S-1/A 1 a2195644zs-1a.htm S-1/A

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As filed with the Securities and Exchange Commission on March 23, 2010

Registration No. 333-162595

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

Pre-effective
AMENDMENT NO. 3
to
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

FREEDOM GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization)
  3484
(Primary Standard Industrial
Classification Code number)
  26-0174491
(I.R.S. Employer
Identification Number)

870 Remington Drive
Madison, North Carolina 27025-1776
(336) 548-8700

(Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)

Fredric E. Roth, Jr.
General Counsel and Secretary
Freedom Group, Inc.
870 Remington Drive P.O. Box 1776
Madison, North Carolina 27025-1776
(336) 548-8700
(Name, address, including zip code and telephone number, including area code, of agent for service)


Please address a copy of all communications to:

Arnold B. Peinado, III, Esq.
Roland Hlawaty, Esq.
Milbank, Tweed, Hadley & McCloy LLP
1 Chase Manhattan Plaza
New York, NY 10005
(212) 530-5000

 

William J. Miller, Esq.
Jonathan A. Schaffzin, Esq.
Cahill Gordon & Reindel LLP
80 Pine Street
New York, NY 10005
(212) 701-3000

Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.

                If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. o

                If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

                If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

                If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. 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.

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

                The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.


Table of Contents

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

Subject to Completion
Preliminary Prospectus dated            , 2010

PROSPECTUS

            Shares

GRAPHIC

Common Stock



              This is Freedom Group, Inc.'s initial public offering. We are selling            shares of our common stock and the selling stockholders are selling            shares of our common stock. We will not receive any proceeds from the sale of shares to be offered by the selling stockholders.

              We expect the public offering price to be between $            and $            per share. Currently, no public market exists for the shares. After pricing of the offering, we expect that the shares will trade on the            under the symbol "            ."

              Investing in the common stock involves risks that are described in the "Risk Factors" section beginning on page 19 of this prospectus.



 
 
Per Share
 
Total
Public offering price   $   $
Underwriting discount   $   $
Proceeds, before expenses, to us   $   $
Proceeds, before expenses, to the selling stockholders   $   $

              The underwriters may also purchase up to an additional            shares from us, and up to an additional            shares from the selling stockholders, at the public offering price, less the underwriting discount, within 30 days from the date of this prospectus to cover over-allotments, if any.

              Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

              The shares will be ready for delivery on or about            , 2010.

The date of this prospectus is            , 2010.


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TABLE OF CONTENTS

 
  Page

Prospectus Summary

  1

Risk Factors

  19

Special Note Regarding Forward-Looking Statements

  35

Use of Proceeds

  38

Dividend Policy

  38

Capitalization

  39

Dilution

  42

Selected Historical Consolidated Financial Data

  44

Unaudited Pro Forma Condensed Consolidated Financial Information

  46

Management's Discussion and Analysis of Financial Condition and Results of Operations

  50

Business

  79

Management

  103

Compensation Discussion and Analysis

  108

Certain Relationships and Related Person Transactions

  132

Principal and Selling Stockholders

  135

Description of Certain Indebtedness

  138

Description of Capital Stock

  141

Shares Eligible for Future Sale

  145

Material United States Federal Income and Estate Tax Considerations for Non-U.S. Holders

  147

Underwriting

  151

Legal Matters

  156

Experts

  156

Where You Can Find More Information

  156

Index to Consolidated Financial Statements

  F-1

              You should rely only on the information contained in this prospectus or contained in any free writing prospectus filed with the Securities and Exchange Commission (the "SEC"). Neither we, the selling stockholders nor the underwriters have authorized anyone to provide you with additional information or information different from that contained in this prospectus or in any free writing prospectus filed with the Securities and Exchange Commission. We and the selling stockholders are offering to sell, and seeking offers to buy, our common stock only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of the date of this prospectus, regardless of the time of delivery of this prospectus or of any sale of our common stock.


MARKET AND INDUSTRY DATA

              Market and industry data used throughout this prospectus, including information relating to our relative position in the shooting sports industry, is based on the good faith estimates of management, which in turn are based upon management's review of internal surveys, independent industry surveys and publications, including independent reports and information prepared by the Sports Marketing Research Group ("SMRG"), a syndicated market research firm of hard good sporting goods in the Unites States, the National Shooting Sports Foundation ("NSSF"), a trade association for the shooting, hunting and firearms industry, SportsOneSource, a leading Internet portal for sporting goods industry professionals, and the Annual Firearms Manufacturing and Export Report ("AFMER"), a report produced by the Bureau of Alcohol, Tobacco and Firearms, in each case with respect to 2008 data and the National Rifle Association ("NRA") with respect to 2010 data. Other than with respect to the SMRG reports, which are subscription based, these reports are generally available to the public and were not prepared for a fee.

              Market and industry data for 2008 available from sources such as SMRG and AFMER provide market share details based on brands and manufacturers which the Company is able to tie to its acquired entities and businesses. Market share is then summed together for entities and businesses owned by the Company to arrive at the Company's overall market share.

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PROSPECTUS SUMMARY

              The following summary is qualified in its entirety by, and should be read together with, the more detailed information and financial statements and related notes thereto appearing elsewhere in this prospectus. You should read the entire prospectus carefully, particularly the "Risk Factors" beginning on page 19 and our consolidated financial statements and the related notes thereto. In this prospectus, unless otherwise indicated or the context otherwise requires, references to (1) the terms "we," "us," "our," the "Company" and "Freedom Group" refer to Freedom Group, Inc. and its subsidiaries on a consolidated basis, (2) the term "FGI" refers to Freedom Group, Inc., (3) the term "Remington" refers to Remington Arms Company, Inc. and its direct and indirect subsidiaries, (4) the terms "Bushmaster" and "BFI" refer to Bushmaster Firearms International, LLC and its direct and indirect subsidiaries, (5) the term "Marlin" refers to the Marlin Firearms Company, (6) the term "DPMS" refers to DPMS Firearms LLC, (7) the term "EOTAC" refers to EOTAC, LLC, (8) the term "INTC" refers to INTC USA, LLC, (9) the term "Precision Arms Center" refers to Precision Arms Center, LLC, (formerly known as Bushmaster Custom Shop, LLC), (10) the term "Dakota Arms" refers to Dakota Arms, LLC, (11) the term "S&K" refers to S&K Industries, Inc., (12) the term "AAC" refers to Advanced Armament Corp., (13) the term "Barnes" refers to Barnes Bullets, Inc., (14) the term "CCM" refers only to Cerberus Capital Management L.P., (15) the term "Cerberus" refers to Cerberus Capital Management, L.P., along with its affiliates, (16) the term "Remington Acquisition" refers to our acquisition of 100% of the shares of RACI Holding, Inc., the then parent company of Remington, on May 31, 2007, (17) the term "Marlin Acquisition" refers to Remington's acquisition of 100% of the shares of Marlin and its subsidiary, H&R 1871, LLC, on January 28, 2008 and (18) the term "Dakota Acquisition" refers to our acquisition of certain assets of Dakota Arms on June 5, 2009. The terms "Refinancings" and "Additional Notes Issuance" have the meaning given to them in "Management's Discussion and Analysis of Financial Condition and Results of Operations—2009 Debt Transactions" and the term "Recapitalization" has the meaning given to it in "—The Offering." The Refinancings, the Additional Notes Issuance, the Dakota Acquisition, the S&K Acquisition, the AAC Acquisition, the Barnes Acquisition, the Recapitalization and the offering referred to in this prospectus are referred to collectively herein as the "Transactions." References to Adjusted EBITDA are to Adjusted EBITDA as defined in footnote 5 in "—Summary Historical and Pro Forma Consolidated Financial Data." References to "preferred stock" are to our Series A preferred stock.


Our Company

              We are one of the leading firearms, ammunition and related products companies in the world, with #1 commercial market positions across all of our major product categories in the United States, the largest firearms and ammunition market globally. We are an innovator, designer, manufacturer and marketer of an increasingly broad product line which services the hunting, shooting sports, law enforcement and military end-markets under some of the most globally recognized brands including Remington, Marlin, Bushmaster, and DPMS, among others. With our Remington brand dating back to 1816, we are America's oldest and largest manufacturer of firearms and ammunition. We believe that our long heritage and reputation for quality have resulted in strong brand recognition and customer loyalty. For example, our Remington brand, which we believe represents an enduring symbol of American values and is trusted and respected by generations of sportsmen, is ranked #2 in brand awareness, second only to Nike among sportsmen according to the SportsOneSource 2009 Brand Index. We believe our scale and product breadth are unmatched within the industry, with approximately 1.3 million long guns and 2.5 billion rounds of ammunition sold during the twelve months ended December 31, 2009. For the year ended December 31, 2009, we generated net sales, net income and Adjusted EBITDA of $848.7 million, $54.4 million and $178.1 million, respectively. As of December 31, 2009, we had $276.7 million of total indebtedness, representing a ratio of total debt to Adjusted EBITDA for the year ended December 31, 2009 of 1.6x.

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              We are the only major U.S. manufacturer of both firearms and ammunition, which we believe is a significant competitive advantage and supports our market leadership position. We believe this leadership position across all of our major product categories is evidenced by our #1 U.S. commercial market shares in shotguns, rifles, and ammunition. We estimate that in calendar year 2008 over 85% of our domestic sales came from product categories where we hold the #1 U.S. commercial market share position. We have a focus on innovation that we believe results in category-defining products, strong brand recognition and long-term customer loyalty.

              The following table details our U.S. commercial market leadership for the major product categories in which we participate.

Categories
  U.S.
Market
Position
  U.S.
Market
Share
  Selected Brands

Firearms

               
 

Shotguns

    #1     31 %

Remington, Marlin, Parker, H&R, L.C. Smith, Dakota Arms

 

Traditional Rifles

    #1     37 %

Remington, Marlin, H&R, Dakota Arms

 

Modern Sporting Rifles

    #1     48 %

Bushmaster, DPMS, Remington

Ammunition

    #1     33 %

Remington, UMC, Dakota, Barnes


Note:
Based on 2008 Firearms and Ammunition Market Data from SMRG and AFMER, and excludes law enforcement, international and military sales.

              In addition to our significant commercial business, we sell products to law enforcement, international, government and military end-markets where we already have a strong presence such as in the domestic law enforcement shotgun and military sniper rifle markets. We believe that our increasingly focused law enforcement and global military products divisions will increase our presence in the law enforcement and defense markets beyond our existing customers.

              Today the Freedom Group includes over 10 well-regarded brands, collaborating across all disciplines, from product development to distribution, delivering end-user driven products to the hunting, shooting sports, law enforcement and military end-markets. We have made significant progress in our transition to a customer-focused sales and marketing organization by shifting to a two-tiered sales structure whereby dedicated key account managers sell the full FGI product offering to our top retail accounts while our internal field sales force calls on our network of distributors and dealers. This has allowed us to create a unified customer facing platform capable of selling our entire suite of brands and products across multiple end-markets while providing the ability to leverage our flexible manufacturing capacity to quickly respond to changes in customer preferences and demands.

              Our 11 manufacturing facilities and approximately 2,800 employees represent the largest domestic manufacturing presence in our industry, enabling us to deliver our products throughout the U.S. and internationally to approximately 80 countries. In addition, our product leadership and innovation are supported by what we believe to be the industry's only domestic freestanding and dedicated research and development facility. Our customer focused sales force, together with our flexible manufacturing capability and research and development efforts, have resulted in 18 new product launches in 2009 and a robust future product pipeline.


Our History

              With the goal of creating the world's leading firearms, ammunition and related products company, we have built a family of brands and products through the successful integration of four primary acquisitions (Bushmaster, Remington, DPMS and Marlin). FGI is a holding company

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controlled by Cerberus, dating back to the first firearms acquisition of certain assets and liabilities of Bushmaster by Cerberus in April 2006.

              Cerberus created FGI on March 30, 2007 and FGI subsequently acquired Remington Arms Company, Inc. on May 31, 2007. On December 13, 2007, we acquired certain assets and assumed certain liabilities of Defense Procurement/Manufacturing Services, Inc. Subsequently, on January 28, 2008, we acquired 100% of the shares of the Marlin Firearms Company and its subsidiary H&R 1871, LLC through our Remington subsidiary. We currently conduct our business operations principally through our two main operating subsidiaries, Remington and Bushmaster.

              We also have made four additional strategic acquisitions to supplement and expand the current brand portfolio and have participated in other strategic joint-ventures through our non-wholly owned subsidiaries.


Our Products

Firearms

              We design, manufacture and market our firearms primarily under the Remington, Marlin, Bushmaster, DPMS, H&R, L.C. Smith, Parker, Dakota Arms, Miller Arms, and Nesika brand names. Through our diversified portfolio of leading brands, we offer a wide variety of long guns as well as components which enable gun enthusiasts to build and continually upgrade and customize their firearms. Our brand strategy allows us to address a variety of end-user preferences, ranging from hunting and shooting sports to government, military and law enforcement applications, from beginner to accomplished shooters, as well as to build strong brand awareness and generate attractive cross-selling opportunities. As the largest firearms manufacturer in the United States, we sold approximately 1.3 million long guns during the twelve months ended December 31, 2009.

              For the year ended December 31, 2009, firearms accounted for $508.1 million of net sales, or 59.9% of our total net sales. For the year ended December 31, 2009, on a pro forma basis, firearms accounted for $510.4 million in net sales, or 58.8% of our total net sales.

Ammunition

              We are the largest manufacturer of commercial ammunition in the United States, and sold approximately 2.5 billion rounds of ammunition during the twelve months ended December 31, 2009. As the only major supplier of both firearms and ammunition in the United States, we believe our ability to sell ammunition creates a unique competitive advantage within the industry and allows us to solidify and extend our existing long-term relationship with our loyal customer base. The NRA estimates 70 to 80 million people in the United States own approximately 300 million firearms, creating a large installed base for our ammunition products.

              Our ammunition offerings consist of a comprehensive line of sporting ammunition and ammunition reloading components, along with ammunition for the government, military, and law enforcement markets, marketed under the Remington, UMC, Dakota and Barnes brand names both domestically and internationally. Our ammunition products include in excess of 1,000 SKUs across 60 calibers, ranging from high volume, promotionally priced products to premium, high performance products that meet the needs of the most demanding users of firearms. We have developed and/or manufactured more types of cartridges than any other ammunition manufacturer, and we believe our ability to deliver a complete military solution of firearms and ammunition is distinctive.

              Product performance and innovation are core focuses for us and are important differentiators within the industry. We believe we are one of the world's largest producers of centerfire rifle hunting ammunition. Our Premier STS and Nitro 27 shotshell target loads have won more trophies at the Grand American Trap and World Skeet championship than any other brand.

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              For the year ended December 31, 2009, ammunition accounted for $321.6 million of net sales, or 37.9% of our total net sales. For the year ended December 31, 2009, on a pro forma basis, ammunition accounted for $335.1 million in net sales, or 38.6% of our total net sales.

Accessories, Licensing and Other

              We sell a wide variety of branded accessories, including gun care and cleaning products and folding and collectible knives. We believe we are one of the top brands in complete firearm care, including cleaning chemicals, tools, and kits. In addition to offering a wide range of Remington branded accessories, we also sell a full line of accessory products to military, law enforcement and commercial markets through our recently acquired Advanced Armament brand. Through our majority owned joint venture, EOTAC, we market high quality tactical and discreet garments for military, law enforcement and the private sector. In addition, we hold a minority ownership stake in INTC, a leading producer of non-toxic premium based centerfire and shotshell projectiles and a leading manufacturer of frangible bullets.

              We also license our trademarks to a discrete number of third parties that manufacture and market sporting and outdoor products that complement our product lines. We offer approximately 3,500 SKUs of licensed product and generate over $110 million in sales for our retail partners. Currently, our trademarks are licensed for use on, among other things, apparel, caps, gun cases, tree stands, wildlife feeders, sporting dog equipment, air guns, safety and security products, gun safes, and various other novelty goods. We strive to ensure that the quality, image and appeal of these licensed products are consistent with the high-quality nature of our products and brand strength. We believe that these licenses increase the market recognition of our brands, enhance our ability to market our core products, and generate attractive, high margin income. Additionally, we believe there are significant opportunities for our licensed products as we believe consumer preference is continuing to move toward an outdoor lifestyle.

              For the year ended December 31, 2009, all other businesses accounted for $19.0 million of net sales, or 2.2% of our total net sales. For the year ended December 31, 2009, on a pro forma basis, all other businesses accounted for $22.8 million in net sales, or 2.6% of our total net sales. Licensing represented $3.9 million in other income during the same period.


Our Industry

              We compete in the global marketplace for firearms, ammunition, accessories and licensed products in approximately 80 countries. End customers include police departments, domestic and foreign government organizations, including the U.S. military, and consumers, such as sportsmen, hunters, and recreational shooters. Consumer distribution channels are diverse, and include major chain retail stores, major distributors, smaller dealers, gun clubs and ranges.

              Based on data from the NSSF, we estimate that the annual domestic commercial long gun market is approximately $1.2 billion and the commercial ammunition market is approximately $1.2 billion. We estimate total annual purchases of firearms and ammunition by U.S. military and law enforcement are $1.7 billion and $475 million, respectively. Additionally, we believe there are significant opportunities in the international market for our products.

              The long gun market represents a significant variety of firearms, including both shotguns and rifles. The use of these firearms ranges from hunting, to law enforcement and defense, to other shooting sports, such as skeet, trap, sporting clays and target shooting. According to the NSSF, domestic consumer long gun sales (based on excise tax data) have grown at a 4% compounded annual growth rate, or the CAGR, from 2004 to 2008. We believe the commercial modern sporting rifle market, in which we believe we are the largest producer, has grown at a 31% CAGR from 2004 to 2008. Further,

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the NSSF estimates that consumer ammunition sales grew at a 13% CAGR during the 2004-2008 period.

              Our consumers include people of all ages, gender, educational backgrounds and income levels. The NRA estimates 70 to 80 million people in the U.S. own firearms, with privately held ownership approaching 300 million. This represents a significant installed base that generates a recurring revenue stream for ammunition, parts and accessory sales. In addition, we believe that a number of other developments in the industry are broadening and renewing consumer interest in hunting and shooting sports, including a renewed interest in the outdoors and product offerings designed to introduce new shooters to hunting and shooting.

              We believe that a meaningful percentage of current firearm sales are being made to first time gun purchasers, particularly women. We further believe that the introduction of first time shooters, as well as the renewed interest of many existing shooters, will translate to increased participation across the ever-widening array of shooting sports. In addition, the continued adoption of the modern sporting rifle has led to increased growth in the long gun market, especially with a younger demographic of users and those who like to customize or upgrade their firearms. We view this current increase in demand as having significant long-term benefits, including expanding the popularity of shooting sport categories, as well as providing an opportunity to cultivate new, and renew existing, long-term customer relationships across our portfolio of products and brands.


Our Competitive Strengths

              We believe our business model provides a broad and attractive value proposition to our customers and we believe that we are distinguished by the following competitive strengths:

Category-Defining Brands

              We believe our brand names are some of the most globally recognized in the hunting, shooting sports, law enforcement, and military firearm and ammunition end-markets.

              Built on a legacy of quality and innovation, we believe that the Remington brand represents an enduring symbol of American values and is trusted and respected by generations of sportsmen, lawmen and soldiers. Established in 1816, the Remington brand is ranked #2 in brand awareness, second only to Nike among sportsmen and 8th overall among all sports brands in the SportsOneSource 2009 Brand Index. The brand has been judiciously deployed across virtually every category of our firearms and ammunition. Remington has some of the best-known and longest-selling products in the hunting and shooting sports market, which we believe define their respective categories. For example, the 10 millionth Model 870 pump-action shotgun was produced in April 2009 and we have produced more than 5 million Model 700 bolt-action rifles, which we believe is currently the most widely-distributed rifle in its class.

              The Bushmaster and DPMS brands, established in 1973 and 1986, respectively, represent the largest and second largest designers and suppliers of modern sporting rifles, components and parts for the commercial market, in addition to sales to the law enforcement, military and international markets. Bushmaster was one of the first to introduce modern sporting rifles to the consumer market, which is growing faster than the general firearms industry. Our other niche firearms brands include Marlin (lever-action and bolt-action rifles), Harrington & Richardson (break-action single-shot rifles and shotguns), L.C. Smith (aspirational side-by-side and over-under shotguns), Parker (high-end brand of artisanal shotguns), Dakota Arms (aspirational rifles and shotguns chambered in large calibers), Miller Arms (customized precision single-shot rifles), and Nesika (precision bolt-action rifles and actions).

              Our ammunition brands, including Remington, UMC, Dakota and Barnes, also enjoy leading market positions, strong brand recognition and generations of customer loyalty. We believe that

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Remington Core-Lokt centerfire ammunition is the most widely used, and the Premier STS and Nitro 27 target loads have won more trophies at the Grand American Trap and World Skeet championship than any other brand. The Grand American is believed to be the largest shooting tournament in the world and offers competitors the opportunity to explore the most advanced products and services in the shooting industry. Additionally, we believe trophies at this event are recognized throughout the industry as "best in class".

Leading Market Share Positions

              Our core products are ranked #1 across their respective U.S. commercial product categories.

Categories
  U.S. Market Position   U.S. Market Share  

Firearms

             
 

Shotguns

    #1     31 %
 

Traditional Rifles

    #1     37 %
 

Modern Sporting Rifles

    #1     48 %

Ammunition

    #1     33 %

Note:
Based on SMRG and AFMER data and excludes law enforcement, international and military sales.

Broad Product Portfolio

              We have the broadest firearms, ammunition, components, parts and accessory portfolio in our industry. Our products range in price from entry level firearms under the Harrington & Richardson brand to the aspirational hand-crafted Parker Gun and Dakota brands in addition to our core brands of Remington, Bushmaster, DPMS and Marlin. We are the only company in the United States that is a major supplier of both firearms and ammunition. We further leverage consumer loyalty to our brands by offering components and parts for firearms as well as accessories. We also license our trademarks to a discrete number of third parties that manufacture and market sporting and outdoor products that complement our product lines.

Expertise in Designing Innovative, High-Quality Products

              We focus on providing generations of consumers with the combined advantage of safety and high-performance products through our superior design and construction, proprietary technology and advanced materials. We are an innovation leader in our industry, supported by more than 45 engineers and technicians and what we believe to be the industry's only domestic freestanding and dedicated firearms research and development facility. Our technicians are keenly focused on aligning our products with the growth trend among consumers for increasingly sophisticated products.

              This strategy results in a robust new product pipeline, including our M887 Nitro Mag shotgun, an innovative new pump-action shotgun that features ARMORLOKT, our proprietary protective coating designed for the harshest environments. In addition, we have developed various innovative products for the international, law enforcement and government end-markets under the Remington, Bushmaster and DPMS brands. For example, Remington supplies the M24 Sniper Weapon System to the U.S. Army. Finally, Bushmaster and DPMS, which supplied over 29,000 firearms to law enforcement and international customers in 2009, provide firearms to various federal agencies including the U.S. Department of Defense ("DOD").

              Recent ammunition product introductions have focused on developing exclusive or proprietary technology with application to performance oriented hunting and shooting sports users and special application law enforcement and military needs.

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Multiple Distribution Channels Reaching Diverse End-Markets

      Commercial

              The combination of our strong brands, wide product breadth, leading market shares and the ability to offer both firearms and ammunition has made us a key partner with our commercial retailers and distributors. We have strong relationships with all of the major chain retail stores that sell firearms and ammunition, including Bass Pro Shops, Cabela's, Dick's Sporting Goods, Gander Mountain, Academy, Big Five and Wal-Mart, as well as with major sporting goods distributors such as Sport South and Accusport. In addition, we have strong relationships with dealers and shooting ranges, and are actively working with them to grow sales within this channel. Within the commercial business, our products are used across a wide variety of shooting activities, resulting in numerous diverse customer end-markets serving hunters as well as skeet, trap and target shooters, competitive target shooters and a broad variety of recreational shooters.

      Military/Law Enforcement/International

              In addition to our significant commercial business, we sell products to law enforcement, international, government and military end-markets. These markets represented approximately 16% of our 2009 net sales. We believe that our increasingly focused law enforcement and global military products divisions will increase our presence in the law enforcement and defense markets beyond our existing customers, which include the Texas Department of Public Safety, Los Angeles County Sheriff's Department, Los Angeles Police Department, the California Highway Patrol, the Federal Law Enforcement Training Center ("FLETC"), DOD, the United States Special Operations Command ("SOCOM"), and the United States Secret Service, as well as international governments including Colombia, the Republic of Georgia, Italy, Poland, Malaysia, Mexico and Oman. All firearms and ammunition that we sell and export to foreign countries, whether sold commercially or to international governments and militaries, must be licensed and approved by the U.S. Department of State or the U.S. Department of Commerce.

Differentiated, Customer-Focused Sales and Marketing Approach

              We have significantly grown and transitioned our dedicated sales force to a two-tiered structure whereby dedicated key account managers sell the full FGI product offering to our top eight retail accounts while our internal field sales force calls on our network of approximately 800 distributors and dealers. This investment and effort has significantly reduced our use of third-party, non-exclusive sales representatives. This sales structure is similar to those utilized by many leading consumer products companies and allows for us to sell our entire suite of brands and products more effectively to our key customers and distributors. We believe this sales structure will lead both to increased market share with our key customers as well as to provide the ability to leverage our flexible manufacturing capacity to quickly respond to changes in customer preferences and demands.

              We have also shifted our business from a manufacturing-based "push system," in which product volumes and mix are determined based on available capacity, to a customer-focused "pull system," in which customer and consumer demand determine manufacturing decisions. We mine our extensive and proprietary database of consumer contacts and are an industry leader in our ability to capture and analyze point-of-sale and sell-through data from our key customers and distributors to determine what products our customers demand. Additionally our key account managers have access to the full suite of FGI products and we believe are leveraged by our retail partners to assist in long range sales planning.

              Our law enforcement and global military products divisions capitalize on key relationships to identify customer needs, so that research and development investments are focused and timely in providing products that meet these needs. We supplement our law enforcement and military efforts through the consultation with our board members who have extensive knowledge and experience.

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Attractive Cash Flow Generation

              We believe our balanced business model built upon sales, marketing and distribution of both firearms and ammunition to long standing customers further supports our ability to generate strong future cash flows that can be re-invested in research and development, the growth of sales within our distribution channels and in the acquisition of select complementary businesses. We have achieved substantial working capital improvements since 2007 by decreasing average days sales outstanding by 28 days and inventory days by 57 days from January 2007 through December 2009. Our attractive operating margins, variable cost structure, relatively low maintenance capital expenditures and low working capital needs all result in strong cash flow generation.

Proven and Experienced Management Team

              Our senior management team has substantial industry and related operational, sales and marketing and financial experience. For example, our Chief Executive Officer, Ted Torbeck, joined us after a 28 year career with General Electric, our Chief Sales Officer, Scott Blackwell, has over 20 years experience in the firearm and law enforcement industry and our Chief Financial Officer, Stephen Jackson, has been with the Company for six years and has over 19 years of financial and accounting experience. In addition to key managers that have been in place at our companies, we have added numerous experienced external professionals to execute our business strategy. Our management team is also supported by a dedicated group of employees who embody an innovation driven culture.


Our Growth Strategy

              Our fundamental strategy is to continue to strengthen and broaden our leading market positions across the firearms, ammunition and related product markets. We do so by actively and collectively managing our broad portfolio of powerful brands and products across a diverse set of end-markets. Our core strengths described above are augmented by a constant focus on operational improvements designed to increase manufacturing efficiency, quality and profitability. Specific additional strategic initiatives include:

Increase Commercial Market Share through Marketing-Focused Organization

              The combination of our strong brands, wide product breadth, leading market shares and the ability to offer both firearms and ammunition has cultivated a broad and loyal customer base across a wide range of commercial retailers and distributors. We have invested in our commercial sales organization, growing our headcount by 44% over the past two years, to increase the experience, reach and impact of our team. This investment and effort has significantly reduced our use of third-party, non-exclusive sales representatives. We expect to continue to grow our commercial market share by leveraging our strong brand and product portfolio with our dedicated sales force to increase shelf space. By increasing our consumer points-of-contact and continued focus on a customer driven platform supported by our sales and marketing optimization efforts, we believe we will continue to expand our leading market position.

Further Penetrate the Domestic and International Defense and Law Enforcement Channels

              Our global military products division, operating under a unified leadership across all of our brands, has focused research efforts on developing products in advance of key emerging imminent firearms solicitation windows for the DOD over the next several years. We continue to significantly ramp up and augment our business to take advantage of these opportunities. While we have supplied products to the military and law enforcement channels for many years, we view this area as having high potential for further penetration and growth both for new and existing products. We use key relationships to identify customer needs in anticipation of formal bids, so that research and

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development investments are focused and timely in providing products that meet those needs. Specific opportunities include the development of the next generation tactical sniper system, the next generation service rifle for the U.S. Army, an upgrade option to our current M24 Sniper Weapon System for the U.S. Army, and a materials and coatings sniper rifle study for the Defense Advanced Research Projects Agency (DARPA). In addition, we are aligning ourselves with certain suppliers to exploit our competitive advantages and secure future government-funded research and development opportunities.

              Our international business has increased significantly in net sales over the last two years with firearm and ammunition sales to governmental customers in Mexico, Thailand, Malaysia and Afghanistan, among other countries. In addition to the new products mentioned above, we are developing several products specific to the foreign markets, including a 7.62mm semi-auto sniper system and several personal defense weapons. We believe we are well-positioned as an important player in this growing global market and can offer full firearms and ammunition solutions to existing and new foreign military customers. We believe leveraging current and future DOD contracts will further enhance our ability to win international business. All firearm export sales need to be licensed and approved by the United States Department of State or the United States Department of Commerce, and we have a successful track record of obtaining such approvals.

Continued Focus on Innovation and New Product Development

              Our team develops new products, such as the weather-resistant M887 Nitro Mag shotgun which was launched in May 2009, as well as processes to bring new products such as the XL7 series of rifles to market more quickly and cost effectively. Our focus on innovation has resulted in diverse new products such as the Remington R-15 modern sporting rifle, the R-25 modern sporting rifle, the Bushmaster .50 BMG bolt action rifle, and the .308 DPMS modern sporting rifle. In 2009, we also launched the Remington M597 VTR rimfire rifle, the Marlin .338 MXLR/MX lever action line of rifles and the Remington R-15 styled rifle for the new Remington 30AR cartridge, along with a variety of other new ammunition products. We are driving product development for our law enforcement, international and military efforts, as well as additional sales to existing commercial customers with additional part configurations and calibers for the modern sporting rifle. Specific examples include the Adaptive Combat Rifle and 7.62mm semi-auto sniper system. We have numerous new products in development with multiple new firearms product platforms and extensions to existing product lines scheduled for introduction in 2010 and beyond.

Continue to Optimize Manufacturing Operations

              We have continued to augment and integrate our facilities over the last 24 months and have focused on improving our operating efficiency. To this end, we have completed a number of lean manufacturing projects, including a factory consolidation and six sigma efforts led by the introduction of more than 50 black belt process experts since implementation of the program. Such projects have increased throughput and reduced direct labor, square footage and equipment downtime along with improved cash flow from lower inventory levels. These activities, which we call "continuous cost improvements," will continue to be a cornerstone of our organization as we build and optimize our world class manufacturing platform.

              Our manufacturing optimization efforts have also included the shift of some modern sporting rifle components and parts production into our plants and away from third-party vendors. These efforts have made the combined organization considerably more flexible, improved our quality and margins and enabled us to more quickly and efficiently address future changes in demand. The benefits of our past work are starting to appear in our ability to leverage our existing manufacturing footprint during periods of high demand while maintaining variability in our cost structure. We enhance this variability through our use of third parties for many modern sporting rifle components with no long-term contracts, so that we can adjust our inventory quickly and at a low cost.

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Pursue Complementary Acquisitions and Strategic Investments

              We have built and strengthened our family of brands and products over the past three years, primarily through the successful integration of four primary acquisitions (Bushmaster, Remington, DPMS and Marlin) made between April 2006 and January 2008. We did so with the goal of creating the world's leading firearms and ammunition company. We have a proven track record of successfully identifying and integrating acquisitions, as demonstrated by the integration of our brands, and have achieved significant operational improvements as a result. We intend to continue to identify and pursue add-on strategic acquisitions or investments that expand and enhance our brand, product and intellectual property portfolio. We seek to acquire highly complementary products, intellectual property or external capabilities to expand our portfolio or extend our brands and channel relationships.

              We completed four strategic acquisitions in 2009 financed by cash from operations, which we believe will enhance our business performance in 2010. On June 5, 2009, we acquired certain assets of Dakota Arms, LLC, a producer of high-end rifles, shotguns and ammunition for approximately $1.8 million. This acquisition positions us in the largely customized, high precision, large caliber and safari segments of the market. In addition, on September 22, 2009, we acquired certain assets from S&K Industries, Inc., a supplier of high quality walnut and laminate wood stocks for our firearms operations for approximately $3.8 million ("S&K Acquisition"). We believe this acquisition will reduce certain costs of acquiring the wood stocks and improve efficiencies in our firearms manufacturing processes. On October 2, 2009, we completed the acquisition of certain assets of Advanced Armament Corp. for approximately $11.1 million, with an additional amount of approximately $8.0 million due in 2015 upon achievement of certain conditions ("AAC Acquisition"). AAC manufactures and markets a full line of firearm accessory products used in certain military (including current use by the DOD), law enforcement and commercial markets. Finally, on December 31, 2009, we completed the acquisition of certain assets and liabilities of Barnes Bullets, Inc., a supplier of copper bullets, including copper-tin composite core bullets, for approximately $25.6 million ("Barnes Acquisition"). We believe this acquisition allows us to offer a premium product offering to complement our existing products and to provide shooters and hunters with a premium line of high performance bullets.


Ownership

              Immediately after the offering, funds and accounts managed by Cerberus or its affiliated management companies, which we refer to collectively as our controlling stockholder, will control approximately            % (approximately            % if the underwriters' option to purchase additional shares to cover over-allotments is exercised in full) of our common stock. Established in 1992, Cerberus, along with its affiliates, is one of the world's leading private investment firms. Cerberus currently holds controlling or significant minority investments in companies around the world. Cerberus invests in divestitures, turnarounds, recapitalizations, financial restructurings, public-to-privates and management buyouts in a variety of sectors.


Corporate Information

              Our principal executive offices are located at 870 Remington Drive, P.O. Box 1776, Madison, North Carolina 27025-1776, and our telephone number is (336) 548-8700. For information on our corporate history, see "Business—Company Overview—Our History and Corporate Structure."

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THE OFFERING

Common stock offered:

   
 

By Freedom Group, Inc. 

 

            shares (or            shares if the underwriters exercise their over-allotment option in full).

 

By the selling stockholders

 

            shares (or            shares if the underwriters exercise their over-allotment option in full).

Shares outstanding after the offering

 

            shares (or            shares if the underwriters exercise their over-allotment option in full).

Shares outstanding or issuable after the offering

 

            shares (or            shares if the underwriters exercise their over-allotment option in full).

Use of proceeds

 

The net proceeds to us from this offering will be approximately $             million after deducting underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for working capital and other general corporate purposes. See "Use of Proceeds." We will not receive any proceeds from the sale of shares by the selling stockholders.

Dividend Policy

 

The declaration and payment of any dividends will be at the sole discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends, and other considerations that our board of directors deems relevant. See "Dividend Policy."

Risk factors

 

See "Risk Factors" and other information included in this prospectus for a discussion of factors you should carefully consider before deciding to invest in our common stock.

Proposed ticker symbol

 

"            "

              The number of shares of common stock outstanding after the offering is based on            shares of common stock outstanding as of            , 2010 (assuming that the Recapitalization had taken place) and includes common stock underlying options that are exercisable within 60 days of            , 2010, but excludes common stock underlying all other options. The number of shares excluded in the previous sentence are included in the number of shares of common stock outstanding or issuable after this offering (which includes the shares issuable upon the exercise of all outstanding options).

              Unless otherwise indicated, all information contained in this prospectus assumes:

    that the underwriters do not exercise their option to purchase up to            additional shares of our common stock from us and the selling stockholders to cover over-allotments, if any;

    the        -for-1 reverse stock split of all our outstanding common stock and the reclassification of all our outstanding preferred stock into a calculated amount of shares of our common stock, which will occur immediately prior to the closing of this offering (the foregoing, collectively, the "Recapitalization"); the amount of shares of common stock to be issued upon the reclassification of such preferred stock will be determined by                  ; and

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    the filing of our amended and restated certificate of incorporation and the adoption of our amended and restated bylaws, which will occur immediately prior to the closing of this offering.

              For more detailed information regarding our common stock and options, see "Description of Capital Stock."

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SUMMARY HISTORICAL AND PRO FORMA CONSOLIDATED FINANCIAL DATA

              The summary historical financial data below for each of the years ended December 31, 2009, 2008 and 2007 are derived from the consolidated financial statements of Freedom Group. All financial statements described above have been audited by Grant Thornton LLP, independent registered public accounting firm, and are included elsewhere in this prospectus.

              The summary unaudited condensed consolidated pro forma financial information for the year ended December 31, 2009 has been derived from the unaudited pro forma consolidated financial information for the year ended December 31, 2009 included in "Unaudited Pro Forma Condensed Consolidated Financial Information." The unaudited pro forma consolidated statement of operations data has been adjusted to give effect to the Refinancings, the Additional Notes Issuance, the Dakota Acquisition, the S&K Acquisition, the AAC Acquisition, the Barnes Acquisition and the Recapitalization as if they had occurred on January 1, 2009, and the unaudited pro forma, as adjusted consolidated statement of operations data has been adjusted to give effect to the Transactions as if they had occurred on January 1, 2009. The unaudited pro forma consolidated balance sheet data reflects our financial position as if the Recapitalization had occured as of December 31, 2009, and the unaudited pro forma, as adjusted consolidated balance sheet data reflects our financial position as if the offering of our common stock and the use of proceeds thereof had occurred as of December 31, 2009.

              The summary unaudited pro forma consolidated financial data is for informational purposes only and does not purport to present what our results of operations and financial condition would have been had these transactions actually occurred as of the dates indicated, nor does it project our results of operations for any future period or our financial condition at any future date.

              You should read the following audited and unaudited summary historical and pro forma consolidated financial data of Freedom Group in conjunction with "Selected Historical Consolidated Financial Data," "Capitalization," "Unaudited Pro Forma Condensed Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and their notes and other financial information appearing elsewhere in this prospectus.

              Our results of operations for the year ended December 31, 2007 also include the results of operations of Remington, which we acquired on May 31, 2007. Due to the significant impact of the acquired Remington operations, our financial results for periods subsequent to May 31, 2007 may not be comparable to our results from prior-year periods. In addition, on December 13, 2007 we consummated the acquisition of certain assets of DPMS and on January 28, 2008, we consummated the Marlin Acquisition. Due to the impact of the acquired Marlin and DPMS operations, our results of operations for 2008 may not be comparable to our results from prior-year periods. We consummated the acquisitions of certain assets and liabilities of Dakota Arms on June 5, 2009, S&K on September 22, 2009, AAC on October 2, 2009, and Barnes on December 31, 2009. Due to the impact of the acquisitions in 2009, our results of operations for 2009 may not be comparable to our results from prior-year periods. For additional information regarding our acquisitions, see "Business—Company Overview—Our History and Corporate Structure."

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Historical Consolidated Financial Data

 
  Year Ended December 31,  
 
  2007(3)   2008(3)   2009  
 
  (in millions, except share and per share data)
 

Income Statement and Other Data

                   

Net Sales(1)

  $ 384.9   $ 722.5   $ 848.7  

Cost of Goods Sold

    306.0     524.4     566.7  

Gross Profit

    78.9     198.1     282.0  

Operating Expenses

    70.1     186.9     169.7  

Operating Income

    8.8     11.2     112.3  

Interest Expense

    21.2     30.8     29.8  

Income (Loss) before Taxes

    (12.4 )   (19.6 )   82.5  

Net Income (Loss)

    (9.0 )   (28.6 )   54.4  

Net Income (Loss) Applicable to Common Stock

    (9.9 )   (48.2 )   33.6  

Net Income (Loss) Per Share(2)

                   

Basic

  $ (0.62 ) $ (2.97 ) $ 2.05  

Diluted

  $ (0.62 ) $ (2.97 ) $ 2.00  

Weighted Average Number of Shares Outstanding(2)

                   

Basic

    16,084,174     16,236,305     16,332,045  

Diluted

    16,084,174     16,236,305     16,806,876  

Operating and Other Financial Data

                   

Net Cash provided by (used in):

                   

Operating Activities

  $ 70.8   $ 52.9   $ 122.3  

Investing Activities

    (90.7 )   (57.1 )   (58.8 )

Financing Activities

    43.9     57.3     (81.1 )

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Pro Forma Consolidated Financial Data

 
  Year
Ended
December 31,
(Pro Forma)
(Unaudited)
  Year
Ended
December 31,
(Pro Forma,
as Adjusted)
(Unaudited)
 
 
  2009   2009  
 
  (in millions, except share and per share data)
 

Income Statement and Other Data

             

Net Sales(1)

  $ 868.3   $    

Cost of Goods Sold

    569.2        

Gross Profit

    299.1        

Operating Expenses

    179.7        

Operating Income

    119.4        

Interest Expense

    32.1        

Income (Loss) before Taxes

    87.3        

Net Income (Loss)

    57.2        

Net Income (Loss) Applicable to Common Stock

             

Net Income (Loss) Per Share

             

Basic

  $ 2.23   $    

Diluted

  $ 2.17   $    

Weighted Average Number of Shares Outstanding

             

Basic

    16,332,045        

Diluted

    16,723,673        
 
  As of December 31, 2009
(Unaudited)
 
 
  Actual   Pro Forma,
as Adjusted
 
 
  (in millions)
 

Balance Sheet Data

             

Cash and Cash Equivalents

  $ 60.2   $    

Working Capital

    174.8        

Total Assets

    686.9        

Total Debt(4)

    276.7        

Net Debt(4)

    216.5        

Stockholders' Equity (Deficit)

    (71.3 )      

 

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  Year Ended December 31,   Year Ended
December 31,
(Pro Forma)
(Unaudited)
  Year Ended
December 31,
(Pro Forma,
as Adjusted)
(Unaudited)
 
 
  2007(3)   2008(3)   2009   2009   2009  
 
  (in millions)
 

Other Financial Data

                               

Net Income (Loss)

  $ (9.0 ) $ (28.6 ) $ 54.4   $ 57.2   $    

Net Income (Loss) Margin(5)

    (2.3 )%   (4.0 )%   6.4 %   6.6 %     %

Adjusted EBITDA(6)

  $ 54.6   $ 104.7   $ 178.1   $ 181.1   $    

Adjusted EBITDA Margin(7)

    14.2 %   14.5 %   21.0 %   20.9 %     %

Capital Expenditures

  $ 8.4   $ 18.4   $ 14.1   $ 14.1   $    

 

 
  Year Ended
December 31, 2009
(Pro Forma)
(Unaudited)
 
 
  (in millions,
except ratios)

 

Pro Forma Data

       

Ratio of Total Debt to Adjusted EBITDA(4)(6)

    1.5 x

Ratio of Adjusted EBITDA to Interest Expense(6)

    5.6 x

Interest Expense

  $ 32.1  

(1)
Presented net of federal excise taxes. Federal excise taxes were $70.2 million, $54.5 million, $31.0 million and $3.8 million for the years ended 2009, 2008, 2007 and 2006, respectively.

(2)
Net income (loss) per share and weighted average number of shares outstanding give effect to our proposed Recapitalization.

(3)
Results for the year ended December 31, 2007 reflect the impact of the acquired Remington and DPMS operations, which were acquired in May 2007 and December 2007, respectively. Results for the year ended December 31, 2008 reflect the impact of the acquired Marlin operations, which was effective January 28, 2008, and the acquired DPMS operations, which was effective December 13, 2007. Results for the year ended December 31, 2009, reflect the impact of the acquired Dakota operations, which was effective June 5, 2009, the acquired S&K operations, which was effective September 22, 2009, and the acquired AAC operations, which was effective October 2, 2009.

(4)
Total Debt consists of short-term and long-term debt, current portion of long-term debt and capital lease obligations. Net Debt consists of Total Debt less cash on hand.

(5)
Defined as net income divided by net sales.

(6)
"Adjusted EBITDA" is defined in the indenture governing the Notes (referred to as EBITDA in the indenture governing 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 as set forth below. Adjusted EBITDA is a primary component of the fixed charge coverage ratio used in covenants under the indenture governing the Notes.

      Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, management believes that Adjusted EBITDA is useful to investors in evaluating our performance because it is a commonly used financial analysis tool for measuring and comparing companies in our industry in areas of operating performance. Management believes that the disclosure of Adjusted EBITDA offers an additional financial metric that, when

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      coupled with the GAAP results and the reconciliation to GAAP results, provides a more complete understanding of our results of operations and the factors and trends affecting our business.

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

      Adjusted EBITDA is calculated as follows:

 
  Year Ended
December 31,
  Year Ended
December 31,
(Pro Forma)
(Unaudited)
 
 
  2007   2008   2009   2009  
 
  (in millions)
 

Net Income (Loss)

  $ (9.0 ) $ (28.6 ) $ 54.4   $ 57.2  

Adjustments:

                         
 

Equity in Losses of Unconsolidated JV

            0.2     0.2  
 

Depreciation

    8.7     16.4     16.9     16.9  
 

Interest

    21.2     30.8     29.8     32.1  
 

Income Tax Expense (Benefit)

    (4.0 )   9.1     28.2     30.1  
 

Amortization of Intangibles

    3.0     6.7     6.2     6.2  
 

Impairment Charges

        47.4          
 

Product Safety Warning(A)

            6.6     6.6  
 

Other Non-cash Charges(B)

    (2.6 )   4.9     15.8     11.8  
 

Non-recurring Charges(C)

    37.3     18.0     20.0     20.0  
                   
 

Total Adjustments

    63.6     133.3     123.7     123.9  
                   
 

Adjusted EBITDA

  $ 54.6   $ 104.7   $ 178.1   $ 181.1  
                   

(A)
Consists of an accrual to reflect the estimated costs related to a product safety warning related to 17 HMR ammunition and Remington Model 597 17 HMR semi-automatic rifles.

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(B)
Other non-cash charges include the following:
 
  Year Ended
December 31,
  Year Ended
December 31,
(Pro Forma)
(Unaudited)
 
 
  2007   2008   2009   2009  
 
  (in millions)
 

Retiree Benefits and Pension Expenses

  $ 3.5   $ 0.9   $ 6.5   $ 2.5  

Plan Amendments/Curtailment(i)

    (6.4 )            

Stock Option Expense

    0.1     1.4     0.6     0.6  

Loss on Disposal of Assets

        0.7     1.1     1.1  

Inventory Write-off

    0.3     2.0     5.4     5.4  

Loss on Extinguishment of Debt

            2.1     2.1  

Miscellaneous and Non-cash Rent

    (0.1 )   (0.1 )   0.1     0.1  
                   
 

Total Other Non-cash Charges

  $ (2.6 ) $ 4.9   $ 15.8   $ 11.8  
                   

(i)
Consists of non-cash gain related to the amendment of our defined benefit plan.

(C)
Non-recurring charges include the following:
 
  Year Ended
December 31,
  Year Ended
December 31,
(Pro Forma)
(Unaudited)
 
 
  2007   2008   2009   2009  
 
  (in millions)
 

Restructuring and Integration Expenses(i)

  $ 4.0   $ 4.9   $ 0.1   $ 0.1  

Purchase Accounting(ii)

    31.8     6.1          

Write off of Surveillance Products Inventory(iii)

        3.1     3.4     3.4  

Gain on Sale of Investment(iv)

        (1.4 )        

Employee Related Costs(v)

    0.3     3.3     4.7     4.7  

Other Fees and Transaction Costs(vi)

    1.2     2.0     11.8     11.8  
                   
 

Total Non-recurring Charges

  $ 37.3   $ 18.0   $ 20.0   $ 20.0  

(i)
Consists of factory integration costs associated with lean six sigma implementation and Marlin back-office integration including external consulting, consulting services by Cerberus Operations and Advisory Company, LLC, an affiliate of Cerberus, travel and equipment transportation expenses.

(ii)
Consists of purchase accounting adjustments related to the write-up of inventory and recording of hedging agreements at estimated fair value in accordance with FASB ASC 805 "Business Combinations" that were rolled out over the subsequent period for which inventory was sold and period for which hedging contracts were expected to mature.

(iii)
Consists of cost of write-downs on inventory incurred upon exit of technology business.

(iv)
Consists of gain associated with sale of investment.

(v)
Consists of employee separation benefits, relocation and employment search fees.

(vi)
Consists of costs incurred for the development of DOD organization and fees and expenses associated with due diligence for potential acquisitions and the current refinancing, offset by a gain associated with a federal excise tax audit.

(7)
Defined as Adjusted EBITDA divided by net sales.

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RISK FACTORS

              An investment in our common stock is subject to a number of risks. You should carefully consider the risks described below together with all the other information contained in this prospectus before deciding whether to purchase our common stock. If any of the following risks occurs, our business, financial condition, prospects or results of operations could be harmed. In such an event, the trading price of our common stock could decline and you may lose part or all of your investment.

Risks Relating to Our Business

Unfavorable market trends and regulatory concerns could adversely affect demand for our products and our business.

              We believe that a number of trends that currently exist may affect the hunting and shooting sports market:

    the development of rural property in many locations has curtailed or eliminated access to private and public lands previously available for hunting;

    environmental issues, such as concern about lead in the environment; and

    decreases in consumer confidence and levels of consumer discretionary spending.

              These trends may have a material adverse effect on our business by impairing industry sales of firearms, ammunition and other shooting-related products.

Our business could be materially adversely affected as a result of general economic and market conditions. Continued volatility and disruption of the credit and capital markets may negatively impact our revenues and our, or our suppliers' or customers', ability to access financing on favorable terms or at all.

              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.

              While we intend to finance expansion, renovation and other projects with existing cash, cash flow from operations and borrowings under the ABL Revolver, we may require additional financing to support our continued growth. As widely reported in recent months, the financial crisis in the banking sector and financial markets has resulted in a tightening in the credit markets, a low level of liquidity in many financial markets, and extreme volatility in fixed income, credit and equity markets. Possible consequences from the financial crisis to our business include decreased revenues from our operations attributable to decreases in consumer spending, limitations on our, or our suppliers' or customers', access to capital on terms acceptable to each party or at all, potential failure to satisfy the financial and other restrictive covenants to which we are subject under the ABL Revolver or the indenture governing the Notes, insolvency of key suppliers resulting in product delays, inability of customers to obtain credit to finance purchases of our products and/or customer insolvencies, increased risk that customers may delay payments, fail to pay or default on credit extended to them, and counterparty failures negatively impacting our treasury operations, each of which could have a material adverse effect on our results of operations or financial condition.

Our business is subject to economic and market factors beyond our control or ability to predict.

              The sale of our products 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

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discretionary items. Historically, the general level of economic activity has significantly affected the demand for sporting goods products in the hunting and shooting sports and related markets. As economic activity slows, consumer confidence and discretionary spending by consumers decline. Competitive pressures arising from any significant or prolonged economic downturn could have a material adverse impact on our financial condition and results of operations, and such impact could be intensified by our leveraged condition.

Significant increases in commodity and energy prices could have a material impact on our financial condition, results of operations or cash flows.

              The manufacturing of our products is dependent upon the availability of raw materials such as lead, copper, zinc, steel and brass. Increases in the prices of any of these raw materials as well as an increase in energy prices could have a material impact on our financial condition. We can provide no assurance as to the future trends of these conditions or to what extent future increases could be offset through customer price increases.

Our results of operations are affected by seasonal fluctuations in business, and our inventory management practices have had an effect on our business.

              Many of our firearms products are purchased in anticipation of use during the fall hunting season. As a result of the seasonal nature of our sales, our historical working capital financing needs generally have exceeded cash provided by operations during certain parts of the year. Our efforts to shorten terms and reduce dating plan billing practices, under which a distributor may purchase these products beginning in December (the start of our firearms dating plan year) and pay for them on extended terms, have moderated this seasonal aspect of working capital financing needs as compared to prior years. However, our working capital financing needs still tend to be higher during the spring and summer months, decreasing during the fall and reaching their lowest points during the winter.

              In addition, we believe that worsening economic conditions have caused other customers (dealers and chains) to defer purchases of our products until later in the core fall hunting seasons (September through December) and to utilize lower inventory levels than during prior periods. This overall trend in demand continues to date, and there can be no assurance that such trends will not continue.

              As a result of the seasonal nature of our sales and our customers' inventory management practices, our working capital financing needs may significantly exceed cash provided by operations during certain periods in a year.

A substantial amount of our business comes from one "national account" customer. A substantial portion of our accounts receivable is concentrated with two customers. Loss of business from either of these customers could adversely affect our financial condition, results of operations or cash flows.

              Our dedicated sales force and key account managers market our products directly to national accounts (consisting primarily of mass merchandisers) and to federal, state and local government agencies. Approximately 10%, 14% and 15% of our total sales for the years ended December 31, 2009, 2008 and 2007, respectively, and 12% of our accounts receivable balance as of each of December 31, 2009 and 2008, were attributable to one national account, Wal-Mart. Our sales to Wal-Mart are generally not governed by a written long-term agreement. In the event that Wal-Mart significantly reduces or terminates its purchases of firearms and/or ammunition from us, our financial condition, results of operations or cash flows, could be adversely affected.

              Wal-Mart, together with another customer, accounted for approximately 18% and 21% of our accounts receivable balance as of December 31, 2009 and 2008, respectively. This other customer, due to the timing of its purchasing, usually maintains significant amounts of accounts receivable at the end

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of our fiscal year. In the event that this customer incurs financial difficulty and is unable to pay its account in full, our financial condition, results of operations or cash flows could be adversely affected.

We have experienced a significant increase in demand for certain of our ammunition products since late 2008. There can be no assurance that this increased demand for this ammunition will continue.

              Demand for certain ammunition increased significantly in 2008, which we believe has been due in part to increased consumer uncertainty relating to new and potentially more restrictive legislation, the increase of home defense spending in light of the global economic downturn, and the increase in users. While we view this increase in demand as a significant long-term opportunity to expand our customer base and strengthen our customer relationships, there can be no assurance that this increased demand will continue or that demand will not decrease in the near or long-term. Any decrease in market demand for our products could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We are dependent on a number of key suppliers. Loss of or damage to our relationships with these suppliers could have a material adverse effect on our business, financial condition, results of operations or cash flows.

              To manufacture our various products, we use many raw materials, including steel, zinc, lead, brass, copper, plastics and wood, as well as manufactured parts purchased from independent manufacturers. An extended interruption in the supply of these or other raw materials or in the supply of suitable substitute materials would disrupt our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, we may incur additional costs in sourcing raw materials from alternative producers.

              For a number of our raw materials, we rely on one or a few suppliers. Alternative sources, many of which are foreign, exist for each of these materials. We do not, however, currently have significant supply relationships with any of these alternative sources. We cannot estimate with any certainty the length of time that would be required to establish alternative supply relationships, or whether the quantity or quality of materials that could be so obtained would be sufficient.

              In addition, we rely on a limited number of vendors to perform machining processes on key rifle components. Any disruption of the operations of one of our key vendors could materially impact our ability to obtain certain rifle components. In the event that we lose one of our principal vendors, we may not be able to find an alternative vendor in a timely fashion, and as a result, our ability to produce rifles could be materially and adversely affected.

We may not be able to compete successfully within our highly competitive markets, which could adversely affect our business, financial condition, results of operations or cash flows.

              The markets in which we operate are highly competitive. Product image, name, quality and innovation are the primary competitive factors in the firearms industry. Product differentiation exists to a much lesser extent in the ammunition industry, where price is the primary competitive factor. Reductions in price by our competitors in the ammunition industry could force us to reduce prices or otherwise alter terms of sale as a competitive measure, which could adversely affect our business, financial condition, results of operations or cash flows.

              Our competitors vary by product line. Some of our competitors are subsidiaries of large corporations with substantially greater financial resources than us. Although we believe that we compete effectively with all of our present competitors, we may not continue to do so, and our ability to compete could be adversely affected by our leveraged condition. See "Business—Competition."

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An increase in revenues to government, law enforcement and military sales channels could result in increased uncertainty to the timing of our sales revenues.

              Government, law enforcement and military sales channels are typically in the form of contract sales arrangements. We are exposed to these channels through our sale of certain firearms and ammunition products. An increasing percentage of our sales revenues could therefore be subject to contract negotiations. This trend could cause sales revenue amounts to be increasingly volatile and uncertain with respect to the timing of orders.

We intend to evaluate acquisitions, joint ventures and other strategic initiatives, any of which could distract our management or otherwise have a material adverse effect on our business, financial condition, results of operations or cash flows.

              Our future success may depend on opportunities to buy or obtain rights to other businesses or technologies that could complement, enhance or expand our current business or products or that might otherwise offer us growth opportunities. In particular, we intend to evaluate potential mergers, acquisitions, joint venture investments, strategic initiatives, alliances, vertical integration opportunities and divestitures. However, we may not experience the anticipated benefits of these transactions. In addition, we may be unable to effectively integrate any acquired businesses into our organization, and may not succeed in managing such acquired businesses or the larger company that results from such acquisitions. If we attempt to engage in these transactions, we expose ourselves to various inherent risks, including:

    accurately assessing the value, future growth potential, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates;

    unanticipated expenses and potential delays related to integration of the operations, technology, and other resources of the acquired companies;

    the potential loss of key personnel of an acquired or combined business;

    our ability to achieve projected economic and operating synergies;

    difficulties successfully integrating, operating, maintaining and managing newly-acquired operations or employees;

    difficulties maintaining uniform standards, controls, procedures and policies;

    unanticipated changes in business and economic conditions affecting an acquired business;

    the possibility we could incur impairment charges if an acquired business performs below expectations;

    the potential strain on our financial and managerial controls and reporting systems and procedures;

    exposure to legal claims for activities of the acquired business prior to acquisition; and

    the diversion of our management's attention from our existing business to integrate the operations and personnel of the acquired or combined business or implement the strategic initiative.

              If any of the foregoing risks materializes, our results of operations and the results of the proposed transactions would likely differ from our expectations and market expectations, and our stock price could, accordingly, decline. In addition, we may not be able to complete desirable transactions for reasons including a failure to secure financing or due to restrictions in agreements with third parties.

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Because of the nature of potential injuries relating to firearms and ammunition, certain public perceptions of our products, and recent efforts to expand liability of manufacturers of firearms and ammunition, product liability cases and claims, and insurance costs associated with such cases and claims, may cause us to incur significant costs.

              We are currently defending product liability litigation involving Remington brand firearms (including firearms manufactured under the Marlin, H&R and L.C. Smith names) and our ammunition products (including ammunition manufactured under the UMC and Peters names). As of December 31, 2009, approximately 17 individual bodily injury cases or 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. There were no pending product liability cases involving our other brands.

              Because the nature and extent of liability based on the manufacture and/or sale of allegedly defective products is uncertain, particularly as to firearms and ammunition, our resources may not be adequate to cover pending and/or future product liability occurrences, cases or claims, in the aggregate, and such cases and claims may have a material adverse effect upon our business, financial condition or results of operations. Insurance coverage for these risks is expensive and relatively difficult to obtain. Our insurance costs were approximately $3.7 million and $5.6 million for the fiscal years ended December 31, 2009 and 2008, respectively. Any inability to obtain insurance, any significant increases in the cost of insurance we obtain, or any losses in excess of our insurance coverage could have a material adverse effect on our business, financial condition or results of operations. See "Business—Legal Proceedings and Related Matters."

Our business is subject to extensive governmental legislation and regulation that may restrict our operations, increase our costs of operations, or adversely affect the demand for our products by limiting the availability and/or increasing the cost of our products.

              The manufacture, sale and purchase of firearms and ammunition are subject to extensive federal, state and local and foreign governmental regulation. Although we do not believe that current regulations have had such an impact to date, future regulations may adversely affect our operations by limiting the types of products that we can manufacture and/or sell, or imposing additional costs on us or on our customers in connection with the manufacture and/or sale of our products. Such regulations may also adversely affect demand for our products by imposing limitations that increase the costs of our products, making it more difficult or cumbersome for our distributors or end users to transfer and own our products, or creating negative consumer perceptions with respect to our products.

              Current federal regulations include:

    licensing requirements for the manufacture and/or sale of firearms and ammunition;

    a national system of instant background checks for all purchases of firearms from federal license holders, including purchases of our firearms products and purchases from license holders at gun shows; and

    a federal system of Department of State and Commerce Department licensing governing the sale, export and distribution of firearms and ammunition.

              In addition, 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 us, our distributors and our customers could be significant, depending on the type of firearms and ballistic information included in the database. Bills have also been introduced in Congress in the past several years that would affect the manufacture and sale of ammunition, including bills to regulate the manufacture, importation and sale of armor-piercing bullets, to prohibit the manufacture, transfer or importation of .25 caliber, .32 caliber

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and 9 mm handgun ammunition, and to increase or impose new taxes on the sales of certain types of ammunition, as well as bills addressing the use of lead in ammunition. Certain 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 September 2004, the United States Congress declined to renew the Federal Assault Weapons Ban of 1994 ("AWB"), which generally prohibited the manufacture of certain firearms defined under that statute as "assault weapons" and the sale or possession of "assault weapons." Various states and local jurisdictions have adopted their own version of the AWB, some of which apply to Bushmaster, DPMS and certain Remington sporting firearms products. If a statute similar to AWB were to be re-enacted it could have a material adverse effect on our business.

              State and local laws and regulations may place additional restrictions on gun ownership and transfer as described below.

    Some states have recently enacted, and others are considering, legislation restricting or prohibiting the ownership, use or sale of specified categories of firearms and ammunition. Many states currently have mandatory waiting period laws in effect for the purchase of firearms, including rifles and shotguns. Although there are few restrictive state or local regulations applicable to ammunition, several jurisdictions are considering such restrictions on a variety of bases.

    Some states have enacted regulations prohibiting the sale of firearms unless accompanied by an internal and/or external locking device. In several states, this requirement is imposed on both handguns and long guns. Some states are also considering mandating the inclusion of various design features on safety grounds. Most of these regulations as currently contemplated would be applicable only to handguns.

    To date, two states have established registries of so-called "ballistic images" of ammunition fired from new guns. Although neither law mandates the inclusion of such "imaging" data from long guns in their registries, these or other states may do so in the future. Proposed legislation in at least one other state would be applicable to our rifles and would call for "imaging" of both cartridges and projectiles.

              We believe that existing federal and state legislation relating to the regulation of firearms and ammunition have not had a material adverse effect on our sales of these products. However, the regulation of firearms and ammunition may become more restrictive in the future and any such development might have a material adverse effect on our business, financial condition, results of operations or cash flows. In addition, regulatory proposals, even if never enacted, may affect firearms or ammunition sales as a result of consumer perceptions. See "Business—Regulation."

              Although we are primarily a manufacturer of long guns, the trends regarding firearms regulation, as well as pending industry litigation, and the consumer perception of such developments, may adversely affect sales of firearms, ammunition and other shooting-related products by such means as increasing costs of production and/or reducing the number of distribution outlets for our products.

Environmental litigation and regulations may restrict or increase the cost of our operations and/or impair our financial condition.

              We are subject to a variety of federal, state and local environmental laws and regulations which govern, among other things, the discharge of hazardous materials into the air and water, the handling, treatment, storage and disposal of such materials, as well as remediation of contaminated soil and groundwater. We have programs in place that monitor compliance with those requirements and believe that our operations are in material compliance with them. In the normal course of our manufacturing

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operations, we are subject to occasional governmental proceedings and orders pertaining to waste disposal, air emissions and water discharges into the environment.

              Based on information known to us, we do not expect current environmental regulations or environmental proceedings and claims to have a material adverse effect on our financial condition, results of operations or cash flows. However, it is not possible to predict with certainty the impact on us of future environmental compliance requirements or of the cost of resolution of future environmental proceedings and claims, in part because the scope of the remedies that may be required is not certain, liability under federal environmental laws is, under certain circumstances, joint and several in nature, and environmental laws and regulations are subject to modifications and changes in interpretation. Environmental regulations may become more burdensome in the future and any such development, or discovery of unknown conditions, may require us to make material expenditures or otherwise materially adversely affect the way we operate our business, as well as have a material adverse effect on our financial condition, results of operations or cash flows. See "Business—Environmental Matters."

Worse-than-assumed economic and demographic experience for our postretirement benefit plans (e.g., discount rates, investment returns, and health care cost trends) could negatively impact our financial condition, results of operations or cash flows.

              We sponsor plans to provide postretirement pension and health care for certain of our retired employees. The measurement of our obligations, costs and liabilities associated with these benefits requires that we estimate the present values of projected future payments to all participants. We use many assumptions in calculating these estimates, including discount rates, investment returns on designated plan assets, health care cost trends, and demographic experience (e.g., mortality and retirement rates). To the extent that actual results are less favorable than our assumptions there could be a substantial adverse impact on our financial condition, results of operations or cash flows. For example, a 1% increase or decrease in the discount rate used to project our liability for our defined benefit pension plan and a 1% increase or decrease in our health care costs trend rate would increase or decrease our expense by approximately $0.5 million.

Our future pension costs and required level of contributions could be unfavorably impacted by changes in actuarial assumptions and future market performance of plan assets, which could adversely affect our financial condition, results of operations or cash flows.

              We have defined benefit pension obligations. The funding position of our pension plans is impacted by the performance of the financial markets, particularly the equity markets, and the discount rates used to calculate our pension obligations for funding and expense purposes. Recent significant declines in the financial markets have negatively impacted the value of the assets in our pension plans. In addition, lower bond yields may reduce our discount rates resulting in increased pension contributions and expense.

              Funding obligations are determined under government regulations and are measured each year based on the value of assets and liabilities on a specific date. If the financial markets do not provide the long-term returns that are expected under the governmental funding calculations, we could be required to make larger contributions. The equity markets can be, and recently have been, very volatile, and therefore our estimate of future contribution requirements can change dramatically in relatively short periods of time. Similarly, changes in interest rates can impact our contribution requirements. In a low interest rate environment, the likelihood of higher contributions in the future increases.

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A disruption to certain of our manufacturing and distribution facilities could have a material adverse effect on our financial condition, results of operations or cash flows.

              The Ilion, New York, Lonoke, Arkansas, Mayfield, Kentucky, North Haven, Connecticut, Elizabethtown, Kentucky, Memphis, Tennessee, Windham, Maine, St. Cloud, Minnesota and Madison, North Carolina facilities are critical to our success. These facilities house our principal production, research, development, engineering, design, shipping and headquarters functions. Any event that causes a disruption of the operation of any of these facilities for even a relatively short period of time might have a material adverse affect on our ability to produce and ship products and to provide service to our customers.

Resources devoted to research and development may not yield new products that achieve commercial success.

              We devote significant resources to investment in research and development. The research and development process is expensive, prolonged and entails considerable uncertainty. Development of a new firearms product typically takes between one and three years. Because of the complexities and uncertainties associated with research and development, products that we are currently developing may not complete the development process or obtain the regulatory approvals required for us to market such products successfully. The development of new products may take longer and cost more to develop and may be less successful than we currently anticipate as a result of:

    products that may appear promising in development but fail to reach market within the expected or optimal time frame, or fail to ever reach market, for any number of reasons, including efficacy and the difficulty or excessive cost to manufacture; or

    failure to enter into or successfully implement optimal alliances where appropriate for the discovery and commercialization of products, or otherwise to maintain a consistent scope and variety of promising late-stage pipeline products; or

    failure of one or more of our products to achieve or maintain commercial viability.

              We cannot assure you that any of our products currently in our development pipeline will be commercially successful.

If we are unable to favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is not able to provide an unqualified attestation report on the effectiveness of our Company's internal controls over financial reporting, our stock price could be materially adversely affected.

              We will be required to certify to and report on, and our independent registered public accounting firm will be required to attest to, the effectiveness of our internal control over financial reporting on an annual basis, beginning with the second Annual Report on Form 10-K that we file with the SEC after completion of this offering. Following this offering, we expect to devote considerable resources, including management's time and other internal resources, to a continuing effort to comply with regulatory requirements relating to internal controls, as we have not previously been subject to the requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. If we cannot favorably assess the effectiveness of our internal control over financial reporting, or if our independent registered public accounting firm is unable to provide an unqualified attestation report on the effectiveness of our Company's internal controls over financial reporting, investor confidence and, in turn, our stock price could be materially adversely affected.

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Our success depends on sustaining the strength of our brands.

              The willingness of consumers to purchase our products depends in part upon our ability to offer attractive brand value propositions. This in turn depends in part on consumers attributing a higher value to our products than to alternatives. If the difference in the value attributed to our products as compared to those of our competitors narrows, or if there is a perception of such a narrowing, consumers may choose not to buy our products. If we fail to promote and maintain the brand equity of our products, then consumer perception of our products' quality may be diminished and our financial condition, results of operations or cash flows could be materially adversely affected.

Our inability to protect our intellectual property or obtain the right to use intellectual property from third parties could impair our competitive advantage, reduce our revenue, and increase our costs.

              Our success and ability to compete depend in part on our ability to protect our intellectual property. We rely on a combination of patents, copyrights, trade secrets, trademarks, confidentiality agreements, and other contractual provisions to protect our intellectual property, but these measures may provide only limited protection. Our failure to enforce and protect our intellectual property rights or obtain the right to use necessary intellectual property from third parties could reduce our sales and increase our costs. In addition, the laws of some foreign countries do not protect proprietary rights as fully as do the laws of the United States.

              Patents may not be issued for the patent applications that we have filed or may file in the future. Our issued patents may be challenged, invalidated, or circumvented, and claims of our patents may not be of sufficient scope or strength, or issued in the proper geographic regions, to provide meaningful protection or any commercial advantage. We have registered certain of our trademarks in the United States and other countries. We may be unable to enforce existing trademarks or obtain new registrations of principle or other trademarks in key markets. Failure to obtain or enforce such registrations could compromise our ability to protect fully our trademarks and brands and could increase the risk of challenge from third parties to our use of our trademarks and brands.

Labor disputes may cause work stoppages, strikes and disruptions.

              The workforce at our Ilion, New York manufacturing facility is unionized and covered by a collective bargaining agreement, which expires on October 28, 2012. As a result, any labor disputes at this facility, including work stoppages, strikes and disruptions, could have a material adverse impact on our business.

Risks Relating to our Indebtedness

We have a substantial amount of indebtedness, which could have a material adverse effect on our financial health and on our ability to obtain financing in the future and to react to changes in our business and which could adversely affect the price of our common stock.

              We have substantial indebtedness. As of December 31, 2009, we have $276.7 million of total indebtedness. In addition, subject to restrictions in our debt instruments, we may incur additional indebtedness in the future. If new debt is added to our current debt levels, the related risks that we now face could intensify.

              Our significant amount of debt could limit our ability to satisfy our obligations, limit our ability to operate our business and impair our competitive position. For example, it could:

    adversely affect our stock price;

    make it more difficult for us to satisfy our obligations under the Notes or the ABL Revolver;

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    increase our vulnerability to adverse economic and general industry conditions, including interest rate fluctuations, because a portion of our borrowings are and will continue to be at variable rates of interest;

    require us to dedicate a substantial portion of our cash flow from operations to payments on our debt, which would reduce the availability of our cash flow from operations to fund working capital, capital expenditures or other general corporate purposes;

    limit our flexibility in planning for, or reacting to, changes in our business and industry;

    place us at a disadvantage compared to competitors that may have proportionately less debt;

    limit our ability to obtain additional debt or equity financing due to applicable financial and restrictive covenants in our debt agreements; and

    increase our cost of borrowing.

              In addition, we cannot assure you that we will be able to refinance any of our debt or that we will be able to refinance our debt on commercially reasonable terms. If we were unable to make payments or refinance our debt or obtain new financing under these circumstances, we would have to consider other options, such as:

    sales of assets;

    sales of equity; or

    negotiations with our lenders to restructure the applicable debt.

Our debt instruments may restrict, or market or business conditions may limit, our ability to use some of our options.

Our debt instruments may restrict our current and future operations.

              The indenture governing the Notes and the credit agreement governing the ABL Revolver impose significant operating and financial restrictions on us and our subsidiaries. These restrictions limit our ability and the ability of our subsidiaries to, among other things:

    incur or guarantee additional debt, incur liens, or issue disqualified or preferred stock;

    declare or make distributions to our stockholders, repurchase equity or prepay subordinated debt;

    make loans and certain investments;

    enter into transactions with affiliates;

    enter into mergers, acquisitions and other business combinations;

    consolidate or sell all or substantially all of our assets;

    create liens;

    amend or modify our governing documents;

    engage in businesses other than our business as currently conducted; and

    allow certain restrictions on the ability of our restricted subsidiaries to pay dividends or make other payments to us.

              In addition to the covenants listed above, the ABL Revolver requires us, under certain circumstances, to meet a specified financial ratio. Any of these restrictions could limit our ability to

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plan for or react to market conditions or meet extraordinary capital needs and could otherwise restrict corporate activities. See "Description of Certain Indebtedness."

              Our ability to comply with these covenants may be affected by events beyond our control, and an adverse development affecting our business could require us to seek waivers or amendments of covenants, alternative or additional sources of financing or reductions in expenditures. We cannot assure you that these waivers, amendments or alternative or additional financings could be obtained, or if obtained, would be on terms acceptable to us.

              A breach of any of the covenants or restrictions contained in any of our existing or future financing agreements, including our inability to comply with the financial covenant in the ABL Revolver, could result in an event of default under those agreements. Our default could allow the lenders under our financing agreements, if the agreements so provide, to discontinue lending, to accelerate the related debt as well as any other debt to which a cross acceleration or cross default provision applies, and to declare all borrowings outstanding under our financing arrangements to be due and payable. In addition, the lenders could terminate any commitments they had made to supply us with further funds. If the lenders require immediate repayments, we will not be able to repay them in full.

Substantially all of our assets are pledged as collateral under the Notes and the ABL Revolver.

              As of December 31, 2009, there was $275.3 million and zero of senior secured indebtedness outstanding under the Notes and the ABL Revolver, respectively. Substantially all of our assets are pledged as collateral for these borrowings. As of December 31, 2009, the ABL Revolver permitted additional borrowings of up to a maximum of $75.2 million under the borrowing base as of that date. Furthermore, all of our wholly-owned domestic subsidiaries, with the exception of Barnes and AAC, are guarantors of our obligations under the Notes and are either borrowers or guarantors under the ABL Revolver. Substantially all of our assets are pledged as collateral for these guarantees. If we are unable to repay all secured borrowings when due, whether at maturity or if declared due and payable following a default, the trustee or the lenders, as applicable, would have the right to proceed against the collateral pledged to the indebtedness and may sell the assets pledged as collateral in order to repay those borrowings, which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

Risks Relating to Owning Our Common Stock

Cerberus controls us and may have conflicts of interest with other stockholders in the future.

              Immediately after the offering, funds and accounts managed by Cerberus or its affiliated management companies, which we will refer to collectively as our controlling stockholder, will control approximately            % (approximately            % if the underwriters' option to purchase additional shares to cover over-allotments is exercised in full) of our common stock. As a result, our controlling stockholder will continue to be able to control the election of our directors, determine our corporate and management policies and determine, without the consent of our other stockholders, the outcome of any corporate transaction or other matter submitted to our stockholders for approval, including potential mergers or acquisitions, asset sales and other significant corporate transactions. Our controlling stockholder will also have sufficient voting power to amend our organizational documents. We cannot assure you that the interests of our controlling stockholder will coincide with the interests of other holders of our common stock. Additionally, our controlling stockholder is in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses that compete directly or indirectly with us. Our controlling stockholder may also pursue, for its own account, acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us. So long as our controlling stockholder continues to

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own a significant amount of the outstanding shares of our common stock, it will continue to be able to strongly influence or effectively control our decisions, including potential mergers or acquisitions, asset sales and other significant corporate transactions.

Shares eligible for future sale may cause the market price of our common stock to decline, even if our business is doing well.

              Sales of substantial amounts of our common stock in the public market after this offering, or the perception that these sales may occur, could adversely affect the price of our common stock and could impair our ability to raise capital through the sale of additional equity securities. Upon completion of this offering, our amended and restated certificate of incorporation will authorize us to issue            shares of common stock and we will have            shares of common stock outstanding. Of these outstanding shares, the            shares of common stock sold in this offering will be freely tradable, without restriction, in the public market unless purchased by our affiliates. The remaining            shares of common stock will be "restricted securities," as that term is defined in Rule 144 under the Securities Act of 1933, as amended (the "Securities Act"), which will be freely tradable subject to applicable holding period, volume and other limitations under Rule 144 or Rule 701 of the Securities Act. As of                        , 2010, there were a total of            options outstanding, of which            were vested. Upon completion of this offering,             shares of these restricted securities will be subject to a lock-up agreement with the underwriters, restricting the sale of such shares for 180 days after the date of this offering. This lock-up agreement is subject to a number of exceptions and holders may be released from these agreements without prior notice at the discretion of                        . Moreover, after this offering, holders of an aggregate of                 shares of our common stock will have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. Once we register these shares, they can be freely sold in the public market upon issuance, subject to the lock-up agreements described in the "Shares Eligible for Future Sale" section of this prospectus. See "Shares Eligible for Future Sale."

The shares you purchase in this offering will experience immediate and substantial dilution.

              The initial public offering price of our common stock will be substantially higher than the tangible book value per share of our outstanding common stock. Assuming an initial public offering price of $            per share, the midpoint of the range on the cover of this prospectus, purchasers of our common stock will effectively incur dilution of $            per share in the net tangible book value of their purchased shares. The shares of our common stock owned by existing stockholders will receive a material increase in the net tangible book value per share. You may experience additional dilution if we issue common stock in the future. As a result of this dilution, you may receive significantly less than the full purchase price you paid for the shares in the event of a liquidation. See "Dilution."

Provisions in our charter documents, certain agreements governing our indebtedness and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management, even if beneficial to our stockholders.

              Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws that will become effective upon the closing of this offering may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.

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Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions:

    establish a staggered board of directors such that not all members of the board are elected at one time;

    upon such date that Cerberus, its Affiliates (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), or any person who is an express assignee or designee of Cerberus's rights under our amended and restated certificate of incorporation (and such assignee's or designee's Affiliates) (of these entities, the entity that is the beneficial owner of the largest number of shares is referred to as the Designated Controlling Stockholder) ceases to own, in the aggregate, at least 50% of the outstanding shares of our common stock, which we refer to as the 50% Trigger Date, allow the authorized number of our directors to be changed only by the affirmative vote of two-thirds of our shares of common stock or by resolution of our board of directors;

    upon the 50% Trigger Date, limit the manner in which stockholders can remove directors from the board;

    upon such date that Cerberus, its Affiliates, or any express assignee or designee of Cerberus, and such assignees or designee's Affiliates cease to own, in the aggregate, at least 30% of the outstanding shares of our common stock, which we refer to as the 30% Trigger Date, establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors;

    upon the 30% Trigger Date, require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent;

    limit who may call stockholder meetings;

    require any stockholder (or group of stockholders acting in concert) who seek to transact business at a meeting or nominate directors for election to submit a list of derivative interests in any company securities, including any short interests and synthetic equity interests held by such proposing stockholder;

    require any stockholder (or group of stockholders acting in concert) who seeks to nominate directors for election to submit a list of "related party transactions" with the proposed nominee(s) (as if such nominating person were a registrant pursuant to Item 404 of Regulation S-K, and the proposed nominee was an executive officer or director of the "registrant"); and

    authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a "poison pill" that would work to dilute the stock ownership of a potential hostile acquiror, effectively preventing acquisitions that have not been approved by our board of directors.

              Our amended and restated certificate of incorporation authorizes the board of directors to issue up to            shares of preferred stock. The preferred stock may be issued in one or more series, the terms of which may be determined by our board of directors at the time of issuance or fixed by resolution without further action by the stockholders. These terms may include voting rights, preferences as to dividends and liquidation, conversion rights, redemption rights, and sinking fund provisions. The issuance of preferred stock could diminish the rights of holders of our common stock, and therefore could reduce the value of our common stock. In addition, specific rights granted to holders of preferred stock could be used to restrict our ability to merge with, or sell assets to, a third party. The ability of our board of directors to issue preferred stock could make it more difficult, delay,

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discourage, prevent, or make it more costly to acquire or effect a change in control, thereby preserving the current stockholders' control.

              Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. The restrictions contained in Section 203 are not applicable to any of our existing stockholders that will own 15% or more of our outstanding voting stock upon the closing of this offering.

              In addition, under the credit agreement governing the ABL Revolver, a change in control may lead the lenders to exercise remedies such as acceleration of the loan, termination of their obligations to fund additional advances and collection against the collateral securing such loan. Also, under the indenture governing the Notes, a change of control may require us to offer to repurchase the all of the outstanding Notes for cash at a premium to the principal amount of the Notes.

A trading market may not develop for our common stock, and you may not be able to sell your stock.

              There is no established trading market for our common stock, and the market for our common stock may be highly volatile or may decline regardless of our operating performance. You may not be able to sell your shares at or above the initial public offering price.

              Prior to this offering, you could not buy or sell our common stock publicly. Subject to official notice of issuance, our common stock has been approved for quotation on the             . However, an active public market for our common stock may not develop or be sustained after this offering. If a market does not develop or is not sustained, it may be difficult for you to sell your shares of common stock at a price that is attractive to you, or at all.

              The initial public offering price will be determined through negotiation between us and representatives of the underwriters, and may not be indicative of the market price for our common stock after this offering.

The stock price of our common stock may be volatile.

              The price at which our common stock will trade after this offering may be volatile due to a number of factors, including:

    actual or anticipated fluctuations in our financial condition or annual or quarterly results of operations;

    changes in investors' and financial analysts' perception of the business risks and conditions of our business;

    changes in, or our failure to meet, earning estimates and other performance expectations of investors or financial analysts;

    unfavorable commentary or downgrades of our stock by equity research analysts;

    our success or failure in implementing our growth plans;

    changes in the market valuations of companies viewed as similar to us;

    changes or proposed changes in governmental regulations affecting our business;

    changes in key personnel;

    depth of the trading market in our common stock;

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    failure of securities analysts to cover our common stock after this offering;

    termination of the lock-up agreement or other restrictions on the ability of our existing stockholders to sell shares after this offering;

    future sales of our common stock;

    the granting or exercise of employee stock options or other equity awards;

    increased competition;

    realization of any of the risks described above; and

    general market and economic conditions.

              In addition, equity markets have experienced significant price and volume fluctuations that have affected the market prices for the securities of newly public companies for a number of reasons, including reasons that may be unrelated to our business or operating performance. These broad market fluctuations may result in a material decline in the market price of our common stock and you may not be able to sell your shares of common stock at prices you deem acceptable. In the past, following periods of volatility in the equity markets, securities class action lawsuits have been instituted against public companies. Such litigation, if instituted against us, could result in substantial cost and the diversion of management attention.

We have never operated as a public company and the obligations incident to being a public company will require additional expenditures of both time and resources.

              Prior to the consummation of this offering, we have never operated as a public company, and we expect that the obligations of being a public company, including substantial public reporting, auditing and investor relations obligations, will require significant additional expenditures, place additional demands on our management and require the hiring of additional personnel. These obligations will increase our operating expenses and could divert our management's attention from our operations. The Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing that Act, as well as various            rules, will require us to implement additional corporate governance practices and may require further changes. These new rules and regulations will increase our legal and financial compliance costs, and make some activities more difficult, time-consuming and/or costly. In particular, our management will be required to conduct an annual evaluation of our internal controls, and have that evaluation attested to by our independent auditor. We also expect these new rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance. We may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These new rules and regulations could also make it more difficult for us to attract and retain qualified independent members of our board of directors and qualified members of our management team.

We are a "controlled company" within the meaning of the            rules and, as a result, will qualify for, and intend to rely on, exemptions from certain corporate governance requirements. You will not have the same protections afforded to stockholders of companies that are subject to such requirements.

              Upon completion of this offering, Cerberus or its affiliated management companies will continue to control a majority of our outstanding common stock. As a result, we are a "controlled company" within the meaning of the            corporate governance standards. Under the            rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain            corporate governance requirements, including:

    the requirement that a majority of the board of directors consist of independent directors;

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    the requirement that we have a nominating/corporate governance committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities;

    the requirement that we have a compensation committee that is composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities; and

    the requirement for an annual performance evaluation of the nominating/corporate governance and compensation committees.

              Following this offering, we intend to utilize these exemptions. As a result, we will not have a majority of independent directors nor will our nominating/corporate governance and compensation committees consist entirely of independent directors. Accordingly, you will not have the same protections afforded to stockholders of companies that are subject to all of the            corporate governance requirements.

We will have broad discretion over the use of the proceeds to us from this offering, and we may not use these funds in a manner of which you would approve or which would enhance the market price of our common stock.

              We will have broad discretion to use the net proceeds we receive from this offering, and you will be relying on the judgment of our board of directors and management regarding the use of these proceeds. Although we expect to use the net proceeds from this offering for working capital and other general corporate purposes, we have not allocated these net proceeds for specific purposes and cannot assure you that we will use these funds in a manner of which you would approve.

We may be restricted from paying dividends on our common stock.

              We are a holding company that does not conduct any business operations of our own, and, therefore, we are dependent upon cash dividends and other transfers from our subsidiaries to make dividend payments on our common stock.

              In addition, our ability to pay dividends will be restricted by agreements governing our debt, including the credit agreement governing our ABL Revolver and the indenture governing the Notes, and may be restricted by agreements governing any of our future indebtedness. Furthermore, we are permitted under the terms of our debt agreements to incur additional indebtedness that may severely restrict or prohibit the payment of dividends.

              Under the DGCL, our board of directors may not authorize payment of a dividend unless it is either paid out of our surplus, as calculated in accordance with the DGCL, or if we do not have a surplus, it is paid out of our net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

Our dividend policy may change.

              We are not required to pay dividends, and our stockholders will not be guaranteed, or have contractual or other rights, to receive dividends. Our board of directors may decide, in its discretion, at any time, to decrease the amount of dividends, otherwise modify or repeal the dividend policy or discontinue entirely the payment of dividends. Our board of directors could depart from or change our dividend policy, for example, if it were to determine that we had insufficient cash to take advantage of other opportunities with attractive rates of return.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

              This prospectus contains statements which constitute forward-looking statements, including statements relating to trends in the operations and financial results and the business and the products of Freedom Group 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 us. Such forward-looking statements are not guarantees of future performance. The following important factors, and those important factors described elsewhere in this prospectus, including the matters set forth under the section entitled "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 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, all of which could materially adversely affect our business.

    The degree to which we are leveraged could have important consequences, all of which could materially adversely affect our business, 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.

    The development of rural property in many locations has curtailed or eliminated access to private and public lands previously available for hunting, and the continuation of the development of rural property could materially adversely affect our industry as well as our business and results of operations.

    A significant portion of our sales are seasonal. As a result of the seasonal nature of our sales, our historical working capital financing needs generally have exceeded cash provided by operations during certain parts of the year. 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

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      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, brass and zinc prices historically have experienced significant increases and volatility primarily due to increased global demand. Furthermore, fuel and energy costs have increased and have remained volatile 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.

    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 domestic and international competition and our competitors vary according to product line. Certain of these competitors are subsidiaries of large corporations with substantially greater financial resources than we have. 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 10%, 14% and 15% of our total sales for the years ended December 31, 2009, 2008 and 2007, respectively, and 12% of our accounts receivable balance as of each of December 31, 2009 and 2008. Wal-Mart, together with another customer, accounted for approximately 18% and 21% of our accounts receivable balance as of December 31, 2009 and 2008, respectively. Our sales to Wal-Mart are generally not governed by a written long-term contract between the parties. In the event that Wal-Mart were to significantly reduce or terminate its purchases of firearms, ammunition and/or other products from us, our financial condition, results of operations, or cash flows could be adversely affected.

    We utilize numerous raw materials, including steel, zinc, lead, copper, 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 our 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 manufacture, sale and purchase of firearms and ammunition are subject to extensive governmental regulation on the federal, state and local levels. Changes in regulation could materially adversely affect our business by restricting the types of products we manufacture or sell or by imposing additional costs on us or our customers in connection with the manufacture or sale of our products. 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 had a material adverse effect on our sales, no assurance can be given that more

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      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 primarily 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.

    Our operation as a public company as a result of this offering will require significant additional expenditures, place additional demands on our management and require the hiring of more personnel to meet public reporting, auditing and investor relations requirements under the Sarbanes-Oxley Act of 2002 and the SEC rules and regulations implementing that Act, as well as various          rules. Our management will be required to conduct an annual evaluation of our internal controls, and have that evaluation attested to by our independent auditor. We expect these new rules and regulations to make director and officer liability insurance more expensive.

              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 prospectus.

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USE OF PROCEEDS

              We estimate that the net proceeds from the shares offered by us will be approximately $           million, after deducting the underwriting discount and estimated expenses of this offering and assuming we sell the shares for $          per share, the midpoint of the estimated price range set forth on the cover page of this prospectus.

              We will retain broad discretion over the allocation of the net proceeds of this offering. We intend to use the net proceeds of this offering for working capital and other general corporate purposes.

              We will not receive any proceeds from the sale of shares by the selling stockholders.

              Pending specific application of the net proceeds to us, we currently plan to invest the net proceeds received in a variety of capital preservation investments, including short-term, investment grade, interest-bearing securities.


DIVIDEND POLICY

              We are not required to pay dividends, and our stockholders will not be guaranteed, or have contractual or other rights to receive, dividends. The declaration and payment of any dividends will be at the sole discretion of our board of directors and will depend upon, among other things, our earnings, financial condition, capital requirements, level of indebtedness, contractual restrictions with respect to the payment of dividends, and other considerations that our board of directors deems relevant. Our board of directors may decide, in its discretion, at any time, to decrease the amount or dividends, otherwise modify or repeal the dividend policy or discontinue entirely the payment of dividends.

              The agreements governing our indebtedness contain, and agreements governing any of our future indebtedness may contain, various covenants that limit our ability to pay dividends. We are also a holding company that does not conduct any business operations of our own. As a result, we are dependent upon cash dividends and distributions and other transfers from our subsidiaries to make dividend payments on our common stock. In addition, our subsidiaries are permitted to pay dividends to us subject to general restrictions imposed on dividend payments under the jurisdiction of incorporation or organization of each subsidiary. See "Risk Factors—Risks Related to the Offering—We may be restricted from paying dividends on our common stock" and "Risk Factors—Risks Related to Owning Our Capital Stock—Our dividend policy may change."

              The ability of our board of directors to declare a dividend is also subject to limits imposed by Delaware corporate law. Under Delaware law, our board of directors and the boards of directors of our corporate subsidiaries incorporated in Delaware, may declare dividends only to the extent of our "surplus," which is defined as total assets at fair market value minus total liabilities, minus statutory capital, or if there is no surplus, out of net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year.

              We did not pay any dividends during 2007, 2008, 2009 and to date during 2010.

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CAPITALIZATION

              The following table sets forth our cash and cash equivalents and our capitalization on a consolidated basis as of December 31, 2009:

    on an actual basis;

    on a pro forma basis, giving effect to the Additional Notes Issuance and the Recapitalization, as if they occurred on December 31, 2009; and

    on a pro forma, as adjusted basis, giving effect to the Additional Notes Issuance, the Recapitalization and the sale by us of          shares of common stock in this offering at an assumed initial public offering price of $          per share, the midpoint of the range on the cover of this prospectus, and the receipt of the net proceeds thereof, after deducting underwriting discounts and commissions and the estimated offering expenses payable by us, as if they had occurred on December 31, 2009.

              The pro forma information below is illustrative only and our capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at pricing. This table should be read in conjunction with "Use of Proceeds," "Selected Historical Consolidated Financial Data," "Unaudited Pro Forma Condensed Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of

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Operations" and our historical financial statements and their notes appearing elsewhere in this prospectus.

 
  As of December 31, 2009  
 
  (Unaudited)
 
 
  Actual   Pro Forma   Pro Forma,
as Adjusted(1)
 
 
  (in millions, except share and per share data)
 

Cash and Cash Equivalents(2)

  $ 60.2   $            $           
               

Long-term debt, including current portion:

                   
 

ABL revolver(3)

  $   $   $  
 

101/4% Senior Secured Notes due 2015(4)

    275.3          
 

Capital Leases

    1.4          
               
     

Total long-term debt, including current portion

    276.7                     

Mezzanine Equity:

                   
 

Preferred Stock, $0.01 par value, 20,000,000 shares authorized of which 19,000,000 are Series A preferred shares, 18,697,464 Series A preferred shares issued and outstanding, $238.2 aggregate liquidation preference, actual as of 12/31/09;             shares authorized, no shares issued and outstanding, no aggregate liquidation preference, pro forma and pro forma, as adjusted as of 12/31/09

    238.2          

Stockholders' Equity (Deficit):

                   
 

Common Stock, $0.01 par value, 20,000,000 shares authorized of which 16,673,920 were issued and 16,439,186 were outstanding, actual as of 12/31/09;        shares authorized of which        were issued and        were outstanding, pro forma as of 12/31/09;        shares authorized of which        were issued and        were outstanding, pro forma, as adjusted as of 12/31/09

                        
 

Additional Paid-in Capital

                        
 

Accumulated Equity (Deficit)

    (32.6 )                   
 

Accumulated Other Comprehensive Income (Loss)

    (38.3 )                   
               
     

Total Stockholders' Equity (Deficit)

    (71.3 )                   
               

Total Capitalization

  $ 443.6   $            $           
               

(1)
A $1.00 increase (decrease) in the assumed initial public offering price of $        per share, the midpoint of the range on the cover of this prospectus, would result in an approximately $         million increase or decrease in each of the pro forma, as adjusted, cash and cash equivalents, pro forma, as adjusted, additional paid-in capital, pro forma, as adjusted, total stockholders' equity (deficit) and pro forma, as adjusted, total capitalization assuming the number of shares offered by us, as set forth on the cover page of this prospectus (assuming that the Recapitalization had taken place and excluding shares issuable under options outstanding other than shares underlying options that are exercisable within 60 days of                        , 2010), remains the same and after deducting the commissions and discounts and estimated offering expenses payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would result in an approximately $             million increase or decrease in each of the pro forma, as adjusted, cash and cash equivalents, pro forma, as adjusted, additional paid-in capital, pro forma, as adjusted, total stockholders' equity (deficit) and pro forma, as adjusted, total capitalization, assuming the assumed initial public offering

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    price of $            per share, the midpoint of the range on the cover of this prospectus, remains the same and after deducting the commissions and discounts and estimated offering expenses payable by us.

(2)
Cash on hand was approximately $60.2 million and $52.2 million at December 31, 2009 and February 28, 2010, respectively.

(3)
Consists of a $180.0 million senior secured asset based revolving credit facility. As of December 31, 2009 and February 28, 2010, no debt was outstanding under the ABL Revolver.

(4)
Consists of $200.0 million aggregate principal amount of the 2015 Notes, offered at a discounted price of 97.827% and $75.0 million aggregate principal amount of the Additional Notes, offered at a premium price of 106.25%. The related discount/premium will be amortized into interest expense until the Notes mature.

              This table is based on            shares of common stock outstanding as of                        , 2010 (assuming that the Recapitalization had taken place and including common stock underlying options that are exercisable within 60 days of                        , 2010) and excludes, as of                        , 2010,            shares of common stock issuable upon exercise of options with a weighted average exercise price of $            per share.

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DILUTION

              Purchasers of the common stock in the offering will suffer an immediate dilution in net tangible book value per share. Dilution is the amount by which the price paid by the purchasers of common stock in this offering will exceed the pro forma net tangible book value per share of common stock immediately after this offering. Our net tangible book value at December 31, 2009 was $       million or $      per share of common stock. Net tangible book value per share represents our tangible assets less total liabilities and preferred stock, divided by the number of shares of common stock outstanding as of December 31, 2009. Our pro forma net tangible book value as of December 31, 2009 was $             million or $        per share of common stock. Pro forma net tangible book value gives effect to the Refinancings and the Recapitalization. After giving effect to the consummation of this offering, assuming an initial public offering price of $        per share, the midpoint of the range on the cover of this prospectus, and the application of the net proceeds therefrom, our pro forma net tangible book value as of December 31, 2009 would have been $         million or $        per share of common stock. This represents an immediate increase in pro forma net tangible book value to existing stockholders of $        per share of common stock and an immediate dilution to new investors of $        per share of common stock. The following table illustrates this per share dilution:

Assumed initial public offering price per share

        $         

Net tangible book value per share as of December 31, 2009

             

Decrease per share attributable to reclassification of preferred stock

                  

Pro forma net tangible book value per share as of December 31, 2009

                  

Increase in pro forma net tangible book value per share resulting from this offering

                  
             

Pro forma net tangible book value per share after this offering

                  
             

Pro forma dilution per share to new investors

        $         
             

Pro forma fully diluted dilution per share to new investors

        $         
             

              A $1.00 increase (decrease) in the assumed initial public offering price of $      per share, the midpoint of the range on the cover of this prospectus, would increase or decrease our as adjusted net tangible book value by $       million, the net tangible book value per share of common stock after this offering by $      per share of common stock, and the dilution per share of common stock to new investors is adjusted by $      per share of common stock, assuming the number of shares offered by us, as set forth on the cover page of this prospectus (assuming that the Recapitalization had taken place), remains the same and after deducting the commissions and discounts and estimated offering expenses payable by us.

              The following table summarizes, on the pro forma basis set forth above as of December 31, 2009, the difference between the total cash consideration paid and the average price per share paid by existing stockholders and the purchasers of common stock in this offering with respect to the number

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of shares of common stock purchased from us, before deducting estimated underwriting discounts, commissions and offering expenses payable by us.

 
  Shares Purchased   Total Consideration   Average Price
Per Share
 
 
  Number   Percent   Amount   Percent  

Existing stockholders

                          % $                       % $           

Purchasers of common stock in this offering(1)

                          %                         %             
                             

Total

                 100 % $              100 %      
                             

(1)
The            shares of common stock sold in this offering include            shares of common stock to be sold by existing stockholders.

              A $1.00 increase or decrease in the assumed initial public offering price of $            per share, the midpoint of the range on the cover of this prospectus, would increase or decrease total consideration paid by new investors and total consideration paid by all stockholders by $             million, assuming that the number of shares offered by us, as set forth on the front cover of this prospectus (assuming that the Recapitalization had taken place), remains the same and after deducting the commissions and discounts and estimated offering expenses payable by us. An increase or decrease of 1.0 million shares in the number of shares offered by us would increase or decrease the total consideration paid to us by new investors and total consideration paid to us by all stockholders by $             million, assuming the assumed initial public offering price of $            per share, the midpoint of the range on the cover of this prospectus, remains the same and after deducting the commissions and discounts and estimated offering expenses payable by us.

              The tables above are based on            shares of common stock outstanding as of December 31, 2009 (assuming that the Recapitalization had taken place) and assumes an initial public offering price of $            per share, the midpoint of the range on the cover of this prospectus. The number of shares of common stock outstanding after this offering excludes, as of December 31, 2009,            shares issuable upon exercise of options with a weighted average exercise price of $            per share. To the extent these options are exercised, there will be further dilution to purchasers of common stock in this offering. The amount presented in "Pro forma fully diluted dilution per share to new investors" assumes full exercise of the outstanding options listed above.

              If the underwriters exercise their over-allotment option to purchase shares from us and the selling stockholders in full, the following will occur:

    the pro forma percentage of shares of our common stock held by existing stockholders will decrease to approximately             % of the total number of pro forma shares of our common stock outstanding after this offering; and

    the pro forma number of shares of our common stock held by new public investors will increase to            , or approximately            % of the total pro forma number of shares of our common stock outstanding after this offering.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

              The selected historical financial data below for each of the years ended December 31, 2009, 2008 and 2007 and the period from April 1, 2006 to December 31, 2006 are derived from the consolidated financial statements of Freedom Group and the selected historical financial data below for the period from January 1, 2006 to March 31, 2006 is derived from the consolidated financial statements of Bushmaster Firearms, Inc. and its subsidiaries. Those consolidated financial statements have been audited by Grant Thornton LLP, registered independent public accounting firm, and are included elsewhere in this prospectus. The consolidated financial statements of Bushmaster Firearms, Inc. (predecessor) for the year ended December 31, 2005 are not included in this prospectus.

              As a result of the acquisition of the assets of Bushmaster by CCM, which was effective as of April 1, 2006, our financial results for 2006 have been separately presented in our consolidated financial statements for the "Predecessor Entity" for the period January 1, 2006 through March 31, 2006 and for the "Successor Entity" for the period April 1, 2006 through December 31, 2006. We have combined the 2006 Predecessor Entity and Successor Entity periods from January 1, 2006 through December 31, 2006 in the selected historical consolidated financial data below, as we believe this combination is more useful to explain our results of operations. This presentation is not a measure under generally accepted accounting principles in the United States ("GAAP") and it is provided to enhance the reader's understanding of our results of operations for the period presented.

              You should read the following audited and unaudited selected historical financial data of Freedom Group in conjunction with "Capitalization," "Unaudited Pro Forma Condensed Consolidated Financial Information," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the historical financial statements and other financial information appearing elsewhere in this prospectus.

              The results of operations for the years ended December 31, 2005 and 2006 reflect the results of operations of Bushmaster. Our results of operations for the year ended December 31, 2007 also include the results of operations of Remington, which we acquired on May 31, 2007. Due to the significant impact of the acquired Remington operations, our financial results for periods subsequent to May 31, 2007 may not be comparable to our results from prior-year periods. In addition, on December 13, 2007 we consummated the acquisition of certain assets of DPMS and on January 28, 2008, we consummated the Marlin Acquisition. Due to the impact of the acquired Marlin and DPMS operations, our results of operations for 2008 may not be comparable to our results from prior-year periods. We consummated the acquisitions of certain assets and liabilities of Dakota Arms on June 5, 2009, S&K on September 22, 2009, AAC on October 2, 2009, and Barnes on December 31, 2009. For additional information regarding our acquisitions, see "Business—Company Overview—Our History and Corporate Structure."

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  Predecessor   Successor  
 
  Year Ended
December 31,
(Unaudited)
  January 1
through
March 31,
  April 1
through
December 31,
  Year Ended
December 31,
 
 
  2005   2006   2006   2007(2)   2008(2)   2009  
 
  (in millions, except share and per share data)
 

Statement of Operations Data:

                                     

Net Sales(1)

  $ 60.8   $ 16.8   $ 41.3   $ 384.9   $ 722.5   $ 848.7  

Cost of Goods Sold

    37.3     9.8     24.6     306.0     524.4     566.7  

Gross Profit

    23.5     7.0     16.7     78.9     198.1     282.0  

Operating Expenses

    12.0     3.8     8.9     70.1     186.9     169.7  

Operating Income

    11.5     3.2     7.8     8.8     11.2     112.3  

Interest Expense

    0.4     0.1     4.5     21.2     30.8     29.8  

Income (Loss) before Taxes

    11.2     3.1     3.3     (12.4 )   (19.6 )   82.5  

Net Income (Loss)

    11.2     3.1     2.1     (9.0 )   (28.6 )   54.4  

Net Income (Loss) Applicable to Common Stock

    11.2     3.1     2.1     (9.9 )   (48.2 )   33.6  

Net Income (Loss) Per Share(3):

                                     

Basic

  $ 0.70   $ 0.19   $ 0.13   $ (0.62 ) $ (2.97 ) $ 2.05  

Diluted

  $ 0.70   $ 0.19   $ 0.13   $ (0.62 ) $ (2.97 ) $ 2.00  

Weighted Average Number of Shares Outstanding(3):

                                     

Basic

    15,917,341     15,917,341     15,958,261     16,084,174     16,236,305     16,332,045  

Diluted

    15,917,341     15,917,341     16,187,849     16,084,174     16,236,305     16,806,876  

Operating and Other Financial Data:

                                     

Net Cash provided by (used in):

                                     
 

Operating Activities

  $ 10.1   $ 3.0   $ 3.4   $ 70.8   $ 52.9   $ 122.3  
 

Investing Activities

    2.8         (77.3 )   (90.7 )   (57.1 )   (58.8 )
 

Financing Activities

    (12.9 )   (2.9 )   74.6     43.9     57.3     (81.1 )

 

 
  As of December 31,  
 
  2005   2006   2007   2008   2009  
 
  (in millions, except share and per share data)
 

Balance Sheet Data (end of period):

                               

Cash and Cash Equivalents

  $   $ 0.7   $ 24.7   $ 77.8   $ 60.2  

Working Capital(4)

    1.2     6.8     175.7     224.8     174.8  

Total Assets

    18.5     86.1     628.3     672.9     686.9  

Long-Term Debt

    2.4     52.0     296.8     334.2     276.7  

Total Debt(5)

    11.2     52.0     300.3     337.4     276.7  

Stockholders' Equity (Deficit)

    2.4     27.3     (24.0 )   (106.8 )   (71.3 )

(1)
Presented net of federal excise taxes. Federal excise taxes were $70.2, $54.5, $31.0, $1.1, $2.7 and $4.1 for the years ended 2009, 2008 and 2007, the three months ended March 31, 2006, the nine months ended December 31, 2006, and the year ended 2005, respectively.

(2)
Results for the year ended December 31, 2007 reflect the impact of the acquired Remington and DPMS operations, which were acquired in May 2007 and December 2007, respectively. Results for the year ended December 31, 2008 reflect the impact of the acquired Marlin operations, which was effective in January 2008. Results for the year ended December 31, 2009 reflect the impact of the acquired Dakota Arms operations, which was effective in June 2009; the acquired S&K operations, which was effective in September 2009, and the acquired AAC operations which was effective in October 2009.

(3)
Net income (loss) per share and weighted average number of shares outstanding give effect to our proposed Recapitalization.

(4)
Working capital is defined as current assets less current liabilities.

(5)
Consists of short-term and long-term debt, current portion of long-term debt and capital lease obligations.

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UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED FINANCIAL INFORMATION

              The following unaudited pro forma condensed consolidated statement of operations for the year ended December 31, 2009 is based on our historical consolidated financial statements, after giving effect to the Refinancings and the Additional Notes Issuance, the Dakota Acquisition, the S&K Acquisition, the AAC Acquisition, the Barnes Acquisition and the Recapitalization as if they had occurred on January 1, 2009. The unaudited pro forma condensed, as adjusted, consolidated statement of operations reflects the above adjustments and, in addition, gives effect to the offering of our common stock and the use of proceeds thereof. The unaudited pro forma condensed consolidated balance sheet gives effect to the Recapitalization. The unaudited pro forma condensed, as adjusted, consolidated balance sheet gives effect to the offering of our common stock and the use of proceeds thereof.

              Pro forma purchase price adjustments related to the Dakota Acquisition were not included, as they were deemed immaterial. Pro forma purchase price adjustments related to the S&K Acquisition, the AAC Acquisition and the Barnes Acquisition were not included as the purchase price allocations are not yet complete and are not expected to be material.

              Pro forma adjustments for the Refinancings and the Additional Notes Issuance were made to reflect:

    the offering of the 2015 Notes, issued at a discounted price of 97.827%;

    the offering of the Additional Notes, issued at a premium price of 106.25%;

    interest expense resulting from the issuance of $200.0 million of the 2015 Notes, the $75.0 million of the Additional Notes and the $8.7 million borrowing under the ABL Revolver;

    amortization of certain deferred financing costs of $20.7 million on the Notes and the ABL Revolver;

    amortization of bond premium of $4.7 million on the Additional Notes; and

    an assumed effective tax rate of 40.0%.

              Additionally, adjustments for the Recapitalization were made to reflect the            -for-1 reverse stock split of all our outstanding common stock and the reclassification of all our outstanding preferred stock into a number of shares of our common stock determined by                        which will occur immediately prior to the closing of this offering.

              Pro forma adjustments for the offering give effect to the sale by us of            shares of common stock and the use of the proceeds thereof. The pro forma data assumes that the common stock is offered at $            per share, the midpoint of the range set forth on the cover page of this prospectus, and after deducting the estimated underwriting discounts and commissions on the shares offered by us and the estimated offering expenses payable by us.

              The unaudited pro forma consolidated financial information should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations," our historical consolidated financial statements and our notes and the historical consolidated financial statements of Marlin and the associated notes included elsewhere in this prospectus. The unaudited pro forma consolidated financial information is being furnished solely for informational purposes and is not intended to represent or be indicative of the consolidated results of operations or financial position that we would have reported had these transactions been completed as of the dates and for the periods presented, nor is it necessarily indicative of future results.

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Freedom Group, Inc. and Subsidiaries
Unaudited Pro Forma Consolidated Statements of Operations
(Dollars in Millions)
For the Year Ended December 31, 2009

 
   
   
   
   
   
  Pro Forma Adjustments    
   
   
   
 
 
  FGI
Historical
December 31,
  Dakota
Historical (e)
Jan 1-May 31,
  S&K
Historical (e)
Jan 1-Sept 30
  AAC
Historical (e)
Jan 1-Sept 30
  Barnes
Historical (e)
Jan 1-Dec 31
  Refinancings   Additional
Notes
Issuance
  S&K
Pro Forma
Adjustments
  Recapitalization   Pro Forma
December 31,
  The
Offering
  Pro Forma,
as Adjusted
December 31,
 
 
  2009   2009   2009   2009   2009   2009   2009   2009   2009   2009   2009   2009  

Net Sales

  $ 848.7   $ 1.1     5.8     3.8     13.5   $   $   $ (4.6 )(d) $   $ 868.3   $   $ 868.3  

Cost of Goods Sold

    566.7     0.4     4.6     1.7     4.0         (3.6 )(c) $ (4.6 )(d)       569.2         569.2  
                                                   
 

Gross Profit

    282.0     0.7     1.2     2.1     9.5         3.6             299.1         299.1  

Selling, General and Administrative Expenses

    157.4     1.0     2.0     1.8     7.2         (0.4 )(c)           169.0         169.0  

Research and Development Expenses

    11.7                 0.2                     11.9         11.9  

Impairment Charges

                                                 

Other Income

    0.6         (1.5 )       (0.3 )                   (1.2 )       (1.2 )
                                                   
 

Operating Income

    112.3     (0.3 )   0.7     0.3     2.4         4.0             119.4         119.4  

Interest Expense

    29.8                     (3.8 )(a)   6.1   (a)           32.1         32.1  
                                                   
 

Income (Loss) from Continuing Operations before Taxes, Equity in Losses from Unconsolidated Joint Venture and Noncontrolling Interest in Consolidated Subsidiary

    82.5     (0.3 )   0.7     0.3     2.4     3.8     (2.1 )   0.0     0.0     87.3     0.0     87.3  

Income Tax Provision (Benefit)

    28.2     (0.1 )   0.3     0.1     1.0     1.5   (b)   (0.8 )(b)     (b)     (b)   30.1       (b)   30.1  

Equity in Losses from Unconsolidated Joint Venture

    0.2                                     0.2         0.2  

Net Income (Loss)

    54.1     (0.2 )   0.4     0.2     1.4     2.3     (1.3 )           56.9         56.9  

Add: Net Loss Attributable to Noncontrolling Interest

    0.3                                     0.3         0.3  
                                                   
 

Net Income (Loss) Attributable to Controlling Interest

  $ 54.4   $ (0.2 )   0.4     0.2     1.4   $ 2.3   $ (1.3 ) $         57.2   $     57.2  
                                                     

Accretion of Preferred Stock

    (20.8 )                                                               (20.8 )

Net Income (Loss) Applicable to Common Stock

    33.6                                                                 36.4  

Net Income (Loss) Per Share—Basic

  $ 2.05                                                               $ 2.23  

Net Income (Loss) Per Share—Diluted

  $ 2.00                                                               $ 2.17  

Weighted Average Number of Shares Outstanding—Basic

    16,332,045                                                                 16,332,045  
                                                                         

Weighted Average Number of Shares Outstanding—Diluted

    16,723,673                                                                 16,723,673  
                                                       

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Freedom Group, Inc. and Subsidiaries

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Millions, except share and per share)
As of December 31, 2009

 
  Historical
December 31,
2009
  Recapitalization   Pro Forma
December 31,
2009
  The
Offering
  Pro Forma,
as Adjusted,
December 31,
2009
 

ASSETS

                               

Current Assets

                               

Cash and Cash Equivalents

  $ 60.2   $   $ 60.2   $   $ 60.2  

Accounts Receivable Trade—net

    92.5         92.5           92.5  

Inventories—net

    108.8         108.8           108.8  

Supplies Inventory—net

    6.5         6.5           6.5  

Prepaid Expenses and Other Current Assets

    35.2         35.2           35.2  

Assets Held for Sale

    1.9         1.9           1.9  

Deferred Tax Assets

    12.9         12.9           12.9  
                       
 

Total Current Assets

    318.0         318.0         318.0  

Property, Plant and Equipment—net

    121.2         121.2           121.2  

Goodwill and Intangibles—net

    211.4         211.4           211.4  

Debt Issuance Costs—net

    19.4         19.4         19.4  

Other Noncurrent Assets

    16.9         16.9           16.9  
                       
 

Total Assets

  $ 686.9   $   $ 686.9   $   $ 686.9  
                       

LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS' EQUITY (DEFICIT)

                               

Current Liabilities

                               

Accounts Payable

    52.2         52.2           52.2  

Current Portion of Long-Term Debt

    0.7         0.7           0.7  

Current Portion of Product Liability

    2.8         2.8           2.8  

Other Accrued Liabilities

    87.5         87.5           87.5  
                       
 

Total Current Liabilities

    143.2         143.2         143.2  

Long-Term Debt, net of Current Portion

    276.0         276.0         276.0  

Retiree Benefits, net of Current Portion

    46.8         46.8         46.8  

Product Liability, net of Current Portion

    10.4         10.4           10.4  

Deferred Tax Liabilities

    31.2         31.2           31.2  

Other Long-Term Liabilities

    12.4         12.4           12.4  
                       
 

Total Liabilities

    520.0         520.0         520.0  
                       

Preferred Stock, $0.01 par value, 20,000,000 shares authorized of which 19,000,000 are Series A preferred shares, 18,697,464 Series A preferred shares issued and outstanding, $238.2 aggregate liquidation preference, actual as of 12/31/09;            shares authorized, no shares issued and outstanding, no aggregate liquidation preference, pro forma and pro forma, as adjusted as of 12/31/09

    238.2                    
                       
 

Total Mezzanine Equity

    238.2                    
                       

Common Stock, $0.01 par value, 20,000,000 shares authorized of which 16,673,920 were issued and 16,439,186 were outstanding, actual as of 12/31/09;            shares authorized of which            were issued and            were outstanding, pro forma as of 12/31/09;            shares authorized of which            were issued and            were outstanding, pro forma, as adjusted as of 12/31/09

    0.2           0.2           0.2  

Less: Treasury Stock

    (0.6 )         (0.6 )         (0.6 )

Accumulated Other Comprehensive Loss

    (38.3 )         (38.3 )         (38.3 )

Accumulated Equity (Deficit)

    (32.3 )         (32.3 )         (32.3 )
                       
 

Total Parent's Equity (Deficit)

    (71.0 )         (71.0 )         (71.0 )

Deficit in Noncontrolling Interest

    (0.3 )         (0.3 )         (0.3 )
                       
 

Total Stockholders' Equity (Deficit)

    (71.3 )         (71.3 )       (71.3 )
                       
 

Total Liabilities, Mezzanine Equity and Stockholders' Equity (Deficit)

  $ 686.9   $     $ 686.9   $   $ 686.9  
                       

See the accompanying notes to these Unaudited Pro Forma Condensed Consolidated Financial Statements.

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Freedom Group, Inc.

Notes to Unaudited Pro Forma Condensed Consolidated Financial Information

(dollars in millions)

(a)
Adjustments made to eliminate historical interest expense and reflect incremental interest expense for the year ended December 31, 2009:
 
   
 

Adjustments to Reflect Refinancings (Pro Forma January 1-July 28, 2009):

       

Remove Interest on Remington 10.5% Senior Notes Due 2011

    (12.6 )

Remove Interest on BFI Term Loan, 15.0% Subordinated Notes Due 2012 and Revolver

    (3.5 )

Add Interest on New Senior Notes issued July 29, 2009 ($200.0 at 10.25%)

    12.0  

Remove historical interest and amortization and add interest and amortization on other debt in connection with the Refinancings

    0.3  
 

Total Adjustments to Reflect Refinancings:

  $ (3.8 )

Adjustments to Reflect Additional Notes Issuance:

       

Pro Forma January 1-November 1, 2009:

       

Add Interest on New $75 Notes issued November 2, 2009 ($75.0 at 10.25%)

    6.4  

Amortization of finance costs/bond premium

    (0.3 )
 

Total Adjustments to Reflect Additional Notes Issuance:

  $ 6.1  

      For each 0.125% increase or decrease in the blended weighted-average interest rate, our annual interest expense would increase or decrease by $0.4 million.

(b)
Reflects the estimated tax effect of the pro forma adjustments on the historical results of Freedom Group, utilizing an estimated combined federal and state statutory tax rate of 40.0% to compute the estimated tax expense or benefit of the Refinancings.

(c)
Adjustment to reflect the reduction of pension expense by $4.0 million, allocated 90% to cost of goods sold and 10% to selling, general and administrative expense as a result of the funding of $48.6 million to the pension plan.

(d)
Adjustment reflects elimination of intercompany sales of S&K to Remington and related cost of sales.

(e)
Pro forma adjustments for Dakota are deemed immaterial. Pro forma adjustments for AAC and Barnes, and certain pro forma adjustments for S&K, are excluded as the valuations are not yet complete and the amounts are deemed immaterial.

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

              You should read the following discussion of our results of operations and financial condition together with the "Selected Historical Consolidated Financial Data," "Unaudited Pro Forma Condensed Consolidated Financial Information" and the audited and unaudited historical consolidated financial statements and related notes included elsewhere in this prospectus. This discussion contains forward-looking statements and involves numerous risks and uncertainties, including, but not limited to, those described in the "Risk Factors" section of this prospectus. Actual results may differ materially from those contained in any forward-looking statements. Certain monetary amounts, percentages and other figures included in this prospectus have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be the arithmetic aggregation of the figures that precede them, and figures expressed as percentages in the text may not total 100% or, as applicable, when aggregated may not be the arithmetic aggregation of the percentages that precede them.

Company Overview

              We are one of the leading firearms, ammunition and related products companies in the world, with #1 commercial market positions across all of our major product categories in the United States, the largest firearms and ammunition market globally. With our Remington brand dating back to 1816, we are America's oldest and largest manufacturer of firearms and ammunition. We are the only major U.S. manufacturer of both firearms and ammunition, which we believe is a significant competitive advantage and supports our market leadership position. We believe this leadership position across all of our major product categories is evidenced by our #1 U.S. commercial market shares in shotguns, rifles and ammunition.

              We have made significant progress in our transition to a customer-focused sales and marketing organization, successfully creating a single customer facing platform with the ability to leverage our flexible manufacturing capability across our end-markets to quickly respond to changes in customer preferences and demands. Our 11 manufacturing facilities and approximately 2,800 employees represent the largest domestic manufacturing presence in the industry, enabling us to deliver our products throughout the United States and internationally to approximately 80 countries. In addition, our product leadership and innovation is supported by our freestanding research and development facility.

              We continue to look for opportunities to improve our quality and efficiencies in our manufacturing facilities as we strive to be a customer focused company in an increasingly demanding global marketplace. Accordingly, we have undertaken an effort to accelerate existing initiatives in the area of lean manufacturing, six sigma and other continuous improvement projects focused on inventory management, cost reductions and productivity.

              In addition, we are committed to enhancing our core businesses and positioning ourselves to take advantage of opportunities to strategically grow and improve our business by identifying and pursuing add-on strategic acquisitions or investments that expand and enhance our brand, product and intellectual property portfolio. We seek to acquire highly complementary products, brands or external capabilities to fill gaps in our portfolio or extend our brands and channel relationships.

              Despite the current macroeconomic environment, we have experienced no significant adverse impact in our overall sales. We believe the overall demand for certain of our products has picked up since the change in U.S. Presidential administration and consumers' concerns that the new administration may support more restrictive firearms and ammunition legislation. Management's strategy in light of this uncertain economic and political environment has been to focus on manufacturing efficiencies, research and development and meeting our customers' demands. In

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addition, we have remained committed and focused on our marketing and merchandising efforts across all product categories.

              One of our core strategies is to consistently introduce new and innovative products. These efforts are focused on the introduction or planned launch of the M887 Nitro Mag shotgun, the .30 R-15, R-15, R-25, Adaptive Combat Rifle, .50 BMG, .338 MXLR/MX, M597 VTR, and .308 DPMS firearms, and a variety of new ammunition products. We are also engaged in selective efforts to promote certain of our products through marketing and promotional activities, including ammunition and firearms customer and end-user rebates.

              Due to continuing volatility of metal, energy and transportation costs, management continues to assess our pricing strategies. As a result of this approach, firearms prices generally held steady in 2009 in most categories, and demand remained stable. In our ammunition segment, pricing has been relatively flat across our product offerings in 2009 although commodity costs associated with ammunition have continued to show volatility.

              Management's strategy in light of the current economic and political environment has been to continue to introduce new products, enhance our sales and marketing efforts and improve overall performance in working capital and operating productivity. Finally, we continue to pursue growth initiatives in our government, military, and law enforcement divisions along with broadening our brand awareness with selective licensing arrangements.

2009 Debt Transactions

              On July 29, 2009, we issued $200.0 million in aggregate principal amount of 10.25% Senior Secured Notes due 2015 (the "2015 Notes"). The 2015 Notes were priced at 97.827% of their face amount. We also contemporaneously entered into a $180.0 million senior secured asset-based revolving credit facility (the "ABL Revolver") and borrowed $51.9 million thereunder. We used the proceeds of the 2015 Notes and the initial borrowing under the ABL Revolver, together with cash on hand, to repay various debt instruments outstanding within the operating companies and consolidate its debt structure. The issuance of the 2015 Notes, the borrowing under the ABL Revolver and the related repayments of outstanding indebtedness (including the termination of any commitments thereunder) described here and in Note 12 to the financial statements are referred to collectively as the "Refinancings."

              On November 3, 2009, we issued $75.0 million in aggregate principal amount of our 2015 Notes (the "Additional Notes" and, together with the 2015 Notes, the "Notes"). The Additional Notes issued by FGI (the "Additional Notes Issuance") were priced at 106.25% of their face amount. We used the net proceeds of the Additional Notes to contribute approximately $50.0 million to the funding of the unfunded portion of our defined benefit plans, to pay fees and expenses related to the offering and expect to use any remaining funds for general corporate purposes. The Additional Notes were issued pursuant to the same indenture under which the 2015 Notes are issued and a supplement thereto.

Current Sales Demand

              Our industry has experienced a significant increase in certain ammunition demand since late 2008. We believe a number of consumers have been concerned about increased firearms and ammunition regulations as a result of the new administration in connection with the 2008 Presidential election. We view this increase in demand as having significant long-term benefits, including expanding the popularity of shooting sport categories, as well as providing an opportunity to cultivate new, and renew existing, long-term customer relationships across our portfolio of products and brands. This increase has resulted in sales growth of 16.7% in our ammunition segment during the year ended December 31, 2009 versus the year ended December 31, 2008. However, this increase may not be

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sustainable, and demand for our ammunition may decrease for any number of reasons. See "Risk Factors—Risks Relating to Our Business". We have experienced a significant increase in demand for our products since late 2008. There can be no assurance that this increased demand for ammunition will continue in the medium to long-term.

17 HMR Product Safety Warning

              On August 14, 2009, we announced a product safety warning directed towards the public and our consumers concerning the 17 HMR ammunition we market and sell under the Remington brand name. We purchase this ammunition from a third party and were advised by the manufacturer that its ammunition should not be used with any semi-automatic firearms. We are recalling the ammunition to apply applicable safety warnings and are offering a coupon for the voluntary replacement of the Remington Model 597 17 HMR semi-automatic rifle with other Remington firearms. We manufactured and sold this semi-automatic rifle from July 2002 to June 2007. The product safety warning is focused on the recall of the Remington branded 17 HMR ammunition for purposes of adding appropriate product warnings; and, since there is not a source of other ammunition, the replacement of the Remington Model 597 17 HMR semi-automatic rifles with other Remington firearms. As of December 31, 2009 we had expensed $6.6 million to reflect the estimated cost of this ammunition recall and rifle replacement program. The product safety warning has been publicized through internet postings, direct mailings, retail locations postings and magazine advertisements. As of December 31, 2009, we have received over 6,000 calls associated with the product recall and we continue to identify methods to inform affected customers. Actual costs related to these actions will depend on several factors, including the number of consumers who respond to the program, the costs of administration of the program, and whether costs will be recovered from the supplier and we are continually evaluating these factors.

EBITDA Measurements

              We use the terms Management EBITDA and Adjusted EBITDA throughout this prospectus. These EBITDA calculations are not measures of performance defined in accordance with GAAP. We use Management EBITDA as a supplement to our GAAP results in evaluating certain aspects of our business, as described below, and since the Notes were issued, we calculate an additional measurement referred to as Adjusted EBITDA, as defined in the indenture governing the Notes.

              Management EBITDA is included in this prospectus because it is a basis upon which our management has historically assessed performance. Management EBITDA assists us in comparing our performance over various reporting periods on a consistent basis because it excludes items that we do not believe reflect our core operating performance.

              We believe that Management EBITDA and Adjusted EBITDA are useful to investors in evaluating our performance because such measures are commonly used financial metrics for measuring and comparing the operating performance of companies in our industry. We believe that the disclosure of Management EBITDA and Adjusted EBITDA offers additional financial metrics that, when coupled with the GAAP results and the reconciliation to GAAP results, provide a more complete understanding of our results of operations and the factors and trends affecting our business.

              Management EBITDA and Adjusted EBITDA should not be considered as alternatives to net income (loss), as indicators of our performance, as alternatives to net cash provided by operating activities, as measures of liquidity, or as alternatives to any other measure proscribed by GAAP. There are limitations to using non-GAAP measures such as Management EBITDA and Adjusted EBITDA. Although we believe that Management EBITDA and Adjusted EBITDA may make an evaluation of

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our operating performance more consistent because such measures remove items that do not reflect our core operations:

    (i)
    other companies in our industry may define Management EBITDA and Adjusted EBITDA differently than we do and, as a result, such measures may not be comparable to similarly titled measures used by other companies in our industry; and

    (ii)
    such measures exclude financial information that some may consider important in evaluating our performance.

              We compensate for these limitations by providing disclosure of the differences between our EBITDA calculations and GAAP results, including providing a reconciliation of GAAP results to Management EBITDA and Adjusted EBITDA, to enable investors to perform their own analysis of our operating results. For a reconciliation of consolidated Management EBITDA to its most directly comparable GAAP measure, net income (loss), see "—Results of Operations—Management EBITDA" for each of the periods presented. For a reconciliation of Management EBITDA to Adjusted EBITDA, see "—Liquidity and Capital Resources—Adjusted EBITDA."

              Because of these limitations, Management EBITDA and Adjusted EBITDA should not be considered as measures of the income generated by our business or discretionary cash available to us to invest in the growth of our business. Our management compensates for these limitations by relying primarily on our GAAP results and using Management EBITDA and Adjusted EBITDA as supplemental financial metrics for evaluation of our operating performance. See our consolidated statements of operations and consolidated statements of cash flows in our consolidated financial statements included elsewhere in this prospectus.

Results of Operations

Years Ended December 31, 2009 and 2008

Net Sales

              The following table compares net sales by reporting segment for each of the periods presented:

 
  Year Ended December 31,  
 
  2009   Percentage of
Total
  2008   Percentage of
Total
  Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Firearms

  $ 508.1     59.9 % $ 426.6     59.0 % $ 81.5     19.1 %

Ammunition

    321.6     37.9     275.9     38.2     45.7     16.6  

All Other

    19.0     2.2     20.0     2.8     (1.0 )   (5.0 )
                           
 

Total

  $ 848.7     100.0 % $ 722.5     100.0 % $ 126.2     17.5 %
                           

      Firearms

              Net sales for the year ended December 31, 2009 were $508.1 million, an increase of $81.5 million, or 19.1%, as compared to the year ended December 31, 2008. Centerfire rifle sales increased by $53.6 million, or 18.1%, as compared to the prior-year period, primarily due to increased sales volumes of modular products. Shotgun sales increased by $17.5 million, or 17.9%, as compared to the prior-year period. Rimfire rifle sales increased by $9.4 million, or 40.7%, as compared to the prior-year period.

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      Ammunition

              Net sales for the year ended December 31, 2009 were $321.6 million, an increase of $45.7 million, or 16.6%, as compared to the year ended December 31, 2008. Centerfire ammunition sales increased by $30.4 million, or 20.4%, as compared to the prior-year period. The increase in sales is attributable mainly to strong market demand for rifle and pistol ammunition combined with volume growth across most other product categories. Rimfire ammunition sales increased by $10.5 million, or 57.7%, as compared to the prior-year period, primarily due to increased sales demand within these product categories.

      All Other

              Net sales were $19.0 million in all other businesses for the year ended December 31, 2009, a decrease of $1.0 million, or 5.0%, as compared to the prior-year period. This decrease was principally due to sales declines within our targets business of $2.0 million and powder metal product business of $1.2 million, partially offset by increased accessories sales of $0.9 million and apparel sales of $1.4 million.

Cost of Goods Sold and Gross Profit

              The Company's cost of goods sold includes all costs of material, labor, and overhead associated with product manufacturing, except for transfer costs from our plants to our distribution center which are included in selling, general, and administrative expense. These costs totaled $1.0 million and $0.9 million for the year ended December 31, 2009 and 2008, respectively. Accordingly, our gross margins may not be comparable to those of other entities. The table below compares cost of goods sold and gross profit by reporting segment for each of the periods presented:

 
  Year Ended December 31,  
 
  2009   Percentage of
Net Sales
  2008   Percentage of
Net Sales
  Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Cost of Goods Sold

                                     

Firearms

  $ 355.4     69.9 % $ 309.1     72.5 % $ 46.3     15.0 %

Ammunition

    198.2     61.6     198.8     72.1     (0.6 )   (0.3 )

All Other

    13.1     68.9     16.5     82.5     (3.4 )   (20.6 )
                           
 

Total

  $ 566.7     66.8 % $ 524.4     72.6 % $ 42.3     8.1 %
                           

Gross Profit

                                     

Firearms

  $ 152.7     30.1 % $ 117.5     27.5 % $ 35.2     30.0 %

Ammunition

    123.4     38.4     77.1     27.9     46.3     60.1  

All Other

    5.9     31.1     3.5     17.5     2.4     68.6  
                           
 

Total

  $ 282.0     33.2 % $ 198.1     27.4 % $ 83.9     42.4 %
                           

      Firearms

              Gross profit for the year ended December 31, 2009 was $152.7 million, an increase of $35.2 million, or 30.0%, as compared to the prior-year period. Gross margin was 30.1% for the year ended December 31, 2009 and 27.5% for the year ended December 31, 2008. The improvement in gross margin was mainly due to increased production levels, leveraging our fixed overhead utilization, favorable sales mix toward centerfire rifle products and continued factory improvements through the implementation of lean manufacturing principles, six sigma and other initiatives.

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      Ammunition

              Gross profit for the year ended December 31, 2009 was $123.4 million, an increase of $46.3 million, or 60.1%, as compared to the prior-year period. Gross margin was 38.4% for the year ended December 31, 2009 and 27.9% for the year ended December 31, 2008. Gains achieved in gross margin, which improved by 10.5%, were primarily due to lower material costs of $28.3 million, driven by commodity cost reductions net of hedging contract costs, a favorable sales mix and higher sales volumes of $19.1 million, offset by unfavorable pricing of $1.4 million driven by increased rebates on certain product categories.

      All Other

              Gross profit for the year ended December 31, 2009 was $5.9 million, an increase of $2.4 million, as compared to the prior-year period, and was primarily related to increased sales in our higher margin apparel businesses.

Operating Expenses

              Operating expenses consist of selling, general and administrative expenses, research and development expenses and other (income) expenses. The following table sets forth certain information regarding operating expenses for each of the periods presented:

 
  Year Ended December 31,  
 
  2009   2008   Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Selling, general and administrative expenses

  $ 157.4   $ 133.7   $ 23.7     17.7 %

Research and development expenses

    11.7     7.1     4.6     64.8  

Impairment charges

        47.4     (47.4 )   (100.0 )

Other (income) expense

    0.6     (1.3 )   1.9     146.2  
                   
 

Total

  $ 169.7   $ 186.9   $ (17.2 )   (9.2 )%
                   

              Total operating expenses for the year ended December 31, 2009 were $169.7 million, a decrease of $17.2 million, or 9.2%, as compared to the prior-year period. Selling, general and administrative expenses increased $23.7 million, or 17.7%, primarily due to $6.6 million expensed for the 17 HMR product safety warning; a $3.5 million increase in marketing expenses and a $3.5 million increase in wage, benefit and travel costs as a result of the addition of experienced management personnel and continued development of a customer-focused sales and marketing structure; a $3.6 million increase in costs associated with incentive compensation accruals driven by financial performance; an increase of $1.6 million related to the addition of the EOTAC and AAC businesses; an increase of $1.5 million in our parent company management fees; and $1.5 million of increased commissions expense related to increased sales performance. Research and development expenses increased $4.6 million, or 64.8%, reflecting development costs associated with current initiatives to compete for opportunities within the law enforcement and defense markets and to a lesser extent to implement continuous improvement processes. The impairment charge in 2008 was caused by a combination of factors that occurred during 2008, including the deterioration of the economic and credit environment and market conditions in the hunting industry. Other expense increased $1.9 million, primarily the result of transaction fees related to the Refinancings, including the loss on early extinguishment of debt.

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Management EBITDA

              The following tables compare Management EBITDA by reporting segment for each of the periods presented:

 
  Unaudited  
 
  Year Ended December 31,  
 
  2009   2008   Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Management EBITDA

                         

Firearms

  $ 83.4   $ 58.9   $ 24.5     41.6 %

Ammunition

    80.9     43.3     37.6     86.8  

All Other

    0.2     3.4     (3.2 )   (94.1 )

Other Reconciling Items

    (8.0 )   (4.2 )   (3.8 )   90.5  
                   
 

Total

  $ 156.5   $ 101.4   $ 55.1     54.3 %
                   

Firearms

              Management EBITDA in our firearms segment increased $24.5 million, or 41.6%, for the year ended December 31, 2009 primarily due to the favorable gross profit impact of $35.2 million. The improvement in gross margin was mainly due to improved fixed overhead utilization, favorable sales mix and continued factory improvements, as discussed under "—Cost of Goods Sold and Gross Profit—Firearms", offset by increased operating expenses primarily due to increases in wage, benefit and travel costs, as discussed under "—Operating Expenses".

Ammunition

              Management EBITDA in our ammunition segment increased $37.6 million, or 86.8%, for the year ended December 31, 2009 primarily due to the favorable gross profit impact of $46.3 million. The improvement in gross margin was primarily due to lower material costs and a favorable sales mix, as discussed under "—Cost of Goods Sold and Gross Profit—Ammunition", offset by increased operating expenses primarily due to an accrual to reflect the estimated cost of the 17 HMR ammunition and rifle product safety warning and increases in wage, benefit and travel costs, as discussed under "—Operating Expenses".

All Other

              Management EBITDA in our All Other businesses decreased $3.2 million, or 94.1%, for the year ended December 31, 2009 primarily due to increased operating expenses, as discussed under "—Operating Expenses", offset by the favorable gross profit impact of $2.4 million due primarily to a write-off in 2008 that did not recur in 2009, as discussed under "—Cost of Goods Sold and Gross Profit—All Other".

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Changes in Reconciling Items:

              The following table illustrates the calculation of Management EBITDA by reconciling Net Income to Management EBITDA:

 
  Unaudited  
 
  Year Ended December 31,  
 
  2009   2008   Increase
(Decrease)
  Percentage
Change
 

Net Income (loss)

  $ 54.4   $ (28.6 ) $ 83.0     290.2 %

Adjustments:

                         

Equity in losses of unconsolidated joint venture

    0.2         0.2     100.0  

Depreciation

    16.9     16.4     0.5     3.0  

Interest

    29.8     30.8     (1.0 )   (3.2 )

Income tax expense

    28.2     9.1     19.1     209.9  

Amortization of intangibles

    6.2     6.7     (0.5 )   (7.4 )

Other non-cash charges

    5.9     3.5     2.4     68.6  

Impairment charges

        47.4     (47.4 )   (100.0 )

Non-recurring charges

    14.9     16.1     (1.2 )   (7.5 )
                   
 

Management EBITDA

  $ 156.5   $ 101.4   $ 55.1     54.3 %
                   

              Other non-cash charges increased $2.4 million for the year ended December 31, 2009, primarily due to a $2.1 million loss on extinguishment of debt related to the Refinancings, increased retiree benefits and pension expense of $0.7 million and loss on disposal of assets of $0.4 million, offset by $0.8 million in decreased stock option expense.

              Non-recurring charges decreased $1.2 million for the year ended December 31, 2009, primarily due to reduced restructuring and integration expenses of $4.8 million, the impact of purchasing accounting adjustments of $6.1 million that occurred in 2008 but did not recur in 2009, a $3.1 million write off of our surveillance products inventory that occurred in 2008 but did not recur in 2009, and a $0.7 million gain on the purchase of Dakota, offset by a $6.6 million product safety expense, increased Employee Related Costs of $3.0 million, and an increase of $2.6 million in Other Fees and Transaction Costs, consisting of costs incurred for the development of DOD organization and fees and expenses associated with due diligence for potential acquisitions and the Refinancings.

Interest Expense

              Interest expense was $29.8 million and $30.8 million for the year ended December 31, 2009 and 2008, respectively. The $1.0 million decrease in interest expense over the prior year period was primarily related to favorable rate movement on interest rate swaps in the first quarter of 2009 associated with BFI's term loans, offset by increased amortization of deferred financing costs related to the Refinancings.

Income Tax Provision

              Our effective tax rate on continuing operations for the year ended December 31, 2009 and 2008 was 34.0% and 47.6%, 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 utilization of available tax credits as of December 31, 2009 and 2008. Additionally, the difference between the statutory rate and the actual effective tax rate for the year ended December 31, 2008 was primarily related to a permanent difference associated with the impairment of goodwill. Excluding the impact of the goodwill impairment, the effective tax rate would have been 31.4% for this period. The

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valuation allowance was increased by $0.2 million to reduce the deferred tax asset related to certain state tax credits, which management believes will not be realized before the benefits are scheduled to expire.

              We are subject to ongoing audits by federal and various state tax authorities. Depending on the outcome of these audits, we may be required to pay additional taxes. However, we do not believe that any additional taxes and related interest or penalties would have a material impact on our financial position, results of operations, or cash flows.

Years Ended December 31, 2007 and 2008

Net Sales

              The following table compares net sales by reporting segment for each of the periods presented:

 
  Year Ended December 31,  
 
  2007   Percentage of
Total
  2008   Percentage of
Total
  Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Firearms

  $ 201.6     52.4 % $ 426.6     59.0 % $ 225.0     111.6 %

Ammunition

    169.3     44.0     275.9     38.2     106.6     63.0  

All Other

    14.0     3.6     20.0     2.8     6.0     42.9  
                           
 

Total

  $ 384.9     100.0 % $ 722.5     100.0 % $ 337.6     87.7 %
                           

Firearms

              Net sales for the year ended December 31, 2008 were $426.6 million, an increase of $225.0 million, or 111.6%, as compared to the year ended December 31, 2007, primarily due to the impact of the acquired Remington, DPMS and Marlin operations, which collectively accounted for $199.2 million of the increase in firearms sales. Excluding the impact of the acquired Remington, DPMS and Marlin operations, net sales for the year ended December 31, 2008 were $88.7 million, an increase of $25.8 million, or 41%, as compared to the year ended December 31, 2007. Discussion of major product category results is included below.

              Centerfire rifle sales increased by $154.9 million, or 112.2%, as compared to the prior-year period, principally due to a $129.1 million increase due to the impact of a full year of sales for the acquired Remington and DPMS operations and eleven months of sales for the acquired Marlin operations and a $25.8 million increase due to higher sales volumes of Bushmaster branded modern sporting rifles.

              Shotgun sales increased by $44.8 million, or 85.7%, as compared to the prior-year period, mainly due to the impact of a full year of sales for the acquired Remington operations and eleven months of sales for the acquired Marlin operations.

              Rimfire rifle sales increased by $18.6 million, or 391.2%, as compared to the prior-year period, mainly due to the impact of a full year of sales for the acquired Remington operations and eleven months of sales for the acquired Marlin operations.

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Ammunition

              Net sales for the year ended December 31, 2008, were $275.9 million, an increase of $106.6 million, or 63%, as compared to the year ended December 31, 2007, principally due to an $81.1 million increase due to the impact of the acquired Remington operations and a $44.1 million increase due to price increases on most categories of ammunition, partially offset by a $17.7 million decrease in sales of ammunition due to lower sales volumes as a result of decreased production during late 2008. Discussion of major product category results is included below.

              Centerfire ammunition sales increased by $65.2 million, or 77.9%, as compared to the prior-year period, which included a $47.3 million increase attributable to the full-year impact of the acquired Remington operations and a $18.8 million increase due to incremental price increases on most centerfire categories. In addition, we experienced volume increases within the centerfire ammunition category during late 2008 due to increased market demand for rifle and pistol ammunition.

              Shotshell ammunition sales increased by $24.8 million, or 40.9%, as compared to the prior-year period, which included a $23.3 million increase attributable to the full-year impact of the acquired Remington operations and a $14.6 million increase due to incremental price increases on most shotshell categories, partially offset by a $13.9 million decrease in sales of shotshell ammunition due to lower sales volumes as a result of decreased production during late 2008.

              Rimfire ammunition sales increased by $6.4 million, or 54.6%, as compared to the prior-year period, which included a $6.1 million increase attributable to the full-year impact of the acquired Remington operations and a $3.8 million increase due to incremental price increases on most rimfire categories, partially offset by a $3.4 million decrease in sales of rimfire ammunition due to lower sales driving a level of reduced production during late 2008.

All Other

              Net sales were $20.0 million in All Other businesses for the year ended December 31, 2008, an increase of $6.0 million, or 42.9%, as compared to the prior-year period due mainly to continued growth within the accessories business, including a $4.6 million increase from efforts of our newly developed internal sales force, a $1.8 million increase due to aggregate sales volume increases for most other businesses and a $0.9 million increase attributable to the full-year impact of the acquired Remington operations, partially offset by a $1.2 million decrease due to declining sales volumes within technology products as part of exiting that business.

Cost of Goods Sold and Gross Profit

              The Company's Cost of Good Sold includes all costs of material, labor, and overhead associated with product manufacturing, except for transfer costs from our plants to our distribution center which are included in Selling, General, and Administrative expense. These costs totaled $0.9 million and $0.8 million for the years ended December 31, 2008 and 2007, respectively. Accordingly, our gross margins may not be comparable to those of other entities. The table below

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compares cost of goods sold and gross profit by reporting segment for the years ended December 31, 2007 and 2008:

 
  Year Ended December 31,  
 
  2007   Percentage
of Net
Sales
  2008   Percentage
of Net
Sales
  Increase
(Decrease)
  Percentage Change  
 
  (dollars in millions)
 

Cost of Goods Sold

                                     

Firearms

  $ 145.5     72.2 % $ 309.1     72.5 % $ 163.6     112.4 %

Ammunition

    150.1     88.7     198.8     72.1     48.7     32.4  

All Other

    10.4     74.3     16.5     82.5     6.1     5.9  
                           
 

Total

  $ 306.0     79.5 % $ 524.4     72.6 % $ 218.4     71.4 %
                           

Gross Profit

                                     

Firearms

  $ 56.1     27.8 % $ 117.5     27.5 % $ 61.4     109.4 %

Ammunition

    19.2     11.3     77.1     27.9     57.9     301.6  

All Other

    3.6     25.7     3.5     17.5     (0.1 )   (2.8 )
                           
 

Total

  $ 78.9     20.5 % $ 198.1     27.4 % $ 119.2     151.1 %
                           

Firearms

              Gross profit for the year ended December 31, 2008 was $117.5 million, an increase of $61.4 million, or 109.4%, as compared the year ended December 31, 2007, primarily due to the impact of the acquired Remington, DPMS and Marlin operations, which collectively accounted for $50.9 million of the firearms gross profit increase. Excluding the impact of the acquired Remington, DPMS and Marlin operations, total gross profit for the year ended December 31, 2008 was $36.7 million, an increase of $10.5 million, or 40%, as compared to the year ended December 31, 2007. Gross margin was 27.5% for the year ended December 31, 2008 and 27.8% for the year ended December 31, 2007. Gross margin remained relatively flat, declining 0.3% due to the impact of the acquired Remington, DPMS and Marlin businesses, which have inherently lower margin products, partially offset by increased production levels on certain centerfire rifles products leveraging our fixed overhead utilization and lower rollout of purchase accounting related amortization as a result of our acquisitions of $12.2 million.

              In connection with accounting for our acquisitions as business combinations using the purchase method of accounting, inventories were required to be written up to their estimated selling prices less the costs to complete and dispose and a reasonable selling profit. As a result, inventory subsequently sold has negatively impacted cost of goods sold. The impact for the year ended December 31, 2008 was approximately $2.8 million, compared to the impact for the year ended in 2007 of $15.0 million, a net decrease to cost of goods sold of $12.2 million.

Ammunition

              Gross profit for the year ended December 31, 2008 was $77.1 million, an increase of $57.9 million, or 301.6%, as compared to the year ended December 31, 2007, primarily due to the impact of the acquired Remington operations, which collectively accounted for $22.1 million of the ammunition gross profit increase. Excluding the impact of the acquired Remington operations, total gross profit for the year ended December 31, 2008 was $55.0 million, an increase of $35.8 million, or 186.5%, compared to the year ended December 31, 2007. Gross margin was 27.9% for the year ended December 31, 2008 and 11.3% for the year ended December 31, 2008. Gross margin improved 16.6%, reflecting higher realized prices in 2008 for most categories and decreased impact of purchase

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accounting related amortization as a result of the Remington Acquisition, partially offset by unfavorable cost absorption driven by lower production volumes during late 2008.

              In connection with accounting for the Remington Acquisition as a business combination using the purchase method of accounting, inventories were required to be written up to their estimated selling prices less the costs to complete and dispose and a reasonable selling profit. As a result, inventory subsequently sold in 2007 negatively impacted cost of goods sold. The impact for the year ended December 31, 2007 was approximately $13.1 million and was included in cost of goods sold.

All Other

              Gross profit for the year ended December 31, 2008 was $3.5 million, a decrease of $0.1 million, as compared to the year ended December 31, 2007. The full year impact of the acquired Remington operations accounted for an increase of $2.1 million for all other gross profit. Excluding the impact of the acquired Remington operations, total gross profit for the year ended December 31, 2008 was $1.4 million, a decrease of $2.2 million, or 61.1%, compared to the year ended December 31, 2007, as a result of the write-off of remaining technology products inventory of $3.1 million as part of exiting this business partially offset by lower rollout of purchase accounting related amortization of $0.6 million as a result of the Remington Acquisition.

              In connection with accounting for the Remington Acquisition as a business combination using the purchase method of accounting, inventories were required to be written up to their estimated selling prices less the costs to complete and dispose and a reasonable selling profit. As a result of this write-up, estimated inventory subsequently sold increased cost of goods sold. The impact for the year ended December 31, 2007 was approximately $0.6 million and was included in cost of goods sold.

Operating Expenses

              Operating expenses consist of selling, general and administrative expense, research and development expenses and other (income) expense. The following table sets forth certain information regarding operating expenses for the years ended December 31, 2007 and 2008:

 
  Year Ended December 31,  
 
  2007   2008   Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Selling, general and administrative

  $ 68.1   $ 133.7   $ 65.6     96.3 %

Research and development expenses

    3.8     7.1     3.3     86.8  

Impairment charges

        47.4     47.4     100.0  

Other (income) expense

    (1.8 )   (1.3 )   0.5     27.8  
                   
 

Total

  $ 70.1   $ 186.9   $ 116.8     166.6 %
                   

              Total operating expenses for the year ended December 31, 2008 were $186.9 million, an increase of $116.8 million, or 166.6%, as compared to the year ended December 31, 2007, primarily due to the impact of the acquired Remington, DPMS and Marlin operations, which collectively accounted for an increase of $45.1 million. Excluding the impact of the acquired Remington, DPMS and Marlin operations, total operating expenses for the year ended December 31, 2008 were $141.8 million, an increase of $71.7 million, or 102.3%, compared to the year ended December 31, 2007, of which $47.4 million was related to impairment charges recorded in December 2008. The impairment charge was caused by a combination of factors that occurred during 2008, including the deterioration of the economic and credit environment and market conditions in the hunting industry.

              As part of our annual impairment testing under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 350 "Intangible Assets—Goodwill and Other",

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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. For the remaining reporting units, management believes the estimated fair value substantially exceeds the carrying value.

              Selling, general and administrative expenses increased $65.6 million, or 96.3%, primarily due to the impact of the acquired Remington, DPMS and Marlin operations, which collectively accounted for an increase of $46.6 million. Excluding the impact of the acquired Remington, DPMS and Marlin operations, selling, general and administrative expenses were $87.1 million, an increase of $19 million, or 27.9%, compared to December 31, 2007, primarily due to a $3.9 million increase in wage, benefits and travel costs reflecting continued development of a customer-focused sales and marketing structure, a $3.6 million increase in wage, benefit and travel costs due to the addition of experienced management personnel, a $3.0 million increase due to incremental amortization as a result of the DPMS acquisition, a $1.6 million increase due to costs associated with incentive compensation accruals as plan participation increased and other expenses.

              Research and development expenses increased $3.3 million, or 86.8%, primarily due to a $3.2 million increase attributable to the full year impact of the acquired Remington, DPMS and Marlin operations.

              Other expense (income) decreased $0.5 million, or 27.8%, driven mainly by recorded stock option expense of $1.4 million in 2008 and higher intangible amortization of $1.1 million partially offset by the impact of the acquired Remington operations on licensing income of $1.5 million.

Management EBITDA

              The following tables compare Management EBITDA by reporting segment for each of the periods presented:

 
  Unaudited  
 
  Year Ended December 31,  
 
  2007   2008   Increase
(Decrease)
  Percentage
Change
 
 
  (dollars in millions)
 

Management EBITDA

                         

Firearms

  $ 35.7   $ 58.9   $ 23.2     65.0 %

Ammunition

    17.4     43.3     25.9     148.9  

All Other

    2.3     3.4     1.1     47.8  

Other Reconciling Items

    (4.8 )   (4.2 )   0.6     (12.5 )
                   
 

Total

  $ 50.6   $ 101.4   $ 50.8     100.4 %
                   

Firearms

              Management EBITDA for the year ended December 31, 2008 in our Firearms segment increased $23.2 million, or 65.0%, as compared to the year ended December 31, 2007. The increase was primarily due to the favorable gross margin impact of the acquired Remington, DPMS and Marlin operations.

Ammunition

              Management EBITDA for the year ended December 31, 2008 in our Ammunition segment increased $25.9 million, or 148.9%, as compared to the year ended December 31, 2007. The increase was primarily due to owning Remington for a full fiscal year (acquired May 31, 2007).

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All Other

              Management EBITDA for the year ended December 31, 2008 in our All Other segment increased $1.1 million, or 47.8%, as compared to the year ended December 31, 2007. The increase was primarily due to the favorable gross margin impact of the acquired Remington, DPMS and Marlin operations. $2.1 million of the increase was attributed to the increase in gross margin due to owning Remington for a full fiscal year (acquired May 31, 2007).

Changes in Reconciling Items:

              The following table illustrates the calculation of Management EBITDA by reconciling Net Income to Management EBITDA:

 
  Unaudited  
 
  Year Ended December 31,  
 
  2007   2008   Increase
(Decrease)
  Percentage
Change
 

Net Income (loss)

  $ (9.0 ) $ (28.6 ) $ (19.6 )   217.8 %

Adjustments:

                         

Depreciation

    8.7     16.4     7.7     88.5  

Interest

    21.2     30.8     9.6     45.3  

Income Tax Expense

    (4.0 )   9.1     13.1     *  

Amortization of Intangibles

    3.0     6.7     3.7     123.3  

Other Non-cash Charges

    (6.0 )   3.5     9.5     *  

Impairment Charges

        47.4     47.4     *  

Non-recurring Charges

    36.7     16.1     (20.6 )   (56.1 )
                   
 

Management EBITDA

  $ 50.6   $ 101.4   $ 50.8     100.4 %
                   

*
Not Meaningful

              Other Non-cash Charges increased $9.5 million for the year ended December 31, 2008, primarily due to pension and retiree related costs and inventory write-offs. In the year ended December 31, 2007, the Company had a curtailment gain of $6.4 million and $1.1 million of additional pension and retiree benefit expense as compared to the year 2008. In the year ended December 31, 2008, the Company had $1.3 million of additional stock option expense as compared to the year 2007. The Company also had a $0.7 million loss on the disposal of assets during the year ended December 31, 2008.

              Non-recurring Charges decreased $20.6 million for the year ended December 31, 2008, primarily due to the fewer inventory related charges. For the year ended December 31, 2008, the Company had $25.7 fewer inventory write-up charges related to the purchase accounting on the Remington acquisition. The reduction in inventory write-up costs was offset by increases in restructuring costs of $0.7 million, transaction costs of $0.6 million, and employee related costs of $1.4 million. The Company also had a write-off of inventory related to discontinued products of $3.1 million, Marlin and H&R integration costs of $2.1 million, and a gain from the sale of an investment of $1.4 million that occurred in 2008 that did not occur in 2007.

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Interest Expense

              Interest expense for the year ended December 31, 2008 was $30.8 million, an increase of $9.6 million, or 45.3%, as compared to the year ended December 31, 2007, primarily due to the full-year impact of the acquired Remington and DPMS operations.

Income Tax Provision (Benefit)

              The Company recorded tax expense of $9.1 million for the year ended December 31, 2008, an effective rate of approximately 47.6%. This tax rate was primarily driven by a permanent tax difference associated with the impairment of goodwill. Excluding the impact of the goodwill impairment, the effective tax rate would have been 31.4% for this period. The effective tax rate for the year ended December 31, 2007 was 31.0%. The difference between the actual effective tax rate for the respective periods above and the U.S. federal statutory rate of 35% is principally due to permanent differences including the impairment of goodwill, utilization of research and development tax credits and the impact of the valuation allowance.

              We are currently subject to ongoing audits by federal and various state tax authorities. Depending on the outcome of these audits, we may be required to pay additional taxes. However, we do not believe that any additional taxes and related interest or penalties would have a material impact on our financial position, results of operations, or cash flows.

Liquidity and Capital Resources

Cash Flows and Working Capital

              Net cash provided by operating activities was $122.3 million for the year ended December 31, 2009 compared to net cash provided by operating activities of $52.9 million for the year ended December 31, 2008. The $69.4 million increase in cash provided by operating activities for the year ended December 31, 2009 compared to the prior-year period resulted primarily from:

    net income of $54.1 million for the year ended December 31, 2009 compared to a net loss of $28.7 million for the year ended December 31, 2008;

    inventory decreasing by $21.6 million during the year ended December 31, 2009 compared to a decrease of $32.6 million during the year ended December 31, 2008, primarily due to higher sales volumes coupled with enhanced initiatives to reduce inventory levels;

    accounts receivable decreasing by $17.7 million during the year ended December 31, 2009 compared to an increase of $19.4 million during the year ended December 31, 2008, primarily due to enhanced initiatives to shorten program historical sales terms as part of efforts to improve working capital offset by higher sales volume; offset by

    pension plan contributions during the year ended December 31, 2009 of $56.4 million compared to $15.6 million during the year ended December 31, 2008;

    income taxes payable decreasing by $2.6 million during the year ended December 31, 2009 compared to a decrease of $2.2 million during the year ended December 31, 2008, primarily due to increased operating income of $101.1 million;

    prepaid and other current assets increasing by $7.1 million during the year ended December 31, 2009 compared to a decrease of $4.7 million during the year ended December 31, 2008, primarily due to more hedging contracts outstanding in 2009 resulting in higher prepaid hedging expense; and

              Net cash used in investing activities was $58.8 million during the year ended December 31, 2009 and $57.1 million during the year ended December 31, 2008. The cash used in investing activities

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for the year ended December 31, 2009 was primarily related to $42.3 million in payments, net of cash acquired, for various acquisitions in 2009 including $1.8 million for Dakota on June 5, 2009, $3.8 million for S&K on September 22, 2009, $11.1 million for AAC on October 2, 2009, and $25.6 million for Barnes on December 31, 2009, compared to a $46.3 million payment in connection with the Marlin Acquisition in 2008, net of cash acquired. In addition, in the year ended December 31, 2009, the Company purchased $1.2 million less in property, plant and equipment, received $0.8 for the sale of property, plant and equipment and received $5.6 million less in proceeds received from the termination of company owned life insurance compared to the year ended December 31, 2008.

              Net cash used in financing activities during the year ended December 31, 2009 was $81.1 million compared to net cash provided by financing activities of $57.3 million during the year ended December 31, 2008. The $138.4 million decrease in net cash provided by financing activities in 2009 compared to 2008 was primarily related to the extinguishment of our previously outstanding debt. During 2009, the Company borrowed $95.3 million less on its revolving credit facilities, while repaying $6.7 million more than in 2008. The Company obtained $275.4 million in proceeds from the issuance of the 2015 Notes and Additional Notes while repaying $268.2 million more in outstanding indebtedness during 2009 compared to 2008. In 2009, the Company paid $21.4 million in debt issuance fees related to the issuance of the 2015 Notes and Additional Notes while receiving $25.8 million less in capital contributions compared to 2008.

              Net cash provided by operating activities was $52.9 million during the year ended December 31, 2008 compared to net cash provided by operating activities of $70.8 million during the year ended December 31, 2007. The $17.9 million decrease in cash provided by operating activities during the year ended December 31, 2008 compared to the prior-year period resulted primarily from:

    the recognition of net loss of $28.6 million for the year ended December 31, 2008 compared to net loss of $9.0 million for the year ended December 31, 2007, partially offset by non-cash impairment charges of $47.4 million and an increase of $12.0 million in depreciation and amortization for the year ended December 31, 2008;

    accounts receivable increasing by $19.4 million over the year ended December 31, 2008 compared to a decrease of $22.7 million during the year ended December 31, 2007, primarily due to increased sales, partially offset by our efforts to shorten historical sales terms as part of our efforts to improve working capital;

    inventory decreasing by $32.6 million over the year ended December 31, 2008 compared to a decrease of $61.7 million during the year ended December 31, 2007, primarily due to higher sales volumes and management initiatives to reduce inventory; and

    prepaid and other current assets decreasing by $4.7 million over the year ended December 31, 2008 compared to an increase of $11.9 million during the year ended December 31, 2007, primarily due to fewer hedging contracts in 2008 resulting in lower prepaid hedging expense.

              Net cash used in investing activities for the year ended December 31, 2008 was $57.1 million compared to $90.7 million for the year ended December 31, 2007. The $33.6 million decrease in cash used in investing activities was primarily related to a $46.6 million payment in connection with the Marlin Acquisition in 2008, net of cash acquired, and $17.3 million in purchases of property, plant and equipment for the year ended December 31, 2008, compared to a $48.3 million payment for the purchase of RACI Holding, Inc., the then parent of Remington ("RACI"), net of cash acquired, a $22.8 million payment for the purchase of DPMS, net of cash acquired, a $5.0 million payment for the purchase of Cobb Manufacturing, Inc., net of cash acquired, $11.7 million of transaction costs related to the RACI, DPMS Firearms, LLC and Cobb Manufacturing, Inc. acquisitions and $8.4 million in purchases of property, plant and equipment for the year ended December 31, 2007.

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              Net cash provided by financing activities was $57.3 million for the year ended December 31, 2008 compared to net cash provided by financing activities of $43.9 million for the year ended December 31, 2007. The $13.4 million increase in net cash provided by financing activities primarily resulted from $50.2 million of proceeds received from revolving credit facilities, and $25.8 million of capital contributions, partially offset by $12.7 million of principal payments on long-term debt for the year ended December 31, 2008 compared to $43.0 million of proceeds received from borrowings of long-term debt and $133.3 million of capital contributions, partially offset by $83.6 million of payments on revolving credit facilities, and $48.2 million of principal payments on RACI notes for the year ended December 31, 2007.

Sources and Uses of Liquidity

              We generally expect to fund expenditures for operations, administrative expenses, capital expenditures, debt service obligations and dividend payments with internally generated funds from operations, and satisfy working capital needs from time to time with borrowings under our revolving credit facility. 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 in compliance with our various debt instruments in the future with cash flow from operations and borrowings under the ABL Revolver, although no assurance can be given in this regard. We continue to focus on working capital management by monitoring key metrics associated with inventory, accounts receivable and accounts payable while recognizing changes to our sales demand can impact our working capital strategies.

Debt

              As of December 31, 2009, we had outstanding indebtedness of approximately $276.7 million, which consisted of the following:

    $275.3 million of outstanding 10.25% Senior Notes due 2015; and

    $1.4 million of capital lease obligations and other debt.

              As of December 31, 2009, there was no indebtedness outstanding under the ABL Revolver and approximately $75.2 million in borrowings were available. Standby letters of credit outstanding as of December 31, 2009 were $7.3 million. Our ABL Revolver contains a financial maintenance covenant ratio referred to as the Fixed Charge Coverage Ratio, which is determined by comparing EBITDA to Fixed Charges (each as defined in the credit agreement governing our ABL Revolver). Under certain circumstances as described in our ABL Revolver, we are required to maintain a Fixed Charge Coverage Ratio of not less than 1.10 to 1.00. Our Fixed Charge Coverage ratio was 2.1 to 1.0 as of December 31, 2009.

              See Note 12—Debt to our consolidated financial statements for a complete discussion of all of our indebtedness at December 31, 2009.

Adjusted EBITDA

              In addition to Management EBITDA which is calculated as set forth in "—Results of Operations," we calculate a measure called Adjusted EBITDA. Adjusted EBITDA (referred to as EBITDA in the indenture governing the Notes) is defined in the indenture governing 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 as set forth below. Adjusted EBITDA is a primary component of the fixed charge coverage ratio used in covenants under the indenture governing the Notes.

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              A reconciliation of net income (loss) to Management EBITDA and Management EBITDA to Adjusted EBITDA for the years ended December 31, 2007, 2008 and 2009 is as follows:

 
  Year Ended December 31,  
 
  2009   2008   2007  

Net Income (Loss)

  $ 54.4   $ (28.6 ) $ (9.0 )

Adjustments:

                   
 

Equity in Losses of Unconsolidated JV

    0.2          
 

Depreciation

    16.9     16.4     8.7  
 

Interest

    29.8     30.8     21.2  
 

Income Tax Expense (Benefit)

    28.2     9.1     (4.0 )
 

Amortization of Intangibles

    6.2     6.7     3.0  
 

Impairment Charges

        47.4      
 

Other Non-cash Charges

    5.9     3.5     (6.0 )
 

Non-recurring Charges

    14.9     16.1     36.7  
               
   

Management EBITDA

  $ 156.5   $ 101.4   $ 50.6  
               

Additional nonrecurring charges included in determining Adjusted EBITDA:

                   
 

Employee Relocation & Search Fees

    2.5     1.7     0.1  
 

Restructuring & Integration Costs

            0.5  
 

Other Fees and Transaction Costs

    9.2     0.2      

Additional noncash charges included in determining Adjusted EBITDA:

                   
 

Inventory Writeoff

    5.4     2.0     0.3  
 

Retiree Benefits

    4.5     (0.5 )   3.2  
 

Other

        (0.1 )   (0.1 )
               
   

Adjusted EBITDA

  $ 178.1   $ 104.7   $ 54.6  
               

              We expect Adjusted EBITDA to be affected by the same trends that affect Management EBITDA. For a discussion of these trends, see "—Results of Operations—Management EBITDA" for each of the periods presented.

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

              Adjusted EBITDA should not be considered as an alternative to net income (loss) as an indicator of our performance or as an alternative to net cash provided by operating activities as a measure of liquidity or as an alternative to any other measure prescribed by GAAP. The primary material limitations associated with the use of Adjusted EBITDA as compared to GAAP results are (i) it may not be comparable to similarly titled measures used by other companies in our industry, and (ii) it excludes financial information that some may consider important in evaluating our performance.

Capital and 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 June 2016, our Madison

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annex office that expires in August 2014, and leases for several of our BFI manufacturing facilities that expire on various dates between 2010 and 2012. We also maintain contracts including, among other things, a services contract with our third party warehouse provider. We also have various pension plan obligations, although we do not expect substantial future contributions at this time.

Capital Expenditures

              Gross capital expenditures for the year ended December 31, 2009 and 2008 were $14.1 million and $18.4 million, respectively, consisting primarily of capital expenditures both for new equipment related to the manufacture of firearms and ammunition, as well as capital maintenance of existing facilities. We expect total capital expenditures for 2010 to be in the range of $20.0 million to $25.0 million, of which approximately $8.0 million is expected to be related to capital maintenance projects and the remainder related to capital expenditures for new assets.

Off-Balance Sheet Arrangements

              Our only off balance sheet arrangements consist of our obligations in respect of standby letters of credit.

Contractual Obligations and Commercial Commitments

              We have various purchase commitments for services incidental to the ordinary conduct of business, including, among other things, a services contract with our third-party warehouse provider. We do not believe such commitments are at prices in excess of current market prices. Included in those purchase commitments are purchase contracts with certain raw materials suppliers, for periods ranging from one to five years, some of which contain firm commitments to purchase minimum specified quantities. However, such contracts had no material impact on our financial condition, results of operations, or cash flows during the reporting periods presented herein.

              We support service and repair facilities for all of our firearm products in order to meet the service needs of our distributors, customers and consumers nationwide. We provide consumer warranties against manufacturing defects in all firearm products we manufacture in the United States. Estimated future warranty costs are accrued at the time of sale which are primarily based upon historical experience. Product modifications or corrections are voluntary steps taken by us to assure proper usage or performance of a product by consumers. The cost associated with product modifications and/or corrections are recognized in accordance with FASB ASC 450 "Contingencies", and charged to operations. The cost of these programs is not expected to have a material adverse impact on our operations, liquidity or cash flows.

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              The following represents our contractual obligations and other commercial commitments as of December 31, 2009:

 
  Payments Due by Period  
 
  Total
Amounts
Committed
  Less Than
1 Year
  1–3
Years
  3–5
Years
  Over
5 Years
 
 
  (dollars in millions)
 

Contractual Obligations:

                               
 

Notes(a)

  $ 275.0   $   $   $   $ 275.0  
 

ABL Revolver

                     
 

Expected Interest Payments on the Notes

    169.2     28.2     56.4     56.4     28.2  
 

Expected Interest Payments on ABL Revolver

                     
 

Required Pension Contributions

    5.3     0.6     2.3     1.8     0.6  
 

Capital Lease Obligations

    1.5     0.8     0.6     0.1      
 

Operating Lease Obligations

    9.6     1.8     3.5     3.2     1.1  
 

Other Long-term Purchase Obligations(b)

    5.7     4.7     1.0          
                       
   

Total Contractual Cash Obligations(c)

  $ 466.3   $ 36.1   $ 63.8   $ 61.5   $ 304.9  
                       

Other Commercial Commitments:

                               
 

Standby Letters of Credit

  $ 7.3   $ 7.3              
                       
   

Total Commercial Commitments

  $ 7.3   $ 7.3              
                       

(a)
Represents new debt incurred in connection with the Refinancings and the Additional Notes.

(b)
Other Long-term Purchase Obligations includes minimum obligations due under various contracts, including a services contract with our third-party warehouse provider, and minimum purchases associated with certain materials necessary for the manufacturing process.

(c)
Contractual cash obligations above exclude: (i) income taxes that may be paid in future years; (ii) any impact for likely future reversal of net deferred income tax liabilities when reversal occurs; (iii) income tax liabilities of approximately $3.8 million as of December 31, 2009 for unrecognized tax benefits due to uncertainty on the timing of related payments, if any; (iv) capital expenditures that may be made although not under contract as of December 31, 2009 (cash paid for capital expenditures was approximately $16.1 million in the year ended December 31, 2009) and (v) pension contributions beyond 5 years.

Quantitative and Qualitative Analysis of 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 December 31, 2009 and 2008, we had long-term borrowings of $276.0 million and $315.0 million, respectively, excluding $0.7 million and $19.2 million, respectively, classified as the current portion of long-term debt, of which zero and $103.4 million, respectively, were issued at variable rates. Assuming no changes in the monthly average variable-rate debt levels of $64.8 million and $128.7 million for the year ended December 31, 2009 and 2008, respectively, we estimate that a hypothetical change of 100 basis points in the LIBOR and Alternate Base Rate interest rates would impact interest expense for the year ending December 31, 2009 and 2008 by $0.6 million and $1.3 million, respectively, on an annualized pretax basis.

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              Prior to the Refinancings, we were party to several interest rate swap agreements with respect to our outstanding variable rate indebtedness at BFI as of December 31, 2008 and December 31, 2007. The purpose of entering into these interest rate swap arrangements was to hedge against the risk of interest rate increases on the related variable rate indebtedness and not to hold the instrument for trading purposes. The interest rate swap agreements, which were derivative financial instruments, were classified as a cash flow hedge. We were required to enter into these interest rate swaps in accordance with certain BFI debt instruments. We accounted for these as derivative financial instruments in accordance with FASB ASC 815 "Derivatives and Hedging" Accordingly, the derivative financial instruments were reflected on the balance sheet at their fair market value. However, as the interest rate swaps did not meet specific hedge accounting criteria, the change in fair value over the period covered was reflected in interest expense. These interest rate swap agreements were terminated on July 28, 2009.

              We purchase copper and lead options contracts to hedge against price fluctuations of anticipated commodity purchases. Lead and copper prices have experienced significant volatility over the past five years primarily due to increased demand and the uncertainty in the global economy.

              The amounts of premiums paid for commodity contracts outstanding at December 31, 2009 were $4.6 million, which was $1.8 million lower than the same date in 2008, as fewer contracts were entered into in the last twelve months. At December 31, 2009 and 2008, the market value of our outstanding contracts relating to firm commitments and anticipated purchases up to twelve months for both years, from the respective date was $11.1 million and $0.8 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 December 31, 2009 and 2008, we would experience an approximate $6.0 million and $1.5 million, respectively, increase in our cost of related inventory purchased on an annualized pretax basis, which would be partially offset by an approximate $4.0 million and $0.1 million, respectively, increase in the value of related hedging instruments.

              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 December 31, 2009 and 2008, we would experience an approximate $1.0 million and $0.8 million, respectively, increase in each period in our cost of related inventory purchased on an annualized pre-tax basis.

              We do not believe that we have a material exposure to fluctuations in foreign currencies. We do not hold or issue financial instruments for speculative purposes.

Critical Accounting Policies and Estimates

              Our discussion and analysis of our financial condition, results of operations, and cash flows are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to inventories, supplies, accounts receivable, warranties, long-lived assets, product liability, revenue recognition (inclusive of cash discounts, rebates, and sales returns), advertising and promotional costs, self-insurance, pension and post-retirement benefits, deferred tax assets, and goodwill. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As noted below, in some cases, our estimates are also based in part on the assistance of independent advisors. Actual results may differ from these estimates under different assumptions or conditions.

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

Revenue Recognition

              Sales, net of an estimate for discounts, returns and allowances, and related cost of sales are recorded at which time risk of loss and title transfer to the customer. We continually evaluate our sales terms against criteria outlined in SEC Staff Accounting Bulletin 104, Revenue Recognition. While we follow the industry practice of selling select firearms pursuant to a "dating" plan, allowing the customer to purchase these products commencing in December (the start of our dating plan year) and to pay for them on extended terms, we have now commenced to shorten the duration of these terms. Historically, use of the dating plan has had the effect of shifting some firearms sales from the second and third quarters to the first and fourth quarters. As a competitive measure, we offer extended terms on select ammunition purchases. However, use of the dating plans also results in deferral of collection of accounts receivable until the latter part of the year. Customers do not have the right to return unsold product. Management uses historical trend information as well as other economic data to estimate future discounts, returns, rebates and allowances.

Allowance for Doubtful Accounts

              We maintain an allowance for doubtful receivables for estimated losses resulting from the inability of our trade customers to make required payments. We provide an allowance for specific customer accounts where collection is doubtful and also provide an allowance for customer deductions based on historical collection and write-off experience. Additional allowances would be required if the financial conditions of our customers deteriorated.

Inventories

              Our inventories are valued at the lower of cost or market. We evaluate the quantities of inventory held against past and future demand and market conditions to determine excess or slow moving inventory. For those product classes of inventory identified, we estimate their market value based on current and projected selling prices. If the projected market value is less than cost, we provide an allowance to reflect the lower value of that inventory. This methodology recognizes projected inventory losses at the time such losses are evident rather than at the time goods are actually sold.

              As part of the Marlin Acquisition, we now account for a portion of our inventory, the North Haven manufactured firearms, under a Last-In First-Out ("LIFO") assumption under the double extension method. As of December 31, 2009 and 2008, approximately 6.7% and 11.0%, respectively, of our total inventory excluding the LIFO adjustment was accounted for under the LIFO method. Under a First-In First-Out assumption, inventories would have been lower by $1.6 million and $1.1 million at December 31, 2009 and 2008, respectively.

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Property, Plant and Equipment

              Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is determined on a straight-line basis over the estimated useful lives of the individual asset by major asset class as follows:

Buildings

  20 to 43 years

Building and leasehold improvements

  1 to 15 years

Machinery and equipment

  7 to 15 years

Furniture and fixtures

  7 to 10 years

Trailers and automotive equipment

  3 to 5 years

Computer equipment

  1 to 3 years

              In accordance with FASB ASC 360 "Property, Plant, and Equipment", management assesses property, plant and equipment for impairment whenever facts and circumstances indicate that the carrying amount may not be fully recoverable.

              Maintenance and repairs are charged to operations; replacements and betterments are capitalized. Computer hardware and software, lighting and postage equipment under capital leases are amortized over the term of the lease. The cost and related accumulated depreciation applicable to assets sold or retired are removed from the accounts and the gain or loss on disposition is recognized in operations, included in the other income and expenses.

              Interest is capitalized in connection with the construction of major projects. The capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset's useful life. There was no capitalized interest in 2009.

Goodwill, Goodwill Impairment, and Intangible Assets

              We adopted the provisions of FASB ASC 350 "Intangibles-Goodwill and Other", for goodwill and intangible assets pursuant to FASB ASC 350. As of October 1 each year, we test for impairment of goodwill according to a two-step approach. In the first step, we estimate the fair values of our reporting units using a combination of the present value of future cash flows approach, market approach and a transactional approach, all equally weighted, subject to a comparison for reasonableness to our market capitalization at the date of valuation. In addition, goodwill of a reporting unit is tested for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value. For other intangible assets, the impairment test consists of a comparison of the fair value of the intangible assets to their respective carrying amount.

              As part of our annual impairment testing under FASB ASC 350, 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. For the remaining reporting units, management believes the estimated fair value substantially exceeds the carrying value as of December 31, 2009 and 2008.

Reserves for Product Liability

              We provide for estimated defense and settlement costs related to product liabilities when it becomes probable that a liability has been incurred and reasonable estimates of such costs are available. Estimates for accruals for product liability matters are based on historical patterns of the number of occurrences, costs incurred and a range of potential outcomes. We also utilize the assistance of independent advisors to assist in analyzing the adequacy of such reserves. Due to the inherently unpredictable nature of litigation, actual results will likely differ from estimates and those differences could be material.

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Employee Benefit Plans

              We have defined benefit plans that cover a significant portion of our salaried and hourly paid employees. As a result of amendments to our defined benefit plans, future accrued benefits for all employees were frozen as of January 1, 2008. We derive pension benefit expense from an actuarial calculation based on the defined benefit plans' provisions and management's assumptions regarding discount rate, rate of increase in compensation levels and expected long-term rate of return on assets. Management determines the expected long-term rate of return on plan assets based upon historical actual asset returns and the expectations of asset returns over the expected period to fund participant benefits based on the current investment mix of our plans. Management sets the discount rate based on the yield of high quality fixed income investments expected to be available in the future when cash flows are paid. The rate of increase in compensation levels is established based on management's expectations of current and foreseeable future increases in compensation. In addition, management also consults with independent actuaries in determining these assumptions.

Reserves for Workers' Compensation Liability

              We provide for estimated medical and indemnity compensation costs related to workers' compensation liabilities when it becomes probable that a liability has been incurred and reasonable estimates of such costs are available. Estimates for accruals for workers compensation liability matters are based on historical patterns of the number of occurrences, costs incurred and a range of potential outcomes. We also utilize the assistance of independent advisors to assist in analyzing the adequacy of such reserves.

Income Taxes

              Income tax expense is based on pretax financial accounting income. We recognize deferred tax assets and liabilities for the future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded when it is more likely than not that the deferred tax asset will not be recognized.

              The Company's continuing practice is to recognize interest and/or penalties related to income tax matters in income tax expense.

Fair Value Measurements

              We adopted FASB ASC 820 "Fair Value Measurements and Disclosures" and amendments to FASB ASC 825 "Recognition of the Fair Value Option for Financial Instruments" on January 1, 2008. FASB ASC 820 (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. FASB ASC 820 applies both to items recognized and reported at fair value in the financial statements and items disclosed at fair value in the notes to the financial statements. FASB ASC 820 does not change existing accounting rules governing what can or what must be recognized and reported at fair value in the financial statements, or disclosed at fair value in the notes to the financial statements. Additionally, FASB ASC 820 does not eliminate practicability exceptions that exist in accounting pronouncements amended by FASB ASC 820 when measuring fair value. As a result, we will not be required to recognize any new assets or liabilities at fair value.

              Prior to FASB ASC 820, 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). FASB ASC 820 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

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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, we use valuation techniques that place greater reliance on observable inputs and less reliance on unobservable inputs. In measuring fair value, we may make adjustments for risks and uncertainties, if a market participant would include such an adjustment in its pricing.

              FASB ASC 820 establishes a fair value hierarchy that distinguishes between assumptions based on market data (observable inputs) and our 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 our estimates and assumptions, which reflect those that market participants would use. The following table presents information about assets and liabilities measured at fair value on a recurring basis:

 

 
  Fair value measurements at December 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   $ 11.1 million   Not applicable   $ 11.1 million  

Life Insurance Policies

  Not applicable   $ 0.2 million   Not applicable   $ 0.2 million  

              As shown above, commodity contract derivatives valued by using quoted prices 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 2 of the fair value hierarchy. We value the interest rate swap using the Income Approach valuation technique. This method uses valuation techniques to convert future amounts to a single present value amount. The measurement is based on the value indicated by current market expectations about those future amounts.

              The determination of where an asset or liability falls in the hierarchy requires significant judgment. We evaluate our 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, we expect 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 FASB ASC 820, we attempt to maximize the use of observable market inputs in our models. When observable inputs are not available, we default 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 and are determined with the assistance of the Company's counterparty.

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              In February 2007, the FASB issued amendments to FASB ASC 825. These amendments to FASB ASC 825 provides 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, we 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.

Recent Accounting Pronouncements

              In December 2007, the FASB issued FASB ASC 810 "Noncontrolling Interests in Consolidated Financial Statements". This statement is intended to improve, simplify, and converge internationally the reporting of noncontrolling interests in consolidated financial statements. FASB ASC 810 requires all entities to report noncontrolling (minority) interests in subsidiaries in the same way as equity in the consolidated financial statements. Moreover, it requires that transactions between an entity and noncontrolling interests be treated as equity transactions. FASB ASC 810 is effective for fiscal years beginning after December 15, 2008. Consequently, FASB ASC 810 was implemented by the Company on January 1, 2009 and the accompanying consolidated financial statements for the current and prior periods have been presented in accordance with FASB ASC 810. As of January 1, 2009, the Company now accounts for its consolidated joint venture, EOTAC, under FASB ASC 810 "Noncontrolling Interest in a Subsidiary". Upon adoption of FASB ASC 810, the Company reclassified minority interests in its consolidated balance sheet from other noncurrent liabilities to the equity section. Additionally, the Company changed the way non-controlling interests are presented within the consolidated statement of operations such that the statement of operations reflects results attributable to both the Company's interests and non-controlling interests. The results attributable to the Company's interests did not change upon the adoption of FASB ASC 810.

              In March 2008, the FASB issued an amendment to FASB ASC 815 "Disclosures about Derivative Instruments and Hedging Activities—an amendment to FASB Statement No. 133". The amendment to FASB ASC 815 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 FASB ASC 815 "Derivatives and Hedging"; and how derivative instruments and related hedged items affect its financial position, financial performance, and cash flows. The amendment to FASB ASC 815 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. It is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and, consequently, was implemented by the Company on January 1, 2009. Upon adoption of the amendment to FASB ASC 815, the Company enhanced its disclosures for derivative instruments and hedging activities by providing additional information regarding the underlying risk, objectives, extent of hedging activity, and accounting designation. Since the amendment to FASB ASC 815 requires additional disclosures, its adoption did not affect the Company's financial position or results of operations.

              In December 2008, the FASB issued an amendment to FASB ASC 715 "Compensation—Defined Benefit Plans". The amendment expands the disclosures of plan assets for defined benefit pension or other postretirement plans. The amendment's objectives are to provide users of financial

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statements with an understanding of: (1) how investment asset allocation decisions are made, (2) the major categories of plan assets, (3) the inputs and valuation techniques used to measure the fair value of plan assets, (4) the impact of fair value measurements that use unobservable inputs (Level 3) on changes in plan assets for the period, and (5) significant concentrations of risk within plan assets. It is effective for periods ending after December 15, 2009 for annual financial statements only. The Company adopted the amendment to FASB ASC 715 by enhancing its disclosures of plan assets in its defined benefit retirement plans. Since the guidance requires additional disclosures related to plan assets, its adoption has had no significant impact on the Company's results of operations, financial condition and equity.

              In April 2009, the FASB issued an amendment to FASB ASC 820 "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 for Fair Value Measurement and Disclosures". The amendment to FASB ASC 820 provides guidelines for making fair value measurements more consistent with the principles presented in FASB ASC 820 "Fair Value Measurements and Disclosures". The amendment to FASB ASC 820 relates to determining fair values when there is no active market or where the price inputs being used represent distressed sales. It reaffirms what FASB ASC 820 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. The amendment to FASB ASC 820 is effective for interim and annual periods ending after June 15, 2009. The adoption of the amendment to FASB ASC 820 has had no significant impact on the Company's results of operations, financial condition and equity.

              In April 2009, the FASB issued an amendment to FASB ASC 825 "Interim Disclosures about Fair Value of Financial Instruments". The amendment to FASB ASC 825 enhances consistency in financial reporting by increasing the frequency of fair value disclosures. The amendment to FASB ASC 825 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 the amendment, fair values for these assets and liabilities were only disclosed once a year. FASB ASC 825 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. The amendment to FASB ASC 825 is effective for interim and annual periods ending after June 15, 2009. The adoption of the amendment to FASB ASC 825 has had no significant impact on the Company's results of operations, financial condition and equity.

              In April 2009, the FASB issued an amendment to FASB ASC 320 "Recognition and Presentation of Other-Than-Temporary Impairments of Debt and Equity Investments". The amendment to FASB ASC 320 provides additional guidance designed to create greater clarity and consistency in accounting for and presenting impairment losses on securities. The amendment to FASB ASC 320 relates to other-than-temporary impairments and 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. The amendment to FASB ASC 320 also requires increased and more timely disclosures sought by investors regarding expected cash flows, credit losses, and an aging of securities with unrealized losses. The amendment to FASB ASC 320 is effective for interim and annual periods ending after June 15, 2009. The adoption of the amendment to FASB ASC 320 has had no significant impact on the Company's results of operations, financial condition and equity.

              In May 2009, the FASB issued FASB ASC 855 "Subsequent Events". FASB ASC 855 establishes general guidelines for accounting and disclosing events that occur subsequent to an entity's balance sheet date but prior to issuance of its financial statements. FASB ASC 855 defines the period

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after the balance sheet date and the circumstances which an entity should recognize events in its financial statements FASB ASC 855 is effective for interim and annual periods ending after June 15, 2009. As a result of adopting this guidance, the Company accrued $6.6 million for the three months ended June 30, 2009 for the estimated costs of the 17 HMR ammunition and Remington Model 597 17 HMR semi-automatic rifle product safety warning.

              In June 2009, the FASB issued an amendment to FASB ASC 860 "Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140". The statement removes the concept of a qualifying special-purpose entity from FASB ASC 860 "Transfers and Servicing", and removes the exception from applying FASB ASC 810 "Consolidation of Variable Interest Entities". The amendment clarifies the objective of whether a transferor has surrendered control over the financial assets and limits the circumstances in which a financial asset should be derecognized. It also requires that all assets acquired and liabilities incurred resulting from the transfer of a financial asset be initially measured at fair value. The amendment to FASB ASC 860 is effective for interim and annual periods ending after November 15, 2009. The adoption of the amendment to FASB ASC 860 has had no significant impact on the Company's results of operations, financial condition and equity.

              In June 2009, the FASB issued an amendment to FASB ASC 810 "Amendments to FASB Interpretation No. 46(R)". The amendment requires a reporting enterprise to perform an analysis and ongoing reassessments to determine whether the enterprise's variable interest gives it a controlling financial interest. It also requires an enterprise to assess whether it has an implicit financial responsibility to ensure a variable interest operates as designed when determining whether it has the power to control the variable interest. The amendment eliminates the quantitative approach previously required when determining the primary beneficiary of a variable interest and augments current disclosures. The amendment to FASB ASC 810 is effective for interim and annual periods ending after November 15, 2009. The adoption of the amendment to FASB ASC 320 has had no significant impact on the Company's results of operations, financial condition and equity.

              In June 2009, the FASB issued FASB Accounting Standards Update ("ASU") 2009-01 "Topic 105—General Accounting Principles—amendments based on Statement of Financial Accounting Standards 168—the FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles". FASB ASC 105 establishes the Accounting Standards Codification ("Codification") as the source of authoritative U.S. generally accepted accounting principles for all nongovernmental entities. On the effective date of this ASU, all then-existing and non-SEC accounting and reporting standards will be nonauthoritative and superseded by the Codification. New standards by the Financial Accounting Standards Board, will be issued through Accounting Standards Updates. Accounting Standard Updates are not considered authoritative in their own right, but will update, guide, and provide the bases for conclusions on changes in the Codification. FASB ASC 105 is effective for financial statements issued after September 15, 2009. The adoption of FASB ASU 2009-01 has had no significant impact on the Company's results of operations, financial condition and equity.

              In August 2009, the FASB issued FASB ASU 2009-05 "Fair Value Measurements and Disclosures—Measuring Liabilities at Fair Value". In circumstances where the fair value of a company's liabilities are not traded in an active market, this ASU requires the use of one or more of the following techniques in measuring the fair value of a liability: the use of a quoted price of an identical liability when traded as an asset in an active market, the use of quoted prices for similar liabilities when traded as assets in an active market, or other valuation techniques consistent with FASB ASC 820 such as the income or market approach. This ASU does not require a separate input or adjustment to other inputs when estimating the fair value of liabilities when transfer restrictions exist. Quoted prices on identical liabilities when they are traded as assets are level 1 fair value measurements. FASB ASU 2009-05 is effective for interim and annual periods beginning after August 2009. The adoption of FASB ASU 2009-05 has had no significant impact on the Company's results of operations, financial condition and equity.

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              In September 2009, the FASB issued FASB ASC 2009-08 "Earnings Per Share". The ASU amends SEC requirements for redemption or induced conversion of preferred stock. During the period when a redemption occurs, the SEC staff believes that the difference between the fair value of the consideration transferred to the holders and the carrying value of the preferred stock on the company's financial statements should be excluded from net income when determining income available to common stockholders when calculating earnings per share. During the period when a redemption of a portion of the outstanding preferred shares occurs, the redeemed shares should be considered separately from other convertible preferred shares in determining whether the "of-converted" method is dilutive for the period. FASB ASU 2009-08 was effective in September 2009. The Company does not expect the adoption of FASB ASU 2009-08 to have a significant impact on its results of operations, financial condition and equity.

              In September 2009, the FASB issued FASB ASU 2009-09 "Accounting for Investments—Equity Method and Joint Ventures and Accounting for Equity-Based Payments to Non-Employees". The ASU establishes SEC requirements for classifying income or expense related to stock-based compensation to employees of an equity-method investee into the same income statement caption as equity earnings of the investee. FASB ASU 2009-09 was effective in September 2009. The adoption of FASB ASU 2009-09 has had no significant impact on the Company's results of operations, financial condition and equity.

              In December 2009, the FASB issued FASB ASU 2010-02 "Accounting and Reporting for Decreases in Ownership of a Subsidiary—a Scope Clarification". The ASU clarifies the scope for decreases in ownership and deconsolidation provisions for (1) a subsidiary or group of assets that is a business, (2) a subsidiary that is a business that is transferred to an equity method investee, and (3) an exchange of a group of assets that constitutes a business for a noncontrolling interest in an entity. Decreases in ownership provisions in accordance with FASB ASC 810 "Consolidations" are not applicable to sales of in substance real estate or conveyances of oil and gas mineral rights. Decreases in ownership of subsidiaries not categorized as businesses should follow applicable guidance outside of ASC 810. If no other guidance exists, the decrease in ownership should follow the provision guidelines in ASC 810. The ASU also requires additional disclosures about the deconsolidation of the subsidiary. FASB ASU 2010-02 is effective for interim and annual periods ending on or after December 15, 2009. The adoption of FASB ASU 2010-02 has had no significant impact on the Company's results of operations, financial condition and equity.

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BUSINESS

Company Overview

Our Company

              We are one of the leading firearms, ammunition and related products companies in the world, with #1 commercial market positions across all of our major product categories in the United States, the largest firearms and ammunition market globally. We are an innovator, designer, manufacturer and marketer of an increasingly broad product line which services the hunting, shooting sports, law enforcement and military end-markets under some of the most globally recognized brands including Remington, Marlin, Bushmaster, and DPMS, among others.

              Remington, founded in 1816, designs, manufactures and markets a comprehensive line of primarily firearms, ammunition and related products for the global hunting and shooting sports marketplace, under the Remington brand name. Remington is engaged primarily in the design, manufacture, import and sale of sporting goods products for the hunting/shooting sports and related markets. Remington also designs, manufactures and sells firearms and ammunition products to certain federal agency, law enforcement, and military markets. Product lines are sold under the Remington, Marlin, H&R 1871, L.C. Smith and Parker names and other labels. Remington's principal manufacturing facilities are located in New York, Arkansas and Connecticut. Remington was acquired by the Company on May 31, 2007.

              Today, Freedom Group includes over 10 well-regarded brands, collaborating across all disciplines, from product development to distribution, delivering end-user driven products to the hunting, shooting sports, law enforcement and military end-markets. We have made significant progress in our transition to a customer-focused sales and marketing organization by shifting to a two-tiered sales structure whereby dedicated key account managers sell the full FGI product offering to our top retail accounts while our internal field sales force calls on our network of distributors and dealers. This has allowed us to create a unified customer facing platform capable of selling our entire suite of brands and products across multiple end-markets while providing the ability to leverage our flexible manufacturing capacity to quickly respond to changes in customer preferences and demands.

Our Industry

              We compete in the global marketplace for firearms, ammunition, accessories and licensed products in approximately 80 countries. End customers include police departments, domestic and foreign government organizations, including the U.S. military, and consumers, such as sportsmen, hunters, and recreational shooters. Consumer distribution channels are diverse, and include major chain retail stores, major distributors, smaller dealers, gun clubs and ranges.

              Based on data from the NSSF, we estimate that the annual domestic commercial long gun market is approximately $1.2 billion and the commercial ammunition market is approximately $1.2 billion. We estimate total annual purchases of firearms and ammunition by U.S. military and law enforcement are $1.7 billion and $475 million, respectively. Additionally, we believe there are significant opportunities in the international market for our products.

              The long gun market represents a significant variety of firearms, including both shotguns and rifles. The use of these firearms ranges from hunting, to law enforcement and defense, to other shooting sports, such as skeet, trap, sporting clays and target shooting. According to the NSSF, domestic consumer long gun sales (based on excise tax data) have grown at a 4% CAGR from 2004 to 2008. We believe the commercial modern sporting rifle market, in which we believe we are the largest producer, has grown at a 31% CAGR from 2004 to 2008. Further, the NSSF estimates that consumer ammunition sales grew at a 13% CAGR during the 2004-2008 period.

              Our consumers include people of all ages, gender, educational backgrounds and income levels. The NRA estimates 70 to 80 million people in the U.S. own firearms, with privately held ownership

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approaching 300 million. This represents a significant installed base that generates a recurring revenue stream for ammunition, parts and accessory sales. In addition, we believe that a number of other developments in the industry are broadening and renewing consumer interest in hunting and shooting sports, including a renewed interest in the outdoors and product offerings designed to introduce new shooters to hunting and shooting.

              We believe the accessories market for our products creates a significant opportunity for revenue growth and enhances the perception of our overall product portfolio. Accessory opportunities range from gun care products and gun parts in our hunting and shooting sports categories to trigger, barrel, stock, and grip upgrades, and caliber-changing upper assemblies in the tactical and modern sporting rifle lines.

              We believe that a meaningful percentage of current firearm sales are being made to first time gun purchasers, particularly women. We further believe that the introduction of first time shooters, as well as the renewed interest of many existing shooters, will translate to increased participation across the ever-widening array of shooting sports. In addition, the continued adoption of the modern sporting rifle has led to increased growth in the long gun market, especially with a younger demographic of users and those who like to customize or upgrade their firearms. We view this current increase in demand as having significant long-term benefits, including expanding the popularity of shooting sport categories, as well as providing an opportunity to cultivate new, and renew existing, long-term customer relationships across our portfolio of products and brands.

Our Competitive Strengths

              We believe our business model provides a broad and attractive value proposition to our customers and we believe that we are distinguished by the following competitive strengths:

Category-Defining Brands

              We believe our brand names are some of the most globally recognized in the hunting, shooting sports, law enforcement, and military firearm and ammunition end-markets. This recognition is enhanced by our deep rooted philosophy and heritage of investing in the great American outdoors that is actively driven through our partnerships with hunting, shooting, outdoor sports and conservation organizations.

              Built on a legacy of quality and innovation, we believe that the Remington brand represents an enduring symbol of American values and is trusted and respected by generations of sportsmen, lawmen and soldiers. Established in 1816, the Remington brand is ranked #2 in brand awareness, second only to Nike among sportsmen and 8th overall among all sports brands in the SportsOneSource 2009 Brand Index. The brand has been judiciously deployed across virtually every category of our firearms and ammunition. Remington has some of the best-known and longest-selling products in the hunting and shooting sports market, which we believe define their respective categories. For example, the 10 millionth Model 870 pump-action shotgun was produced in April 2009 and we have produced more than 5 million Model 700 bolt-action rifles, which we believe is currently the most widely-distributed rifle in its class. The Remington brand is licensed to third parties for use in related products, is heavily used in our accessories businesses and is well-known in the domestic and international law enforcement and military channels.

              The Bushmaster and DPMS brands, established in 1973 and 1986, respectively, represent the largest and second largest designers and suppliers of modern sporting rifles, components and parts for the commercial market, in addition to sales to the law enforcement, military and international markets. Bushmaster was one of the first to introduce modern sporting rifles to the consumer market, which is growing faster than the general firearms industry.

              Our other firearms brands include:

    Marlin—Key producer of lever-action and bolt-action rifles

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    Harrington & Richardson—Producer of break-action single-shot rifles and shotguns

    L.C. Smith—Major producer of aspirational side-by-side and over-under shotguns

    Parker Gun—Key producer of aspirational high-end brand of artisanal shotguns

    Dakota Arms—Key producer of aspirational rifles and shotguns often chambered in large calibers

    Miller Arms—Producer of customized precision single-shot rifles

    Nesika—Producer of precision bolt-action rifles and actions

              Our ammunition brands, including Remington, UMC, Dakota and Barnes, also enjoy leading market positions, strong brand recognition and generations of customer loyalty. We believe that Remington Core-Lokt centerfire ammunition is the most widely used, and the Premier STS and Nitro 27 target loads have won more trophies at the Grand American Trap and World Skeet championship than any other brand. The Grand American is believed to be the largest shooting tournament in the world and offers competitors the opportunity to explore the most advanced products and services in the shooting industry. Additionally, we believe trophies at this event are recognized throughout the industry as "best in class".

              Our EOTAC and INTC joint ventures extend into tactical and discreet clothing and frangible ammunition, respectively.

Leading Market Share Positions

              Our core products are ranked #1 across their respective U.S. commercial product categories.

Categories
  U.S. Market Position   U.S. Market Share  

Firearms

             
 

Shotguns

    #1     31 %
 

Traditional Rifles

    #1     37 %
 

Modern Sporting Rifles

    #1     48 %

Ammunition

    #1     33 %

Note: Based on 2008 Firearms and Ammunition Market Data from SMRG and AFMER, and excludes law enforcement, international and military sales.

Broad Product Portfolio

              We have the broadest firearms, ammunition, components, parts and accessory portfolio in our industry:

    Firearms—We provide a wide variety of firearms, including a full product line of both shotguns and rifles. Our shotgun firearm types include single-shot, pump-action, auto-loading, over-and-under, break-action and side-by-side. Our rifles are both centerfire and rimfire, and include lever-action, bolt-action, break-action, single-shot and modern sporting rifle firearm types. Our products range in price from entry level firearms under the Harrington & Richardson brand to the aspirational hand-crafted Parker Gun and Dakota brands in addition to our core brands of Remington, Bushmaster, DPMS and Marlin. Varied price points enable us to build lifetime relationships and brand loyalty with our customers as they mature in, and expand across additional categories of, the outdoor marketplace. In addition, we believe that we offer the widest variety of shotgun gauges and rifle caliber chamberings of any long gun manufacturer, and also offer high-end precision, aspirational and custom firearms.

    Ammunition—We are the only company in the United States that is a major supplier of both firearms and ammunition. Our prominence in the ammunition market and ability to leverage

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      brand loyalty creates a recurring and stable revenue stream in ammunition to complement our firearms business. We produce over 1,000 SKUs of ammunition (loaded rounds and components) across 60 calibers and gauges for use across the entire spectrum of firearms, including centerfire rifles, rimfire rifles, shotguns, and handguns, at a variety of price points and for a broad spectrum of applications.

    Components and Parts—Our business of providing components and parts to customize firearms, particularly modern sporting rifles, generates additional sales to existing customers, with component systems and parts often generating higher margins than complete rifles, which are reported within our firearms segment. Most of these components and parts, with the exception of the serialized lower receiver, can be sold directly to consumers without going through a federally licensed firearms dealer.

    Accessories—We sell a wide variety of branded accessories, including gun care and cleaning products, Dan Walter protective firearms cases and folding and collectible knives. AAC manufactures and markets a full line of firearm accessory products for military and commercial applications. Through our EOTAC majority owned joint venture, we market high quality tactical and discreet garments for military, law enforcement and the commercial sector.

    Licensing—We license our trademarks to a discrete number of third parties that manufacture and market sporting and outdoor products that complement our product lines. We currently offer approximately 3,500 SKUs and generate over $110 million in sales for our retail partners. Currently, our trademarks are licensed for use on, among other things, sporting and outdoor apparel, caps, gun cases and slings, tree stands, wildlife feeders, sporting dog equipment, air guns, game decoys and calls, hunting and shooting safety and security products, gun safes, and various other nostalgia and novelty goods. We strive to ensure that the quality, image and appeal of these licensed products are consistent with the high-quality nature of our products and brand strength. We believe that these licenses increase the market recognition of our brands, enhance our ability to market our core products, and generate attractive, high margin income. Additionally, we believe there are significant opportunities for our licensed products as we believe consumer preference is continuing to move toward an outdoor lifestyle.

              Our broad product portfolio provides a wide assortment of choices and options for end-users, so that we can provide a solution for any firearm or any ammunition application. This enables us to be a key supplier to our commercial, law enforcement and military customers with significant cross-selling and bundling opportunities, while building strong brand loyalty across all shooting sports and needs.

Multiple Distribution Channels Reaching Diverse End-Markets

      Commercial

              The combination of our strong brands, wide product breadth, leading market shares and the ability to offer both firearms and ammunition has made us a key partner with our commercial retailers and distributors. We have strong relationships with all of the major chain retail stores that sell firearms and ammunition, including Bass Pro Shops, Cabela's, Dick's Sporting Goods, Gander Mountain, Academy, Big Five and Wal-Mart, as well as with major sporting goods distributors such as Sport South and Accusport. In addition, we have strong relationships with dealers and shooting ranges, and are actively working with them to grow sales within this channel. Within the commercial business, our products are used across a wide variety of shooting activities, resulting in numerous diverse customer end-markets serving hunters as well as skeet, trap and target shooters, competitive target shooters and a broad variety of recreational shooters.

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      Military/Law Enforcement/International

              In addition to our significant commercial business, we sell products to law enforcement, international, government and military end-markets where we already have a strong presence. These markets represented approximately 16% of our 2009 net sales. We believe that our increasingly focused law enforcement and global military products divisions will increase our presence in the law enforcement and defense markets beyond our existing customers, which include the Texas Department of Public Safety, Los Angeles County Sheriff's Department, Los Angeles Police Department, the California Highway Patrol, FLETC, DOD, the United States SOCOM, and the United States Secret Service, as well as international governments including Colombia, the Republic of Georgia, Italy, Poland, Malaysia, Mexico and Oman. All firearms and ammunition that we sell and export to foreign countries, whether sold commercially or to international governments and militaries, must be licensed and approved by the U.S. Department of State or the U.S. Department of Commerce.

Differentiated, Customer-Focused Sales and Marketing Approach

              We have significantly grown and transitioned our dedicated sales force to a two-tiered structure whereby dedicated key account managers sell the full FGI product offering to our top eight retail accounts while our internal field sales force calls on our network of approximately 800 distributors and dealers. This investment and effort has significantly reduced our use of third-party, non-exclusive sales representatives. This sales structure is similar to those utilized by many leading consumer products companies and allows for us to more effectively sell our entire suite of brands and products to our key customers and distributors. We believe this sales structure will lead both to increased market share with our key customers as well as to provide the ability to leverage our flexible manufacturing capacity to quickly respond to changes in customer preferences and demands.

              We have also shifted our business from a manufacturing-based "push system," in which product volumes and mix are determined based on available capacity, to a customer-focused "pull system," in which customer and consumer demand determine manufacturing decisions. We mine our extensive and proprietary database of consumer contacts and are an industry leader in our ability to capture and analyze point-of-sale and sell-through data from our key customers and distributors to determine what products our customers demand. Additionally, our key account managers have access to the full suite of FGI products and we believe are leveraged by our retail partners to assist in long range sales planning.

              Our law enforcement and global military products divisions capitalize on key relationships to identify customer needs, so that research and development investments are focused and timely in providing products that meet these needs. We supplement our law enforcement and military efforts through the consultation with our board members who have extensive knowledge and experience.

Attractive Cash Flow Generation

              We believe our balanced business model based upon sales, marketing and distribution of both firearms and ammunition to long standing customers further supports our ability to generate strong future cash flows that can be re-invested in research and development, the growth of sales within our distribution channels and in the acquisition of select complementary businesses. We have achieved substantial working capital improvements since 2007 by decreasing average days sales outstanding by 28 days and inventory days by 57 days from January 2007 through December 2009. Our attractive operating margins, variable cost structure, relatively low maintenance capital expenditures and low working capital needs all result in strong cash flow generation.

Proven and Experienced Management Team and Board of Directors

              Our senior management team has substantial industry and related operational, sales and marketing and financial experience. For example, our Chief Executive Officer, Ted Torbeck, joined us after a 28 year career with General Electric, our Chief Sales Officer, Scott Blackwell, has over 20 years experience in the firearm and law enforcement industry and our Chief Financial Officer, Stephen

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Jackson, has been with the Company for six years and has over 19 years of financial and accounting experience. Immediately after the offering, our management will own approximately        % of our common stock (on a fully diluted basis). In addition to key managers that have been in place at our companies, we have added numerous experienced external professionals to execute our business strategy including a Chief Operating Officer, Chief Sales Officer, Chief Information Officer, Chief Marketing Officer, Chief Technology Officer and General Counsel. Further, our board members provide a wealth of relevant experience and expertise across operations, sales and marketing and defense, including Edward Rensi, the former Chief Executive Officer of McDonalds U.S.A.; retired four star Generals Michael Hagee, former Commandant of the United States Marine Corps, and George Joulwan, former SACEUR (Supreme Allied Commander Europe and Head of NATO); Bobby Brown, former President of Remington; James Pike, Chief Executive Officer of CTA Acoustics and Maul Technology; David Bell, former Chairman Emeritus of Interpublic Group; Grant Gregory, Vice Chairman of Cerberus Capital Management; and Jeff Bleustein, former Chairman and Chief Executive Officer of Harley-Davidson.

Our Growth Strategy

              Our fundamental strategy is to continue to strengthen and broaden our leading market positions across the firearms, ammunition and related product markets. We do so by actively and collectively managing our broad portfolio of powerful brands and products across a diverse set of end-markets. Our core strengths described above, augmented by a constant focus on operational improvements designed to increase manufacturing efficiency, quality and profitability, have been implemented and are continuously refined by our highly experienced management team. Specific additional strategic initiatives include:

Increase Commercial Market Share through Marketing-Focused Organization

              The combination of our strong brands, wide product breadth, leading market shares and the ability to offer both firearms and ammunition has cultivated a broad and loyal customer base across a wide range of commercial retailers and distributors. We have invested in our commercial sales organization, growing our headcount by 44% over the past two years, to increase the experience, reach and impact of our team. This investment and effort has significantly reduced our use of third-party, non-exclusive sales representatives. We expect to continue to grow our commercial market share by leveraging our strong brand and product portfolio with our dedicated sales force to increase shelf space. As we continue to see results of our sales and marketing optimization efforts, we will benefit from the key account managers developing stronger ties to and long term plans with our core retailers while the broader sales force capitalizes on an extensive existing dealer network. By increasing our consumer points-of-contact and continued focus on a customer driven platform, we believe we will continue to expand our leading market position.

Further Penetrate the Domestic and International Defense and Law Enforcement Channels

              Our global military products division, operating under a unified leadership across all of our brands, has focused research efforts on developing products in advance of key emerging imminent firearms solicitation windows for the DOD over the next several years. We continue to significantly ramp up and augment our business to take advantage of these opportunities. While we have supplied a number of products to the military and law enforcement channels for many years, we view this area as having high potential for further penetration and growth for a wide variety of our existing products, as well as products we have recently developed and continue to develop. Specific opportunities include the development of the next generation tactical sniper system for special operations and conventional military customers, the next generation service rifle for the U.S. Army, an upgrade option to our current M24 Sniper Weapon System for the U.S. Army for greater range and capability, and a materials and coatings sniper rifle study for the Defense Advanced Research Projects Agency (DARPA) that focuses on barrel life and long range accuracy. In addition, we are aligning ourselves with certain suppliers to exploit our competitive advantages and secure future government-funded research and development opportunities in this area.

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              Our international business has increased significantly in net sales over the last two years with firearm (sniper systems, shotguns, and service rifles) and ammunition sales to governmental customers in Mexico, Thailand, Malaysia and Afghanistan, among other countries. In addition to the new products mentioned above, we are developing several products specific to the foreign markets, including a 7.62mm semi-auto sniper system and several personal defense weapons. We believe we are well-positioned as an important player in this growing global market and can offer full firearms and ammunition solutions to existing and new foreign military customers. We believe leveraging current and future DOD contracts will further enhance our ability to win international business. All firearm export sales need to be licensed and approved by the United States Department of State or the United States Department of Commerce, and we have a successful track record of obtaining such approvals.

Continued Focus on Innovation and New Product Development

              We are an innovation leader in our industry, supported by more than 45 engineers and technicians and what we believe to be the industry's only domestic freestanding and dedicated firearms research and development facility. Our team develops new products, such as the weather-resistant M887 Nitro Mag shotgun which was launched in May 2009, as well as processes to bring new products such as the XL7 series of rifles to market more quickly and cost effectively. Our focus on innovation has resulted in the introduction of diverse products such as the Remington R-15 modern sporting rifle, the R-25 modern sporting rifle, the Bushmaster .50 BMG bolt action rifle, and the .308 DPMS modern sporting rifle. In 2009, we also launched the Remington M597 VTR rimfire rifle, the Marlin .338 MXLR/MX lever action line of rifles and the Remington R-15 styled rifle for the new Remington 30AR cartridge, along with a variety of other new ammunition products. We are driving product development for our law enforcement, international and military efforts, as well as additional sales to existing commercial customers with additional part configurations and calibers for the modern sporting rifle. Specific examples include the Adaptive Combat Rifle and 7.62mm semi-auto sniper system. We have numerous new products in development with multiple new firearms product platforms and extensions to existing product lines scheduled for introduction in 2010 and beyond.

Continue to Optimize Manufacturing Operations

              We have continued to augment and integrate our facilities over the last 24 months and have focused on improving our operating efficiency. To this end, we have completed a number of lean manufacturing projects, including a factory consolidation and six sigma efforts led by the introduction of more than 50 black belt process experts since implementation of the program. Such projects have increased throughput and reduced direct labor, square footage and equipment downtime along with improved cash flow from lower inventory levels. These activities, which we call "continuous cost improvements," will continue to be a cornerstone of our organization as we build and optimize our world class manufacturing platform.

              Our manufacturing optimization efforts have also included the shift of some modern sporting rifle components and parts production into our plants and away from third-party vendors. These efforts have made the combined organization considerably more flexible, improved our quality and margins and enabled us to more quickly and efficiently address future changes in demand. The benefits of our past work are starting to appear in our ability to leverage our existing manufacturing footprint during periods of high demand while maintaining variability in our cost structure. We enhance this variability through our use of third parties for many modern sporting rifle components with no long-term contracts, so that we can adjust our inventory quickly and at a low cost.

Pursue Complementary Acquisitions and Strategic Investments

              We have built and strengthened our family of brands and products over the past three years, primarily through the successful integration of four primary acquisitions (Bushmaster, Remington,

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DPMS and Marlin) made between April 2006 and January 2008. We did so with the goal of creating the world's leading firearms and ammunition company. We have focused on integrating and optimizing our consolidated business operations since the spring of 2008. We have a proven track record of successfully identifying and integrating acquisitions, as demonstrated by the integration of our brands, and have achieved significant operational improvements as a result. We intend to continue to identify and pursue add-on strategic acquisitions or investments that expand and enhance our brand, product and intellectual property portfolio. We seek to acquire highly complementary products, intellectual property or external capabilities to fill gaps in our portfolio or extend our brands and channel relationships.

              We completed four strategic acquisitions in 2009 financed by cash from operations, which we believe will enhance our business performance in 2010. On June 5, 2009, we acquired certain assets of Dakota Arms, a producer of high-end rifles, shotguns and ammunition for approximately $1.8 million, which primarily consisted of inventory and equipment. This acquisition positions us in the largely customized, high precision, large caliber and safari segments of the market, with premium and aspirational firearm and ammunition brands including Dakota Arms, Miller Arms and Nesika, as well as Dan Walter premium gun cases. In addition, on September 22, 2009, we acquired certain assets from S&K Industries, Inc. ("S&K"), a supplier of high quality walnut and laminate wood stocks for our firearms operations for approximately $3.8 million. The assets acquired are primarily inventory, machinery and equipment. We believe this acquisition will reduce certain costs of acquiring the wood stocks and improve efficiencies in our firearms manufacturing processes. On October 2, 2009, we completed the acquisition of certain assets of Advanced Armament Corp. ("AAC") for approximately $11.1 million, with an additional amount of approximately $8.0 million due in 2015 upon achievement of certain employment and financial conditions. AAC manufactures and markets a full line of firearm accessory products used in certain military and commercial markets and provides us further product portfolio expansion. Finally, on December 31, 2009, we completed the acquisition of certain assets and liabilities of Barnes, a supplier of copper bullets, including copper-tin composite core bullets, for approximately $25.6 million. We believe this acquisition allows us to offer a premium product offering to complement our existing products and to provide shooters and hunters with a premium line of high performance bullets.

Our History and Corporate Structure

              With the goal of creating the world's leading firearms, ammunition and related products company, we have built a family of brands and products through the successful integration of four primary acquisitions (Bushmaster, Remington, DPMS and Marlin). As a result of these acquisitions, we have over 190 years of operational history in firearms, ammunition and related products.

              FGI is a holding company controlled by Cerberus, dating back to the first firearms acquisition of certain assets and liabilities of Bushmaster by Cerberus in April 2006. Our predecessor company was created on February 17, 2006 by CCM for the purpose of acquiring the business of Bushmaster Firearms, Inc. Effective April 1, 2006, CCM completed the acquisition of certain assets and assumed certain liabilities of Bushmaster Firearms, Inc.

              FGI (formerly American Heritage Arms, Inc.) was formed on March 30, 2007 by CCM principally for the purpose of acquiring Remington Arms Company, Inc., which was acquired on May 31, 2007. On December 12, 2007, through a series of transactions, Bushmaster Firearms International, LLC and Remington Arms Company, Inc. became wholly owned subsidiaries of FGI. On December 13, 2007, through our subsidiary DPMS Firearms, LLC, we acquired certain assets and assumed certain liabilities of Defense Procurement/Manufacturing Services, Inc. On January 28, 2008, we acquired 100% of the shares of the Marlin Firearms Company and its subsidiary H&R 1871, LLC through our Remington subsidiary. We have focused on integrating and optimizing our consolidated business operations for the past 21 months.

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              We have made four additional small strategic acquisitions to supplement and expand the current brand portfolio. On June 5, 2009, through our wholly owned subsidiary DA Acquisitions, LLC, which was merged into Remington in October 2009, we acquired certain assets and assumed certain liabilities of Dakota Arms. On September 22, 2009, we acquired certain assets from S&K. In addition, we completed the acquisition of certain assets and the assumption of certain liabilities of AAC and Barnes on October 2 and December 31, 2009, respectively.

              We have entered into strategic joint-ventures through our non-wholly owned subsidiaries. On March 19, 2007, we purchased an 80% ownership interest in Precision Arms Center. On November 3, 2008, we purchased 27.1% ownership interest in INTC USA, LLC. On July 30, 2008, we purchased a 61.8% ownership interest in EOTAC, LLC.

              On February 13, 2009 we formed E-RPC, LLC as a wholly owned domestic subsidiary principally to carry out certain operating activities related to our re-entrance into the handgun market.

              The following chart shows our corporate structure as of the date of this prospectus:

GRAPHIC


(1)
73% owned by third parties.
(2)
38% owned by third parties.
(3)
50% owned by Spectrum Brands Inc.
(4)
20% owned by third parties.

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Trademarks and Trade Names

              We own or have rights to trademarks or trade names that we use in conjunction with the operation of our business. In addition, our name, logo and website name and address are our service marks or trademarks. Each trademark, trade name or service mark by any other company appearing in this prospectus belongs to its holder. Some of the more important trademarks that we use include Remington®, Peters®, UMC®, Premier®, Express®, Ultra-Mag™, Core-Lokt®, Core-Lokt Ultra™, Fireball™, Model 870™, Model 1100™, Model 11-87™, Model 11-87 Super Magnum™, Model 700™, EtronX®, Model 700 Etron X™, Model Seven™, Model 7400™, Model 7600™, Model 597™, Model 300™, M-27™, ARMORLOKT®, Marlin®, H&R 1871®, Parker®, LC Smith®, Bushmaster®, DPMS™, Panther Arms®, EOTAC™, Dakota™, Miller Arms®, Nesika®, RemOil®, Brite-Bore™ and RemAction Cleaner™.

Segment Overview

              We operate our business under three separate reporting segments: (1) our "firearms" segment, which designs, manufactures, assembles, imports and markets primarily shotguns, centerfire rifles and rimfire rifles; (2) our "ammunition" segment which designs, manufactures and markets primarily sporting ammunition and ammunition reloading components; and (3) an "all other" reporting segment which includes accessories, other gun-related products, licensed products and apparel. The following table sets forth our sales for our reportable operating segments for the periods shown:

 
  Predecessor   Successor  
 
  January 1
through
March 31,
  April 1
through
December 31,
  Year Ended
December 31,
 
 
  2006   2006   2007   2008   2009  
 
   
  (dollars in millions)
   
 

Firearms

  $ 16.8   $ 41.3   $ 201.6   $ 426.6   $ 508.1  

Ammunition

            169.3     275.9     321.6  
                       

All other

            14.0     20.0     19.0  
                       

Totals

  $ 16.8   $ 41.3   $ 384.9   $ 722.5   $ 848.7  
                       

Firearms

Overview

              We design, manufacture and market our firearms primarily under the Remington, Marlin, Bushmaster, DPMS, H&R, L.C. Smith, Parker, Dakota Arms, Miller Arms, and Nesika brand names. Through our diversified portfolio of leading brands, we offer a wide variety of long guns including pump-action shotguns, auto-loading shotguns, side-by-side shotguns, over-and-under shotguns, break-action shotguns, and a comprehensive variety of centerfire and rimfire rifle types, including custom and precision guns, lever-action rifles, bolt-action rifles, break-action rifles, single-shot rifles, and modern sporting rifles. Our products appeal to a broad range of gun owners, attracting novice and experienced consumers alike. We offer our products at a range of price points, from entry level, value priced guns to premium brands that appeal to gun enthusiasts and collectors worldwide. We also produce components, including uppers, lowers, barrels and spare parts, which enable gun enthusiasts to build and continually upgrade and customize their firearms. Our brand strategy allows us to address a variety of end-user preferences, ranging from hunting and shooting sports to government, military and law enforcement applications, from beginner to accomplished shooters, as well as build strong brand awareness and generate attractive cross-selling opportunities.

              We believe our portfolio contains powerful brands acknowledged throughout the broader U.S. sporting goods and outdoor recreation markets and that our products are recognized by sportsmen and shooters worldwide for superior value, performance and durability. One of our core strategies is to

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consistently introduce new and innovative products. This strategy results in a robust new product pipeline, including our M887 Nitro Mag shotgun, an innovative new pump-action shotgun that features ARMORLOKT, our proprietary protective coating designed for the harshest environments. In addition, we have developed various innovative products for the international, law enforcement and government end-markets under the Remington, Bushmaster and DPMS brands. For example, Remington supplies the M24 Sniper Weapon System to the U.S. Army. Finally, Bushmaster and DPMS, which supplied over 29,000 firearms to law enforcement and international customers in 2009, provide firearms to various federal agencies including the DOD.

Products

              Our most popular Remington shotguns are the Model 870 pump-action shotgun and the Model 1100 and Model 11-87 auto-loading shotguns. Remington shotguns are offered in versions that are marketed to both novices and experienced gun owners. Specialty shotguns focus on the deer, turkey and other specialized hunting markets, recreational and competitive clay target shooting, and various law enforcement and military applications. We also offer premium over/under, side-by-side, and entry-level single-shot shotguns.

              Our most popular Remington rifles are the Model 700, Model Seven and Model 770 centerfire rifles and the Model 597 rimfire rifles. To appeal to a broad range of gun owners, we manufacture these rifles in a wide variety of chamberings, configurations and finishes. In addition, Remington offers the R-15 and R-25 modern sporting rifles for hunting use.

              Marlin is synonymous with lever-action rifles. The Model 336, Model 1895, Model 1894 and the recently introduced XLR configurations are designed for high performance and durability across multiple medium and large centerfire calibers. Marlin also produces the Model 39A lever action rimfire rifle, which is the longest continuously manufactured rifle in the world, having commenced production in 1891. In addition to lever-action rifles, Marlin is also known for its rimfire rifle offerings particularly, the Model 60, as well as the Model 795, Model 925 and Model 917. Marlin also offers a bolt-action centerfire rifle in the competitively priced XL7 series rifle.

              Bushmaster produces superior quality and highly advanced modern sporting rifles, used worldwide in the commercial, law enforcement, international and military markets. Bushmaster produces a wide range of upper and lower assemblies for modern sporting rifles, carbon composite carbines, M4 type carbines and a wide range of custom products with a primary focus on the .223 and 5.56mm caliber. Bushmaster has introduced innovative products and caliber offerings such as the .50 BMG and .450 Bushmaster with several new platforms currently under development.

              DPMS is a leading innovator of modern sporting rifles with a broad range of caliber offerings such as .308, .338 and .243. In addition, DPMS produces a range of upper and lower assemblies, stocks and other gun components to a diverse customer base including dealers and end-users.

              Harrington & Richardson offers competitively priced break-action single-shot shotguns and rifles. Popular models include the Pardner line of single-shot shotguns as well as the Handi-Rifle single-shot rifle and Ultra Slug Hunter rifled slug shotguns.

              Recently, we completed the acquisition of Dakota Arms. Dakota Arms is a manufacturer of premier rifles used in the high precision, large caliber and safari segments of the market.

Product Introductions

              We focus our product development efforts on satisfying customer preferences. Recent Remington product introductions include the Model 887 Nitro Mag, an innovative new pump-action shotgun fully encased in a rugged polymer shell, the Model 700 XHR rifle with a triangular profiled barrel and the Model R-15 rifle chambered in the new .30 Remington modern sporting cartridge. Additionally, Remington upgraded the X-Mark Pro trigger for the Model 700 series with external

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trigger pull weight adjustment capability. Recent Marlin introductions include the .338 MXLR and .338 MX rifles chambered for the new .338 Marlin Express cartridge, short-action chamberings in the X7 series rifles as well as a big loop lever version of the 1895 series rifle. New products under development include the Remington ACR and the .30 Remington.

Ammunition

Overview

              As the only major supplier of both firearms and ammunition in the United States, we believe our ability to sell ammunition creates a unique competitive advantage within the industry and allows us to solidify and extend our existing long-term relationship with our loyal customer base. Our ammunition product offerings consist of a comprehensive line of sporting ammunition and ammunition reloading components, along with ammunition for the government, military, and law enforcement markets, marketed under the Remington,