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, 2004
OR
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to
Commission file number: 333-104141
REMINGTON ARMS COMPANY, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 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 x No ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities and Exchange Act of 1934). Yes ¨ No x
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Class A Common Stock, par value $.01 per share, outstanding at May 11, 2004 1,000 shares
Remington Arms Company, Inc.
Consolidated Balance Sheets
(Dollars in Millions, Except Per Share Data)
| Unaudited |
||||||||
| March 31, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and Cash Equivalents |
$ | 0.2 | $ | 0.4 | ||||
| Accounts Receivable Trade - net |
105.4 | 67.1 | ||||||
| Inventories - net |
98.0 | 85.7 | ||||||
| Supplies |
6.3 | 6.7 | ||||||
| Prepaid Expenses and Other Current Assets |
14.2 | 6.8 | ||||||
| Deferred Tax Assets |
9.4 | 14.2 | ||||||
| Total Current Assets |
233.5 | 180.9 | ||||||
| Property, Plant and Equipment - net |
73.8 | 75.8 | ||||||
| Intangible Assets (Goodwill and other) - net |
62.7 | 62.7 | ||||||
| Debt Issuance Costs - net |
10.1 | 10.6 | ||||||
| Other Noncurrent Assets |
8.0 | 7.8 | ||||||
| Deferred Tax Assets |
0.7 | — | ||||||
| Assets Held for Sale |
— | 18.0 | ||||||
| Total Assets |
$ | 388.8 | $ | 355.8 | ||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| Current Liabilities |
||||||||
| Accounts Payable |
$ | 29.3 | $ | 20.1 | ||||
| Book Overdraft |
4.4 | 6.7 | ||||||
| Short-Term Debt |
4.8 | — | ||||||
| Current Portion of Long-Term Debt |
0.5 | 0.5 | ||||||
| Current Portion of Product Liability |
2.4 | 2.4 | ||||||
| Accrued Income Taxes |
7.7 | 2.5 | ||||||
| Other Accrued Liabilities |
39.3 | 28.7 | ||||||
| Total Current Liabilities |
88.4 | 60.9 | ||||||
| Long-Term Debt, net of Current Portion |
224.4 | 230.0 | ||||||
| Retiree Benefits |
44.8 | 43.1 | ||||||
| Product Liability, net of Current Portion |
6.7 | 7.3 | ||||||
| Deferred Tax Liabilities |
— | 1.9 | ||||||
| Other Long-Term Liabilities |
0.2 | 0.2 | ||||||
| Total Liabilities |
364.5 | 343.4 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholder’s Equity |
||||||||
| Class A Common Stock, par value $.01; 1,000 shares authorized and outstanding at March 31, 2004 and December 31, 2003, respectively |
— | — | ||||||
| Paid in Capital |
86.4 | 86.4 | ||||||
| Accumulated Other Comprehensive Income (Loss) |
0.4 | (1.2 | ) | |||||
| Retained Earnings (Accumulated Deficit) |
(62.5 | ) | (72.8 | ) | ||||
| Total Shareholder’s Equity |
24.3 | 12.4 | ||||||
| Total Liabilities and Shareholder’s Equity |
$ | 388.8 | $ | 355.8 | ||||
The accompanying notes are an integral part of these consolidated financial statements
2
Remington Arms Company, Inc.
Consolidated Statements of Operations
(Dollars in Millions)
| Unaudited |
||||||||
| Year-to-Date March 31, |
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| 2004 |
2003 |
|||||||
| Sales (1) |
$ | 83.9 | $ | 81.0 | ||||
| Cost of Goods Sold |
64.4 | 59.6 | ||||||
| Gross Profit |
19.5 | 21.4 | ||||||
| Selling, General and Administrative Expenses |
16.3 | 16.5 | ||||||
| Research and Development Expenses |
1.5 | 1.5 | ||||||
| Other Income |
(0.4 | ) | (0.4 | ) | ||||
| Other Unusual Charges |
— | 6.7 | ||||||
| Operating Income (Expense) |
2.1 | (2.9 | ) | |||||
| Interest Expense |
6.1 | 4.8 | ||||||
| Loss Before Income Taxes and Discontinued Operations |
(4.0 | ) | (7.7 | ) | ||||
| Benefit for Income Taxes |
(1.5 | ) | (2.9 | ) | ||||
| Loss from Continuing Operations before Discontinued Operations: |
(2.5 | ) | (4.8 | ) | ||||
| (Loss) Income from Discontinued Operations, net of tax (benefit) expense of ($0.1) and $0.3 for the year-to-date periods ended March 31, 2004 and 2003, respectively |
(0.2 | ) | 0.6 | |||||
| Gain on Sale, net of tax expense of $9.4 |
13.0 | — | ||||||
| Net Income (Loss) |
$ | 10.3 | $ | (4.2 | ) | |||
| (1) | Sales are presented net of Federal Excise taxes of $6.8 million and $6.7 million for the year-to-date periods ended March 31, 2004 and 2003, respectively. |
The accompanying notes are an integral part of these consolidated financial statements
3
Remington Arms Company, Inc.
Consolidated Statements of Cash Flows
(Dollars in Millions)
| Unaudited |
||||||||
| Year-To-Date March 31, |
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| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net Income (Loss) |
$ | 10.3 | $ | (4.2 | ) | |||
| Adjustments to reconcile Net Income (Loss) to Net Cash provided by Operating Activities: |
||||||||
| Depreciation |
2.3 | 2.4 | ||||||
| Amortization |
0.5 | 1.9 | ||||||
| Gain on Sale of Assets Held for Sale |
(22.4 | ) | — | |||||
| Loss on Disposal of Assets |
0.2 | — | ||||||
| Provision for Retiree Benefits |
2.1 | 1.2 | ||||||
| Provision (Benefit) for Deferred Income Taxes, net |
2.2 | (0.3 | ) | |||||
| Changes in Operating Assets and Liabilities: |
||||||||
| Accounts Receivable Trade - net |
(38.3 | ) | (46.0 | ) | ||||
| Inventories |
(12.3 | ) | (13.7 | ) | ||||
| Supplies |
0.4 | 0.2 | ||||||
| Prepaid Expenses and Other Current Assets |
(7.4 | ) | (6.5 | ) | ||||
| Other Noncurrent Assets |
(0.2 | ) | 2.4 | |||||
| Accounts Payable |
9.2 | 9.6 | ||||||
| Product Liabilities |
(0.6 | ) | 0.1 | |||||
| Income Taxes Payable |
5.2 | (2.2 | ) | |||||
| Other Accrued and Long-Term Liabilities |
10.6 | 1.4 | ||||||
| Net Cash used in Operating Activities |
(38.2 | ) | (53.7 | ) | ||||
| Net Cash provided by (used in) Discontinued Operations |
0.1 | (0.4 | ) | |||||
| Net Cash used in Operating Activities |
(38.1 | ) | (54.1 | ) | ||||
| Investing Activities |
||||||||
| Proceeds from Sale of Assets, Net of Transaction fees of $1.5 |
41.5 | — | ||||||
| Purchase of Property, Plant and Equipment |
(0.5 | ) | (1.3 | ) | ||||
| Net Cash provided by (used in) Investing Activities |
41.0 | (1.3 | ) | |||||
| Financing Activities |
||||||||
| Proceeds Revolving Credit Facility |
45.4 | 78.0 | ||||||
| Payments on Revolving Credit Facility |
(50.9 | ) | (19.9 | ) | ||||
| Cash Dividends Paid |
— | (100.0 | ) | |||||
| Principal (Payments) Borrowings on Long-Term Debt |
(0.1 | ) | 112.9 | |||||
| Net Borrowings from Short-Term Debt |
4.8 | 4.1 | ||||||
| Decrease Book Overdraft |
(2.3 | ) | (8.7 | ) | ||||
| Debt Issuance Costs |
— | (11.2 | ) | |||||
| Net Cash (used in) provided by Financing Activities |
(3.1 | ) | 55.2 | |||||
| Decrease in Cash and Cash Equivalents |
(0.2 | ) | (0.2 | ) | ||||
| Cash and Cash Equivalents at Beginning of Period |
0.4 | 0.4 | ||||||
| Cash and Cash Equivalents at End of Period |
$ | 0.2 | $ | 0.2 | ||||
| Supplemental Cash Flow Information: |
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| Cash Paid During the Year for: |
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| Interest |
$ | 0.4 | $ | 1.6 | ||||
| Income Taxes |
$ | — | $ | 1.2 | ||||
| Noncash Financing and Investing Activities: |
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| Issuance of Deferred Shares in Lieu of Bonus |
$ | — | $ | 0.3 | ||||
| Payment Made to Vendors on Behalf of RACI Holding, Inc. |
$ | — | $ | 0.9 | ||||
The accompanying notes are an integral part of these consolidated financial statements
4
Remington Arms Company, Inc.
Consolidated Statement of Shareholder's Equity (Accumulated Deficit) and Comprehensive Income (Loss)
(Dollars in Millions)
(Unaudited)
| Paid-in Capital |
Accumulated Other |
Retained Earnings |
Total Shareholder’s Equity |
||||||||||||
| Balance, December 31, 2003 |
$ | 86.4 | $ | (1.2 | ) | $ | (72.8 | ) | $ | 12.4 | |||||
| Comprehensive Net Income: |
|||||||||||||||
| Net Income |
— | — | 10.3 | 10.3 | |||||||||||
| Other comprehensive income: |
|||||||||||||||
| Net derivative gains, net of tax effect |
— | 1.7 | — | 1.7 | |||||||||||
| Net derivative gains reclassified as earnings |
— | (0.1 | ) | — | (0.1 | ) | |||||||||
| Total Comprehensive Net Income |
— | 1.6 | 10.3 | 11.9 | |||||||||||
| Balance, March 31, 2004 |
$ | 86.4 | $ | 0.4 | $ | (62.5 | ) | $ | 24.3 | ||||||
The accompanying notes are an integral part of these consolidated financial statements
5
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”) include the accounts of its wholly owned subsidiaries, RA Brands, L.L.C. (“RA Brands”) and RA Factors, Inc. (together with Remington, the “Company”). The accounts of the Company’s parent, RACI Holding, Inc. (“Holding”), which owns 100% of the issued and outstanding common stock of Remington, are not presented herein. Transactions between the Company and Holding and the related balances are reflected in the financial statements.
The accompanying unaudited interim consolidated financial statements of Rem