SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                               ___________________

                                    FORM 10-Q

             [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                        SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended September 30, 1998

                                       OR

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

                        For the transition period from to

                         Commission file number 0-1282-3

                             Swiss Army Brands, Inc.
             (Exact name of registrant as specified in its charter)
        

                               Delaware 13-2797726
          (State of incorporation) (I.R.S. Employer Identification No.)

                 One Research Drive, Shelton, Connecticut 06484
              (Address of principal executive offices) (Zip Code)

       Registrant's telephone number, including area code: (203) 929-6391

                                 NOT APPLICABLE
      (Former name, former address and former fiscal year, if changed since
                                 last report.)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports)  and  (2)  has  been  subject  to such  filing
requirements for the past 90 days.
                                                                        Yes X No

The number of shares of Issuer's  Common Stock,  $.10 par value,  outstanding on
November 10, 1998, was 7,900,110 shares.
                                                                   
<PAGE>



                             SWISS ARMY BRANDS, INC.
                                AND SUBSIDIARIES
                                      INDEX

<TABLE>
<CAPTION>
<S>             <C>                                                    <C>
PART I:          FINANCIAL INFORMATION                                  Page No.

Item 1.          FINANCIAL STATEMENTS

                 Consolidated Balance Sheets as of
                 September  30, 1998 and December 31, 1997.             3 - 4

                 Consolidated Statements of Operations 
                 for the Three and Nine Months Ended 
                 September 30, 1998 and 1997.                               5

                 Consolidated Statements of Stockholders' Equity
                 for the Nine Months Ended September 30, 1998 and 1997.     6

                 Consolidated Statements of Cash Flows for the
                 Nine Months Ended September 30, 1998 and 1997.             7

                 Notes to Consolidated Financial Statements            8 - 10

Item 2.          MANAGEMENT'S DISCUSSION AND ANALYSIS
                 OF FINANCIAL CONDITION AND RESULTS OF
                 OPERATIONS                                           11 - 14


Item 3.          QUANTITATIVE AND QUALITATIVE DISCLOSURES
                 ABOUT MARKET RISK                                         14



Part II:         OTHER INFORMATION

Item 6.          EXHIBITS AND REPORTS ON FORM 8-K                          15

Signatures                                                                 16

The Exhibit Index appears on page 15.

</TABLE>
                                       2
<PAGE>

                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
                                     Assets

<TABLE>
<CAPTION>

                                             September 30,         December 31,
                                                 1998                  1997       
                                              (unaudited)     
<S>                                         <C>                   <C>

Current assets:
   Cash and cash equivalents                 $  616                $1,078

   Accounts receivable, less
    allowance for doubtful accounts
    of $975 for both periods,
    respectively                             28,402                28,224

   Inventories                               28,599                27,438

   Deferred income taxes                      3,571                 3,519

   Prepaid and other                          4,285                 3,885
                                            --------               -------

      Total current assets                   65,473                64,144
                                            --------               -------

Deferred income taxes                         2,329                 2,407

Property, plant and equipment, net            3,852                 3,751

Investments in preferred units, at cost       7,199                 8,793

Investments in common stock                   2,153                   369

Foreign distribution rights, net of
   accumulated amortization of $3,694
   and $3,193 respectively                    3,044                 3,551

Other assets, net of accumulated
   amortization of $1,762 and
   $1,223 respectively                       12,308                11,036
                                            --------              --------  

Total Assets                               $ 96,358               $94,051
                                            ========              ========
</TABLE>


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

                                       3
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)

                      Liabilities and Stockholders' Equity

<TABLE>
<CAPTION>

                                          September 30,             December 31,
                                              1998                      1997      
                                          (unaudited)        
<S>                                      <C>                       <C>
      
Current liabilities:
   Accounts payable                      $9,763                    $8,478  

   Accrued liabilities                   10,555                     9,865 

   Line of credit                         1,830                       -
                                        --------                  -------- 

     Total current liabilities           22,148                    18,343  
                                        --------                  --------

Commitments and contingencies

Stockholders' equity:
   Preferred stock, par value $.10
   per share: shares authorized -
   2,000,000; no shares issued              -                         -

Common stock, par value $.10 per
   share: shares authorized -
   18,000,000; shares issued -
   8,858,218 and 8,822,968, respectively    885                       882  

 Additional paid-in capital              46,472                    46,186  

 Foreign currency translation 
  adjustment                               (405)                     (240)

 Unrealized gain on marketable securities   303                       -

 Retained earnings                       34,847                    33,993
                                        --------                  --------
                                         82,102                    80,821  

 Less:    Tresury stock; 
          900,108 shares                 (7,676)                   (5,113)
          Deferred compensation            (216)                      -
                                        --------                  ---------

Total stockholders' equity               74,210                    75,708  
                                        --------                  ---------

Total Liabilities and 
  Stockholders' Equity                  $96,358                   $94,051  
                                        ========                  =========

</TABLE>


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

                                       4
<PAGE>




                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     (in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>

                                    Three Months Ended         Nine Months Ended
                                       September 30,             September 30,
                                    1998          1997        1998          1997

<S>                                <C>        <C>            <C>       <C>

Net sales                          $31,370    $27,866        $86,167   $80,943

Cost of sales                       18,680     17,270         52,605    51,019
                                   --------   --------      ---------  --------
Gross profit                        12,690     10,596         33,562    29,924

Selling, general and 
administrative expenses             11,880     12,160         33,715    35,095
                                   --------  ---------      ---------  --------

Operating income (loss)                810     (1,564)          (153)   (5,171)

Interest and other income 
  (expense), net                        (4)        29            112       140

Gain on sale of investments             -         285          1,500       395
                                   --------  ----------     ---------  --------

Total interest and other 
  income,net                             4        314          1,612       535
                                   --------  ----------     ---------  --------

Income (loss) before income taxes      806     (1,250)         1,459    (4,636)

Income tax provision (benefit)         341       (475)           605    (1,847)
                                   --------  ----------     ---------  --------

Net income (loss)                     $465      ($775)          $854   ($2,789)
                                   ========  ==========     =========  ========

Earnings per share:
   Basic                             $0.06     ($0.09)         $0.10    ($0.34)
                                   ========  ==========     =========  ========
   Diluted                           $0.06     ($0.09)         $0.10    ($0.34) 
                                   ========  ==========     =========  ========

Weighted average number of
   shares outstanding:
   Basic                             8,213      8,210          8,215     8,209
                                   ========  ==========     =========  ========
   Diluted                           8,237      8,210          8,241     8,209
                                   ========  ==========     =========  ========

</TABLE>


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

                                       5
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
             FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
                     (in thousands, except for share data)
<TABLE>
<CAPTION>

                                                             Foreign         Unrealized
                           Common Stock       Additional     Currency         Gain on     
                         Par Value  $.10       Paid-In      Translation      Marketable      Retained    Treasury 
                        Shares      Amount     Capital       Adjustment      Securities      Earnings      Stock    
<S>                  <C>           <C>       <C>           <C>              <C>            <C>           <C>

BALANCE
December 31, 1996     8,822,968    $882      $46,182      ($113)            $ -            $38,018      ($5,113)

Net loss for 
nine months ended
September 30, 1997
(unaudited)                -         -           -           -                -             (2,789)         -
     
Stock options 
  exercised                 750      -             4         -                -                -            -    
   
Foreign currency
  translation adjustment   -         -           -          (31)              -                -            - 
                     -----------  ------    ----------   --------         ------          ----------     --------
   
BALANCE, 
 September 30, 1997
 (unaudited)          8,823,718    $882      $46,186      ($144)            $ -            $35,229      ($5,113)
                     ===========  ======    ==========   ========         ======          ==========     ========

BALANCE
December 31,1997      8,823,718    $882      $46,186      ($240)            $ -            $33,993      ($5,113)

Net income for 
nine months ended
September 30, 1998
(unaudited)                -         -           -            -               -                854          -
  
Stock options 
  exercised               9,500      -            70          -               -                 -           -  

Stock grant              25,000       3          216          -               -                 -           -   

Stock repurchase           -         -            -           -               -                 -        (2,563)
  
Unrealized gain on
  marketable securities    -         -            -           -             303                 -           -
                
Foreign currency
  translation adjustment   -         -            -        (165)              -                 -           - 
                       ---------  -------   ----------   --------        -------          ----------     ---------
  
BALANCE, September 
30, 1998 (unaudited)  8,858,218    $885      $46,472      ($405)           $303            $34,847      ($7,676)
                      ==========  =======   ==========   ========        =======          ==========     ========= 

</TABLE>


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

                                       6
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                  (unaudited)


<TABLE>
<CAPTION>

                                                           Nine months ended
                                                             September 30,
                                                          1998            1997
<S>                                                    <C>              <C>
Cash flows from operating activities:
   Net income (loss)                                    $  854          ($2,789)
   Adjustments to reconcile net income (loss) to cash
   provided from (used for) operating activities:
      Depreciation and amortization                      2,172            2,068
      Stock compensation expense                             3               - 
      Deferred income taxes                                 26               - 
      Gain on sale of investments                       (1,500)            (285) 
                                                       --------         --------
                                                         1,555           (1,006)    

Changes in other current assets and liabilities:
   Accounts receivable                                    (257)          10,041
   Inventories                                          (1,253)          (6,118)
   Prepaid and other                                      (446)          (1,791) 
   Accounts payable                                      1,296           (2,389) 
   Accrued liabilities                                     692               67
                                                      ---------        ---------   
Net cash provided from (used for) 
   operating activities                                  1,587           (1,196)       

Cash flows from investing activities:                  
   Capital expenditures                                 (1,115)            (881)
   Additions to other assets                            (1,917)          (1,149)   
   Proceeds from sale of investment                      1,613              438
                                                      ---------        ---------        
Net cash (used for) investing activities                (1,419)          (1,592)
                                                      ---------        ---------
 
Cash flows from financing activities:
  Net borrowings under line of credit agreement          1,830            1,630
  Repurchase of common stock                            (2,563)              -
  Proceeds from exercise of stock options                   70                4
                                                      ---------        ---------                       
Net cash provided from (used for) 
  financing activities                                    (663)           1,634 
                                                      ---------        ---------

Effect of exchange rate changes on cash                     33              (52)
                                                      ---------        ---------

Net decrease in cash and cash equivalents                 (462)          (1,206)
   Cash and cash equivalents, beginning of period        1,078            2,067
                                                      ---------        ---------
   Cash and cash equivalents, end of period            $   616          $   861    
                                                      =========        =========

Cash paid during the period:
   Interest                                            $    32          $    15
                                                      =========        ========= 
   Income taxes                                        $ 1,062          $   453
                                                      =========        =========
</TABLE>

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

                                       7
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          SEPTEMBER 30, 1998 and 1997
                                  (unaudited)

CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------
     The consolidated  financial statements included in this Form 10-Q have been
prepared by Swiss Army Brands, Inc. ("Swiss Army", the "Company") without audit.
Certain  information  and footnote  disclosures  normally  included in financial
statements prepared in accordance with generally accepted accounting  principles
have been  condensed  or omitted  pursuant to the rules and  regulations  of the
Securities  and Exchange  Commission.  It is suggested  that these  consolidated
financial  statements be read in conjunction  with the financial  statements and
notes thereto  included in the Company's  report on Form 10-K for the year ended
December  31, 1997.  In the opinion of  management  of the Company,  the interim
financial statements included herein reflect all adjustments, consisting only of
normal recurring adjustments, necessary for a fair presentation of the financial
position,  results  of  operations  and  cash  flows  for  the  interim  periods
presented.  The preparation of financial statements in conformity with generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that affect the reported  amounts of assets and  liabilities at the
date of the  financial  statements  and the  reported  amounts of  revenues  and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.  Due to the seasonal nature of the Company's business, the results of
operations for the interim periods  presented are not necessarily  indicative of
the operating results for the full year.

INVENTORIES
-----------
     Domestic  inventories  are stated at the lower of cost  (determined  by the
last-in,  first-out (LIFO) method) or market.  Foreign inventories are valued at
the  lower  of  cost  or  market  determined  by the  FIFO  method.  Inventories
principally consist of finished goods.

COMPREHENSIVE INCOME
--------------------
     Effective  January 1, 1998,  the Company  adopted  Statement  of  Financial
Standards ("SFAS") No. 130, "Reporting  Comprehensive  Income" which establishes
standards  for  the  reporting  and  display  of  comprehensive  income  and its
components.

The components of comprehensive income (loss), net of tax, are as follows:
<TABLE>
<CAPTION>


                                 Three Months Ended           Nine Months Ended
                                    September 30,                September 30, 
                                  1998         1997           1998        1997
                                                   (in thousands)
<S>                              <C>          <C>            <C>         <C>

 Net income (loss)               $465        ($775)          $854       ($2,789)
 Other comprehensive income,
 net of tax:
   Foreign currency 
    translation adjustment        (36)          (1)           (96)          (18)
   Unrealized gain on 
    marketable securities         (14)           -            177             -
                                -------      -------        -------     --------  
   Other comprehensive income     (50)          (1)            81           (18)
                                -------      -------        -------     --------
   Comprehensive income (loss)   $415        ($776)          $935       ($2,807)
                                =======      =======        =======     ========
</TABLE>

                                       8
<PAGE>


INVESTMENTS
-----------
 Investments consist of the following:
<TABLE>
<CAPTION>

                                       September 30,1998       December 31, 1997
                                                     (in thousands)
       <S>                                    <C>                     <C>

        Preferred units of Hudson
           River Capital LLC (A)               $6,313                  $7,907
        Preferred units of
           Victory Ventures LLC (B)               886                     886
                                               -------                 -------
        Total investments in preferred units   $7,199                  $8,793
                                               =======                 =======

        Common stock of Iron Mountain
           Incorporated (C)                    $1,891                  $  -
        Common stock of Chaparral Resources,    
           Inc. (D)                               112                     219
        Common stock of SWWT, Inc. (E)            150                     150
                                               -------                --------
        Total investments in common stock      $2,153                    $369
                                               =======                ========
</TABLE>


(A)  Hudson  River  Capital  LLC  ("Hudson  River"),  is a private  equity  firm
specializing  in middle  market  acquisitions,  re-capitalization  and expansion
capital  investments.  In January 1998,  Hudson River distributed to the Company
$1,613,000 in cash and authorized the  distribution of 63,019 (as adjusted for a
three to two stock split which  occurred  in July 1998)  shares of common  stock
(valued at $1,481,000) of Iron Mountain  Incorporated.  The Company received the
common stock in June 1998. In the first quarter of 1998, the Company  recognized
a $1.5 million gain on the cash and common stock  distribution which is included
in gain on sale of investment in the accompanying financial statements.

(B) Victory Ventures LLC is a private equity firm  specializing in small venture
capital investments.

(C) Iron Mountain Incorporated ("Iron Mountain"),  a publicly traded company, is
a full service provider of records management and related services. At September
30, 1998,  the Company owns 63,019 shares of Iron  Mountain  stock valued at $30
per share. The Company accounts for this investment at fair value,  with changes
between cost and fair value reflected as a component of stockholders' equity.

(D) Chapparal Resources,  Inc.  ("Chapparal"),  a publicly traded company, is an
independent  oil and gas exploration  and production  company.  At September 30,
1998 the Company owns 87,634  shares of  Chapparal  common stock valued at $1.28
per share. The Company accounts for this investment at fair value,  with changes
between cost and fair value reflected as a component of stockholders'equity.

(E) SWWT, Inc is a holding company formerly in the business of manufacturing and
marketing portable water purification and filtration systems to certain markets.
The Company has recorded this investment at its estimated fair value.

                                       9
<PAGE>

INCOME TAXES
------------

     Income taxes are provided at the projected  annual  effective tax rate. The
income tax  provisions  (benefits)  for the interim 1998 and 1997 periods exceed
the federal  statutory  rate of 34% due  primarily to state income taxes (net of
federal benefit).

EARNINGS PER SHARE
------------------

     In the fourth quarter of 1997, the Company adopted SFAS No. 128,  "Earnings
Per Share". This statement replaces the calculation of primary and fully diluted
earnings per share with basic and diluted  earnings per share.  All earnings per
share  amounts for all periods  presented  have been  restated to conform to the
requirements of this statement.

     For the periods ended  September 30, 1997,  the weighted  average number of
shares of common stock  outstanding do not include the dilutive  effect of stock
options as they would have anti-dilutive effect.

STOCK REPURCHASE
----------------
     On  September  16, 1998,  the  Company's  Board of  Directors  authorized a
repurchase of up to 400,000  shares of its common stock.  At September 30, 1998,
the  Company  had  repurchased  286,000  shares  for a total  purchase  price of
approximately $2,563,000.

STOCK GRANT
-----------

     On September 16, 1998,  the Company issued 25,000 shares of common stock to
certain key members of  management.  The stock vests in four equal  installments
over three years starting with the grant date.

LINE OF CREDIT
--------------

     On September 30, 1998,  the Company  amended its line of credit  agreement,
which among other  things,  extended the  maturity of the  agreement to June 29,
1999.  The agreement  states that the Company can borrow up to  $10,000,000  for
working capital  purposes at one of three interest rate options  available;  (i)
LIBOR plus 1.1%;  (ii) Base Rate,  as defined;  or (iii) Cost of Funds rate,  as
defined.  The  line of  credit  is  unsecured  and  contains  certain  financial
covenants  including,  but not limited to, minimum tangible net worth,  interest
rate  coverage,   current  ratio,   and  the   continuation   of  the  exclusive
distributorship arrangement with Victorinox Cutlery Company. As of September 30,
1998, the Company had $1,830,000  outstanding under the line of credit and is in
compliance with the covenants contained in the agreement.

                                       10
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
          MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                           AND RESULTS OF OPERATIONS
                                  (unaudited)

                           FORWARD LOOKING STATEMENTS
                           --------------------------

     The following discussion contains, in addition, to historical  information,
forward looking statements.  The forward looking statements were prepared on the
basis of certain assumptions which relate, among other things, to the demand for
and cost of purchasing and marketing the Company's products; the prices at which
such products may be sold; new product development; seasonal selling trends; the
Swiss franc- U.S. dollar exchange rates; the extent to which the Company is able
to successfully hedge against foreign currency  fluctuations;  the impact of the
year 2000 issue on the Company's financial position or results of operations and
the Company's  anticipated credit needs and ability to obtain such credit.  Even
if the  assumptions  upon which the  projections  are based prove  accurate  and
appropriate,  the actual  results of the Company's  operations in the future may
vary widely from financial projections due to increased competition,  changes in
consumer tastes and other factors not yet known or anticipated. Accordingly, the
actual  results of the  Company's  operations in the future may vary widely from
the forward-looking statements included herein.

                             RESULTS OF OPERATIONS
                             ---------------------

Comparison for the Three Months Ended September 30, 1998 and 1997
-----------------------------------------------------------------

     Sales for the three  months  ended  September  30, 1998 were $31.4  million
compared  with  $27.9  million  for the same  period  in 1997,  representing  an
increase of $3.5 million or 12.6%.  Sales comparisons for the three months ended
September  30,  1998,  were  impacted  by sales  related to special  promotional
programs with one customer which  accounted for  approximately  8.9% and 5.6% of
sales in the three  months  ended  September  30,  1998 and 1997,  respectively.
Excluding sales related to these special promotional  programs,  sales increased
by $2.4  million  or 8.9% in the  three  months  ended  September  30,1998  , as
compared to the  comparable  period in 1997. The sales increase was due of to an
increase in sales of Victorinox(r)  products,  primarily  Victorinox(r) Original
Swiss Army Knives and the Victorinox(r)  SwissTool(tm),  and Swiss Army Brand(r)
Sunglasses.

     Gross profit of $12.7 million for the three months ended September 30, 1998
increased  $2.1 million or 19.8% from 1997.  The gross profit margin  percentage
for the third  quarter of 1998 of 40.4% was higher than the gross profit  margin
percentage of 38.0%,  reported for the same period in 1997  primarily due to the
increase in the value of the U.S.  dollar versus the Swiss franc.  The Company's
gross profit  margin is a function of both product mix and Swiss franc  exchange
rates. Since the Company imports virtually all of its products from Switzerland,
its costs are  affected  by both the spot rate of  exchange  and by its  foreign
currency-hedging program. The Company enters into foreign currency contracts and
options to hedge the exposure  associated  with foreign  currency  fluctuations.
Based upon current Swiss franc  requirements  the Company  believes it is hedged
through  the third  quarter  of 1999.  However,  such  hedging  activity  cannot
eliminate the long-term adverse impact on the Company's competitive position and
results of operations  that would result from a sustained  decrease in the value
of the dollar  versus the Swiss franc.  These  hedging  transactions,  which are
meant to reduce foreign currency risk, also reduce the beneficial effects to the
Company if the dollar  increases  relative to the Swiss franc. The Company plans
to continue to engage in hedging  transactions;  however,  it is uncertain as to
what extent to which such hedging transactions will reduce the effect of adverse
currency fluctuations.

                                       11
<PAGE>

     Selling,  general and  administrative  expenses  for the three months ended
September  30, 1998 of $11.9  million  were $0.3  million or 2.3% lower than the
amount for the comparable period in 1997.

     As a percentage  of net sales,  total  selling  general and  administrative
expenses decreased from 43.6% in 1997 to 37.9% in 1998.

     Interest and other income (expense), net of $4,000 of expense for the three
months  ended  September  30, 1998 versus  income of $29,000 for the  comparable
period in 1997 was primarily due to increased borrowings during 1998 as compared
to 1997.

     As a result of these  changes,  income  (loss)  before income taxes for the
three months ended  September  30, 1998 was income of $806,000  versus a loss of
$1,250,000 for the same period in 1997, an improvement of $2,056,000.

     Income tax expense (benefit) was provided at an effective rate of 42.3% and
38.0% in 1998 and 1997, respectively.

     As a result,  net income  (loss) for the three months ended  September  30,
1998 was income of $465,000  ($0.06 per share,  basic and diluted) versus a loss
of $775,000 ($0.09 per share, basic and diluted) for the same period in 1997, an
improvement of $1,240,000.

Comparison for the Nine Months Ended September 30, 1998 and 1997
----------------------------------------------------------------

     Sales for the nine  months  ended  September  30,  1998 were $86.2  million
compared  with  $80.9  million  for the same  period  in 1997,  representing  an
increase of $5.2  million or 6.5%.  Sales  comparison  for the nine months ended
September  30,  1998,  were  impacted  by sales  related to special  promotional
programs with one customer which accounted for  approximately  3.6% and 9.2% and
of sales in the nine months  ended  September  30, 1998 and 1997,  respectively.
Excluding sales related to these special promotional  programs,  sales increased
by $6.9 million or 9.4% in the nine months ended September 30, 1998, as compared
to the  comparable  period in 1997. The sales increase was due of to an increase
in sales of Victorinox(r)  products,  primarily the Victorinox(r)  SwissTool(tm)
and the Victorinox(r) SwissCard(tm), and Swiss Army Brand(r) Sunglasses.

     Gross profit of $33.6 million for the nine months ended  September 30, 1998
increased  $3.6 million or 12.2% from 1997.  The gross profit margin  percentage
for the nine months ended  September 30, 1998 of 38.9% was higher than the gross
profit  margin  percentage of 37.0%,  reported for the same period in 1997.  The
gross profit  percentage  increase is primarily due to the increase in the value
of the U.S. dollar versus the Swiss franc.  The Company's gross profit margin is
a function of both product mix and Swiss franc exchange rates. Since the Company
imports virtually all of its products from  Switzerland,  its costs are affected
by both the spot rate of exchange and by its foreign  currency-hedging  program.
The Company  enters into  foreign  currency  contracts  and options to hedge the
exposure associated with foreign currency fluctuations. Based upon current Swiss
franc  requirements  the Company believes it is hedged through the third quarter
of 1999.  However,  such hedging activity cannot eliminate the long-term adverse
impact on the  Company's  competitive  position and results of  operations  that
would  result  from a sustained  decrease in the value of the dollar  versus the
Swiss  franc.  These  hedging  transactions,  which are meant to reduce  foreign
currency risk,  also reduce the beneficial  effects to the Company if the dollar
increases  relative to the Swiss franc.  The Company plans to continue to engage
in hedging  transactions;  however,  it is  uncertain as to what extent to which
such  hedging   transactions   will  reduce  the  effect  of  adverse   currency
fluctuations.

                                       12
<PAGE>

     Selling,  general and  administrative  expenses  for the nine months  ended
September  30, 1998 of $33.7  million  were $1.4  million or 3.9% lower than the
amount for the comparable period in 1997.

     As a percentage  of net sales,  total  selling  general and  administrative
expenses decreased from 43.4% in 1997 to 39.1% in 1998.

     Interest and other income  (expense) , net was $112,000 for the nine months
ended  September  30, 1998 versus  $140,000  for the  comparable  period in 1997
primarily due to increased  invested  cash  balances  during 1997 as compared to
1998.

     Gain on sale of investments  was $1,500,000 and $395,000 in the nine months
ended September 30, 1998 and 1997, respectively. In 1998, the Company recorded a
$1.5  million  gain  due to a cash and  stock  distribution  from the  Company's
investment in Hudson River Capital LLC. In 1997, the Company recovered  $110,000
related to an investment in a privately held start-up entity,  which the Company
had written off in 1996, and the Company received a $438,000  distribution  from
its investment in Victory Ventures LLC, which resulted in a gain of $285,000.

     As a result of these  changes,  income  (loss)  before income taxes for the
nine months  ended  September  30, 1998 was income of  $1,459,000  versus a loss
$4,636,000 for the same period in 1997, an improvement of $6,095,000.

     Income tax expense (benefit) was provided at an effective rate of 41.5% and
39.8% in 1998 and 1997, respectively.

     As a result, net income (loss) for the nine months ended September 30, 1998
was $854,000  ($0.10 per share,  basic and diluted)  versus a loss of $2,789,000
($0.34 per share) for the same period in 1997, an improvement of $3,643,000.

                        LIQUIDITY AND CAPITAL RESOURCES
                        -------------------------------

     As of September 30, 1998, the Company had working  capital of $43.3 million
compared with $45.8 million as of December 31, 1997, a decrease of $2.5 million.
Significant uses of working capital included a stock repurchase of $2.6 million,
$1.9 million increase in other assets and capital  expenditures of $1.1 million.
The Company currently has no material commitments for capital expenditures.

     Cash provided from operating  activities was approximately  $1.6 million in
the nine months ended  September 30, 1998 compared with cash used from operating
activities of $1.2 million in the comparable period in 1996. The change resulted
primarily  from a smaller  increase  in  inventory  in 1998  versus  1997 and an
increase in accounts  payable in 1998 versus a decrease in 1997,  offset in part
by an increase in accounts receivables in 1998 versus a decrease in 1997.

     The Company meets its short-term  liquidity  needs with cash generated from
operations, and, when necessary, bank borrowings under its credit agreement.  As
of  September  30,  1998,  the  Company  has a $10.0  million  revolving  credit
agreement,  which expires in June 1999.  The Company's  short-term  liquidity is
affected by seasonal changes in inventory levels,  payment terms and seasonality
of sales.  The Company  believes  its  current  liquidity  levels and  financial
resources will be sufficient to meet its operating needs in the near-term.

                                       13
<PAGE>

Year 2000
---------

     The  Company  has been  conducting  a review of its  computer  systems  and
operations  to  identify  those  areas that could be affected by the "Year 2000"
issue and has  developed  an  implementation  plan to minimize  disruption.  The
Company  presently  believes that, with  modifications to existing  software and
hardware,  of which some already have been  implemented, and  investment  in new
software and  hardware,  the Year 2000 problem as it relates to its own computer
systems will not pose  significant  operational  concerns.  The costs associated
with the Year 2000  compliance  for the  Company's  computer  systems  primarily
include costs to upgrade computer systems not currently compliant.  The majority
of these costs will be incurred in the normal  course of business as the Company
has  continually  upgraded  their  hardware  and  software  to  keep  pace  with
technological  advances.  These costs over the next twelve months could range up
to $350,000,  of which most will be  capitalized.  All of the  material  systems
with-in the Company are expected to be Year 2000 compliant by June 30, 1999.

     In addition to its internal assessment,  the Company is currently assessing
the Year 2000  readiness of its key  suppliers  and service  providers and their
ability to continue  provide service and products through the change to 2000. If
any  of  the  Company's  significant  suppliers  and  service  providers  do not
successfully and in a timely manner achieve Year 2000 compliance,  the Company's
business  could  be  materially  affected.  The  Company  has  not  developed  a
contingency  plan  regarding  the Year 2000  readiness of its key  suppliers and
service  providers,  but  intends  to do  so if  further  discussions  with  its
suppliers and service  providers  warrant the  development  of such  contingency
plan.


           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
           ----------------------------------------------------------

Foreign Exchange Risk

     The  Company  is exposed to market  risk from  changes in foreign  exchange
rates as the Company  imports  virtually all its products from  Switzerland.  To
minimize the risks associated with  fluctuations in the value of the Swiss franc
versus the U.S. dollar,  the Company enters into foreign currency  contracts and
options.  Pursuant to guidelines approved by its Board of Directors, the Company
is to engage in these  activities  only as a hedging  mechanism  against foreign
exchange  rate  fluctuations   associated  with  specific   inventory   purchase
commitments to protect gross margin and is not to engage in speculative trading.
Gains or losses on these  contracts  and options are deferred and  recognized in
cost of sales when the related  inventory is sold.  At September  30, 1998,  the
Company  entered  into  foreign  currency  contracts  and  options  to  purchase
approximately  69,800,000  Swiss  francs in 1998 and 1999 at a weighted  average
rate $1.418 Swiss  franc/dollar.  At September 30, 1998, the unrealized  gain on
these  contracts  and options was  approximately  $0.8  million.  The  Company's
ultimate  unrealized  gain or loss on these contracts and options will primarily
depend on the currency  exchange  rates in effect at the time the  contracts and
options mature.

                                       14
<PAGE>

Item 6. Exhibits and Reports on Form 8-K

A.)     Exhibits

 (2)    Not Applicable

 (3)    Not Applicable

 (4)    Not Applicable

(10.1)  1998 Amended and Restated  Commercial Loan Agreement dated September 30,
          1998 between Fleet National Bank and Swiss Army Brands, Inc.

(11)   Statement  regarding  computation of per  share earnings is not required 
          because  the relevant computation can be clearly  determined  from the
          material contained in the Financial Statements included herein.

(15)    Not Applicable

(18)    Not Applicable

(19)    Not Applicable

(22)    Not Applicable

(23)    Not Applicable

(24)    Not Applicable

(27)    Financial Data Schedule

(99)    Not Applicable

B.)     There were no reports or exhibits on Form 8-K filed for the three months
          ended September 30, 1998.


                                       15
<PAGE>



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

                                                         SWISS ARMY BRANDS, INC.
                                                         -----------------------
                                                         Registrant


Date:  November 12, 1998        

                                              By /s/ Thomas M. Lupinski
                                              Name:  Thomas M. Lupinski
                                              Title:  Senior Vice President &
                                              Chief Financial Officer, Secretary
                                              and Treasurer












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