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: September 30, 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
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.
FORM 10-Q
September 30, 2004
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 | 23 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 36 | ||
| Item 4. | Controls and Procedures | 37 | ||
| Part II. OTHER INFORMATION | ||||
| Item 1. | Legal Proceedings | 38 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 41 | ||
| Item 3. | Defaults Upon Senior Securities | 41 | ||
| Item 4. | Submission of Matters to a Vote of Security Holders | 41 | ||
| Item 5. | Other Information | 41 | ||
| Item 6. | Exhibits | 42 | ||
| SIGNATURES | 43 | |||
| EXHIBITS | ||||
Consolidated Balance Sheets
(Dollars in Millions, Except Per Share Data)
| Unaudited |
||||||||
| September 30, 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and Cash Equivalents |
$ | 0.3 | $ | 0.4 | ||||
| Accounts Receivable Trade - net |
93.1 | 67.1 | ||||||
| Inventories - net |
97.3 | 85.7 | ||||||
| Supplies |
6.3 | 6.7 | ||||||
| Prepaid Expenses and Other Current Assets |
7.9 | 6.8 | ||||||
| Deferred Tax Assets |
9.4 | 14.2 | ||||||
| Total Current Assets |
214.3 | 180.9 | ||||||
| Property, Plant and Equipment - net |
72.6 | 75.8 | ||||||
| Intangible Assets (Goodwill and other) - net |
62.7 | 62.7 | ||||||
| Debt Issuance Costs - net |
9.2 | 10.6 | ||||||
| Other Noncurrent Assets |
8.2 | 7.8 | ||||||
| Deferred Tax Assets |
0.7 | — | ||||||
| Assets Held for Sale |
— | 18.0 | ||||||
| Total Assets |
$ | 367.7 | $ | 355.8 | ||||
| LIABILITIES AND SHAREHOLDER’S EQUITY |
||||||||
| Current Liabilities |
||||||||
| Accounts Payable |
$ | 31.7 | $ | 20.1 | ||||
| Book Overdraft |
1.5 | 6.7 | ||||||
| Short-Term Debt |
0.8 | — | ||||||
| Current Portion of Long-Term Debt |
1.0 | 0.5 | ||||||
| Current Portion of Product Liability |
2.4 | 2.4 | ||||||
| Accrued Income Taxes |
2.3 | 2.5 | ||||||
| Other Accrued Liabilities |
40.4 | 28.7 | ||||||
| Total Current Liabilities |
80.1 | 60.9 | ||||||
| Long-Term Debt, net of Current Portion |
215.7 | 230.0 | ||||||
| Retiree Benefits |
46.5 | 43.1 | ||||||
| Product Liability, net of Current Portion |
6.8 | 7.3 | ||||||
| Deferred Tax Liabilities |
— | 1.9 | ||||||
| Other Long-Term Liabilities |
0.2 | 0.2 | ||||||
| Total Liabilities |
349.3 | 343.4 | ||||||
| Commitments and Contingencies |
||||||||
| Shareholder’s Equity |
||||||||
| Class A Common Stock, par value $.01; 1,000 shares authorized and outstanding at September 30, 2004 and December 31, 2003, respectively |
— | — | ||||||
| Paid in Capital |
85.8 | 86.4 | ||||||
| Accumulated Other Comprehensive Income (Loss) |
(0.2 | ) | (1.2 | ) | ||||
| Retained Earnings (Accumulated Deficit) |
(67.2 | ) | (72.8 | ) | ||||
| Total Shareholder’s Equity |
18.4 | 12.4 | ||||||
| Total Liabilities and Shareholder’s Equity |
$ | 367.7 | $ | 355.8 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
1
Remington Arms Company, Inc.
Consolidated Statements of Operations
(Dollars in Millions)
| Unaudited |
|||||||||||||||
| Quarter Ended September 30, |
Year-to-Date September 30, |
||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
||||||||||||
| Net Sales (1) |
$ | 119.2 | $ | 112.1 | $ | 290.3 | $ | 273.2 | |||||||
| Cost of Goods Sold |
90.1 | 81.8 | 225.2 | 202.5 | |||||||||||
| Gross Profit |
29.1 | 30.3 | 65.1 | 70.7 | |||||||||||
| Selling, General and Administrative Expenses |
17.3 | 16.7 | 50.1 | 47.6 | |||||||||||
| Research and Development Expenses |
1.5 | 1.3 | 4.5 | 4.5 | |||||||||||
| Other (Income) Expense |
— | (0.5 | ) | (0.8 | ) | (1.2 | ) | ||||||||
| Other Unusual Charges |
— | — | — | 6.7 | |||||||||||
| Operating Profit |
10.3 | 12.8 | 11.3 | 13.1 | |||||||||||
| Interest Expense |
6.4 | 6.3 | 18.7 | 17.1 | |||||||||||
| Income (Loss) Before Income Taxes, Discontinued Operations And Sale of Assets |
3.9 | 6.5 | (7.4 | ) | (4.0 | ) | |||||||||
| Benefit for Income Taxes |
3.0 | 2.5 | (1.5 | ) | (1.5 | ) | |||||||||
| Income (Loss) from Continuing Operations before Discontinued Operations and Sale of Assets |
0.9 | 4.0 | (5.9 | ) | (2.5 | ) | |||||||||
| Income from Discontinued Operations, net of tax expense of $0.2 for the quarter-to-date and $0.8 for the year-to-date periods ended September 30, 2003 |
— | 0.2 | 0.1 | 1.3 | |||||||||||
| Gain on Sale of Assets, net of tax expense of $9.8 for the year-to-date period ended September 30, 2004 |
— | — | 13.5 | — | |||||||||||
| Net Income (Loss) |
$ | 0.9 | $ | 4.2 | $ | 7.7 | $ | (1.2 | ) | ||||||
| (1) | Sales are presented net of Federal Excise taxes of $10.6 million and $10.2 million for the quarterly periods and $24.7 million and $23.5 million for the year-to-date periods ended September 30, 2004 and 2003, respectively. |
The accompanying notes are an integral part of these consolidated financial statements.
2
Remington Arms Company, Inc.
Consolidated Statements of Cash Flows
(Dollars in Millions)
| Unaudited |
||||||||
| Year-To-Date September 30, |
||||||||
| 2004 |
2003 |
|||||||
| Operating Activities |
||||||||
| Net Income (Loss) |
$ | 7.7 | $ | (1.2 | ) | |||
| Adjustments to reconcile Net Income (Loss) to Net Cash used in Operating Activities: |
||||||||
| Depreciation |
6.9 | 7.2 | ||||||
| Amortization |
1.4 | 3.0 | ||||||
| Gain on Sale of Assets Held for Sale |
(23.3 | ) | — | |||||
| Loss on Disposal of Assets |
0.3 | 0.4 | ||||||
| Provision for Retiree Benefits |
4.2 | 1.2 | ||||||
| Provision for Deferred Income Taxes, net |
2.2 | 1.9 | ||||||
| Changes in Operating Assets and Liabilities: |
||||||||
| Accounts Receivable Trade - net |
(26.0 | ) | (25.5 | ) | ||||
| Inventories |
(11.6 | ) | (11.9 | ) | ||||
| Supplies |
0.4 | 0.2 | ||||||
| Prepaid Expenses and Other Current Assets |
(1.1 | ) | (1.7 | ) | ||||
| Other Noncurrent Assets |
(0.4 | ) | 1.9 | |||||
| Accounts Payable |
11.6 | 3.1 | ||||||
| Product Liabilities |
(0.5 | ) | 1.3 | |||||
| Income Taxes Payable |
(0.2 | ) | (3.5 | ) | ||||
| Other Accrued and Long-Term Liabilities |
10.1 | (0.9 | ) | |||||
| Net Cash used in Operating Activities |
(18.3 | ) | (24.5 | ) | ||||
| Net Cash provided by (used in) Discontinued Operations |
0.1 | (1.0 | ) | |||||
| Net Cash used in Operating Activities |
(18.2 | ) | (25.5 | ) | ||||
| Investing Activities |
||||||||
| Proceeds from Sale of Assets, net of Transaction costs of $1.2 |
42.8 | — | ||||||
| Purchase of Property, Plant and Equipment |
(4.4 | ) | (4.7 | ) | ||||
| Proceeds from Sale of Property, Plant and Equipment |
0.4 | — | ||||||
| Net Cash provided by (used in) Investing Activities |
38.8 | (4.7 | ) | |||||
| Net Cash used in Discontinued Operations |
— | (0.1 | ) | |||||
| Net Cash provided by (used in) Investing Activities |
38.8 | (4.8 | ) | |||||
| Financing Activities |
||||||||
| Proceeds from Revolving Credit Facility |
126.0 | 152.4 | ||||||
| Payments on Revolving Credit Facility |
(139.9 | ) | (108.4 | ) | ||||
| Cash Dividends Paid |
(2.1 | ) | (101.2 | ) | ||||
| Proceeds from Issuance of Long-Term Debt |
— | 200.0 | ||||||
| Principal Payments on Long-Term Debt |
(0.3 | ) | (87.6 | ) | ||||
| Capital Contributions from RACI Holding, Inc. |
— | 4.5 | ||||||
| Net Borrowings from Short-Term Debt |
0.8 | 1.2 | ||||||
| Decrease Book Overdraft |
(5.2 | ) | (10.8 | ) | ||||
| Debt Issuance Costs |
— | (12.2 | ) | |||||
| Net Cash (used in) provided by Financing Activities |
(20.7 | ) | 37.9 | |||||
| Decrease in Cash and Cash Equivalents |
(0.1 | ) | 7.6 | |||||
| Cash and Cash Equivalents at Beginning of Period |
0.4 | 0.4 | ||||||