains and losses on items for which the fair value option has been elected will be reported in earnings. Upon adoption of SFAS 159 on January 1, 2008, the Company did not elect to account for any assets and liabilities under the scope of SFAS 159 at fair value.

In October 2008, the FASB issued FSP SFAS 157-3 (“FSP SFAS 157-3”), Determining the Fair Value of a Financial Asset When the Market for that Asset is Not Active, which clarifies the application of SFAS 157 in a market that is not active. The effective date for FSP SFAS 157-3 was October 10, 2008. The adoption of FSP SFAS 157-3 by the Company was insignificant to the Company’s operations and financial position.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Note 4 – Inventories

Inventories consisted of the following at:


	(Unaudited)

	March 31, 2009			December 31, 2008			March 31, 2008

Raw Materials		$	26.8		$	24.3		$	27.6
Semi-Finished Products			27.8			28.1			34.7
Finished Products			43.7			48.5			84.7

Subtotal			98.3			100.9			147.0
LIFO Adjustment			1.2			1.1			0.7

Total		$	99.5		$	102.0		$	147.7

The Company’s inventories are stated at the lower of cost or market. The majority of the Company’s inventories are determined by the First-In, First-Out (“FIFO”) method. Inventory costs associated with Semi-Finished Products and Finished Products include material, labor, and overhead while costs associated with Raw Materials include primarily material. The Company provides inventory allowances based on excess and obsolete inventories.

As part of the Marlin Acquisition, the Company now accounts for a portion of its inventory under a Last In First Out (“LIFO”) method. As of March 31, 2009, approximately 11.7% of the Company’s total inventory was accounted for under the LIFO method. The Marlin Acquisition resulted in a new basis for the value of the Company’s inventory. Accordingly, inventory was adjusted to its estimated fair value as of February 1, 2008, which was estimated to be approximately $25.0. As a result of the adjustment to fair value, the LIFO and FIFO values are the same at the Marlin Acquisition date for the inventory that is accounted for under the LIFO method. Had the FIFO method been used, inventories would have been lower by $1.2 at March 31, 2009.

For the quarter ended March 31, 2008, the Company recorded a charge of $3.1 to cost of goods sold against certain of its surveillance technology products inventory in the accompanying statement of operations as a result of the Company discontinuing its exclusive distribution rights agreement with the technology products manufacturer.

Note 5 –Other Accrued Liabilities

Other Accrued Liabilities consisted of the following at:


	(Unaudited)

	March 31, 2009			December 31, 2008			March 31, 2008

Retiree Benefits		$	1.3		$	1.3		$	1.2
Marketing and Rebate Accruals			7.6			10.5			4.4
Healthcare Costs			4.0			4.1			5.0
Workers’ Compensation			1.8			1.8			2.6
Incentive Compensation			2.3			7.5			1.3
Accrued Excise Taxes			3.5			5.3			2.0
Accrued Employee Costs			4.8			2.5			4.4
Accrued Interest			7.0			1.8			7.1
Escrow			4.9			4.9			5.2
Other			9.9			6.9			9.3

Total		$	47.1		$	46.6		$	42.5

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Note 6 – Income Taxes

Our effective tax rate on continuing operations for the three months ended March 31, 2009 and 2008 was 36.8% and 36.4%, respectively.

Over the next 12 months, the Company has determined it reasonably possible that the level of unrecognized tax benefits could decrease significantly, up to $2.5, as the result of the filing of a tax method change.

The Company files its income taxes as part of a consolidated tax return with FGI, the 100% owner of our sole stockholder, Holding. Current and deferred tax expense is allocated to the members based on an adjusted separate return methodology. Intercompany receivables and payables established as tax attributes are utilized by the consolidated group. The receivable recorded by the Company at March 31, 2009 and 2008 was $2.4 and zero, respectively.

Note 7–Long-Term Debt

Long-term debt consisted of the following at:


	(Unaudited)

	March 31, 2009			December 31, 2008			March 31, 2008

Revolving Credit Facility		$	51.8		$	51.8		$	28.8
10.5% Senior Subordinated Notes due 2011			201.9			202.1			202.9
Term Loan			19.3			20.3			25.0
Capital Lease Obligations			0.7			0.9			0.6
Due to RACI Holding, Inc.			0.7			0.7			0.9

Subtotal			274.4			275.8			258.2
Less: Current Portion			6.7			6.7			6.3

Total		$	267.7		$	269.1		$	251.9

10.5% Senior Subordinated Notes due 2011

The 10.5% Senior Subordinated Notes due 2011 (the “Notes”) are redeemable at the option of the Company, in whole or in part, any time with a redemption price of the principal amount of 100.0%. The Notes are unsecured senior obligations of the Company that are contractually pari passu with all existing and future senior indebtedness, if any, of the Company, but are effectively subordinate to secured indebtedness, including its indebtedness under the Amended and Restated Credit Agreement to the extent of the assets securing such indebtedness.

The Indenture and the Amended and Restated Credit Agreement, as amended by the First, Second and Third Amendments, the Joinder Agreement, and the Letter Amendment, contain various restrictions on the Company’s ability to incur debt, pay dividends and enter into certain other transactions. Pursuant to the Third Amendment entered into by the Company on April 14, 2009, as discussed below, the amount generally available for cash repurchases of the Notes was increased from an aggregate amount of $20.0 to an aggregate amount of $50.0; although under certain circumstances the Company may make cash repurchases of Notes in an aggregate amount greater than $50.0 so long as the portion of the purchase price that exceeds $50.0 is paid in cash provided by FGI.

The First Supplemental Indenture, dated May 17, 2007, revised the term “Permitted Holder” so that the FGI Acquisition would not constitute a “Change of Control” under the Indenture and holders of the Notes would have no put right as a result of the FGI Acquisition, and the former “Sponsors” under the Indenture were replaced with Cerberus.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Pursuant to the Second Supplemental Indenture, dated May 12, 2008, RA Brands, Marlin and H&R became guarantors and unconditionally guarantee all of Remington’s obligations under the Notes on the terms and subject to the conditions of the Indenture.

Revolving Credit Facility


	On April 14, 2009, the Company entered into the Third Amendment to the Amended and Restated Credit Agreement. Key terms of the Company’s Amended and Restated Credit Agreement, as amended by the First, Second and Third Amendments, the Joinder Agreement and the Letter Amendment, include the following:


	1)	Provides up to $155.0 of borrowings under an asset-based senior secured revolving credit facility through June 30, 2010 (extended to January 4, 2011 per the Third Amendment);

	2)	Specifies that amounts available are subject to a borrowing base limitation based on certain percentages of eligible accounts receivable and eligible inventory in addition to a minimum availability requirement of $27.5;

	3)	Includes a letter of credit sub-facility of up to $15.0, under which the Company has aggregate outstanding letters of credit of $7.0 as of March 31, 2009;

	4)	Defines Applicable Margin so that the interest margin applicable to loans under the Amended and Restated Credit Agreement is based on Average Excess Availability, which is described as the amount obtained by adding the aggregate Excess Availability at the end of each day during the period in question and dividing such sum by the number of days in such period;

	5)	Specifies that the Availability Test Period coincides with the Commitment Termination Date;

	6)	Names RA Brands, Marlin and H&R as borrowers;

	7)	Specifies the fee for any available credit under the Revolving Credit Facility at 0.50% of the average amount of available credit (per the Third Amendment);

	8)	Includes a covenant restricting certain capital expenditures in the aggregate not to exceed $15.0 during any fiscal year plus amounts carried forward from previous years (per the Third Amendment);

	9)	Limits “Permitted Acquisitions” to $15.0 (per the Third Amendment); and

	10)	Provides consent to a potential acquisition (per the Third Amendment).

The interest rate margin for the Alternate Base Rate and the Euro-Dollar loans was (0.50%) and 1.00%, respectively, at both March 31, 2009 and 2008. The weighted average interest rate under the Company’s outstanding credit facility was 2.75% and 5.23% for the three month periods ended March 31, 2009 and 2008, respectively.

As of March 31, 2009 approximately $41.1 in additional borrowings including the minimum availability requirement of $27.5 was available as determined pursuant to the Amended and Restated Credit Agreement. As a part of the Second Amendment, the Company could elect for the Term Loan an interest rate of LIBOR plus 200 basis points or prime plus 50 basis points. The Company’s Term Loan was at LIBOR plus 200 basis points (or 2.50%) at March 31, 2009. The Company’s Term Loan was at LIBOR plus 200 basis points (or 4.82%) at March 31, 2008.

The terms of the Third Amendment, as discussed above, amended the interest rate applicable to the Term Loan to 2.50% plus the Alternate Base Rate, for any advance under the Term Loan that is a “Base Rate Loan” and 4.00% plus the relevant LIBOR for any advance under the Term Loan that is a “Euro-Dollar Loan”.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

The weighted average interest rate of the Company’s Term Loan for the three month periods ended March 31, 2009 and 2008 was 2.57% and 6.53%, respectively.

Substantially all of our assets are pledged as security for our obligations under the Amended and Restated Credit Agreement.

Note 8 – Goodwill and Other Intangible Assets

The carrying amount of goodwill and identifiable intangible assets attributable to each reporting unit is outlined in the following tables. No impairment provisions were necessary during the three month periods ending March 31, 2009 or March 31, 2008. December 31, 2008 reflects impairment charges of $44.3 that were recorded to goodwill and identifiable intangible assets. The carrying amount of goodwill and identifiable intangible assets attributable to each reporting segment is outlined in the following tables:


	(Unaudited)

	March 31, 2009				December 31, 2008				March 31, 2008

Goodwill
Firearms		$	—			$	—			$	35.7
Ammunition			24.0				24.0				14.5
All Other			—				—				16.8

Total		$	24.0			$	24.0			$	67.0


	(Unaudited)

	March 31, 2009				December 31, 2008				March 31, 2008

Identifiable Intangible Assets
Firearms		$	54.1			$	54.1			$	57.7
Ammunition			10.5				10.5				10.5
All Other			16.5				16.5				15.7

Total			81.1				81.1				83.9
Less: Accumulated Amortization			(4.7	)			(4.1	)			(2.0	)

Total		$	76.4			$	77.0			$	81.9

The following table is a summary of the intangible assets by major intangible asset, as well as their accumulated amortization and amortization period:


	(Unaudited)

	March 31, 2009 Gross Balance				Accumulated Amortization				March 31, 2009 Net Balance				Amortization Period

Identifiable Intangible Assets
Tradenames and Trademarks		$	45.3				N/A			$	45.3		Indefinite
Customer Relationships			27.7				(2.5	)			25.2		19.6 Years*
License Agreements			8.4				(2.2	)			6.2		7 Years
Internally Developed Software			0.1				(0.1	)			—		2 Years
Leasehold Interest			(0.4	)			0.1				(0.3	)	3.5 Years

Total		$	81.1			$	(4.7	)		$	76.4

* Weighted average amortization period for Customer Relationships is based on $25.5 of Remington Customer Relationships with an amortization period of 20 years and $2.2 of Marlin Customer Relationships with an amortization period of 15 years.

Note 9 – Retiree Benefits

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008 for detailed descriptions and disclosures about the various benefit plans offered by Remington.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

The following table summarizes the components of net periodic pension cost for the Company’s defined benefit pension plans (including two months for the acquired Marlin Pension Plan for 2008) for the three month periods ended:


	(Unaudited)

	Three Months Ended March 31, 2009				Three Months Ended March 31, 2008

Service Cost		$	—			$	—
Interest Cost			3.2				2.9
Expected Return on Assets			(3.4	)			(3.4	)
Amortization of Prior Service Cost			—				—
Recognized Net Actuarial Loss			1.5				0.4

Net Periodic Pension Cost		$	1.3			$	(0.1	)

The following table summarizes the components of net periodic postretirement cost for the Company’s postretirement plan (including two months for the acquired Marlin Postretirement Plan for 2008) for the three month periods ended:


	(Unaudited)

	Three Months Ended March 31, 2009				Three Months Ended March 31, 2008

Service Cost		$	0.1			$	0.1
Interest Cost			0.3				0.3
Net Amortization and Deferral			(0.1	)			—

Net Periodic Pension Cost		$	0.3			$	0.4

Anticipated Contributions

As previously disclosed in its audited consolidated financial statements for the year ended December 31, 2008, the Company expects to make aggregate cash contributions of approximately $7.5 to its pension plans during the 12 months ending December 31, 2009. As of May 7, 2009, total contributions of $3.5 have been made. The Company presently anticipates contributing an additional amount of approximately $4.0 to fund its required contributions for these plans during the remainder of 2009.

Note 10 – Stock Purchase, Option Plans and Restricted Stock Awards

Stock Purchase and Option Plan — On May 14, 2008, the board of directors of FGI (the “FGI Board”) adopted the American Heritage Arms, Inc. 2008 Stock Incentive Plan (the “Plan”). The Plan is designed to provide a means by which certain current employees, officers, non-employee directors and other individual service providers, including those of Remington and other subsidiaries of FGI, may be given an opportunity to benefit from increases in the value of FGI common stock (the “Common Stock”), through the grant of awards. FGI, by means of the Plan, seeks to retain the services of such eligible persons and to provide incentives for such persons to exert maximum efforts for the success of FGI and its subsidiaries.

The awards under the Plan may be in the form of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards and stock unit awards. The maximum aggregate number of shares of Common Stock that may be issued under all awards granted to participants under the Plan is 2,424,703 shares, subject to certain adjustments as set forth in the Plan.

On May 14, 2008, the FGI Board adopted the form of Nonqualified Stock Option Award Agreement (the “Form Award Agreement”). The Form Award Agreement outlines terms relating to stock option awards, including (i) the exercise price per share of each option granted, which shall be the fair market value of a share of the Common

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Stock on the date of grant (as defined in the Plan), (ii) the vesting schedule of the options granted, and (iii) acceleration provisions upon the occurrence of a change in control, termination of employment without cause or termination of employment for good reason.

As previously disclosed in its audited consolidated financial statements for the year ended December 31, 2008, as of December 31, 2008, there were nonqualified stock option awards to purchase 1,771,258 shares of Common Stock outstanding and 268,268 shares of Common Stock outstanding relating to various members of Remington’s management and board of directors. The vesting of the options and shares of Common Stock occur at various times through July 2012. In the first quarter of 2009, an additional 170,777 nonqualified stock option awards were granted and another 448,082 nonqualified stock option awards were forfeited due to the departure of certain members of Remington’s management, leaving nonqualified stock option awards to purchase 1,493,593 shares of Common Stock outstanding and 268,268 shares of Common Stock outstanding at March 31, 2009. The Company utilizes the Black-Scholes option pricing model to value the options granted under its option plan. For the quarter ended March 31, 2009, the Company recognized less than $0.1 in expense related to these options and Common Stock. Since the inception of the Plan, the Company has recognized approximately $1.3 in stock compensation expense. The Company expects to recognize additional stock compensation expense of approximately $1.7 in relation to these grants through 2012.

Note 11 - Commitments and Contingencies

The Company has various purchase commitments for services incidental to the ordinary conduct of business, including, among other things, a services contract with its third-party warehouse provider. Such commitments are not at prices in excess of current market prices. Included in the purchase commitment amount are the Company’s purchase contracts with certain raw materials suppliers, for periods ranging from one to seven years, some of which contain firm commitments to purchase minimum specified quantities. Otherwise, such contracts had no significant impact on the Company’s financial condition, results of operations, or cash flows during the reporting periods presented herein.

The Company is subject to various lawsuits and claims with respect to product liabilities, governmental regulations and other matters arising in the normal course of business. Pursuant to an asset purchase agreement (the “Purchase Agreement”), on December 1, 1993, the Company acquired certain assets and assumed certain liabilities (the “Asset Purchase”) of the sporting goods business formerly operated by E. I. du Pont de Nemours and Company (“DuPont”) and one of DuPont’s subsidiaries (together with DuPont, the “1993 Sellers”). Under the Purchase Agreement, the Company generally bears financial responsibility for all product liability cases and claims relating to occurrences after the closing of the Asset Purchase, except for certain costs relating to certain shotguns, for all cases and claims relating to discontinued products and for limited other costs. Because the Company’s assumption of financial responsibility for certain product liability cases and claims involving pre-Asset Purchase occurrences was limited to a fixed amount that has now been fully paid, and with the 1993 Sellers retaining liability in excess of that amount and indemnifying the Company in respect of such liabilities, the Company believes that product liability cases and claims involving occurrences arising prior to the Asset Purchase are not likely to have a material adverse effect upon the financial condition, results of operations or cash flows of the Company. Moreover, although it is difficult to forecast the outcome of litigation, the Company does not believe, in light of relevant circumstances (including the current availability of insurance for personal injury and property damage with respect to cases and claims involving occurrences arising after the Asset Purchase, the Company’s accruals for the uninsured costs of such cases and claims and the 1993 Sellers’ agreement to be responsible for a portion of certain post-Asset Purchase shotgun-related product liability costs, as well as the type of firearms products made by the Company), as well as the passage of time, that the outcome of all pending post-Asset Purchase product liability cases and claims will be likely to have a material adverse effect upon the financial condition, results of operations, or cash flows of the Company. Nonetheless, in part because the nature and extent of manufacturer liability based on the manufacture and/or sale of allegedly defective products (particularly as to firearms and ammunition) is uncertain, there can be no assurance that the Company’s resources will be adequate to cover pending and future product liability occurrences, cases or claims, in the aggregate, or that such a material adverse effect upon the Company’s financial condition, results of operations or cash flows will not result therefrom. Because of the nature of its products, the Company anticipates that it will continue to be involved in product liability litigation in the future.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

The Company’s accruals for losses relating to product liability cases and claims include accruals for all probable losses for which the amount 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 Asset Purchase, the Company’s accruals for the uninsured costs of such cases and claims and the 1993 Sellers’ agreement to be responsible for a portion of certain post-Asset Purchase shotgun-related product liability costs, as well as the type of firearms products made by the Company), the Company does not believe with respect to product liability cases and claims that any reasonably possible loss exceeding amounts already recognized through the Company’s accruals has been incurred.

The Marlin Acquisition triggered the Connecticut Transfer Act (the “Act”) with respect to the facility located in North Haven, Connecticut. The Act is designed to identify properties contaminated with hazardous wastes and to ensure that such properties are cleaned up to the satisfaction of the Connecticut Department of Environmental Protection (“DEP”). Under the Act, Marlin is required to investigate areas of environmental concern at the North Haven facility and to clean up contamination exceeding state standards to the satisfaction of DEP. The investigation of the North Haven facility is ongoing. Remediation costs may be incurred, but such costs at this time are not expected to be material to operations or cash flows.

Marlin is also conducting remediation of oil-related contamination at a former Marlin facility in New Haven, Connecticut. Costs for the New Haven remediation are not expected to be material.

Note 12 – Accounting for Derivatives and Hedging Activities

The Company purchases copper and lead (and zinc in 2008) options contracts to hedge against price fluctuations of anticipated commodity purchases. The options contracts are intended to limit the unfavorable effect that cost increases will have on these metal purchases.

In accordance with the provisions of SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities – an amendment of FASB Statement No. 133 (“SFAS 138”) and by SFAS No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities (“SFAS 149”), commodity contracts are designated as cash flow hedges, with the fair value of these financial instruments recorded in prepaid expenses and other current assets, changes in fair value recorded in accumulated other comprehensive income, and net gains/losses reclassified to cost of sales based upon inventory turnover, indicating consumption and sale of the underlying commodity in the Company’s products. In March 2009, the Company adopted SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. SFAS 161 requires disclosure of gains and losses on derivative instruments in a tabular format.

At March 31, 2009, the fair value of the Company’s outstanding derivative contracts relating to firm commitments and anticipated consumption (aggregate notional amount of 27.2 million pounds of copper and lead) up to fifteen months from such date was $2.7 as determined with the assistance of the Company’s commodity counterparty. At March 31, 2008, the fair value of the Company’s outstanding derivative contracts relating to firm commitments and anticipated consumption (aggregate notional amount of 42.7 million pounds of copper, lead and zinc) up to eighteen months from such date was $9.6 as determined with the assistance of the Company’s commodity counterparties.

The volatility of pricing the Company has experienced to date has affected our results of operations for the three month periods ended March 31, 2009 and 2008. The Company believes that further significant changes in commodity pricing could have a future material impact on the consolidated financial position, results of operations, and cash flows of the Company.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Fair Values of Derivative Instruments As of,

March 31, 2009

March 31, 2008

Derivatives designated as hedging instruments under Statement 133

Balance
Sheet
Location

Fair
Value

Balance
Sheet
Location

Fair
Value

Commodity Contracts

Prepaid and Other Current Assets

$2.7

Prepaid and Other Current Assets

$9.6

Derivatives in
Statement 133
Net
Investment
Hedging
Relationships

Amt of Gain (Loss)
(net of tax)
Recognized in OCI on
Derivative (Effective
Portion) and recorded
in Prepaid Expenses
and Other Current
Assets at Fair Value

Location of
Gain or (Loss)
Reclassified
from
Accumulated
OCI into
Income
(Effective
Portion)

Amount of Gain or
(Loss) Reclassified
from Accumulated
OCI into Income
(Effective Portion)

Location of
Gain or (Loss)
Recognized in
Income on
Derivative
(Ineffective
Portion and
Amount
Excluded from
Effectiveness
Testing)

Amount of Gain (net
of tax) or (Loss)
Recognized in Income
on Derivative
(Ineffective Portion
and Amount Excluded
from Effectiveness
Testing)

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

March 31, 2009

March 31, 2008

Commodity Contracts

$0.7

$2.1

Cost of Sales

($1.2)

$2.0

N/A

Note 13 - Segment Information

The Company identifies its reportable segments in accordance with SFAS No. 131, Disclosures about Segments of an Enterprise and Related Information (“SFAS 131”). Based upon SFAS 131, the Company’s business is classified into two reportable segments: Firearms, which designs, manufactures and imports, and markets primarily sporting shotguns and rifles (which includes results of the Marlin Acquisition since February 1, 2008), and Ammunition, which designs, manufactures and markets sporting ammunition and ammunition reloading components. The remaining operating segments, which include accessories and other gun-related products, the manufacture and marketing of clay targets and powder metal products, licensed products, technology products and apparel are combined into our All Other reporting segment. Other reconciling items include corporate and other assets not allocated to the individual segments. The chief operating decision makers are a group of executive officers.

Although the Company reports its financial results in accordance with U.S. GAAP, the Company primarily evaluates the performance of its segments and allocates resources to them based on the non-GAAP financial measure “Adjusted EBITDA”, which is unaudited. Adjusted EBITDA differs from the term “EBITDA” as it is commonly used, and is substantially similar to the measure “Consolidated EBITDA” that is used in the Indenture. In addition to adjusting net income (loss) to exclude income taxes, interest expense, and depreciation and amortization, Adjusted EBITDA also adjusts net income (loss) by excluding items or expenses not typically excluded in the calculation of “EBITDA”, such as noncash items, gain or loss on asset sales or write-offs, extraordinary, unusual or nonrecurring items, including certain transaction activity associated with the acquisition of Holding by FGI in 2007 and the Marlin Acquisition.

In managing the Company’s business, the Company utilizes Adjusted EBITDA to evaluate performance of the Company’s business segments and allocate resources to those business segments. The Company believes that

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

Adjusted EBITDA provides useful supplemental information to investors and enables investors to analyze the results of operations in the same way as management.

Adjusted EBITDA is not a measure of performance defined in accordance with U.S. GAAP. However, management believes that Adjusted EBITDA is useful to investors in evaluating the Company’s performance because it is a commonly used financial analysis tool for measuring and comparing companies in the Company’s industry in areas of operating performance. Management believes that the disclosure of Adjusted EBITDA offers an additional view of the Company’s operations that, when coupled with the U.S. GAAP results and the reconciliation to U.S. GAAP results, provides a more complete understanding of the Company’s results of operations and the factors and trends affecting the Company’s business.

Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of the Company’s performance or as an alternative to net cash provided by operating activities as a measure of liquidity. The primary material limitations associated with the use of Adjusted EBITDA as compared to U.S. GAAP results is (i) it may not be comparable to similarly titled measures used by other companies in the Company’s industry, and (ii) it excludes financial information that some may consider important in evaluating the Company’s performance. The Company compensates for these limitations by providing disclosure of the differences between Adjusted EBITDA and U.S. GAAP results, including providing a reconciliation of Adjusted EBITDA to U.S. GAAP results, to enable investors to perform their own analysis of the Company’s operating results.

Information on Segments:


	(Unaudited)

	Three Months Ended March 31, 2009				Three Months Ended March 31, 2008

Net Sales:
Firearms		$	73.4			$	59.0
Ammunition			67.1				57.8
All Other			4.7				5.3

Consolidated Net Sales		$	145.2			$	122.1


Adjusted EBITDA:
Firearms		$	3.9			$	5.5
Ammunition			15.0				10.1
All Other			0.6				1.2
Other Reconciling Items			(1.0	)			(0.4	)

Adjusted EBITDA		$	18.5			$	16.4


	(Unaudited)

	March 31, 2009			December 31, 2008			March 31, 2008

Assets:
Firearms		$	151.3		$	205.2		$	228.2
Ammunition			166.0			156.7			153.3
All Other			42.9			41.6			25.9
Other Reconciling Items			185.1			130.6			161.0


Consolidated Assets		$	545.3		$	534.1		$	568.4

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

The following table illustrates the calculation of Adjusted EBITDA, by reconciling Net Income (Loss) to Adjusted EBITDA:


	(Unaudited)

	Three Months Ended March 31, 2009				Three Months Ended March 31, 2008

Net Income (Loss)		$	5.5			$	(1.4	)
Adjustments:
Depreciation Expense			3.9				3.9
Interest Expense (A)			6.0				6.0
Intangibles Amortization			0.6				0.6
Other Noncash Charges (B)			1.0				0.3
Non-Recurring Charges (C)			(1.7	)			7.8
Income Tax (Benefit) Expense			3.2				(0.8	)

Adjusted EBITDA		$	18.5			$	16.4


	(A)	Interest expense for the year-to-date ended March 31, 2009 includes amortization expense of deferred financing costs of $0.4, offset by $0.3 associated with amortization of the premium recorded on the Notes. Interest expense for the year-to-date ended March 31, 2008 includes amortization expense of deferred financing costs of $0.3, offset by $0.3 associated with amortization of the premium recorded on the Notes.

	(B)	Other non-cash charges for the year-to-date ended March 31, 2009 includes $0.2 for loss on disposal of assets, $0.8 for retirement benefit accruals and $0.1 for SFAS 123R stock option expense. Other non-cash charges for the year-to-date ended March 31, 2008 includes $0.1 for loss on disposal of assets and $0.2 for retirement benefit accruals.

	(C)	Nonrecurring items for the year-to-date period ended March 31, 2009 includes $0.2 of Marlin integration expense, and $0.1 of project expense, offset by a $2.0 gain due to a federal excise tax audit settlement. Nonrecurring items for the year-to-date period ended March 31, 2008 include $0.8 of expenses incurred in connection with factory improvement initiatives and the Marlin integration, $1.8 related to the inventory write-up from the application of purchase accounting to inventory being recognized in cost of sales as the acquired inventory is sold at a higher basis, $3.1 for the write-off of technology products inventory, $1.6 of realized gains associated with metals hedging contract adjustments and $0.5 of costs related to the Marlin Acquisition.

Note 14 – Recent Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements (“SFAS 160”). This standard is intended to improve, simplify, and converge internationally the reporting of noncontrolling interests in consolidated financial statements. SFAS 160 requires all entities to report noncontrolling (minority) interests in subsidiaries in the same way as equity in the consolidated financial statements. Moreover, SFAS 160 requires that transactions between an entity and noncontrolling interests be treated as equity transactions. SFAS 160 is effective for fiscal years beginning after December 15, 2008. Consequently, SFAS 160 was implemented by the Company on January 1, 2009. As of January 1, 2009, the Company now accounts for its consolidated joint venture, EOTAC, under the rules of SFAS 160.

REMINGTON ARMS COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share amounts) – Unaudited

sales. It reaffirms what SFAS 157 states is the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP SFAS 157-4 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that adopting FSP SFAS 157-4 will have on its results of operations, financial condition and equity.

In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP SFAS 107-1”). FSP SFAS 107-1 enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP SFAS 107-1 relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing FSP SFAS 107-1, fair values for these assets and liabilities were only disclosed once a year. FSP SFAS 107-1 now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP SFAS 107-1 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that adopting FSP SFAS 107-1 will have on its results of operations, financial condition and equity.

In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP SFAS 115-2”), provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. FSP SFAS 115-2 on other-than-temporary impairments is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP SFAS 115-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP SFAS 115-2 is effective for interim and annual periods ending after June 15, 2009. The Company is currently evaluating the impact that adopting FSP SFAS 115-2 will have on its results of operations, financial condition and equity.

Note 15—Investment in INTC

On October 31, 2008, the Company purchased a 27.1% membership interest in INTC USA, LLC (“INTC USA”). Remington’s initial investment was $0.8, with expected subsequent cash contributions up to a total of $1.5. The Company owns 27.1% of the issued and outstanding membership interests in INTC USA. INTC USA owns a majority interest in Springfield Munitions Company, LLC, which with Delta Frangible Ammunition, LLC owns intellectual property rights related to manufacturing rights for various shot, ammunition and other products. The Company believes this investment, which is accounted for using the equity method of accounting and is included in other non-current assets, will allow INTC USA to acquire, construct and/or lease and thereafter equip and operate a manufacturing facility for the production of products for sale to the Company and others.

The following summarizes the Company’s investment account balance associated with INTC USA:


	(Unaudited)

	March 31, 2009		December 31, 2008		March 31, 2008

Account
Investment in Membership Interest		$ 0.8		$ 0.8		—
Equity in (Earnings) Losses from Membership Interest		—		—		—

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the accompanying unaudited interim consolidated financial statements and related notes of Remington Arms Company, Inc. (“Remington”), which includes the financial results of The Marlin Firearms Company (“Marlin”) and its subsidiary, H&R 1871, LLC (“H&R”) (as of February 1, 2008), as well as the accounts of Remington’s subsidiaries, RA Brands, L.L.C. (“RA Brands”), Remington Steam, LLC (“Remington Steam”), Remington’s consolidated joint venture EOTAC, LLC (“EOTAC”) and Remington’s unconsolidated 27.1% membership interest in INTC USA, LLC (“INTC USA”) (collectively with Remington, the “Company”) as of and for the period ended March 31, 2009, and with the Company’s audited consolidated financial statements as of and for the year ended December 31, 2008, included with Remington’s Annual Report on Form 10-K on file with the SEC. These audited consolidated financial statements for the year ended December 31, 2008 include a summary of the significant accounting policies and methods used in the preparation of our consolidated financial statements.

On January 28, 2008, 100% of the shares of Marlin were purchased by Remington (the “Marlin Acquisition”). The Marlin Acquisition includes Marlin’s 100% ownership interest in H&R. Although the Marlin Acquisition closed on January 28, 2008, based on the accounting policies adopted by Marlin and in place prior to the Marlin Acquisition, full financial statements were not available for the resulting stub period January 28-31, 2008 (the “Stub Period”). In addition, it was determined by the Company that it would require significant effort and time to generate financial statements for the Stub Period. Based on materiality tests performed using guidance from SAB Topic 1 (M1), the Marlin Stub Period was deemed immaterial to the unaudited interim consolidated financial statements and thus, Remington has reported consolidated financial statements with Marlin financial data since February 1, 2008.

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


	•	Recent Developments

	•	Executive Overview

	•	Business Outlook

	•	Liquidity and Capital Resources

	•	Results of Operations

	•	Recent Accounting Pronouncements

	•	Environmental Matters

	•	Regulatory Developments

	•	Critical Accounting Policies and Estimates

	•	Information Concerning Forward-Looking Statements

Recent Developments

On March 13, 2009, our former Chief Executive Officer, Thomas L. Millner, announced that he was terminating his employment with Remington and resigning as a member of the Board of Directors of Remington (the “Board”). On March 14, 2009, effective immediately, the Board appointed Theodore H. Torbeck to serve as Chief Executive Officer and a director of Remington.

On April 14, 2009, Remington entered into the Third Amendment to the Amended and Restated Credit Agreement, as previously amended. See “Amended and Restated Credit Agreement”below for a discussion of the Third Amendment to the Amended and Restated Credit Agreement.

Executive Overview

We evaluate our business primarily on Adjusted EBITDA (as described in Note 13 to our consolidated financial statements appearing elsewhere in this quarterly report) from two core segments, Firearms and Ammunition, and to a lesser degree on other operating segments organized within the All Other reporting segment, consisting of Accessories, Licensed Products, Clay Targets, Powder Metal Products and Apparel. Following the

Marlin Acquisition, the Marlin and H&R products are included in our Firearms reporting segment. As part of this evaluation, we focus on managing inventory (including quantity), length and volume of extended dating sales terms and trade payables through, among other things, production management, expense control and improving operating efficiencies at our factories via Lean and Six Sigma techniques.

We continue to look for opportunities to improve our quality and efficiencies in our manufacturing facilities as we strive to be a market-driven company in an increasingly demanding global marketplace. Accordingly, we have undertaken an effort to accelerate existing initiatives in the area of Lean manufacturing. In addition, we are committed to refining our core businesses and positioning ourselves to take advantage of opportunities to strategically grow and improve our business. As we regularly evaluate our overall business, we look for new products in the hunting, shooting, accessories, law enforcement, government, and military areas that complement our core strategies, which may include new product development, direct product sourcing, licensing, acquisitions or other business ventures.

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

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. The industry can be affected by macroeconomic factors, including changes in national, regional, and local economic conditions, employment levels and consumer spending patterns. Disruptions in the overall economy and financial markets have historically reduced consumer confidence in the economy and negatively affected consumer spending. 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 loses momentum, confidence and discretionary spending by consumers has historically decreased. We are currently experiencing effects that are countercyclical to the depressed economic conditions amid concerns about the political environment.

We believe that existing and potential customers have concerns that the new administration could ban or impose more stringent regulation of firearms and ammunition more severely than previous administrations. We believe these concerns have increased the market demand for certain of our firearms and ammunition products for the periods presented herein. Although we believe that regulation of firearms and ammunition, and consumer concerns about such regulation, have not had a significant adverse influence on the market for our firearms and ammunition products for the periods presented herein, there can be no assurance that the regulation of firearms and ammunition will not become more restrictive in the future or that any such development will not adversely affect these markets.

We continue to experience volatile costs related to materials and energy (including lead, copper, zinc, steel, and fuel) which are above any historical comparisons. Specifically, management currently estimates that its 2009 annual costs for certain core materials and energy alone have increased in the range of $50-70 million over 2003 annual levels. Since 2005, management has initiated price increases to our customers in an attempt to partially offset these costs increases. However, we have not initiated price increases in 2009 at the levels recently experienced due to the acquisition costs of certain materials declining and will continue to evaluate the need for future price adjustments in light of these trends, our competitive landscape, and financial results. Management estimates that its cumulative price increases initiated since 2003 have offset approximately 40% of the estimated cumulative costs incurred. These estimates assume no significant loss in overall sales or production volume.

Business Outlook

General Economy

We believe the general economic environment continues to be increasingly volatile and uncertain as a result of credit concerns due to the continued challenges in the financial services industry, the crisis in the housing market, the decline in the stock market, tightening in the credit markets, disappointing labor market conditions, job

losses, and uncertainty about the geopolitical environment and the recent stimulus bill. Consumer confidence is at an all time low. We can provide no assurance that these trends will not continue.

Industry

Although consumer confidence is at an all time low, in the first quarter of 2009 the industry continued to experience increased domestic firearms and ammunition sales that began after the U.S. presidential election. We believe these increases are caused by concerns that the new administration could ban and regulate firearms and ammunition more severely than previous administrations. In addition, the government, military, and law enforcement market have remained strong due to the availability of homeland security funding and political uncertainty.

Meanwhile, the general worldwide economic conditions experienced in 2008, including a downturn due to the sequential effects of the sub prime lending crisis, general credit market crisis, collateral effects on the financial services industry, volatile energy costs, slow economic activity, decreased consumer confidence, adverse business conditions and liquidity concerns, have continued into 2009.

The Company

Management believes that our product sales increased subsequent to the U.S. presidential election primarily due to consumer concerns that the new administration could pass strong legislation and increase taxes on ammunition and firearms. The political uncertainty has caused many consumers to stock up on firearms and ammunition, which has driven up prices and led to inventory shortages.

Subsequent to the U.S. presidential election, demand for high capacity semi-automatic rifles, as well as tactical and home defense style shotguns has increased dramatically, particularly within the consumer segment of the market and ammunition markets amid expectations that the new administration will reimpose an assault weapons ban and fears that taxes on ammunition and firearms might dramatically increase. Management is unable to predict whether current consumer spending trends will continue. However, management continues to evaluate these trends as well as uncertainties associated with costs related to producing and procuring materials, energy, processing and transportation costs.

Management’s strategy in light of the overall economic environment noted above has been to closely monitor and evaluate our production levels in order to meet our sales demand, improve efficiencies and quality, improve profitability, improve average working capital and preserve liquidity. Additionally, management has evaluated and will continue to monitor production and supply constraints to make appropriate adjustments to better meet changing market demands.

In an effort to improve efficiencies and quality, we have implemented Lean manufacturing and Six Sigma initiatives as part of the culture in our factories. The Lean manufacturing and Six Sigma initiatives implemented have had a positive impact in improving our productivity and quality.

In our efforts to improve working capital and preserve liquidity, we have remained disciplined in our approach to limit the use of extended dating terms and evaluating customer creditworthiness. We are continuously evaluating our production levels in order to balance production with our sales demand and maintain our inventory levels.

We continue to pursue growth initiatives in our government, military, and law enforcement divisions along with broadening our brand awareness with selective licensing arrangements and continue to evaluate opportunities that may improve our production processes.

Liquidity and Capital Resources

Overview

Historically, our principal debt financing has consisted of borrowings under our Amended and Restated Credit Agreement (as amended by the First, Second and Third Amendments, the Joinder Agreement and the Letter Amendment) and the indenture for the 10.5% Senior Subordinated Notes due 2011 (the “Notes”) (as supplemented, the “Indenture”).

We generally fund expenditures for operations, administrative expenses, capital expenditures, debt service obligations, potential repurchases of our Notes (which we intend to make from time to time depending on market conditions) and dividend payments with internally generated funds from operations, and satisfy working capital needs from time to time with borrowings under our Amended and Restated Credit Agreement. We believe that we will be able to meet our debt service obligations, fund our short-term and long-term operating requirements, and make permissible dividend payments (subject to restrictions in the Amended and Restated Credit Agreement as amended, and the Indenture) in the future with cash flow from operations and borrowings under our Amended and Restated Credit Agreement, although no assurance can be given in this regard. We continue to focus on managing inventory levels to keep them in line with sales projections and management of accounts payable.

Liquidity

As of March 31, 2009, we had outstanding approximately $274.4 million of indebtedness, consisting of approximately $201.9 million aggregate carrying amount ($200.0 million principal) of the Notes, a $19.3 million balance on our Term Loan, $51.8 million in borrowings under the Amended and Restated Credit Agreement, $0.7 million in capital lease obligations and a $0.7 million note payable to Holding. As of March 31, 2009, we also had aggregate letters of credit outstanding of $7.0 million and $2.1 million in short-term borrowings.

Financing for our efforts to strategically grow from direct product sourcing, licensing, acquisitions or business ventures may be available under our Amended and Restated Credit Agreement, to the extent permitted under the Indenture.

10½% Senior Subordinated Notes due 2011

The FGI Acquisition resulted in a new basis of the value of the Notes. Accordingly, the Notes were adjusted to their estimated fair value as of May 31, 2008 of $203.8 million. The estimated increase of $3.8 million is being amortized into interest expense over the remaining term of the Notes. In addition, debt acquisition costs associated with obtaining waivers, consents and amendments in the amount of $4.2 million related to the Notes and $1.0 million related to the revolver were capitalized as of May 31, 2007 and are being amortized.

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. The Indenture contains restrictive covenants that, among other things, limit the incurrence of debt by Remington and its subsidiaries, the payment of dividends to Holding, the use of proceeds of specified asset sales and transactions with affiliates. In addition, the Indenture permits repurchases of the Notes on the open market, subject to limitations that may be contained in the Amended and Restated Credit Agreement and the Indenture.

On May 12, 2008, Remington entered into a Second Supplemental Indenture, by and among Remington, U.S. Bank National Association as Trustee, and each of RA Brands, Marlin and H&R (the “New Guarantors”), to the Indenture. Pursuant to the Second Supplemental Indenture, each of the New Guarantors has agreed to

unconditionally guarantee all of Remington’s obligations under the Notes on the terms and subject to the conditions of the Indenture.

We may from time to time seek to retire or purchase our outstanding debt through cash purchases or exchanges for equity securities, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors and the amounts involved may be material.

The Amended and Restated Credit Agreement

Our Amended and Restated Credit Agreement provides up to $155.0 million of borrowing capacity under an asset-based senior secured revolving credit facility through January 4, 2011 (per the Third Amendment discussed below). Amounts available under the Amended and Restated Credit Agreement are subject to a borrowing base limitation based on certain percentages of eligible accounts receivable and eligible inventory in addition to the minimum availability requirement of $27.5 million. The Amended and Restated Credit Agreement also includes a letter of credit sub-facility of up to $15.0 million. Pursuant to the Second Amendment, each of Marlin and H&R became a “Borrower” under the Amended and Restated Credit Agreement.

On April 14, 2009, Remington entered into the Third Amendment to the Amended and Restated Credit Agreement, as previously amended. The Third Amendment, among other things:


1)	extended the stated maturity of the Revolving Credit Facility, including Remington’s $25.0 million Term Loan (the “Term Loan”), to January 4, 2011;

2)	amended the interest rate applicable to the Term Loan to 2.50% plus the Alternate Base Rate for any advance under the Term Loan that is a “Base Rate Loan” and 4.00% plus the relevant Adjusted London Interbank Offered Rate (LIBOR) for any advance under the Term Loan that is a “Euro-Dollar Loan”;

3)	increased the fee for any available credit under the Revolving Credit Facility to 0.50% of the average amount of available credit;

4)	increased the amount generally available for cash repurchases of Remington’s Notes from an aggregate amount of $20.0 million to an aggregate amount of $50.0 million, although under certain circumstances Remington may make cash repurchases of Notes in an aggregate amount greater than $50.0 million so long as the portion of the purchase price that exceeds $50.0 million is paid in cash provided by FGI;

5)	included a covenant restricting certain capital expenditures in the aggregate not to exceed $15.0 million during any fiscal year plus amounts carried forward from previous years;

6)	increased the limit on “Permitted Acquisitions” to $15.0 million;

7)	provided for a consent to a potential acquisition; and

8)	amended the pricing grid set forth under the definition of “Applicable Margin”.

The interest rate margin for the Alternate Base Rate and the Euro-Dollar loans was (0.50%) and 1.00%, respectively, at both March 31, 2009 and 2008. The weighted average interest rate under the Company’s outstanding credit facility was 2.75% and 5.23%for the three month periods ended March 31, 2009 and 2008, respectively.

As of March 31, 2009 approximately $41.1 million in additional borrowings including the minimum availability requirement of $27.5 million was available as determined pursuant to the Amended and Restated Credit Agreement. As a part of the Second Amendment, the Company could elect for the Term Loan an interest rate of LIBOR plus 200 basis points or prime plus 50 basis points. The Company’s Term Loan was at LIBOR plus 200 basis points (or 2.50%) at March 31, 2009. The Company’s Term Loan was at LIBOR plus 200 basis points (or 4.82%) at March 31, 2008.

The weighted average interest rate of the Company’s Term Loan for the three month periods ended March 31, 2009 and 2008 was 2.57% and 6.53%, respectively.

Capital & Operating Leases and Other Long-Term Obligations

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

Cash Flows and Working Capital

Net cash provided by operating activities was $14.0 million for the three month period ended March 31, 2009 compared to net cash used in operating activities of $18.3 million for the three month period ended March 31, 2008. The $32.3 million increase in cash provided by operating activities for the three months ended March 31, 2009 compared to the same period ended March 31, 2008 resulted primarily from:


	•	Inventory decreasing by $2.5 million over the three months ended March 31, 2009 compared to an increase of $8.9 million over the three months ended March 31, 2008, primarily due to higher sales;

	•	The recognition of net income of $5.5 million for the three months ended March 31, 2009 compared to a net loss of $1.4 million for the three months ended March 31, 2008; and

	•	Prepaid and other current assets decreasing by $3.9 million for the three months ended March 31, 2009 compared to an increase of $13.8 million for the three months ended March 31, 2008. The change is primarily due to fewer hedging contracts in 2009 resulting in lower prepaid hedging expense.

Net cash used in investing activities for the three months ended March 31, 2009 was $3.1 million and $49.6 million in the three months ended March 31, 2008. The $46.5 million decrease in cash used in investing activities was primarily related to the $46.6 million payment in 2008 for the purchase of Marlin, net of cash acquired.

Net cash used in financing activities for the three months ended March 31, 2009 was $1.1 million compared to net cash provided by financing activities of $44.9 million during the three months ended March 31, 2008. The $46.0 million decrease in net cash provided by financing activities for the three months ended March 31, 2009 compared to the three months ended March 31, 2008 primarily resulted from $28.8 million in lower net borrowings on the revolving credit facility, as well as an $18.2 million cash contribution from FGI, paid through Holding, to fund the Marlin Acquisition, received in the first three months ended March 31, 2008.

Dividend Policy

The declaration and payment of dividends, if any, will be at the sole discretion of our Board of Directors, subject to the restrictions set forth in the Amended and Restated Credit Agreement and the Indenture, which currently restrict the payment of dividends by us to Holding. We expect to make future dividend payments to Holding based on available cash flows as and to the extent permitted by the Amended and Restated Credit Agreement and the Indenture. There were no dividends paid for the three months ended March 31, 2009 or 2008. At present, we do not have the ability to make any dividend payments due to restrictions placed upon us by the Amended and Restated Credit Agreement and the Indenture.

Capital Expenditures

Gross capital expenditures were $1.9 million and $2.1 million for the three months ended March 31, 2009 and 2008, respectively, consisting primarily of capital expenditures related to restructuring and maintenance of the existing facilities. We expect capital expenditures for 2009 to be in a range of $16.0 million to $20.0 million. Per the

terms of the Third Amendment to our Amended and Restated Credit Agreement, capital expenditures may not exceed $15.0 million during any fiscal year plus unused carryovers from previous years. For 2009, allowable capital expenditures are approximately $31.4 million.

Results of Operations for the Three Month Period Ended March 31, 2009 as Compared to the Three Month Period Ended March 31, 2008

Net Sales. The following tables compare net sales by reporting segment for each of the periods indicated:

Quarter Ended March 31,
(Dollars in Millions)


	2009			Percent of Total		2008			Percent of Total		$ Increase/ (Decrease)				% Increase/ (Decrease)

Net Sales
Firearms		$	73.4	50.6	%		$	59.0	48.4	%		$	14.4		24.4	%
Ammunition			67.1	46.2				57.8	47.3				9.3		16.1
All Other			4.7	3.2				5.3	4.3				(0.6	)	(11.3	)

Consolidated		$	145.2	100.0	%		$	122.1	100.0	%		$	23.1		18.9	%

Firearms

The increase in net sales of $14.4 million for the quarter ended March 31, 2009 compared to the prior-year period was due primarily to increased sales volumes of certain rifles of $7.8 million, increased sales volumes of certain shotguns of $4.7 million, and increased sales volumes of domestic sourced products of $3.0 million, offset by decreased sales volumes in international sourced products of $1.0 million. We believe the increased sales volumes are due to increased demand from consumers for certain firearms in light of the current political uncertainty, which could result in more stringent legislation with respect to the purchase of firearms.

Ammunition

The increase in net sales of $9.3 million for the quarter ended March 31, 2009 over the prior-year period was due primarily to increased sales volumes of certain rimfire, centerfire and pistol and revolver ammunition of $8.9 million, increased components and other sales volumes of $0.9 million, as well as realized price increases of $0.6 million, offset by lower sales volumes of certain shotshell ammunition of $1.1 million. We believe the increased sales volumes are due to increased demand from consumers for certain ammunition in light of the current political uncertainty, which could result in more stringent legislation with respect to the purchase of ammunition.

All Other

The decrease in net sales of $0.6 million for the quarter ended March 31, 2009 over the prior-year period was due primarily to lower clay target sales of $0.7 million, lower powder metal products sales of $0.4 million and lower technology product sales of $0.3 million, offset by higher accessories sales of $0.5 million and sales related to the EOTAC joint venture of $0.3 million.

Cost of Goods Sold. The table below depicts the cost of goods sold by reporting segment and the percentage of net sales represented by such cost of goods sold:

Quarter Ended March 31,
(Dollars in Millions)


	2009			Percent of Net Sales		2008			Percent of Net Sales		$ Increase/ (Decrease)				% Increase/ (Decrease)

Cost of Goods Sold
Firearms		$	58.8	80.1	%		$	45.3	76.8	%		$	13.5		29.8	%
Ammunition			42.7	63.6				41.3	71.5				1.4		3.4
All Other			3.2	68.1				6.6	124.5				(3.4	)	(51.5	)

Consolidated		$	104.7	72.1	%		$	93.2	76.3	%		$	11.5		12.3	%

Firearms

The increase in cost of goods sold of $13.5 million for the quarter ended March 31, 2009 over the prior-year period was primarily related to flow-through cost of goods sold of $8.1 million on higher overall sales volumes, as discussed above; unfavorable product mix of $2.5 million driven by increased sales volumes in higher cost point products; increased manufacturing costs of $2.1 million; and increased pension and postretirement costs of $0.8 million.

Ammunition

The increase in cost of goods sold of $1.4 million for the quarter ended March 31, 2009 over the prior-year period was primarily related to flow-through cost of goods sold of $4.0 million on higher overall sales volumes, as discussed above; reduced hedging gains, which increased cost of goods sold by $5.2 million and increased pension and postretirement costs of $0.3 million. These increases were offset in part by reduced manufacturing costs of $7.6 million, reflecting commodity cost reductions, and favorable product mix across most product categories of $0.5 million.

All Other

The decrease in cost of goods sold of $3.2 million for the quarter ended March 31, 2009 over the prior-year period was due primarily to the $3.1 million write-off of the technology products inventory which occurred in the first quarter of 2008.

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


	For the quarterly periods ended,

	March 31, 2009			March 31, 2008			$ Increase/ (Decrease)			% Increase/ (Decrease)

Operating Expenses
SG&A	$	25.7		$	23.9		$	1.8			7.5	%
R&D		2.1			1.8			0.3			16.7
Other Income		(1.9	)		(0.6	)		(1.3	)		(216.7	)

Consolidated	$	25.9		$	25.1		$	0.8			3.2	%

The increase in selling, general and administrative expenses between the two quarterly periods of $1.8 million was primarily attributable to higher costs associated with incentive compensation, salaries and benefits of $1.6 million, higher travel expense of $0.5 million, higher legal fees of $0.3 million, and higher marketing and market development expenses of $0.3 million, offset by lower professional fees of $0.6 million and lower distribution expenses of $0.3

million. The higher costs associated with incentive compensation, salaries and benefits are the result of establishing and staffing a number of additional management positions in an effort to add depth to the existing management team. The increase in other income was due primarily to the recognition of a gain related to a federal excise tax audit settlement.

Interest Expense. Interest expense for the quarter ended March 31, 2009 was $6.0 million, unchanged as compared to the first quarter of 2008. Changes within interest expense from the same period in 2008 consisted of lower interest expense of approximately $0.3 million for the Term Loan primarily due to a lower average interest rate of 2.57% in the first quarter of 2009 compared to 6.53% in the first quarter of 2008, offset by higher interest expense of $0.2 million as the result of higher average outstanding borrowings ($39.3 million) as compared to the same period in 2008 under the Amended and Restated Credit Agreement, as well lower interest income of $0.1 million in 2009 compared to the same period in 2008.

Taxes. Our effective tax rate on continuing operations for the three months ended March 31, 2009 and 2008 was 36.8% and 36.4%, respectively. The difference between the actual effective tax rate and the federal statutory rate of 35% is principally due to state income taxes, permanent differences, and tax credit usage for quarters ended March 31, 2009 and 2008.

Recent Accounting Pronouncements

In April 2009, the FASB issued FSP SFAS 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (“FSP SFAS 157-4”). FSP SFAS 157-4 provides guidelines for making fair value measurements more consistent with the principles presented in SFAS 157, Fair Value Measurements. FSP SFAS 157-4 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what SFAS 157 states is the objective of fair value measurement—to reflect how much an asset would be sold for in an orderly transaction (as opposed to a distressed or forced transaction) at the date of the financial statements under current market conditions. Specifically, it reaffirms the need to use judgment to ascertain if a formerly active market has become inactive and in determining fair values when markets have become inactive. FSP SFAS 157-4 is effective for interim and annual periods ending after June 15, 2009. We are currently evaluating the impact that adopting FSP SFAS 157-4 will have on our results of operations, financial condition and equity.

In April 2009, the FASB issued FSP SFAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments (“FSP SFAS 107-1”). FSP SFAS 107-1 enhances consistency in financial reporting by increasing the frequency of fair value disclosures. FSP SFAS 107-1 relates to fair value disclosures for any financial instruments that are not currently reflected on the balance sheet of companies at fair value. Prior to issuing FSP SFAS 107-1, fair values for these assets and liabilities were only disclosed once a year. FSP SFAS 107-1 now requires these disclosures on a quarterly basis, providing qualitative and quantitative information about fair value estimates for all those financial instruments not measured on the balance sheet at fair value. FSP SFAS 107-1 is effective for interim and annual periods ending after June 15, 2009. We are currently evaluating the impact that adopting FSP SFAS 107-1 will have on our results of operations, financial condition and equity.

In April 2009, the FASB issued FSP SFAS 115-2 and SFAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments (“FSP SFAS 115-2”), provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. FSP SFAS 115-2 on other-than-temporary impairments is intended to bring greater consistency to the timing of impairment recognition, and provide greater clarity to investors about the credit and noncredit components of impaired debt securities that are not expected to be sold. The measure of impairment in comprehensive income remains fair value. FSP SFAS 115-2 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. FSP SFAS 115-2 is effective for interim and annual periods ending after June 15, 2009. We are currently evaluating the impact that adopting FSP SFAS 115-2 will have on our results of operations, financial condition and equity.

Recently Adopted Accounting Pronouncements

Accounting pronouncements adopted by Remington in the first quarter of 2009 are as follows:

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated Financial
Statements (“SFAS 160”). This standard is intended to improve, simplify, and converge internationally the reporting of noncontrolling interests in consolidated financial statements. SFAS 160 requires all entities to report noncontrolling (minority)interests in subsidiaries in the same way as equity in the consolidated financial statements. Moreover, SFAS 160 requires that transactions between an entity and noncontrolling interests be treated as equity transactions. SFAS 160 is effective for fiscal years beginning after December 15, 2008 and, consequently, was implemented by Remington on January 1, 2009.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities (“SFAS 161”). The new standard is intended to improve financial reporting about derivative instruments and hedging activities by requiring enhanced disclosures to enable investors to better understand their effects on an entity’s financial position, financial performance, and cash flows. The new standard is also intended to improve transparency about the location and amounts of derivative instruments in an entity’s financial statements; how derivative instruments and related hedged items are accounted for under SFAS 133; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. SFAS 161 requires disclosure of the fair values of derivative instruments and their gains and losses in a tabular format. It also provides more information about an entity’s liquidity by requiring disclosure of derivative features that are credit risk–related and requires cross-referencing within footnotes to enable financial statement users to locate important information about derivative instruments. SFAS 161 was effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and, consequently, was implemented by Remington on January 1, 2009.

Environmental Matters

The Marlin Acquisition triggered the Connecticut Transfer Act (the “Act”) with respect to the facility located in North Haven, Connecticut. The Act is designed to identify properties contaminated with hazardous wastes and to ensure that such properties are cleaned up to the satisfaction of the Connecticut Department of Environmental Protection (“DEP”). Under the Act, Marlin is required to investigate areas of environmental concern at the North Haven facility and to clean up contamination exceeding state standards to the satisfaction of the DEP. The investigation of the North Haven facility is ongoing. Remediation costs may be incurred, but such costs at this time are not expected to be material.

Marlin is also conducting remediation of oil-related contamination at a former Marlin facility in New Haven, Connecticut. Costs for the New Haven remediation are not expected to be material.

Regulatory Developments

The manufacture, sale and purchase of firearms are subject to extensive federal, state and local governmental regulation. The primary federal laws are the National Firearms Act of 1934 (“NFA”), the Gun Control Act of 1968 (“GCA”) and the Arms Export Control Act of 1976 (“AECA”), which have been amended from time to time. The NFA severely restricts the private ownership of those firearms defined in that regulation, including fully automatic weapons. We manufacture limited NFA products, none of which are fully automatic weapons, primarily for official end users. The GCA places certain restrictions on the interstate sale of firearms, among other things. The AECA requires approved licenses to be in place prior to importing or exporting certain firearms, ammunition and explosives. We cannot guarantee that the administrative branches responsible for approving those licenses will do so in all cases. We possess valid federal licenses and registrations for all of our owned and leased sites to manufacture and/or sell firearms and ammunition.

In September 2004, the United States Congress declined to renew the Federal Assault Weapons Ban of 1994 which generally prohibited the manufacture of certain firearms defined under that statute as “assault weapons” as well as the sale or possession of “assault weapons” except for those that, prior to the law’s enactment, were legally in the owner’s possession. Various states and local jurisdictions have adopted their own version of that former federal law and some laws and regulations at the state and local levels do apply to certain Remington

sporting firearms products. We cannot guarantee that an “assault weapons” ban similar to the Federal Assault Weapons Ban of 1994, or version thereof, will not be re-enacted.

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 dramatically increase the tax on certain handgun ammunition, such as 9mm, .25 caliber, and .32 caliber bullets. Some of these bills would apply to ammunition of the kind we produce, and accordingly, if enacted, could have a material adverse effect on our business.

In addition to federal requirements, state and local laws and regulations may place additional restrictions or prohibitions on gun ownership and transfer. These vary significantly from jurisdiction to jurisdiction. At least one jurisdiction bans the possession of a firearm altogether. Some states or other governmental entities have recently enacted, and others are considering, legislation restricting or prohibiting the ownership, use or sale of certain categories of firearms and/or ammunition. Although numerous jurisdictions presently have mandatory waiting periods for the sale of handguns (and some for the sale of long guns as well), there are currently few restrictive state or municipal regulations applicable to handgun ammunition. Remington firearms are covered under several recently enacted state regulations requiring guns to be sold with internal or external locking mechanisms. Some states are considering mandating certain design features on safety grounds, most of which would be applicable only to handguns. We believe that hunter safety issues may affect sales of firearms, ammunition and other shooting-related products.

Remington is no longer a defendant in any lawsuits brought by municipalities against participants in the firearms industry. In addition, legislation has been enacted in approximately 34 states precluding such actions. Similar federal legislation, entitled “The Protection of Lawful Commerce in Arms Act” was signed into law in October 2005. However, the applicability of the law to various types of governmental and private lawsuits has been challenged.

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

Information Concerning Forward-Looking Statements

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

Forward-looking statements are made based upon management’s current expectations and beliefs concerning future developments and their potential effects on Remington. Such forward-looking statements are not guarantees of future performance. The following important factors, and those important factors described elsewhere in this quarterly report and in our other SEC filings, including our Annual Report on Form 10-K for the year ended December 31, 2008 under Item 1A, “Risk Factors”, 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.


•	We are subject to the effects of general global economic and market conditions. Increases in commodity prices, higher levels of unemployment, higher consumer debt levels, declines in consumer confidence, uncertainty about economic stability and other economic factors that may affect consumer spending or buying habits could adversely affect the demand for products we sell. If the current economic conditions and the related factors remain uncertain or persist, spread or deteriorate further, our business, results of operations or financial condition could be materially adversely affected.

•	Continued volatility and disruption in the credit and capital markets as a result of the global financial crisis may negatively impact our revenues and our, or our suppliers’ or customers’, ability to access financing on favorable terms or at all.

•	Our ability to make scheduled payments of principal or interest on, or to refinance our obligations with respect to, our indebtedness, as well as our ability to comply with the covenants and restrictions contained in the instruments governing such indebtedness, will depend on our future operating performance and cash flow, which are subject to prevailing economic conditions, prevailing interest rate levels, and financial, competitive, business and other factors beyond our control, including the responses of competitors, changes in customer inventory management practices, changes in customer buying patterns, regulatory developments and increased operating costs.

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

•	Our ability to meet our debt service and other obligations depends in significant part on customers purchasing our products during the fall hunting season. Notwithstanding our cost containment initiatives and continuing management of costs, a decrease in demand during the fall hunting season for our higher priced, higher margin products would require us to further reduce costs or increase our reliance on borrowings under our credit facility to fund operations. If we are unable to reduce costs or increase our borrowings sufficiently to adjust to such a reduction in demand, our financial condition and results of operations could be adversely affected.

•	Lead, copper, steel and zinc prices have experienced significant increases over the past five years primarily due to increased demand (including increased demand from India and China). Furthermore, fuel and energy costs have increased over the same time period, although at a slower rate of increase. We currently purchase copper and lead options contracts to hedge against price fluctuations of anticipated commodity purchases. With the volatility of pricing that we have recently experienced, there can be no assurance that we will not see further material adverse changes in commodity pricing or energy costs, and such further changes, were they to occur, could have a material adverse impact on our consolidated financial position, results of operations, or cash.

•	Because of the nature of our products, we anticipate that we will continue to be involved in product liability litigation in the future. Our ability to meet our product liability obligations will depend (among other things) upon the availability of insurance, the adequacy of our accruals, the 1993 Sellers’ ability to satisfy their obligations to indemnify us against certain product liability cases and claims and the 1993 Sellers’ agreement to be responsible for certain post-Asset Purchase shotgun related costs.

•	Achieving the benefits of our acquisitions will depend in part on the integration of products and internal operating systems in a timely and efficient manner. Such integration may be unpredictable, and subject to delay because the products and systems typically were developed independently and were designed without regard to


	such integration. If we cannot successfully integrate such products and internal operating systems on a timely basis, we may lose customers and our business and results of operations may be harmed.

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

•	Sales made to Wal-Mart accounted for approximately 18% of our total net revenues in 2008 and 15% of the accounts receivable balance as of December 31, 2008. Our sales to Wal-Mart are generally not governed by a written contract between the parties. In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms and/or ammunition from us, our financial condition or results of operations could be adversely affected.

•	We utilize numerous raw materials, including steel, zinc, lead, brass, plastics and wood, as well as manufactured parts, which are purchased from one or a few suppliers. Any disruption in our relationship with these suppliers could increase the cost of operations. Such a disruption may result from or be amplified by the recent volatility of and uncertainty in the U.S. and global financial markets.

•	The purchase of firearms is subject to federal, state and local governmental regulation. Regulatory proposals, even if never enacted, may affect firearms or ammunition sales as a result of consumer perceptions. While we do not believe that existing federal and state legislation relating to the regulation of firearms and ammunition has had a material adverse effect on our sales from 2004 through 2008, no assurance can be given that more restrictive regulations, if proposed or enacted, will not have a material adverse effect on us in the future.

•	As a manufacturer of firearms, we were previously named as a defendant in certain lawsuits brought by municipalities or organizations challenging manufacturers’ distribution practices and alleging that the defendants have also failed to include a variety of safety devices in their firearms. Our insurance excludes coverage regarding such claims. In the event that additional such lawsuits were filed, or if certain legal theories advanced by plaintiffs were to be generally accepted by the courts, our financial condition and results of operations could be adversely affected.

•	As part of our annual impairment testing conducted with outside valuation experts under SFAS 144 and SFAS 142, we recorded non-cash impairment charges related to goodwill of $44.3 million and certain trademarks of $3.1 million for the year ended December 31, 2008. The charge eliminated the goodwill amounts from both our Firearms and All Other reporting segments. Our future results of operations may be impacted by the prolonged weakness in the current economic environment which may result in an impairment of any goodwill recorded in the future and/or other long-lived assets, which could adversely affect our results of operations or financial condition.

•	As a result of recent changes in our management, there may be an adjustment period which could cause inefficiencies in the execution of our business and our operations.

•	The uncertainty surrounding the current political environment, which we believe has resulted in increased demand for our products and has made it difficult to accurately forecast our requirements, may adversely affect our results of operations.

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

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

Certain of our financial instruments are subject to interest rate risk. As of March 31, 2009, we had long-term borrowings of $267.7 million ($251.9 million at March 31, 2008), excluding $6.7 million ($6.3 million at March 31, 2008) classified as the current portion of long-term debt, of which $64.8 million ($48.1 million at March 31, 2008) was issued at variable rates. Assuming no changes in the $78.5 million of monthly average variable-rate debt levels from the latest twelve months ended March 31, 2009 ($46.9 million at March 31, 2008), we estimate that a hypothetical change of 100 basis points in the LIBOR and Alternate Base Rate interest rates would impact interest expense by $0.8 million ($0.5 million at March 31, 2008) on an annualized pretax basis. We were not a party to any interest rate cap or other protection arrangements with respect to our variable rate indebtedness as of March 31, 2009 or 2008.

The Company purchases copper and lead (and zinc in 2008) options contracts intended to hedge against price fluctuations of anticipated commodity purchases. Lead, copper and zinc prices have experienced significant increases over the past five years primarily due to increased demand (including increased demand from China). The amounts of premiums paid for commodity contracts outstanding at March 31, 2009 were $4.7 million, which was $4.7 million lower than in 2008 as fewer contracts were entered into in the last twelve months. At March 31, 2009 and 2008, the market value of our outstanding contracts relating to firm commitments and anticipated purchases up to eighteen and fifteen months, respectively, from the respective date was $2.7 million and $9.6 million, respectively, as determined with the assistance of the Company’s counterparty. Assuming a hypothetical 10% increase in lead and copper commodity prices which are currently hedged at March 31, 2009, we would experience an approximate $2.0 million ($9.8 million at March 31, 2008) increase in our cost of related inventory purchased, which would be partially offset by an approximate $0.9 million ($4.3 million at March 31, 2008) increase in the value of related hedging instruments. With the volatility of pricing the Company has experienced, we believe that significant changes in commodity pricing could have a future material impact on our consolidated financial position, results of operations, or cash flows of the Company.

We also purchase steel supplies for use in the manufacture of certain firearms, ammunition, and accessory products. Assuming a hypothetical 10% increase in steel prices at March 31, 2009, we would experience an approximate $0.3 million (an approximate $0.2 million at March 31, 2008) increase in our cost of related inventory purchased.

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

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

Item 4T. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

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

As of and for the period ended March 31, 2009 (the “Evaluation Date”), an evaluation of the effectiveness of the Company’s disclosure controls and procedures was conducted under the supervision of, and reviewed by, the Company’s Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective at the Evaluation Date.

Furthermore, there were no changes in internal control over financial reporting that occurred during the quarter ended March 31, 2009 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Under the terms of the Purchase Agreement, the 1993 Sellers retained liability for, and are required to indemnify us against:


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

•	liability for product liability litigation related to discontinued products; and

•	certain tax liabilities, and employee and retiree compensation and benefit liabilities and intercompany accounts payable which do not represent trade accounts payable.

These indemnification obligations of the 1993 Sellers are not subject to any survival period limitation. We have no current information on the extent, if any, to which the 1993 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 Asset Purchase, we generally bear financial responsibility for the costs of product liability cases and claims relating to occurrences after the Asset Purchase and are required to indemnify the 1993 Sellers against such cases and claims. See “—Certain Indemnities.”

The main types of legal proceedings include:


	•	Product liability litigation filed by individuals.

	•	Product liability litigation filed by municipalities.

	•	Environmental litigation.

Product Liability Litigation

Since December 1, 1993, we have maintained insurance coverage for product liability claims subject to certain self-insured retentions on a per-occurrence basis for personal injury or property damage relating to occurrences arising after the Asset Purchase. 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, 2008 through November 30, 2009 and provides for certain self-insured retention amounts per occurrence. It also includes a limited batch clause provision, which allows that a single retention be assessed when the same defects manufactured in a common lot or batch results in multiple injuries or damages to third parties. The policy excludes from coverage any pollution-related liability. Based in part on the nature of our products, there can be no assurance that we will be able to obtain adequate product liability insurance coverage upon the expiration of the current policy. Certain of our current excess insurance coverage expressly excludes actions brought by municipalities as described below.

As a result of contractual arrangements, we manage the joint defense of product liability litigation involving Remington brand firearms and our ammunition products for both Remington and the 1993 Sellers. As of March 31, 2009, approximately 14 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-Asset Purchase occurrences by settlement. The 14 pending cases involve post-Asset Purchase occurrences for which we bear responsibility under the Purchase Agreement.

The relief sought in individual cases includes compensatory and, sometimes, punitive damages. Certain of the claims and cases seek unspecified compensatory and/or punitive damages. In others, compensatory damages sought may range from less than $50,000 to in excess of $1 million and punitive damages sought may exceed $1 million. Of the individual post-Asset Purchase bodily injury cases and claims pending as of March 31, 2009, the plaintiffs and claimants seek either compensatory and/or punitive damages in unspecified amounts or in amounts within these general ranges. 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 March 31, 2009, our accrual for product liability cases and claims was $13.9 million. The amount of our accrual for product liability cases and claims is based upon estimates developed as follows. We establish reserves for anticipated defense and disposition costs to us of those pending cases and claims for which we are financially responsible. Based on those estimates and an actuarial analysis of actual defense and disposition costs incurred by us with respect to product liability cases and claims in recent years, we determine the estimated defense and disposition costs for unasserted product liability cases and claims. We combine the estimated defense and disposition costs for both pending and unasserted cases and claims to determine the amount of our accrual for product liability cases and claims. It is reasonably possible additional experience could result in further increases or decreases in the period in which such information is made available. We believe that our accruals for losses relating to such cases and claims are adequate. Our accruals for losses relating to product liability cases and claims include accruals for all probable losses the amount of which can be reasonably estimated. Based on the relevant circumstances (including the current availability of insurance for personal injury and property damage with respect to cases and claims involving occurrences arising after the Asset Purchase, our accruals for the uninsured costs of such cases and claims and the 1993 Sellers’ agreement to be responsible for a portion of certain post-Asset Purchase shotgun-related product liability costs, as well as the type of firearms products that we make), we do not believe with respect to product liability cases and claims that any probable loss exceeding amounts already recognized through our accruals has been incurred.

Because our assumption of financial responsibility for certain product liability cases and claims involving pre-Asset Purchase occurrences was limited to an amount that has now been fully paid, with the 1993 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 Asset Purchase are not likely to have a material adverse effect upon our financial condition, results of operations or cash flows. Moreover, although it is difficult to forecast the outcome of litigation, we do not believe, in light of relevant circumstances (including the current availability of insurance for personal injury and property damage with respect to cases and claims involving occurrences arising after the Asset Purchase, our accruals for the uninsured costs of such cases and claims and the 1993 Sellers’ agreement to be responsible for a portion of certain post-Asset Purchase shotgun-related product liability costs, as well as the type of firearms products that we make), that the outcome of all pending post-Asset Purchase product liability cases and claims will be likely to have a material adverse effect upon our financial condition, results of operations or cash flows. Nonetheless, in part because the nature and extent of liability based on the manufacture and/or sale of allegedly defective products (particularly as to firearms and ammunition) is uncertain, there can be no assurance that our resources will be adequate to cover pending and future product liability occurrences, cases or claims, in the aggregate, or that a material adverse effect upon our financial condition, results of operations or cash flows will not result therefrom. Because of the nature of our products, we anticipate that we will continue to be involved in product liability litigation in the future. Because of the potential nature of injuries relating to firearms and ammunition, certain public perceptions of our products, and recent efforts to expand liability of manufacturers of firearms and ammunition, product liability cases and claims, and insurance costs associated with such cases and claims, may cause us to incur material costs.

Municipal Litigation

In addition to these individual cases, as a manufacturer of shotguns and rifles, the Company has been named previously in several actions brought by various municipalities, primarily against manufacturers, distributors and sellers of handguns. However, the Company is not a defendant in any pending municipal litigation.

A majority of states have enacted some limitation on the ability of local governments to file such lawsuits against firearms manufacturers. In addition, similar legislation limiting such lawsuits on a federal level has been proposed in both houses of Congress, most recently by the House of Representatives on October 20, 2005, and the Protection of Lawful Commerce in Arms Act was adopted in October 2005. However, the applicability of the law to various types of governmental and private lawsuits has been challenged in both state and federal courts.

Litigation Outlook

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

Certain Indemnities

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


	•	a number of specified liabilities, including certain trade payables and contractual obligations of the 1993 Sellers;

	•	limited financial responsibility for specified product liability claims relating to disclosed occurrences arising prior to the Asset Purchase;

	•	limited financial responsibility for environmental claims relating to the operation of the business prior to the Asset Purchase; and

	•	liabilities for product liability claims relating to occurrences after the Asset Purchase, except for claims involving products discontinued at the time of closing.

All other liabilities relating to or arising out of the operation of the business prior to the Asset Purchase are excluded liabilities (the “Excluded Liabilities”), which the 1993 Sellers retained. The 1993 Sellers are required to indemnify Remington and its affiliates in respect of the Excluded Liabilities, which include, among other liabilities:


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

	•	liability for product liability litigation related to discontinued products; and

	•	certain tax liabilities, and employee and retiree compensation and benefit liabilities and intercompany accounts payable which do not represent trade accounts payable.

The 1993 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 1993 Sellers’ representations under the Purchase Agreement have expired. We made claims for indemnification involving product liability issues prior to such expiration. See “—Product Liability Litigation”.

In addition, the 1993 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 1993 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 1993 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 Asset Purchase, and are currently engaged in the joint defense of certain product liability claims and proceedings. See “—Product Liability Litigation”.

Item 1A. Risk Factors

In addition to the other information set forth in this quarterly report on Form 10-Q and set forth below, you should carefully consider the factors discussed in Part I, Item 1A, “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2008 and in our other SEC filings, which could materially affect our business, financial condition or future results. The risks and uncertainties described in our Annual Report on Form 10-K and in our other SEC filings are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

We have recently made changes to our management team. As a result of these changes, there may be an adjustment period which could cause inefficiencies in the execution of our business and our operations.

On March 13, 2009, Thomas L. Millner, our former Chief Executive Officer, resigned and Theodore H. Torbeck, who was originally hired as our Chief Operating Officer and later named President, was appointed by the Board of Directors to serve as our Chief Executive Officer. In addition, on April 3, 2009, Joseph B. Gross, Remington’s Vice President, Firearms Manufacturing, was appointed by the Board to serve as our Chief Operating Officer. Since the FGI Acquisition in May 2007, the Company has established and staffed a number of additional management positions in an effort to add depth to the existing management team. Such positions include a Chief Operating Officer, a Chief Sales Officer, a Chief Information Officer, a Chief Supply Chain Officer, a Chief Marketing Officer, a Chief Technology Officer and a General Counsel. We believe we have a qualified leadership team in place for the Company. However, it may take some transition time for the new management team to learn to work together effectively. There can be no assurance that the changes in management will lead to an improvement in our ability to execute our business and there is a risk that our operations may be adversely affected, which could negatively impact our business and financial condition.

The uncertainty surrounding the current political environment, which we believe has resulted in increased demand for our products, has made it difficult to accurately forecast our materials, production and inventory requirements, which may adversely affect our results of operations.

We place orders for raw materials, determine production, and plan inventory based on our forecast of consumer demand, which is currently highly volatile and difficult to predict due to the uncertainty surrounding the political environment. Inaccurate estimation of our requirements could lead to a surplus or shortage of raw materials and/or finished inventory. We may experience a shortage of raw materials, which may result in our inability to meet demand for our inventory, or a surplus of materials that may result in the recording of losses should commodity costs decline. Market fluctuations may cause a shortage of raw materials and may affect our production or the cost of goods sold. Our profitability may also be adversely affected by supply or inventory shortages by temporarily interrupting production or by reducing the price of goods, which will lead to an increase in the ratio of cost of sales to sales. We write down the value of our inventory when it becomes obsolete or when the value of the inventory is otherwise recorded at a higher value than net realizable value. Such inventory adjustments can have a material adverse effect on our operating results and profitability.

Item 6. Exhibits


10.1		Form of Severance Agreement, previously filed as Exhibit 10.1 to Remington’s Current Report on Form 8-K, filed February 20, 2009, and herein incorporated by reference.*

31.1		Certification Pursuant to 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification Pursuant to 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

*		Management contract or compensatory plan or arrangement.

**		These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. In addition, these exhibits shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	REMINGTON ARMS COMPANY, INC.

	/s/ Stephen P. Jackson, Jr.

	Stephen P. Jackson, Jr.

	Chief Financial Officer, Treasurer and Corporate Secretary (Duly Authorized Officer and Principal Financial Officer)

May 8, 2009

EXHIBIT INDEX


Exhibit No.			Description


10.1			Form of Severance Agreement, previously filed as Exhibit 10.1 to Remington’s Current Report on Form 8-K, filed February 20, 2009, and herein incorporated by reference.*

31.1			Certification Pursuant to 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification Pursuant to 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as Amended, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

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

*			Management contract or compensatory plan or arrangement.

**			These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. In addition, these exhibits shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.

REMINGTON ARMS CO INC/ 10-Q