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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended: September 30, 2004

OR

For the transition period from              to             

Commission file number: 333-104141

REMINGTON ARMS COMPANY, INC.

(Exact name of registrant as specified in its charter)

870 Remington Drive

P.O. Box 700

Madison, North Carolina 27025-0700

(Address of principal executive offices)

(Zip Code)

(336) 548-8700

(Registrant’s telephone number, including area code)

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

At October 31, 2004, 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.

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REMINGTON ARMS COMPANY, INC.

FORM 10-Q

September 30, 2004

INDEX

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Remington Arms Company, Inc.

Consolidated Balance Sheets

(Dollars in Millions, Except Per Share Data)

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

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Remington Arms Company, Inc.

Consolidated Statements of Operations

(Dollars in Millions)

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

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Remington Arms Company, Inc.

Consolidated Statements of Cash Flows

(Dollars in Millions)

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

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Remington Arms Company, Inc.

Consolidated Statement of Shareholder’s Equity (Accumulated Deficit) and Comprehensive Income

(Dollars in Millions)

(Unaudited)

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

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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. (collectively referred to as the “Company”), as well as reflecting the impact of the Company’s unconsolidated 50% joint venture interest in Remington ELSAG Law Enforcement Systems, LLC (“RELES”). The accounts of the Company’s parent, RACI Holding, Inc. (“Holding”), which owns 100% of the issued and outstanding common stock of Remington, are not presented herein. Significant transactions between the Company and Holding and the related balances are reflected in the consolidated financial statements and related disclosures.

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 footnote disclosures 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 have been included. Operating results for the three and nine month periods ended September 30, 2004 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2004. The year-end condensed balance sheet information for 2003 was derived from the audited consolidated financial statements but does not include all disclosures required by generally accepted accounting principles.

These consolidated financial statements should be read in conjunction with the audited consolidated financial statements of Remington Arms Company, Inc. and subsidiaries as of and for the year ended December 31, 2003.

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

Note 2 - Inventories

Inventories consisted of the following at:

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

Note 3 - Discontinued Operations

On February 6, 2004, Remington and its wholly-owned subsidiary RA Brands entered into an Asset Purchase Agreement (the “Stren Asset Purchase Agreement”) with Pure Fishing, Inc. and its wholly-owned subsidiaries Pure Fishing I, LLC and Pure Fishing II, LLC (collectively, the “Purchasers”), pursuant

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

to which Remington and RA Brands sold to the Purchasers certain specified assets relating to Remington’s fishing line business, effective as of February 9, 2004. The assets sold consisted of specified machinery and equipment, inventory, purchase orders and other contracts, trademarks, tradenames and other intellectual property, records, claims, and goodwill, in each case relating to Remington’s fishing line business, which had been part of the All Other reporting segment.

The purchase price paid to Remington and RA Brands for the assets sold was $44.0 million in cash, $1.0 million of which was placed into escrow as security for certain post-closing obligations to procure certain materials for the Purchasers. On May 12, 2004, the amount placed into escrow of $1.0 million was paid to Remington by the Purchasers. The Company applied the $43.0 million in cash proceeds to pay down the then outstanding balance under Remington’s senior secured revolving credit facility (the “Credit Facility”) on February 9, 2004, and the $1.0 million in cash proceeds released from escrow were used to pay down Remington’s then outstanding Credit Facility balance on May 12, 2004. The assets sold had a net book value of approximately $17.9 million and Remington retained net working capital of approximately $1.7 million. The gain that was recorded in the nine months of 2004 on the sale of discontinued operations was approximately $13.5 million, net of income taxes. The gain of approximately $13.5 million reflects the release of the $1.0 million escrow amount and adjustments to the estimates of costs associated with the sale based on remaining obligations with respect to the sale as of September 30, 2004.

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

The following represents a summary of key components of quarter-to-date and year-to-date income from discontinued operations:

Included in discontinued operations is an allocation of interest expense of $0.1 million and $1.4 million for the year-to-date periods ended September 30, 2004 and 2003, respectively. The interest expense allocation is based on the Company having made a payment of $43.0 million against its outstanding borrowings under the Credit Facility with the proceeds received at the closing of the sale of the fishing line business on February 9, 2004. The interest expense allocation was computed by taking the $43.0 million Credit Facility balance paid down at the time of the closing of the sale, multiplied by the weighted average interest rate on the Credit Facility for the year-to-date periods ended February 9, 2004 and September 30, 2003. The fishing line business has historically been allocated interest expense (approximately $0.2 million annually) as a result of actual working capital balances for the fishline business.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

Note 4 –Other Accrued Liabilities

Other Accrued Liabilities consisted of the following at:

Note 5 - Warranty Accrual

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

Note 6– Long-Term Debt

Long-Term Debt consisted of the following at:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

The Company’s Credit Facility, as amended, provides up to $125.0 million of borrowings under an asset-based senior secured revolving credit facility through January 23, 2008. Amounts available under the Credit Facility are subject to a borrowing base limitation based on certain percentages of eligible accounts receivable and eligible inventory and an amortizing balance related to eligible machinery and equipment and other limitations. The Credit Facility also includes a letter of credit sub-facility of up to $15.0 million.

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

On February 9, 2004, in connection with the sale of the Company’s fishing line business, the Company entered into a third amendment to the Credit Facility. The Company paid an amendment fee of $0.1 million in connection with the third amendment, which was netted with the gain on the disposal of discontinued operations. Under the terms of the third amendment, the lenders under the Credit Facility consented to Remington’s and RA Brands’ sale of specified assets pursuant to the Stren Asset Purchase Agreement, the release of liens against such assets, and the retention of the proceeds of such sale, subject to a requirement to use such proceeds to invest in productive assets or permanently pay down amounts outstanding under the Credit Facility within one year of such sale.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

The interest rate margin for the ABR and the Euro-Dollar loans at September 30, 2004 is 1.5% and 3%, respectively. The weighted average interest rate under the Company’s Credit Facility was 4.87% and 4.05% for the year to date period ended September 30, 2004 and 2003, respectively.

As of September 30, 2004 the Company was in compliance with the financial covenants and expects to continue to be in compliance with the financial covenants under the Credit Facility, as amended. However, there can be no assurance that the Company will continue to be in compliance.

The initial issuance and sale of the Company’s $200.0 million aggregate principal amount 10.5% Senior Notes due 2011 (the “Notes”) was completed in a private offering on January 24, 2003. A portion of the proceeds from the issuance of the Notes was used for the redemption of all of the Company’s 9 ¹/2% Senior Subordinated Notes due 2003 (the “Refinanced Notes”), at a redemption price equal to 100% of the aggregate principal amount of Refinanced Notes then outstanding of $86.9 million, plus accrued and unpaid interest. The Notes are redeemable at the option of the Company, in whole or in part, any time on or after February 1, 2007. The redemption price ranges from 105.3% of the principal amount in 2007 to 100% in the year 2009 and thereafter. The Notes may also be redeemed with proceeds of specified types of equity offerings prior to 2007, at a redemption price of 110.5% of the principal amount. In the event of a change in control, the Notes may be tendered at the option of the holders for the principal amount plus applicable interest and premium at that date. The Notes are unsecured senior obligations of the Company, ranking equal in right of payment with all existing and future senior indebtedness, if any, of the Company, including its indebtedness under the Credit Facility.

The indenture for the Notes and the Credit Facility contain various restrictions on the Company’s ability to incur debt, pay dividends and enter into certain other transactions. With respect to asset sale transactions (such as the sale of the fishing line business), the indenture for the Notes requires the Company to apply the net cash proceeds thereof in properties and assets that replace the properties and assets that were the subject of the asset sale or in properties and assets that will be used in the businesses of the Company or its Subsidiaries within 365 days after the date of such asset sale. Any uninvested amount must be used to permanently repay the senior debt of the Company in accordance with the terms of the indenture for the Notes and the Credit Facility. In addition, the Indenture permits repurchases of the Notes on the open market, subject to limitations that may be contained in the Credit Facility and the Indenture. As disclosed in the Company’s 8-K filing on September 10, 2004, the Company obtained the consent of the requisite lenders under the Credit Facility to one or more such purchases of Notes in an aggregate amount of up to $5,000,000 on or before December 31, 2004, subject to compliance with specified conditions for the purchases.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

Note 7 - Related Party Transactions and Other Unusual Charges

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

On April 28, 2004, the Board of Directors of the Company declared a dividend of approximately $2.1 million to be paid to RACI Holding, Inc. in the second quarter of 2004. This dividend was paid by the Company to Holding on June 30, 2004.

On November 3, 2004, the Board of Directors of the Company declared a dividend of approximately $0.1 million to be paid to RACI Holding, Inc. in the fourth quarter of 2004.

Note 8 - Intangible Assets

The carrying amount of goodwill and trademarks, which are not subject to amortization, attributable to each reporting segment is outlined in the following tables:

The Company continues to monitor one of the business units in the All Other segment which was determined to have a carrying value of goodwill and trademarks of $3.4 million at September 30, 2004. It is reasonably possible the Company could be required to recognize an impairment charge if the current trend of profitability were to continue within this business unit.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

Note 9 – Retiree Benefits

Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2003, for detailed descriptions and disclosures about the various benefit plans offered by Remington.

The following table summarizes the components of net periodic pension cost for the three and nine month periods ended:

The following table summarizes the components of net periodic postretirement cost for the three and nine month periods ended:

Anticipated Contributions

The Company previously disclosed in its consolidated financial statements for the year ended December 31, 2003 that it expected to contribute approximately $6.4 million to plan assets under its defined benefit pension plan during 2004. As of September 30, 2004, $5.8 million of contributions have been made. Remington contributed the remaining $0.6 million to the plan assets during October of 2004.

Note 10 – Stock Options

In accordance with the provisions of Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (“SFAS 123”), as amended by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation—Transition and Disclosure (“SFAS 148”), the Company has elected to continue to account for stock-based compensation under the intrinsic value-based method of accounting described by Accounting Principles Board Opinion 25, Accounting for Stock Issued to Employees (“APB 25”). Under APB 25, generally no cost is recorded for stock options issued to employees unless the option exercise price is below fair value at the time options are granted. Since options have been granted at exercise prices equal to the estimated fair value of the underlying Common Stock, to date no compensation expense has been recognized with respect to the grant of any outstanding stock options. Had compensation expense for such option grants been recognized under SFAS No. 123 based on the fair value of such options at the grant dates thereof for the three and nine month periods ended September 30, 2004 and 2003, the Company’s net income (loss) on a pro forma basis would have been as follows:

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

In connection with the recapitalization transactions, in February 2003 Holding distributed on behalf of Remington a special payment of $4.5 million in the aggregate to all option holders in exchange for the acceleration and cancellation of 64,144 outstanding options to purchase common stock of Holding. The amount of such payment was determined based on the difference between the price paid for the acceleration and cancellation of the options and the exercise price of the options. Under APB Opinion No. 25, this payment resulted in a compensation expense in respect of such options of $2.7 million, net of taxes. Under SFAS 123, the expense associated with these options would have been approximately $1.8 million in the first quarter of 2003, with the remaining compensation expense having already been recorded in prior years.

Note 11 – Commitments and Contingencies

The Company has various purchase commitments for services incidental to the ordinary conduct of business, including services related to its utilities and NASCAR sponsorship. Such commitments are not at prices in excess of current market prices. The Company has purchase contracts with certain raw materials suppliers, for periods ranging up to approximately two years, some of which contain firm commitments to purchase minimum specified quantities. However, such contracts had no significant impact on the financial condition or results of operations during the reported periods. In recognition of and support of certain legal and legislative initiatives, the shooting sports industry established the Hunting and Shooting Sports Heritage Fund of which the Company is a member. The Company has historically made contributions to the Heritage Fund ranging from 0.5% to 1% of the Company’s net sales. The Company did not make contributions to the Heritage Fund related to the period from January 1, 2003 through March 31, 2004. The Company began making contributions at 0.5% of net sales relating to certain domestically sold ammunition products in reporting periods after March 31, 2004.

On July 19, 2004, the Company entered into a ten year exclusive distribution agreement with a technology products manufacturer that required the payment of $0.5 million in exchange for the exclusive distribution rights for certain security products within the United States, certain of its territories, and Canada. The Company expects to sell these security products to the federal agency and law enforcement markets. The Company anticipates incurring up to $1.1 million (including the above mentioned $0.5

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

million) of expenses associated with the initial launching of the products during 2004 for distribution, selling, marketing, administrative, and transaction costs, and will include related financial results in the newly formed Technology Products segment, which is combined with the All Other reporting segment in 2004. Through September 30, 2004, the Company has paid $0.7 million associated with this agreement (including the above mentioned $0.5 million).

On August 4, 2004, the Company entered into a joint venture agreement with ELSAG, Inc., an unaffiliated third party, to form Remington ELSAG Law Enforcement Systems, LLC (“RELES”). RELES will sell and service a license plate reading technology that is expected to be sold to state and local law enforcement agencies along with certain federal agencies. The venture gives Remington a 50% ownership interest. The agreement calls for each member to provide 50% of required capital investments and receive 50% of distributions, with a maximum contribution amount of $1.5 million by each party. In addition, Remington will provide certain administrative support functions, while ELSAG, Inc. will provide product technology support. Through September 30, 2004, the Company has paid $0.3 million associated with this venture. On October 15, 2004, the Company made its initial capital contribution of approximately $0.3 million to this joint venture. The Company anticipates making total equity contributions of up to $0.8 million by the end of 2004. See Note 15 for further discussion.

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 “Acquisition”) 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 “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 Acquisition, 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-Acquisition occurrences was limited to a fixed amount that has now been fully paid, and with the 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 Acquisition are not likely to have a material adverse effect upon the financial condition, results of operations or cash flows of the Company. Moreover, although it is difficult to forecast the outcome of litigation, the Company does not believe, in light of relevant circumstances (including the current availability of insurance for personal injury and property damage with respect to cases and claims involving occurrences arising after the Acquisition, the Company’s accruals for the uninsured costs of such cases and claims and the Sellers’ agreement to be responsible for a portion of certain post-Acquisition shotgun-related product liability costs, as well as the type of firearms products made by the Company), as well as the passage of time, that the outcome of all pending post-Acquisition product liability cases and claims will be likely to have a material adverse effect upon the financial condition, results of operations, or cash flows of the Company. Nonetheless, in part because of 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 our financial condition, results of operations or cash flows will not result therefrom. Because of the nature of its products, the Company anticipates that it will continue to be involved in product liability litigation in the future.

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) – Unaudited

Note 12 – Accounting for Derivatives and Hedging Activities

The Company purchases copper and lead options contracts to hedge against price fluctuations of anticipated commodity purchases. The options contracts limit the unfavorable effect that price increases will have on these metal purchases. At September 30, 2004, the fair value of the Company’s outstanding derivative contracts relating to firm commitments and anticipated purchases (aggregate notional amount 36.4 million pounds of copper and lead) up to twelve months from such date was $3.5 million as determined with the assistance of a third party. At October 31, 2004, the value of those same contracts outstanding at September 30, 2004, excluding any contracts that were settled or entered into during the month of October, had fallen to approximately $2.7 million, due to price volatility in the market. With the volatility of pricing the Company has experienced, the Company believes that significant changes in commodity pricing could have a future material impact on the consolidated financial position, results of operations, or cash flows of the Company.

In accordance with the provisions of Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (“SFAS 133”), as amended by Statement of Financial Accounting Standards No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities – an amendment of FASB Statement No. 133 (“SFAS 138”) and by Statement of Financial Accounting Standards 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. During the nine month period ended September 30, 2004, a net gain of $1.5 million on derivative instruments was reclassified to cost of sales from accumulated other comprehensive income, and a net gain of $2.5 million was recorded to accumulated other comprehensive income and to prepaid expenses and other current assets.

Note 13 - Segment Information

The Company’s business is classified into three reportable segments: Firearms, which designs, manufactures, and markets shotguns and rifles for the sporting and law enforcement, federal agency and military markets; Ammunition, which designs, manufactures and markets sporting ammunition, pistol & revolver ammunition, ammunition for the law enforcement, federal agency and military markets, and ammunition reloading components; and All Other, which includes accessory related gun products, technology products, and the manufacture and marketing of clay targets and powdered metal products. These products are sold primarily to wholesalers and retailers, mainly through manufacturer’s sales representatives. Other reconciling items include corporate and other assets not allocated to the individual segments, assets held for sale, and discontinued operations.

The Company primarily evaluates the performance of its segments and allocates resources to them based on Adjusted EBITDA. Adjusted EBITDA differs from the term “EBITDA” as it is commonly used, and is substantially similar to the measure “Consolidated EBITDA” that is used in the indenture for the Notes. In addition to adjusting net income (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, and certain “special payments” to Remington employees who hold options and deferred shares in respect of Holding common stock, consisting of amounts that are treated as compensation expense by Remington and are paid in connection with payments of dividends to holders of Holding common stock.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Millions, Except Per Share Amounts) - Unaudited

Information on Segments:

The following table illustrates the calculation of Adjusted EBITDA, by reconciling Net Income/ (Loss) to Adjusted EBITDA, which management believes is the most nearly equivalent GAAP measure: