# 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, 2001

# 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.

YesXNo

The number of
shares of Registrant's Common Stock, $.10 par value, outstanding on November 14, 2001, was 8,167,698 shares.

# SWISS ARMY BRANDS, INC.
AND SUBSIDIARIES
INDEX

|PART I:    | FINANCIAL INFORMATION                                                                                                                      | Page No. | 
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------ | -------- | 
|Item 1.    | FINANCIAL STATEMENTS                                                                                                                       |          | 
|           | Consolidated Balance Sheets as of
September 30, 2001 (unaudited) and December 31, 2000                                                     | 3 - 4    | 
|           | Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2001 and 2000 (unaudited)                          | 5        | 
|           | Consolidated Statements of Stockholders' Equity and
Comprehensive Income for the Nine Months Ended September 30, 2001 and 2000 (unaudited) | 6        | 
|           | Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2001 and 2000 (unaudited)                                    | 7        | 
|           | Notes to Consolidated Financial Statements                                                                                                 | 8 - 10   | 
|Item 2.    | MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                      | 11 - 15  | 
|Item 3.    | QUANTITATIVE AND QUALITATIVE DISCLOSURES
 ABOUT MARKET RISK                                                                                | 15       | 
|Part II:   | OTHER INFORMATION                                                                                                                          |          | 
|Item 6.    | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                           | 15       | 
|Signatures |                                                                                                                                            | 15       | 

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

|                                                                                                                       | September 30,
                      
                      
2001         
                      
              (unaudited) | December 31,2000 | 
|---------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------- | ---------------- | 
|Current assets:                                                                                                        |                                                                                                                            |                  | 
|Cash and cash equivalents                                                                                              | $ 102                                                                                                                      | $ 5,002          | 
|Accounts receivable, less
       allowance for doubtful       accounts of $1,060, for
both       periods, respectively | 24,370                                                                                                                     | 34,173           | 
|Inventories                                                                                                            | 43,946                                                                                                                     | 33,461           | 
|Deferred income taxes                                                                                                  | 184                                                                                                                        | 1,887            | 
|Prepaid and other                                                                                                      | 11,174                                                                                                                     | 4,089            | 
|Total current
 assets                                                                                                  | 79,776                                                                                                                     | 78,612           | 
|Deferred income taxes                                                                                                  | 821                                                                                                                        | 675              | 
|Property, plant and   equipment, net                                                                                   | 6,864                                                                                                                      | 7,506            | 
|Investments                                                                                                            | 4,904                                                                                                                      | 8,274            | 
|Intangible assets, net                                                                                                 | 11,654                                                                                                                     | 12,595           | 
|Other assets, net                                                                                                      | 17,550                                                                                                                     | 16,787           | 
|Total Assets                                                                                                           | $121,569                                                                                                                   | $124,449         | 

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

# SWISS ARMY
BRANDS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(in thousands)
Liabilities and Stockholders Equity

|                                                                                                                                          | September 30,
                    
2001                   
 (unaudited) | December 31,2000 | 
|----------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------- | ---------------- | 
|Current liabilities:                                                                                                                      |                                                                         |                  | 
|Current portion of long-term
debt                                                                                                         | $ 1,545                                                                 | $ 1,493          | 
|Accounts payable                                                                                                                          | 14,088                                                                  | 11,057           | 
|Accrued liabilities
and other                                                                                                             | 6,835                                                                   | 8,452            | 
|Total current liabilities                                                                                                                 | 22,468                                                                  | 21,002           | 
|Long-term liabilities:                                                                                                                    |                                                                         |                  | 
|Long-term debt                                                                                                                            | 14,130                                                                  | 16,038           | 
|Other                                                                                                                                     | 675                                                                     | 675              | 
|Total Liabilities                                                                                                                         | 37,273                                                                  | 37,715           | 
|Minority interest                                                                                                                         | 6,269                                                                   | 6,050            | 
|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         9,076,442 and8,971,080, respectively | 908                                                                     | 897              | 
|Additional paid-in capital                                                                                                                | 48,988                                                                  | 49,005           | 
|Accumulated other comprehensive
income                                                                                                    | 491                                                                     | 1,234            | 
|Retained earnings                                                                                                                         | 35,663                                                                  | 37,589           | 
|                                                                                                                                          | 86,050                                                                  | 88,725           | 
|Less:  Treasury stock
  908,744 and 905,734 shares,           
    respectively                                                          | (8,023)                                                                 | (8,003)          | 
|Deferred compensation                                                                                                                     | -                                                                       | (38)             | 
|Total stockholders' equity                                                                                                                | 78,027                                                                  | 80,684           | 
|Total Liabilities and Stockholders' Equity                                                                                                | $121,569                                                                | $124,449         | 

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

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

|                                               | Three Months EndedSeptember 30,2001
              2000 | Nine Months EndedSeptember 30,2001 
             2000 |         
|---------------------------------------------- | ------------------------------------------------------ | ----------------------------------------------------- | --------
|Net revenues                                   | $27,015                                                | $32,719                                               | $75,865 
|Cost of sales                                  | 15,357                                                 | 19,920                                                | 44,605  
|Gross profit                                   | 11,658                                                 | 12,799                                                | 31,260  
|Selling, general and   administrative expenses | 12,030                                                 | 11,203                                                | 35,258  
|Operating income (loss)                        | (372)                                                  | 1,596                                                 | (3,998) 
|Interest income (expense), net                 | (281)                                                  | (294)                                                 | (736)   
|Investment gain (loss), net                    | 1,854                                                  |                                                      | 1,854   
|Total other income (expense), net              | 1,573                                                  | (294)                                                 | 1,118   
|Income (loss) before income taxes              | 1,201                                                  | 1,302                                                 | (2,880) 
|Income tax provision (benefit)                 | 622                                                    | 525                                                   | (1,007) 
|Minority interest                              | 172                                                    | (12)                                                  | 53      
|Net income (loss)                              | $407                                                   | $789                                                  | ($1,926)
|Earnings per share:                            |                                                        |                                                       |         
|Basic                                          | $0.05                                                  | $0.10                                                 | ($0.24) 
|Diluted                                        | $0.05                                                  | $0.10                                                 | ($0.24) 
|Weighted average number of shares outstanding: |                                                        |                                                       |         
|Basic                                          | 8,171                                                  | 8,037                                                 | 8,129   
|Diluted                                        | 8,284                                                  | 8,250                                                 | 8,129   

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

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' 
EQUITY AND COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(in thousands, except for share data)

|                                                                          | Common StockPar Value  $.10
Shares      Amount | AdditionalPaid-InCapital | AccumulatedOtherComprehensiveIncome
(Loss) | RetainedEarnings | TreasuryStock | ComprehensiveIncome (Loss) |         
|------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ------------------------------------------ | ---------------- | ------------- | -------------------------- | --------
|BALANCEDecember 31, 1999                                                  | 8,866,218                                      | $886                     | $49,137                                    | ($401)           | $35,576       | ($8,711)                   |         
|Comprehensive income:
  Net income                                        |                                               |                         |                                           |                 | 1,220         |                           | $1,220  
|Change in unrealized gain
   in marketable securities                     |                                               |                         |                                           | 1,248            |              |                           | 1,248   
|Foreign currency
   translation adjustment                                |                                               |                         |                                           | (208)            |              |                           | (208)   
|Comprehensive Income                                                      |                                                |                          |                                            |                  |               |                            | $2,260  
|Issuance of common stock                                                  | 106,112                                        | 11                       | (11)                                       |                 |              |                           |         
|Acquisition of Xantia, S. A.                                              |                                               |                         | (110)                                      |                 |              | 708                        |         
|Cancellation of stock grant                                               | (1,250)                                        |                         | (10)                                       |                 |              |                           |         
|BALANCESeptember 30, 2000 (unaudited)                                     | 8,971,080                                      | $897                     | $49,006                                    | $639             | $36,796       | ($8,003)                   |         
|BALANCEDecember 31, 2000                                                  | 8,971,080                                      | $897                     | $49,005                                    | $1,234           | $37,589       | ($8,003)                   |         
|Comprehensive Loss:  Net loss                                             |                                               |                         |                                           |                 | (1,926)       |                           | ($1,926)
|Cumulative effect   
transition adjustment    for derivatives, net of tax |                                               |                         |                                           | (415)            |              |                           | (415)   
|Change in unrealized gain  
 on marketable securities                     |                                               |                         |                                           | (1,837)          |              |                           | (1,837) 
|Fair value adjustment  
 for derivatives, net of tax                      |                                               |                         |                                           | 1,680            |              |                           | 1,680   
|Foreign currency  
 translation adjustment                                |                                               |                         |                                           | (171)            |              |                           | (171)   
|Comprehensive Loss                                                        |                                                |                          |                                            |                  |               |                            | ($2,669)
|Repurchase of common stock                                                |                                               |                         |                                           |                 |              | (20)                       |         
|Cancellation of stock grant                                               | (750)                                          |                         | (6)                                        |                 |              |                           |         
|Issuance of common stock                                                  | 106,112                                        | 11                       | (11)                                       |                 |              |                           |         
|BALANCESeptember 30, 2001 (unaudited)                                     | 9,076,442                                      | $908                     | $ 48,988                                   | $491             | $35,663       | ($8,023)                   |         

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
(in thousands)(unaudited)

|                                                                                                                                                                                                                                                                                                                                       | Nine Months EndedSeptember 30,2001    2000               |                                                     | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------- | --------------------------------------------------- | 
|Cash flows from operating activities:   
 Net income (loss)     Adjustments to reconcile net income (loss) to net cash  
  provided by (used in) operating activities:       
Minority interest        Depreciation and
amortization        Stock compensation
expense        Deferred income
taxes        Investment (gain)
loss, net | ($1,926)  
        53   3,038      
 38     (80) (1,854) | $1,220  
     (12)   2,330       55 
      7(1,583) | 
|                                                                                                                                                                                                                                                                                                                                       | (731)                                                    | 2,017                                               | 
|Changes in other current assets and liabilities: 
   Accounts receivable     Inventories     Prepaid and
other     Accounts payable     Accrued liabilities   
    Net cash used in operating activities                                                                                                                               | 9,882(10,446)   
(815)  3,645(2,202)  (667)              | 5,290(8,319)  
(2,384)  3,204(1,581)  (1,773)       | 
|Cash flows from investing activities:   
 Acquisition of Xantia, S.A., net of cash acquired     Capital expenditures   
 Other assets       Net cash provided by (used in) investing activities                                                                                                                                        | (1,054)(1,106)(2,160)                                   | (1,296)  (518)(592)(2,406)                         
|Cash flows from financing activities:   
 Borrowings under bank agreements     Repayments under bank agreements    
Repurchase of common stock       Net cash provided by (used in) financing activities                                                                                                                               | 34,851(36,763)     
(20)(1,932)                          | 45,967(37,368)     
8,599                         
|Effect of exchange rate changes on cash                                                                                                                                                                                                                                                                                                | (141)                                                    | (540)                                               | 
|Net increase (decrease) in cash    
Cash and cash equivalents, beginning of period     Cash and cash equivalents, end of period                                                                                                                                                                                                        | (4,900)   5,002  
 $102                                  | 3,880   1,302$5,182                                 | 
|Cash paid during the period:    
Interest     Income taxes                                                                                                                                                                                                                                                                             | $685   
  676                                            | $782   
  300                                       | 

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2001 and 2000
(unaudited)

# CONSOLIDATED FINANCIAL STATEMENTS

The consolidated  financial
statements included in this Form 10-Q have been prepared by Swiss Army Brands, Inc. ("Swiss Army" or 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  Annual Report on Form 10-K for the year ended December 31, 2000. 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.

# INVESTMENTS

Investments consist of the
following:

|                                                                      | September 30,2001 | December 31, 2000 | 
|--------------------------------------------------------------------- | ----------------- | ----------------- | 
|                                                                      | (in thousands)    |                   | 
|Preferred units of Highgate
            Capital LLC (A)               | $3,613            | $3,613            | 
|Preferred units of 
           Victory Ventures LLC (B)               | 851               | 851               | 
|Common stock of John Hancock
            Financial Services, Inc. (C) | 428               | 3,798             | 
|Common stock of Chaparral
Resources,                   Inc.
(D)       | 12                | 12                | 
|Total investments                                                     | $4,904            | $8,274            | 

1. Highgate Capital LLC,  is a private equity firm  specializing in
       middle market  acquisitions,  re-capitalization and expansion capital  investments.  The Company accounts for this investment
       on the cost basis, subject to review for permanent impairment.  Since this investment does not have a readily determinable
       fair value, the valuation is subject to uncertainty.
2. Victory  Ventures  LLC is a private  equity firm  specializing  in small
       venture  capital  investments.  The Company accounts for this  investment on the cost basis,  subject to review for permanent
       impairment.  Since this  investment  does not have a readily determinable fair value, the valuation is subject to
       uncertainty.
3. John Hancock Financial  Services,  Inc. (John Hancock), a publicly
       traded company, is a life insurance company. In the nine months  ended  September  30,  2001,  the Company  sold 90,248
       shares of common  stock of John Hancock and recorded an investment  gain of  $1,854,000.  Included in prepaid and other at
       September 30, 2001 is $3.4 million from the proceeds from the sale. The Company received the cash in October 2001. In the
       nine months ended  September  30, 2000,  the Company  recorded and  investment  gain of $1,791,000  related to the
       demutualizaton  of John  Hancock.  At September  30, 2001,  the Company owned 10,690 shares of common stock of John Hancock.
4. Chapparal Resources, Inc. (Chapparal), a publicly traded company,
       is an independent oil and gas exploration and production company.  In the nine months ended September 30, 2000, the Company
       recorded a non-cash write-down of $208,000 of its investment in Chapparal due to the other than temporary impairment in the
       value of the investment.

# INCOME TAXES

Income taxes are provided at
the projected  annual  effective tax rate.  The income tax benefit for interim  periods of 2001 and 2000 differ from the federal
statutory  rate of 34% due  primarily to state income taxes (net of federal  benefit) and foreign  income taxes.

# EARNINGS PER SHARE

For the nine month period ended
September 30, 2001, the weighted average number of shares of common stock outstanding do not include the effect of stock options as
they would have had an anti-dilutive effect.

# ACCOUNTING FOR DERIVIATIVE INSTRUMENTS AND HEDGING ACTIVITIES

Effective January 1, 2001, the
Company adopted Statement of Financial Accounting Standard No. 133 (SFAS No. 133), Accounting for Derivative
Instruments and Hedging Activities (as amended by SFAS No. 138).  SFAS No. 133 establishes new accounting and reporting
standards for derivatives and hedging activities, which requires that all derivative instruments be reported on the balance sheet at
fair value and establishes criteria for designation and effectiveness of transactions entered into for hedging purposes.  The
adoption of SFAS No. 133 did not result in a cumulative effect adjustment being recorded to net income for the change in accounting.
However, the Company recorded a cumulative effective transition adjustment of approximately $415,000 (net of tax) in accumulated
other comprehensive loss in the first quarter of 2001.

The  Company is exposed to
foreign  currency  risks  relating  to  purchases  of  inventories  as part of its  ongoing  business operations and uses
derivative  financial  instruments,  where  appropriate,  to manage these risks. In general,  instruments  used as hedges must be
effective at reducing  the risk  associated  with the  exposure  being hedged and must be  designated  as a hedge at the inception
of the contract.  At the inception of the contract,  the Company has designated its use of derivatives  for foreign  currency
forecasted  transactions as cash flow hedges. The Company hedges  its  exposure  to  variability  in future  cash flows for
forecasted  transactions  up to a maximum  of 24 months. At such time that inventory is received,  the position is re-designated
from a cash flow hedge to a fair value  hedge.  Gains and losses on  derivatives  qualifying  as cash flow hedges are  recorded  in
other  comprehensive income to the extent that hedges are effective  until the underlying  transactions  are  recognized in
earnings.  Gains and losses from fair value hedges are included in earnings.  It is expected that  approximately $1.3 million (net
of tax) of unrealized gains included in other  comprehensive  income at September  30, 2001,  will be  reclassified  into  earnings
in the next twelve  months.   Net gains included in comprehensive  income as of September 30, 2001, including the transition
adjustment,  were approximately $1.3 million (net of tax). Gains and losses related to the ineffective  portion of hedging
instruments,  which are included in net income, and gains and losses from fair value hedges were insignificant.

# RECENT ACCOUNTING PROUNCEMENTS

In June 2001, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards No. 141 (SFAS No. 141), Business
Combinations and Statement of Financial Accounting Standards No. 142.  Goodwill and Other Intangible Assets
(SFAS No. 142).  SFAS No. 141 requires that all business combinations initiated after June 30, 2001 be accounted for
using the purchase method, thus eliminating the use of the pooling-of-interest accounting for business combinations.  SFAS No. 142
changes the accounting for goodwill from an amortization method to an impairment-only approach, whereby goodwill amortization will
no longer be required after December 31, 2001.  The statement will require an annual assessment of goodwill impairment and more
frequent assessments if circumstances indicate a possible impairment.  Additionally, SFAS No. 142 will require all acquired
intangible assets be separately recognized if the benefit of the intangible asset is obtained through contractual or other legal
rights or if the intangible asset can be sold, transferred, licensed, rented, or exchanged regardless of the acquirers intent
to do so.  Whereas, SFAS No. 141 is effective for all business combinations initiated after June 30, 2001,  SFAS No. 142 requires
companies to continue to amortize existing goodwill at June 30, 2001 through the end of 2001, ceasing goodwill amortization on
January 1, 2002.

Amortization of goodwill for
the nine months ended September 30, 2001 was approximately $748,000. The Company is currently evaluating other impacts of adopting
Statement No. 142, but has not yet quantified the impact on its consolidated financial position.

In August 2001, the Financial
Accounting Standards Board issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS No.
144 supercedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed of.
The provisions of this statement are effective for financial statements issued for fiscal years beginning after December 15, 2001.
The Company has not yet determined the impact, if any, this new standard will have on its reported results of operations, financial
position and cash flows.

# MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND 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
continued ability to obtain satisfactory payment terms from the Companys principal suppliers; future compliance with bank
covenants; 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 the effects of a possible continuation of the national economic decline and its impact on
retail sales, likely effects of the terrorist attacks of September 11, 2001 on sales of knives, luggage and other items sold or
licensed by the Company, increased competition, changes in consumer tastes and other factors not yet known, evaluated or
anticipated. Accordingly, the actual results of the Company's operations in the future may vary widely from the forward-looking
statements included herein.

RISKS AND UNCERTAINTIES

The Company believes that
revenues and net income will continue to be impacted negatively, at least for the near term, by the current economic downturn and by
the terrorist attacks of September 11, 2001 and their aftermath.  The majority of the Company's products and many of the products of
the Company's licensees are purchased by their ultimate consumers or by corporations from discretionary resources, making sales by
the Company, including sales at the Company's new flagship store, in the Soho neighborhood of New York City, and sales by its
licensees vulnerable to negative economic indicators. The Company believes that these adverse conditions have accounted for a
significant portion of the decreased revenues for the quarter and the year, particularly in the Companys corporate markets
business.  In addition, the Company believes that restrictions on the carrying of knives on airliners and similar restrictions have
negatively affected sales of the Company's knife and tool products and that such negative effects may continue.  These factors may
also make it difficult for the Company to replace sales lost by Bear Cutlery, Inc.(Bear) resulting from a decrease in
purchases from a single customer. The Company is unable to determine the extent to which these events and trends are responsible for
reduced sales in the quarter but believes that such a connection exists.The Company is also unable at this time to determine whether
these negative trends will continue or to quantify their possible future effects.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended September 30, 2001 and 2000

Net revenues consist of the following

|                   | 2001    | 2000    | 
|------------------ | ------- | ------- | 
|Product sales, net | $26,322 | $32,253 | 
|Royalty income     | 693     | 466     | 
|                   | $27,015 | $32,719 | 

Product sales for the three
months ended  September 30, 2001 were $26.3 million  compared with $32.3 million for the same period in 2000,  representing  a
decrease  of $5.9  million or 18.4%.  The sales  decrease  was due a $2.2  million  decrease  in sales to one customer related to a
special  promotional  program, a decrease in sales of Victorinox  Original Swiss Army Knives, a decrease in sales in the corporate
markets business due to the decline in general economic  conditions,  and sales decrease related to Bear Cutlery,  Inc. (Bear
) where sales to one customer declined significantly. These decreases were offset partially by sales of Swiss Army Brand
Watches.

Gross profit was $11.7 million
for the three months ended  September 30, 2001,  compared with $12.8 million in 2000. The decrease was attributable to a decrease in
sales offset by a higher gross profit  margin  percentage.  The gross profit margin  percentage  for the third quarter of 2001 of
43.2% was higher than the gross profit  margin  percentage of 39.1%  reported for the same period in 2000  primarily because of
favorable  product mix, an increase in the value of the U.S.  dollar versus the Swiss franc, and because royalty revenues have a
higher gross margin than product sales.  The Company's  gross profit margin is a function of both  product  mix  (including  royalty
revenues)  and Swiss franc  exchange  rates.  The Company  imports the majority of its products  from  Switzerland, and its costs
are affected by both the spot rate of exchange and by its foreign  currency and 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 2002. 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 of the extent to which
such hedging transactions will reduce the effect of adverse currency fluctuations.

Selling,  general and
administrative expenses for the three months ended September 30, 2001 was $12.0 million compared with $11.2 million in 2000,  an
increase of $0.8  million or 7.4%. The increase was due to increased advertising expenses and expenses realted to Xantia, S.A.
("Xantia") in which the Company acquired a controlling interest in July 2000. As a  percentage  of net sales,  total  selling,
general and  administrative expenses increased from 34.2% in 2000 to 44.5% in 2001.

Interest  income  (expense) and
other,  net was expense of $281,000 for the three months ended  September 30, 2001,  compared to expense of $294,000 for the
comparable  period in 2000  primarily  due to lower  effective  interest  rates and lower  borrowings  for working capital purposes
offset partially by increased borrowings related to the acquisition of Xantia.

Investment gain (loss), net was
a gain of $1,854,000 and $0 for the three months ended September 30, 2001 and 2000, respectively. In 2001, the gain was due to the
sale of 90,248 shares of common stock of John Hancock Financial Services, Inc. (John Hancock).

As a result of these changes,
income before income taxes for the three months ended September 30, 2001 was income $1,201,000 versus $1,302,000 for the same period
in 2000, a decrease of $101,000.

Income tax expense was provided
at an effective rate of 52.1% and 40.3% in 2001 and 2000, respectively.

Minority  interest  was expense
of  $172,000  and income of $12,000  for the three  months  ended  September  30, 2001 and 2000, respectively, related to Xantia.

As a result,  net income for
the three months ended  September 30, 2001 was $407,000  ($0.05 per share-basic and diluted) versus $789,000 ($0.10 per share -basic
and diluted) for the same period in 2000, a decrease of $382,000.

Comparison for the Nine Months Ended September 30, 2001 and 2000

Net revenues consist of the following

|                   | 2001    | 2000    | 
|------------------ | ------- | ------- | 
|Product sales, net | $74,546 | $86,674 | 
|Royalty income     | 1,319   | 970     | 
|                   | $75,865 | $87,644 | 

Product sales for the nine
months ended  September  30, 2001 were $74.5 million  compared with $86.7 million for the same period in 2000,  representing  an
decrease of $12.1 million or 14.0%.  The sales decrease was due a $3.5 million  decrease in sales related to a special promotional
program with one customer,  a decrease in sales of Victorinox Original Swiss Army Knives, a decrease in sales in the corporate
markets business due to the decline in general economic  conditions,  and a decrease in sales related to Bear where sales to one
customer  declined  significantly. These decreases were offset  partially  by an increase  in sales  related to Xantia,  which the
Company  acquired a controlling interest in July 2000.

Gross profit of $31.3  million
for the nine months ended  September  30, 2001  decreased by $3.0 million or 8.8% from 2000.  The gross  profit  margin  percentage
for the nine months of 2001 of 41.1% was higher than the gross  profit  margin  percentage  of 39.1% reported  for the same period
in 2000  primarily  because of favorable product mix, an increase in the value of the U.S.  dollar  versus the Swiss franc and
because royalty revenues have a higher gross margin than product sales.

Selling,  general and
administrative expenses for the nine months ended September 30, 2001 of $35.3 million were $2.3 million or 7.1% higher  than the
amount for the  comparable  period in 2000.  The  increase  was due to  operating  expenses of Xantia and special charges of $0.8
million for personnel costs related to senior  management  realignments and asset  write-downs.  As a percentage of net sales, total
selling, general and administrative expenses increased from 37.6% in 2000 to 46.4% in 2001.

Interest  income  (expense) and
other,  net was expense of $736,000 for the nine months ended  September  30, 2001  compared to interest of $852,000 in the
comparable  period in 2000 primarily due to lower  effective  interest  rates and lower  borrowings for working  capital purposes
offset partially by increased borrowings related to the acquisition of Xantia.

Investment gain (loss), net was
a gain of $1,854,000 and $1,583,000 for the nine months ended September 30, 2001 and 2000, respectively. In 2001, the gain was due
to the sale of 90,248 shares of common stock  of John Hancock. The gain in 2000 was due to a $1,791,000 gain from the common stock
received related to the demutualization of John Hancock  offset partially by a $208,000 loss related to the write-down of the
Companys common stock investment in Chapparal Resources, Inc.

As a result of these  changes,
income  (loss)  before  income taxes for the nine months ended  September 30, 2001 was a loss of $2,880,000 versus an income of
$2,065,000 for the same period in 2000, a change of $4,945,000.

Income tax expense (benefit)
was provided at an effective rate of 34.9% and 41.5% in 2001 and 2000, respectively.

Minority interest was expense
of $53,000 and income of $12,000 for the nine months ended September 30, 2001 and 2000, respectively, related to Xantia.

As a result, net income (loss)
for the nine months ended September 30, 2001 was a loss of $1,926,000 ($0.24 per share - basic and diluted) versus income of
$1,220,000 ($0.15 per share  basic and diluted) for the same period in 2000, a change of $3,146,000.

LIQUIDITY AND CAPITAL RESOURCES

As of September 30, 2001, the
Company had working  capital of $57.3 million  compared with $57.6 million as of December 31, 2000, a decrease of $0.3 million.
Sources of working  capital  included  $3.4 million from the sale of common stock of John Hancock.  Uses of working capital
included  repayment of debt,  capital  expenditures of $1.1 million and additions to other assets of $1.1 million.  The Company
currently has no material commitments for capital expenditures. In connection with the formation of Victorinox Swiss Army Watch
S.A., the Company is committed to 1,000,000 CHF in capital contributions. In addition, in November 2001 the Company opened a
flagship retail store in New York City, and the Company is unable to determine at the present time the possible effects that this
store will have on the Company's financial condition and liquidity.

Cash used in operating
activities was approximately  $0.7 million in the nine months ended September 30, 2001 compared with cash used in operating
activities of $1.8 million in the comparable  period in 2000. The change  resulted  primarily from a larger  decrease in receivables
in 2001 compared to 2000, offset partially by an larger increase in inventories in 2001 as compared to 2000.

The Company meets its
short-term liquidity needs with cash generated from operations, and, when necessary, bank borrowings under its revolving credit
agreement.  At September 30, 2001, the Company had a $16.0 million credit line, of which 5,640,000 was outstanding and $10,360,000
was available for borrowings. The line of credit expires in September 2003. Also, the Company has approximately $10,035,000 of
outstanding term loans and debt related to acquisitions. In October 2001, the Company prepaid $3.0 million of its term loan from a
portion of the proceeds from the sale of the common stock of John Hancock. 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 next twelve months. The Company's credit facility
includes various financial  covenants, including maintenance of a leverage coverage ratio and interest coverage ratio based on
operating results for the  previous four quarters. The Company was in compliance with all its bank covenants at September 30, 2001.
For the three months ended December 31, 2001, the bank has amended certain covenants to levels the Company believes it can attain
and the Companys  principal suppliers, Xantia and Victorinox, A.G., the Company's majority shareholder, have granted the
Company extended payment  terms in order to permit such compliance for the fourth quarter of 2001.  However, as compliance depends
upon sales, general economic conditions and other factors not in the Companys control, no assurance can be given to such
attainment.  At the present time there is insufficient information to determine whether further adjustment of covenants will be
required to achieve compliance in 2002, and the Company and its lender plan to discuss any appropriate further revision of covenants
at the end of this year.

# Item 3.           
    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 the majority of 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, 2001, the Company has entered into
foreign currency contracts and options to purchase approximately 79.9 million Swiss francs in 2001 and 2002 at a weighted average
rate $1.684 Swiss franc/dollar.  At September 30, 2001, the unrealized gain on these contracts and options was approximately $1.9
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.

# PART II.         
      - OTHER INFORMATION

A.)            
   Exhibits

(10)        
   None

(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.

B.)            
    The Company filed a report on Form 8-K on July 30, 2001 and a report on Form 8-K/A on August, 17, 2001,  related
to the formation of Victorinox Swiss Army Watch, S.A.

# SIGNATURES

Pursuant to the requirements of 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.

Date:  November 14, 2001
                     
                      
                      
                      
                      
       By /s/ Thomas M. Lupinski
                     
                      
                      
                      
                      
       Title:Senior Vice President,
                     
                      
                      
                      
                      
       Chief Financial Officer,
                     
                      
                      
                      
                      
       Secretary and Treasurer