# 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 June 30, 2002

# 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 August 9, 2002, was 8,295,811 shares.

# SWISS ARMY BRANDS, INC.
AND SUBSIDIARIES
INDEX

|PART I:    | FINANCIAL INFORMATION                                                                                                                       | Page No. | 
|---------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------- | 
|Item 1.    | FINANCIAL STATEMENTS                                                                                                                        |          | 
|           | Consolidated Balance Sheets as of
June 30, 2002 (unaudited) and December 31, 2001                                                           | 3 - 4    | 
|           | Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 2002 and 2001 (unaudited)                                 | 5        | 
|           | Consolidated Statements of Stockholders' Equity and
Comprehensive Income (Loss) for the Six Months Ended June 30, 2002 and 2001 (unaudited) | 6        | 
|           | Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2002 and 2001 (unaudited)                                           | 7        | 
|           | Notes to Consolidated Financial Statements                                                                                                  | 8 - 10   | 
|Item 2.    | MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                       | 11 - 17  | 
|Item 3.    | QUANTITATIVE AND QUALITATIVE DISCLOSURES
 ABOUT MARKET RISK                                                                                 | 17       | 
|Part II:   | OTHER INFORMATION                                                                                                                           |          | 
|Item 4.    | SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS                                                                                         | 18       | 
|Item 6.    | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                            | 19       | 
|Signatures |                                                                                                                                             | 19       | 

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

|                                                                                                                  | June 30,
                      
         
2002         
                      
    (unaudited) | December 31,2001 | 
|----------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------- | ---------------- | 
|Current assets:                                                                                                   |                                                                                                |                  | 
|Cash and cash equivalents                                                                                         | $ 845                                                                                          | $ 2,639          | 
|Accounts receivable, less
       allowance for doubtful       accounts of $1,210, and
       $1,310, respectively | 23,372                                                                                         | 29,172           | 
|Inventories                                                                                                       | 47,000                                                                                         | 34,758           | 
|Deferred income taxes                                                                                             | 926                                                                                            | 1,768            | 
|Prepaid and other                                                                                                 | 10,705                                                                                         | 4,772            | 
|Total current
 assets                                                                                             | 82,848                                                                                         | 73,109           | 
|Deferred income taxes                                                                                             | 3,660                                                                                          | 896              | 
|Property, plant and equipment, net                                                                                | 7,429                                                                                          | 7,153            | 
|Investments                                                                                                       | 3,151                                                                                          | 3,834            | 
|Intangible assets, net                                                                                            | 3,840                                                                                          | 11,246           | 
|Other assets, net                                                                                                 | 18,647                                                                                         | 17,896           | 
|Total Assets                                                                                                      | $119,575                                                                                       | $114,134         | 

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

3

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

|                                                                                                                                                            | June 30,      
                      
      2002             
                      
      (unaudited) | December 31,2001 | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ---------------- | 
|Current liabilities:                                                                                                                                        |                                                                                                        |                  | 
|Current portion of long-term
debt                                                                                                                           | $ 6,818                                                                                                | $ 1,264          | 
|Accounts Payable                                                                                                                                            | 15,693                                                                                                 | 14,034           | 
|Accrued liabilities                                                                                                                                         | 9,455                                                                                                  | 9,349            | 
|Total current liabilities                                                                                                                                   | 31,966                                                                                                 | 24,647           | 
|Long-term liabilities:                                                                                                                                      |                                                                                                        |                  | 
|Long-term debt                                                                                                                                              | 6,671                                                                                                  | 6,408            | 
|Other                                                                                                                                                       | 932                                                                                                    | 675              | 
|Total Liabilities                                                                                                                                           | 39,569                                                                                                 | 31,730           | 
|Minority interest                                                                                                                                           | 8,144                                                                                                  | 6,644            | 
|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    9,183,054 and    
     9,076,442, respectively | 919                                                                                                    | 908              | 
|Additional paid-in capital                                                                                                                                  | 48,980                                                                                                 | 48,988           | 
|Accumulated other comprehensive
income (loss)                                                                                                               | 513                                                                                                    | (550)            | 
|Retained earnings                                                                                                                                           | 29,473                                                                                                 | 34,437           | 
|                                                                                                                                                            | 79,885                                                                                                 | 83,783           | 
|Less:  Treasury stock:
  908,743 shares for both          periods,                                                                                          | (8,023)                                                                                                | (8,023)          | 
|Total stockholders' equity                                                                                                                                  | 71,862                                                                                                 | 75,760           | 
|Total Liabilities and Stockholders' Equity                                                                                                                  | $119,575                                                                                               | $114,134         | 

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

4

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

|                                                                                                                                                                                                                   | Three Months EndedJune 30,2002 
             2001 | Six Months EndedJune 30,2002  
            2001 |                             
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------- | ----------------------------------------------- | ----------------------------
|Net revenues                                                                                                                                                                                                       | $25,853                                           | $27,077                                         | $50,594                     
|Cost of sales Gross profit                                                                                                                                                                                         | 14,306    11,547                                  | 15,961    11,116                                | 28,734    21,860            
|Selling, general and administrative expenses                                                                                                                                                                       | 12,133                                            | 11,068                                          | 23,455                      
|Operating income (loss)                                                                                                                                                                                            | (586)                                             | 48                                              | (1,595)                     
|Interest expense and other, net                                                                                                                                                                                    | (200)                                             | (237)                                           | (362)                       
|Investment loss                                                                                                                                                                                                    | (683)                                             |                                                | (683)                       
|Total other income (expense), net                                                                                                                                                                                  | (883)                                             | (237)                                           | (1,045)                     
|Loss before income taxes and cumulative effect of  
 a change in accounting principle                                                                                                                              | (1,469)                                           | (189)                                           | (2,640)                     
|Income tax benefit                                                                                                                                                                                                 | (1,838)                                           | (44)                                            | (2,181)                     
|Minority interest                                                                                                                                                                                                  | (191)                                             | (71)                                            | (83)                        
|Net income (loss) before cumulative effect of a
  change in accounting principle                                                                                                                                   | 560                                               | (74)                                            | (376)                       
|Cumulative effect of a change in accounting   principle                                                                                                                                                            |                                                  |                                                | (4,588)                     
|Net income (loss)                                                                                                                                                                                                  | $ 560                                             | ($74)                                           | ($4,964)                    
|Basic earnings per share:Net income (loss) per share before
cumulative effect   of a change in accounting principleCumulative effect per share of a change in 
  accounting principleNet income (loss) per share   | $0.07    
   $0.07                               | ($0.01)    
   ($0.01)                         | ($0.05)    ($0.55)   ($0.60)
|Diluted earnings per share:Net income (loss) per share before
cumulative effect   of a change in accounting principleCumulative effect per share of a change in 
  accounting principleNet income (loss) per share | $0.07    
   $0.07                               | ($0.01)    
   ($0.01)                         | ($0.05)    ($0.55)   ($0.60)
|Weighted average number of shares outstanding:  
   Basic      Diluted                                                                                                                                             | 8,274   8,362                                     | 8,278   8,278                                   | 8,274   8,274               

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

5

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' 
EQUITY AND COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2002 AND 2001
(in thousands, except for share data)

|                                                                           | Common StockPar Value  $.10
Shares      Amount | AdditionalPaid-InCapital | AccumulatedOtherComprehensiveIncome
(Loss) | RetainedEarnings | TreasuryStock | ComprehensiveIncome (Loss) |         
|-------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ------------------------------------------ | ---------------- | ------------- | -------------------------- | --------
|BALANCE                                                                    |                                                |                          |                                            |                  |               |                            |         
|December 31, 2000                                                          | 8,971,080                                      | $897                     | $49,005                                    | $1,234           | $37,589       | ($8,003)                   |         
|Comprehensive loss:
  Net loss                                             |                                               |                         |                                           |                 | (2,333)       |                           | ($2,333)
|Cumulative effect 
   transition adjustment for    derivatives, net of tax |                                               |                         |                                           | (415)            |              |                           | (415)   
|Unrealized gain on
   marketable securities                                |                                               |                         |                                           | 266              |              |                           | 266     
|Fair value adjustment 
   for derivatives, net of tax                      |                                               |                         |                                           | (942)            |              |                           | (942)   
|Foreign currency
   translation adjustment                                 |                                               |                         |                                           | 46               |              |                           | 46      
|Comprehensive loss                                                         |                                                |                          |                                            |                  |               |                            | 3,378   
|Issuance of common stock                                                   | 106,112                                        | 11                       | (11)                                       |                 |              |                           |         
|BALANCE                                                                    |                                                |                          |                                            |                  |               |                            |         
|June 30, 2001 (unaudited)                                                  | 9,077,192                                      | $908                     | $48,994                                    | $189             | $35,256       | ($8,003)                   |         
|BALANCE                                                                    |                                                |                          |                                            |                  |               |                            |         
|December 31, 2001                                                          | 9,076,442                                      | $908                     | $48,988                                    | ($550)           | $34,437       | ($8,023)                   |         
|Comprehensive Loss:                                                        |                                                |                          |                                            |                  |               |                            |         
|Net loss                                                                   |                                               |                         |                                           |                 | (4,964)       |                           | ($4,964)
|Fair value adjustment  
 for derivatives, net of tax                       |                                               |                         |                                           | 1,313            |              |                           | 1,313   
|Foreign currency  
 translation adjustment                                 |                                               |                         |                                           | (250)            |              |                           | (250)   
|Comprehensive loss                                                         |                                                |                          |                                            |                  |               |                            | ($3,901)
|Stock options exercised                                                    | 500                                            |                         | 3                                          |                 |              |                           |         
|Issuance of common stock                                                   | 106,112                                        | 11                       | (11)                                       |                 |              |                           |         
|BALANCE                                                                    |                                                |                          |                                            |                  |               |                            |         
|June 30, 2002 (unaudited)                                                  | 9,183,054                                      | $919                     | $ 48,980                                   | $513             | $29,473       | ($8,023)                   |         

6

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

|                                                                                                                                                                                                                                                                                                                                                                                         | Six Months EndedJune 30,2002    2001    |                                       | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------------------------------- | ------------------------------------- | 
|Cash flows from operating activities:   
 Net income (loss)     Adjustments to reconcile net income (loss) to net cash   
 provided by (used in) operating activities:        Depreciation and
amortization        Investment loss        Minority interest       
Cumulative effect of a change in accounting principle        Deferred income taxes
        Stock compensation expense | ($4,964)1,637683(83)4,588(74)
         | ($2,333)2,115(119)
36              | 
|Changes in other current assets and liabilities: 
   Accounts receivable     Inventories     Prepaid and other 
   Accounts payable     Accrued liabilities       
   Net cash provided by (used in) operating activities                                                                                                                                                                | 9,564(11,995)(3,198)(1,544)(125)(5,511) | 14,195(8,009)(1,618)(1,882)(1,971)414 | 
|Cash flows from investing activities:   
 Capital expenditures     Additions to other assets        
  Net cash used in investing activities                                                                                                                                                                                                                                             | (1,004)(907)(1,911)                     | (612)(320)(932)                       | 
|Cash flows from financing activities:   
 Borrowings under debt agreements     Repayments under debt agreements    
Proceeds from the exercise of stock options          Net cash provided by
(used in) from financing activities                                                                                                                                                        | 31,421(25,972)35,452                    | 23,330(26,588)(3,258)                | 
|Effect of exchange rate changes on cash                                                                                                                                                                                                                                                                                                                                                  | 176                                     | (278)                                 | 
|Net decrease in cash    Cash and cash
equivalents, beginning of period    Cash and cash equivalents, end of period                                                                                                                                                                                                                                                                       | (1,794)2,639$845                        | (4,054)5,002$948                      | 
|Cash paid during the period:    
Interest     Income taxes                                                                                                                                                                                                                                                                                                                               | $384$174                                | $446$676                              | 

7

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002 and 2001
(unaudited)

1. 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 note  disclosures  normally  included in financial  statements  prepared in accordance  with
accounting  principles  generally  accepted in the United States of America 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  consolidated  financial  statements and notes thereto included in the Company's report on Form 10-K for the
year ended December 31, 2001. 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 accounting principles  generally  accepted in the United States of America 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.
2. 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 first-in,  first-out (FIFO) method).  Inventories  principally consist of finished goods.
The increase in inventories from December 31, 2001 to June 30, 2002 was due to the normal seasonal build of inventory and an
increase due to the rebranding of the inventory related to Victorinox Swiss Army Watch S.A. ("VSA").
3. EARNINGS PER SHARE
For the six month periods ended
June 30, 2002 and 2001, and the three month period ended June 30, 2001,  the weighted average number of shares of common stock
outstanding do not include the dilutive effect of stock options as they would have an anti-dilutive effect.
4. INCOME TAXES
Income taxes are  provided at
the  estimated  annual  effective  tax rate.  The income tax benefit for the interim 2002 and 2001 periods  differ from the federal
statutory  rate of 34% due primarily to state income taxes (net of federal  benefit),  foreign income taxes, capital losses not
benefited for tax purposes and expenses related to the tender offer, see Note 10, which are not deductible for tax purposes.  For
the quarter ended June 30, 2002,  the Company recorded an income tax benefit at an  effective rate of 125.1%.  This rate is higher
than the effective  rate for the six months ended8

June 30, 2002 of 82.6% as the Company's effective rate for first quarter ended
was recorded at a 29.3% effective rate. The Company expects that the effective tax rate for the remainder of 2002 will continue to
be significantly higher than the statutory rate of 34% due to the above reasons.
5. INVESTMENTS
In the quarter ended June 30,
2002, the Company recorded a $683,000 write-down of its investment in Highgate Capital LLC, a private equity firm, due to the other
than temporary impairment in the value of the investment.
6. ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In June 1998, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standard ("SFAS") No. 133, as amended in June 2000 by
SFAS No. 138, "Accounting for Derivative Instruments and Hedging Activities," which standardizes the accounting for derivative
instruments, including certain derivative instruments embedded in other contracts.  This standard requires that an entity recognize
those items as assets or liabilities in the balance sheet and measure them at fair value, resulting in an offsetting adjustment to
income or other comprehensive income, depending on effectiveness of the hedge.  SFAS 133, as amended by SFAS 138, was effective for
the Company beginning January 1, 2001.  The Company adopted this statement effective January 1, 2001.  Based upon the estimated fair
value of the Company's derivative instruments, at January 1, 2001 derivative liabilities of approximately $415,000, net of tax, were
recognized in the balance sheet with an offsetting amount in other comprehensive income (loss).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 net income. It
is expected that approximately $1.7 million (net of tax) of unrealized gains included in other comprehensive income at June 30,
2002, will be reclassified into earnings in the next twelve months. 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.
7. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS
Effective January 1, 2002, the
Company adopted the Emerging Issues Task Force ("EITF") Issue No. 00-14, "Accounting for Certain Sales Incentives," and EITF Issue
No. 00-25, "Accounting for Consideration from a Vendor to a Retailer in Connection with the Purchase or Promotion of the Vendor's
Products."  The impact of the new accounting in the reclassification of9certain revenue incentives, cooperative advertising and promotional expenses
from selling, general and administrative expenses to a reduction of net revenues, but will have no impact on the Company's financial
position or net income. The adoption of these EITF Issues resulted in a reduction of net revenues and selling, general and
administrative expenses of approximately $550,000 and $500,000 for the three months ended June 30, 2002 and 2001, respectively, and
approximately $1,100,000 and $750,000 for the six months ended June 30, 2002 and 2001, respectively.
8. GOODWILL AND OTHER INTANGIBLE ASSETS

In July 2001, the FASB issued
SFAS No. 142, "Goodwill and Other Intangible Assets." Effective January 1, 2002, the Company adopted SFAS No. 142. SFAS No. 142
requires goodwill and intangible assets with indefinite lives no longer to be amortized, but instead be tested for impairment at
least annually.SFAS No. 142 provides a
six-month transitional period from the effective date of adoption for the Company to perform an assessment of whether there is an
indication that goodwill is impaired. To the extent that an indication of impairment exists, the Company must perform a second test
to measure the amount of impairment.  The Company determined that an impairment existed for the goodwill of Bear Cutlery, Inc.
("Bear"). The Company, with the help of a third party valuation firm, then determined the implied fair value of Bear using a
discounted cash flow analysis and compared such value to the carrying amounts of Bear's assets and liabilities. This evaluation
indicated that the entire amount of goodwill related to Bear of approximately $7.3 million was impaired as of January 1, 2002.
Conditions that contributed to the goodwill impairment included a decline in the multi-tool business.  Accordingly, as of
January 1, 2002, the Company recognized a $4.6 million, net of tax, non-cash charge as a cumulative effect of a change in accounting
principle for the write-down of the goodwill.
9. RECENTLY ISSUED ACCOUNTING STATEMENTS

On January 1, 2002,
SFAS No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets" also became effective and it provides  further
implementation  guidance  relative to SFAS No. 121,  "Accounting  for the  Impairment of  Long-Lived  Assets and for Long-Lived
Assets to be Disposed Of." The adoption of SFAS No. 144 did not have a material  adverse  impact on the results of operations or
financial condition of the Company.
10. RELATED PARTY TRANSACTION - TENDER OFFER

On July 23, 2002, SABI
Acquisition Corp.  ("Purchaser"),  a Delaware corporation and a wholly-owned subsidiary of Victorinox AG, a Swiss  corporation and
a Company's  major supplier and majority  stockholder  ("Victorinox"),  made an offer to purchase all of the outstanding  shares
of common stock of the Company not held by Victorinox or its  affiliates  (other than the Company) for a cash price of $9.00 per
share.  The offer will expire at 12:00 Midnight on August 19, 2002.

10

# Item 2.    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
strength of the retail market;  the Swiss franc- U.S.  dollar  exchange rates;  the extent to which the Company is able to
successfully  manage the effects of foreign currency  fluctuations  through  financial  instruments;  the continued  ability to
obtain  satisfactory  payment terms from Victorinox;  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 forward  looking statements 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,
continuing 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,  the restrictions on the carrying of knives on airliners and similar restrictions,  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.

RESULTS OF OPERATIONS

Comparison of the Three Months Ended June 30, 2002 and 2001

Net revenues consist of the
following (in thousands):

|                   | 2002    | 2001    | 
|------------------ | ------- | ------- | 
|Product sales, net | $25,038 | $26,451 | 
|Royalty income     | 815     | 626     | 
|                   | $25,853 | $27,077 | 

11

Product  sales for the three
months ended June 30, 2002 were $25.0  million  compared  with $26.5 million for the same period in 2001,  representing  a  decrease
of $1.4  million  or 5.3%.  The  sales  decrease  was  primarily  due to a 34%  decrease  in sales of Victorinox®  Original
Swiss Army  Knives and tools offset by a 7% increase in watch sales and a 16% increase in professional cutlery  sales.  The
Company believes that the  restrictions  on the carrying of knives and tools on airliners  and similar restrictions  have negatively
affected  sales of the  Company's  knife and tool  products and that such  negative  trends may  continue.  In addition,  product
sales amounts for each  quarter  have been  reduced as the result of the  reclassification  of certain  promotional  expenses  from
selling, general and  administrative  expenses in accordance  with EITF Issues No. 00-14 and 00-25,  which the Company  adopted
during the first quarter  of 2002.  The  reclassified  amounts  for the  second  quarter  of 2002 and 2001 were  approximately
$550,000  and  $500,000, respectively. Royalty income relates to the licensing program of Victorinox® Travel Gear and
Victorinox® Apparel.

Gross  profit of $11.5  million
for the three  months ended June 30, 2002  increased  $0.4 million or 3.9% from 2001.  The gross profit margin  percentage for the
second quarter of 2002 of 44.7% was higher than the gross profit margin  percentage of 41.1% reported for the same period in 2001
primarily  due to an increase in watch sales,  which have a higher gross margin than the  Company's  other products,  and also due
to an 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 (including  royalty  revenues) and Swiss franc exchange  rates.  Since the Company imports the majority 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 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 June 30, 2002 of $12.1  million were $1.1 million or 9.6% higher than the
comparable  period in 2001 due to expenses related to the Company's  retail store,  which opened in October 2001, an increase in
professional fees related to the tender offer and expenses related to Victorinox Swiss Army Watch S.A. ("VSA"). The Company expects
that expenses for 2002 will be higher than 2001, due to the above as well as severance costs of $0.6 million which will be recorded
in the third quarter of 2002.

Interest  expense and other,
net was $200,000 for the three months ended June 30, 2002 compared to $237,000 for the  comparable period in 2001 primarily due to
decreased borrowings and lower effective interest rates.

Investment loss of $683,000 for
the three months ended June 30, 2002, was due to the Company's write-down of its investment in Highgate Capital LLC.

As a result of these changes,
loss before income taxes for the three months ended June 30, 2002 was a loss of $1,469,000 versus $189,000 for the same period in
2001, a change of $1,280,000.

12

Income tax benefit was provided
at an effective rate of 125.1% and 23.3% in 2002 and 2001, respectively. The effective rate for 2002 differs significantly from
the statutory rate of 34% due to expenses related to the tender offer which are not deductible for tax purposes, state income taxes,
capital losses not benefited for tax purposes and the benefit recorded for the losses related to VSA were recorded at a
significantly lower tax rate than 34%. In addition, the income tax benefit for the second quarter is higher than the estimated
income tax benefit of 82.6% as the Company had recorded an income tax benefit of 29.3% for the first quarter of 2002 and therefore
had to increase the second quarter effective rate to reach the estimated effective rate of 82.6%.

Minority interest income of
$191,000 and $71,000 for the three months ended June 30, 2002 and 2001 respectively, related to Xantia and VSA.

As a result of these  changes
and that the efective rate was 125.1% for the quarter, net income  (loss) for the three  months  ended June 30, 2002 was income of
$560,000  ($0.07 per share - basic and  diluted)  versus a loss of $74,000  ($0.01 per share - basic and  diluted)  for the same
period in 2001, a change of $634,000.

Comparison for the Six Months Ended June 30, 2002 and 2001

Net revenues consist of the
following (in thousands):

|                   | 2002    | 2001    | 
|------------------ | ------- | ------- | 
|Product sales, net | $49,175 | $46,917 | 
|Royalty income     | 1,419   | 1,183   | 
|                   | $50,594 | $48,100 | 

Product  sales for the six
months  ended June 30, 2002 were $49.2  million  compared  with $46.9  million for the same period in 2001,  representing  an
increase of $2.3 million or 4.8%.  The sales  increase was primarily due to a 27% increase in watch sales and a $3.7  million
increase in sales  related to a special  promotional  program  with one  customer  offset by a 36%  decrease in sales of
Victorinox®  Original Swiss Army Knives and tools.  The Company  believes that the restrictions on the carrying of knives
and tools on airliners and similar  restrictions  have  negatively  affected  sales of the Company's  knife and tool products and
that such negative trends may continue.  Sales to one customer related to the special  promotional  program were approximately 11%
of net revenues for the six months ended June 30, 2002.  In addition,  product  sales  amounts for each six month period have been
reduced as the result of the reclassification of certain promotional expenses from selling,  general and administrative  expenses in
accordance with EITF Issues No. 00-14 and 00-25 which the Company  adopted  during the first quarter of 2002.  The  reclassified
amounts for the six months ended June 30, 2002 and 2001 were  approximately  $1,100,000  and $750,000,  respectively.  Royalty
income  relates to the  licensing  program of Victorinox® Travel Gear and Victorinox® Apparel.

Gross profit of $21.9  million
for the six months ended June 30, 2002  increased by $3.0 million or 16.0% from 2001.  The gross profit margin  percentage for the
six months of 2002 of 43.2% was higher than the gross profit margin  percentage of 39.2% reported for the same  period in 2001
primarily  due to an increase in watch  sales,  which have a higher  gross  margin that the  Company's  other products, and also due
to an increase in the value of the U.S. dollar versus the Swiss franc.

13

Selling,  general and
administrative  expenses for the six months ended June 30, 2002 of $23.5 million were $1.0 million or 4.3% higher than the amount
for the comparable  period in 2001. The increase was primarily due to expenses  related to the Company's  retail store,  which
opened in October 2001,  expenses related to VSA and an increase in professional  fees related to the tender offer offset by special
charges in 2001 of $0.8 million for personnel costs related to senior management realignments and asset write-downs.

Interest  expense and other,
net was $362,000 for the six months  ended June 30, 2002  compared to $455,000 for the  comparable period in 2001, primarily due to
decreased borrowings and lower effective interest rates.

Investment loss of $683,000 for
the six months ended June 30, 2002 was due to the Company's write-down of its investment in Highgate Capital LLC.

As a result of these changes,
loss before income taxes and cumulative effect of a change in accounting principle for the six months ended June 30, 2002 was a loss
of $2,640,000 versus $4,081,000 for the same period in 2001, a change of $1,441,000.

Income tax benefit was provided
at an effective rate of 82.6% and 39.9% in 2002 and 2001, respectively. The effective rate for 2002 differs significantly from the
statutory rate of 34% due to expenses related to the tender offer which are not deductible for tax purposes, state income taxes,
capital losses not benefited for tax purposes and the benefit recorded for the losses related to VSA were recorded at a
significantly lower tax rate than 34%.

Minority interest income of
$83,000 and $119,000 for the six month period ended June 30, 2002 and 2001, respectively,  related  to Xantia and VSA.

As a result,  net loss for the
six months  ended June 30, 2002 was a loss of  $376,000  ($0.05 per share - basic and  diluted) versus $2,333,000 ($0.28 per
share - basic and diluted) for the same period in 2001, a change of $1,957,000.

Cumulative effect of a change
in accounting principle for the six months ended June 30, 2002 was $4.6 million ($0.55 per share - basic and diluted), net of tax,
due to the write-down of the entire amount of goodwill of Bear resulting from the adoption of SFAS No. 142.

As a result of these  changes,
net loss for the six month period ended June 30, 2002 was a loss of $4,964,000  ($0.60 per share - basic and diluted) versus
$2,333,000 ($0.28 per share - basic and diluted) for the same period  in 2001, a change of $2,631,000.

14

LIQUIDITY AND CAPITAL RESOURCES

The table below presents
summary cash flow information for the six month periods ended June 30, 2002 and 2001(in thousands):

|                                                     | 2002     | 2001     | 
|---------------------------------------------------- | -------- | -------- | 
|Net cash provided by (used in)
 operating activities | ($5,511) | $414     | 
|Net cash provided by (used in)
 investing activities | (1,911)  | (932)    | 
|Net cash provided by (used in)
 financing activities | 5,452    | (3,258)  | 
|Total change in cash and cash
equivalents(a)         | ($1,970) | ($3,776) | 

(a)    
Before exchange rate effects

Operating Activities

Cash provided by operating
activities is the Company's primary source of funds to finance operating needs.  The Company's revolving credit agreement provides
additional liquidity for seasonal and specific purpose expenditures.  The Company believes that cash generated from operations and
the availability under its revolving credit agreement provide sufficient liquidity to support its planned business activities.

As of June 30, 2002,  the
Company had working  capital of $50.9  million  compared with $48.5 million as of December 31, 2001, an increase of $2.4 million.
Significant  uses of working  capital  consisted of additions to other assets of $0.9 million and capital expenditures of $1.0
million.  The Company currently has no material commitments for capital expenditures. The Company does expect to record severance
charges of $0.6 million in the third quarter of 2002 which will negatively impact working capital.

Cash used in operating
activities  was  approximately  $5.5  million in the six months  ended June 30, 2002  compared to cash provided  by  operating
activities  of $0.4  million in the six months  ended June 30,  2001.  The change  primarily  resulted  from a significantly
smaller decrease in accounts  receivable in 2002 compared to 2001 and a larger increase in inventory in 2002 compared to 2001. The
increase in inventory was due to the Company's  normal seasonal build in inventory and an increase due to the rebranding
of the inventory related to VSA.

Investing Activities

Investing activities during
2002 consisted of capital expenditures of $1.0 million and additions to other assets of $0.9 million.

Investing activities during
2001 consisted of capital expenditures of $0.6 million and additions to other assets of $0.3 million.

The Company anticipates that
its capital expenditures and additions to other assets during all of 2002 will be higher in than the amounts spent in 2001 by
approximately $1.0 million due to the construction of a new trade show booth and investments in information technology.

15

Financing Activities

During 2002 and 2001, the
Company's principal financing activities consisted of the borrowing and repayment of bank debt and repayment of debt owed to the
former owners of Xantia, as well in 2002 borrowings from Victorinox related to VSA.

The Company meets its
short-term liquidity needs with cash generated from operations, and, when necessary, bank borrowings under its bank agreement.  As
of June 30, 2002, the Company had a $16.0 million credit line, of which $3,450,000 was outstanding and $12,550,000 was available for
borrowings.  Also, the Company has approximately $6,579,000 of outstanding term loans and debt related to the acquisitions of Bear
and Xantia.  The line of credit expires in June 2003. 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 its bank covenants at June 30, 2002.  For the remainder of 2002, the financial covenants contained in
the agreement are at levels that the Company believes it will not attain.  Accordingly, the Company is currently in negotiations
with its lender which will, among other things, amend the financial covenants to levels that the Company can attain as well
extending the term of the agreement. The Company expects to complete these negotiations in September 2002.  As the debt agreement
with the lender expires in June 2003, the Company has classified all bank debt as of June 30, 2002 as current in the accompanying
balance sheet. The Company believes its current liquidity levels and financial resources available under its current agreement will
be sufficient to meet its operating needs in the next twelve months.

The Company and Victorinox have
entered into an agreement, effective June 20, 2002, pursuant to which Victorinox has agreed to defer until October 15, 2003, payment
of 5,200,000 CHF ($3,459,747) related to amounts owed by VSA to Victorinox. These funds were used by VSA to fund a new trade booth,
purchases inventories and for other operating activities. The amount deferred has been included in long-term debt as of
June 30, 2002.

RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 2002,  SFAS
No. 142,  "Goodwill and Other  Intangible  Assets," became  effective and as a result,  the Company no longer amortizes goodwill.
In lieu of amortization,  the Company is required to complete an initial impairment  assessment of goodwill no later than six months
after the adoption of SFAS No. 142 and perform an annual impairment review  thereafter.  The Company completed its initial
impairment  assessment of goodwill in the second quarter of 2002. As a result, the Company recorded a $4.6 million,  net of tax,
write-down of the goodwill related to Bear Cutlery, Inc.

In January 1, 2002, SFAS
No. 144,  "Accounting for the Impairment or Disposal of Long-Lived Assets" also became effective and it provides  further
implementation  guidance  relative to SFAS No. 121,  "Accounting  for the  Impairment of  Long-Lived  Assets and for Long-Lived
Assets to be Disposed Of." The adoption of SFAS No. 144 did not have a material  adverse  impact on the results of operations or
financial condition of the Company.

16

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

The Company is exposed to
significant  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 in  accumulated  other  comprehensive  income (loss) and recognized in cost of sales when
the related inventory is sold. At June 30, 2002, the Company  entered into foreign  currency  contracts and options to purchase
approximately  29.2 million  Swiss  francs  in 2002 and 3.0  million  Swiss  francs in 2003 at a  weighed  average  rate of $1.71
Swiss  franc/dollar.  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.  At June 30, 2002,  the Company has reviewed
its foreign  exchange risks and based upon its foreign  currency  hedging  program and review of its  outstanding  foreign exchange
contracts,  it believes that a near-term increase  in the value of the Swiss  franc  versus  the U.S.  dollar  would not have a
material  effect  on the  Company's  results  of operations or financial condition.

Interest Rate Risk

The Company has entered into
interest rate protection  agreements to manage its exposure to  fluctuations in earnings  related to changes in interest  rates on
its variable  rate debt.  At June 30, 2002, a 50 basis point  increase or decrease in market  interest rates, principally LIBOR,
would not materially increase or decrease interest expense or cash flows.

17

# PART II.           
    - OTHER INFORMATION

# Item 2.           
    LEGAL ACTIONS

On or about June 13, 2002, the Company became
aware of two lawsuits relating to the tender offer filed in the Court of Chancery of the State of Delaware (the "Initial Stockholder
Suits") against the Company, certain of its directors and officers and Victorinox. Each of the Initial Stockholder Suits was filed
by a stockholder of the Company on behalf of himself/herself and purportedly on behalf of all stockholders of the Company similarly
situated and alleged that, among other things, the proposed $9.00 offer price contained in the tender offer was inadequate and that
the named officers and directors had breached their fiduciary duties to the stockholders. On June 17, 2002, the Company issued a
press release disclosing the Initial Stockholder Suits and stating the Company's belief that the suits do not state valid claims
against the Company or any of its officers or directors. The press release was filed with the SEC as an amendment to Schedule 14D-9
on June 17, 2002. Subsequently, the Company became aware of two additional lawsuits filed against the Company, certain of its
directors and officers and Victorinox, one in the Delaware Court of Chancery and one in Connecticut in Superior Court ("Additional
Stockholder Suits"). Both Additional Stockholder Suits have asserted claims similar to those made in the Initial Stockholder Suits
and, like the Initial Stockholders Suits, were brought by stockholders seeking class action representation and certification on
behalf of other stockholders. The Company does not believe that the Additional Stockholder Suits contain valid claims against the
Company or any of its officers or directors.

# Item 4.           
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of the stockholders of the
Company was held on May 30, 2002, pursuant to notice, at which meeting shareholders elected the following directors:

|NAME                   | NUMBER OF VOTES     
  FOR | NUMBER OF VOTESWITHHELD | 
|---------------------- | -------------------------- | ----------------------- | 
|A. Clinton Allen       | 7,087,885                  | 24,731                  | 
|Clarke H. Bailey       | 7,088,485                  | 24,131                  | 
|Herbert M. Friedman    | 7,048,485                  | 64,131                  | 
|Peter W. Gilson        | 7,087,885                  | 24,731                  | 
|Louis Marx, Jr.        | 7,048,489                  | 64,127                  | 
|Robert S. Prather, Jr. | 7,088,485                  | 24,131                  | 
|Stanley R. Rawn, Jr.   | 7,048,489                  | 64,127                  | 
|John Spencer           | 7,087,889                  | 24,727                  | 
|A. Jeffrey Turner      | 7,087,889                  | 24,727                  | 
|John V. Tunney         | 7,088,485                  | 24,131                  | 

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

A.)            
   Exhibits

(10.1)           
   Temporary modification to the 2001 (second) Amended and Restated Commercial Loan Agreement between Swiss Army
Brands, Inc. and Fleet Bank, N.A. and exhibits.

(10.2)           
   Letter Agreement as of June 20, 2002 between Victorinox Swiss Army Watch, S.A. and Victorinox AG incorporated by
reference to the schedule 14D-9 filed by the Company with the SEC on August 13, 2002.

(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.

(99.1)          
   Section 906 Certification of Chief Executive Officer

(99.2)          
   Section 906 Certification of Chief Financial Officer

B.)            
   There were no reports on Form 8-K for the three months ended June 30, 2002.

# 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:  August 14, 2002
                     
                      
                      
                      
                      
       By /s/ Thomas M. Lupinski
                     
                      
                      
                      
                      
       Name: Thomas M. Lupinski
                     
                      
                      
                      
                      
       Title:Senior Vice President,
                     
                      
                      
                      
                      
       Chief Financial Officer,
                     
                      
                      
                      
                      
       Secretary and Treasurer