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, 1996

                                       OR

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

                        For the transition period from to

                         Commission file number 0-1282-3

                             Swiss Army Brands, Inc.
             (Exact name of registrant as specified in its charter)
                                         
 
                 Delaware                     13-2797726
          (State of incorporation) (I.R.S. Employer Identification No.)

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

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

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

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

The number of shares of Issuer's  Common Stock,  $.10 par value,  outstanding on
October 31, 1996, was 8,208,860 shares.

<PAGE>

                             SWISS ARMY BRANDS, INC.
                                AND SUBSIDIARIES
                                      INDEX
<TABLE>
<CAPTION>


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

Item 1.   FINANCIAL STATEMENTS

          Consolidated Balance Sheets as of
          September  30, 1996 and December 31, 1995.                3 - 4

          Consolidated Statements of Operations for the
          three and nine months ended September 30, 1996 and 1995.      5

          Consolidated Statements of Stockholders Equity
          for the nine months ended September 30, 1996 and 1995.        6

          Consolidated Statements of Cash Flows for the
          nine months ended September 30, 1996 and 1995.                7

          Notes to Consolidated Financial Statements                8 - 9

Item 2.   MANAGEMENTS DISCUSSION AND ANALYSIS
          OF FINANCIAL CONDITION AND RESULTS OF
          OPERATIONS                                              10 - 13

Part II:  OTHER INFORMATION

Item 6.   EXHIBITS AND REPORTS ON FORM 8-K                             14

Signatures                                                             15

The Exhibit Index appears on page 13.
                                       
</TABLE>
                                       2


                                       
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                     Assets
<TABLE>
<CAPTION>



                                              At September 30,  At December 31,
                                                   1996              1995          
                                                (unaudited)
<S>                                          <C>               <C>
Current assets:
   Cash and short-term investments .......... $   2,103,726     $     608,757
   Accounts receivable, less
    allowance for doubtful accounts
    of $860,000 and $975,000, respectively ..    27,652,904        31,970,449
   Inventories ..............................    34,695,192        36,733,146
   Deferred income tax benefits .............     2,395,858         2,395,858
   Prepaid and other ........................     5,332,354         2,647,121
                                                -----------       -----------

      Total current assets ..................    72,180,034        74,355,331
                                                -----------       -----------
Deferred income tax benefits ................       771,371           771,371

Property, plant and equipment, at cost:
   Leasehold improvements ...................     1,001,824           818,446
   Equipment ................................     7,006,789         6,199,914
   Furniture and fixtures ...................     1,665,650         1,473,188
                                                -----------       -----------       
                                                  9,674,263         8,491,548
   Less-accumulated depreciation ............    (5,636,528)       (4,385,683)
                                                -----------       -----------                                          
                                                  4,037,735         4,105,865
                                                -----------       ----------- 
Investment in preferred units, at cost ......     9,002,999         7,002,990
Investment in unconsolidated affiliate ......     1,912,430         2,591,415
Foreign distribution rights, net of
   accumulated amortization of $2,359,319
   and $1,843,812, respectively .............     4,383,372         4,900,396
Other assets, net of accumulated
   amortization of $2,256,081 and
   $3,166,339, respectively .................     8,526,728         7,502,884
                                                -----------       -----------
Total Assets                                  $ 100,814,669     $ 101,230,252
                                              =============     =============



                                       
</TABLE>
                                       3
<PAGE>



                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                      Liabilities and Stockholders' Equity

<TABLE>
<CAPTION>
                                              At September 30,  At December 31,
                                                    1996             1995     
                                                 (unaudited)
<S>                                          <C>               <C>

Current liabilities:
   Accounts payable ......................... $  10,920,912     $   6,479,200
   Accrued liabilities ......................     7,522,354         8,697,994
   Note payable .............................       675,000             ---    
                                                                               
   Income taxes payable .....................         ---           1,114,389
                                                 ----------       -----------  
     Total current liabilities ..............    19,118,266        16,291,583
                                                 ----------       -----------
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 -
      12,000,000; shares issued -
      8,820,468 and 8,800,718, respectively..       882,047           880,072
   Additional paid-in capital ...............    46,136,390        45,897,740

   Unrealized gain on marketable                                    
      securities ............................       169,465             ---
   Foreign currency translation adjustment ..        (1,804)           (9,216)
   Retained earnings ........................    39,623,772        43,283,540
                                                 ----------       -----------
                                                 86,809,870        90,052,136
   Less-cost of common stock in
      treasury; 614,108 shares ..............    (5,113,467)       (5,113,467)
                                                 ----------       -----------
Total stockholders equity                       81,696,403        84,938,669
                                                 ----------       -----------
Total Liabilities and Stockholders Equity .. $ 100,814,669     $ 101,230,252
                                              =============     =============

                                       
</TABLE>

                                       4
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (unaudited)
<TABLE>
<CAPTION>


                               Three Months Ended          Nine Months Ended
                                  September 30,               September 30,
                               1996         1995           1996         1995
<S>                         <C>          <C>          <C>          <C>

Net sales .................  $34,616,208  $30,186,155  $89,372,371  $85,481,135
Cost of sales .............   22,619,819   19,720,049   63,394,304   55,598,986
                              ----------   ----------   ----------   ----------
Gross profit ..............   11,996,389   10,466,106   25,978,067   29,882,149
                                                                               
Selling, general and 
administrative expenses ...   10,828,014    9,636,030   29,537,378   26,768,550
Special charges ...........       ---          ---       2,073,000      ---    
                              ----------   ----------   ----------   ----------
Operating income (loss) ...    1,168,375      830,076   (5,632,311)   3,113,599
Interest (expense) ........      (61,856)     (85,861)    (103,918)    (104,395)
Interest income ...........        5,431      106,861      107,356      523,165

Impairment of investment ..       ---          ---        (800,000)     ---
Other income (expense), net       28,121     (310,745)     156,105     (258,433)
                              ----------    ---------    ---------   ----------
                                                                                                         
Total interest and other 
income,net ................      (28,304)    (289,745)    (640,457)     160,337
                              ----------    ---------    ---------   ----------

Income (loss) before
 income taxes .............    1,140,071      540,331   (6,272,768)   3,273,936
Income tax provision (benefit)   498,000      344,041   (2,613,000)   1,588,681
                              ----------    ---------    ---------   ----------
Net income (loss) .........     $642,071     $196,290  ($3,659,768)  $1,685,255
                              ==========    =========   ==========   ==========
Net income (loss) per share        $0.08        $0.02       ($0.44)       $0.20
                              ==========    =========   ==========   ==========
Weighted average number of
   shares outstanding .....    8,334,166    8,252,978    8,328,423    8,231,012
                              ==========    =========   ==========   ==========
                                       
</TABLE>

                                       5
                                       
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
<TABLE>
<CAPTION>

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

Balance
December 31, 1994         8,796,968   $879,697   $45,866,814    ($28,085)         $ ---            $40,170,324    ($5,113,467)
Net income for                                                                                                                     
  nine months ended
  September 30, 1995
  (unaudited)                ---         ---         ---           ---              ---              1,685,255        ---
Stock options and                                                                                                         
  warrants exercised          2,500        250        22,862       ---              ---                 ---           ---
Foreign currency
  translation adjustment     ---         ---         ---          28,190            ---                 ---           --- 
                          ---------   --------   -----------     -------         ---------         -----------    -----------

Balance, September
30, 1995 (unaudited)      8,799,468   $879,947   $45,889,676        $105            ---            $41,855,579    ($5,113,467)
                          =========   ========   ===========     =======         =========         ===========    ===========
Balance
December 31, 1995         8,800,718   $880,072   $45,897,740     ($9,216)         $ ---            $43,283,540    ($5,113,467) 
Net income (loss) for
  nine months ended
  September 30, 1996
  (unaudited)                ---         ---         ---           ---              ---             (3,659,768)       --- 
Stock options and                                                                                                               
  warrants exercised         19,750      1,975       238,650       ---              ---                 ---           --- 
Unrealized gain on
  marketable securities      ---         ---         ---           ---             169,465              ---           --- 
Foreign currency
  translation adjustment     ---         ---         ---           7,412           ---                 ---           --- 
                          ---------    -------   -----------     -------         ---------         -----------     ----------

Balance, September
30, 1996 (unaudited)      8,820,468   $882,047   $46,136,390     ($1,804)         $169,465         $39,623,772    ($5,113,467)
                          =========   ========   ===========     =======         =========         ===========     ==========

                                       
</TABLE>

                                       6
<PAGE>


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

<TABLE>
<CAPTION>

                                                          Nine months ended
                                                            September 30,
                                                        1996            1995
<S>                                                 <C>           <C>

Cash flows from operating activities:
   Net income (loss)                                ($3,659,768)   $ 1,685,255
   Adjustments to reconcile net income (loss) to cash
   provided from (used for) operating activities:
      Depreciation and amortization                   2,334,200      2,421,880
      Equity in earnings of unconsolidated
         subsidiaries, net of goodwill amortization     ---            299,702
      Deferred income taxes                             ---            141,364
      Special charges                                 6,594,000          ---
      Impairment of investment                          800,000          ---
      Gain on sale of fixed assets                      (24,319)         ---
      Gain on sale of partial investment in stock       (11,050)         ---   
                                                      ---------      ---------
                                                      6,033,063      4,548,201

Changes in other current assets and liabilities:
   Accounts receivable                                4,317,544      3,477,571
   Inventories                                       (2,483,046)   (15,146,112)
   Prepaid and other                                 (3,531,233)    (1,765,827)
   Accounts payable                                   4,527,554     (4,385,566)
   Accrued liabilities                               (1,562,365)      (298,284)
   Income taxes payable                              (1,113,505)    (1,223,193)
                                                      ---------      ----------
       Net cash provided from (used for) operating
       activities                                     6,188,012    (14,793,210)
                                                      ---------     ----------
Cash flows from investing activities:
   Capital expenditures                              (1,221,052)      (953,794)
   Proceeds from sales of property, plant & equipment    42,955          ---
   Additions to other assets                         (2,497,668)    (1,333,024)
   Investment in preferred units                     (2,000,008)         ---
   Investments in common stock                           ---        (3,425,547)
   Proceeds from sale of investments in stock            59,500          ---   
                                                      ---------      ---------
         Net cash (used for) investing activities    (5,616,273)    (5,712,365)
                                                      ---------      ---------

Cash flows from financing activities:
  Proceeds from note payable                            675,000      3,250,000
  Proceeds from exercise of stock options               240,625         23,112
                                                      ---------      ---------
      Net cash provided from financing activities       915,625      3,273,112
                                                      ---------      ---------

Effect of exchange rate changes on cash                   7,605        (99,547)
                                                      ---------      ---------

Net increase (decrease) in cash and short-term
 investments                                          1,494,969    (17,332,010)
   Cash and short-term investments, beginning
 of period                                              608,757     18,019,797
                                                      ---------     ----------
   Cash and short-term investments, end of period     2,103,726        687,787
                                                      =========     ==========

Cash paid during the period:
   Interest                                            $103,918        $24,395
                                                      =========     ==========
   Income taxes                                      $1,692,233     $2,821,410
                                                      =========     ==========
                                       
</TABLE>
                                       7
<PAGE>


                    SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                           September 30, 1996 and 1995
                                   (unaudited)

                        CONSOLIDATED FINANCIAL STATEMENTS

          The consolidated  financial statements included in this Form 10-Q have
     been  prepared by the Swiss Army Brands,  Inc.(the  Company  formerly The
     Forschner  Group,  Inc.) without audit.  Certain  information  and footnote
     disclosures   normally  included  in  financial   statements   prepared  in
     accordance  with  generally  accepted   accounting   principles  have  been
     condensed  or  omitted  pursuant  to  the  rules  and  regulations  of  the
     Securities and Exchange Commission. It is suggested that these consolidated
     financial  statements be read in conjunction with the financial  statements
     and notes  thereto  included in the  Company's  report on Form 10-K for the
     year ended  December 31, 1995. 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 and packaging material.

INVESTMENTS
-----------
          Investments  are  comprised of the  following as of September 30, 1996
     and December 31, 1995
<TABLE>
<CAPTION>

                                                    September 30,  December 31,
                                                        1996          1995 
<S>                                                 <C>            <C>

     Investment in preferred units, at cost (A)      $9,002,999     $7,002,990
     Investment in common stock and note
         receivable, at cost  (B) .............          ---           800,000
     Investment in unconsolidated affiliate (C)       1,912,430      1,791,415
                                                     ----------     ----------
         Total investments                          $10,915,429     $9,594,405
                                                     ==========     ==========
</TABLE>


          (A) Represents  the Companys  investment in Hudson River Capital LLC,
     formerly Victory Capital LLC, a privately held  corporation.  The Companys
     preferred  units  capital  account is  allocated  preferred  amounts  under
     certain  circumstances  in years in which  Victory has  profit.  During the
     second  quarter,  the Company  increased  its  investment  in Hudson  River
     Capital by  approximately  $2,000,000.  The Company is accounting  for this
     investment on the cost basis.
                                       8

<PAGE>                             
          (B)  Represents  the  Companys  investment  in a  private  affiliated
     start-up  entity that is in the business of  designing,  manufacturing  and
     marketing fine jewelry.  The common stock and note receivable were recorded
     at cost. This investment was written-off during the second quarter,  due to
     impairment in the value of this  investment.  


          (C)   Represents   the  Companys   investment  in   SweetWater,   Inc
     (SweetWater).  Effective  January  1, 1996,  the  Company  decreased  its
     percentage  ownership  of  SweetWater  to below  20%.  In  accordance  with
     generally  accepted  accounting   principles,   this  investment  is  being
     accounted for at fair value,  with the Company  recording  unrealized gains
     (losses) as a component of stockholders equity. 

SPECIAL CHARGES
---------------

          The Company recorded non-cash special charges totaling $7.4 million in
     the second quarter.  The write-offs consist of $4.5 million in discontinued
     inventory  (reflected  in cost of  sales)  and  $2.9  million  in  obsolete
     displays, goodwill, intangible assets, and non-strategic investments.

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

          Income taxes are provided at the projected  annual effective tax rate.
     The income tax provisions  (benefits) for the interim 1996 and 1995 periods
     exceed the federal  statutory  rate of 34% due  primarily  to state  income
     taxes (net of federal benefit).

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

          The  weighted  average  number of shares of common  stock  outstanding
     include the dilutive effect of stock options outstanding. The fully diluted
     earnings per share amount for both periods is the same as primary  earnings
     per share.

                                       9
<PAGE>

 

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

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

Comparison of the Three Months Ended September 30, 1996 and 1995
----------------------------------------------------------------

          Sales for the three months ended September 30, 1996 were $34.6 million
     compared with $30.2 million for the same period a year ago, representing an
     increase of $4.4  million or 14.6%.  For the three month  period,  sales of
     Swiss Army Brand Watches and cutlery  increased,  while sales of Victorinox
     Original Swiss Army Knives decreased.

          Gross profit of $12.0 million for the three months ended September 30,
     1996  increased  $1.5  million  or 14%  from  1995.  The  increase  relates
     primarily  to the increase in net sales.  The gross  profit  margin for the
     second  quarter of 1996 of 34.7% was equal to the gross  profit  margin for
     the same period of 1995. Swiss Army's gross profit margin may fluctuate due
     to changes in product mix and Swiss franc exchange rates. Since the Company
     imports  virtually  all of its  products  from  Switzerland,  its costs are
     affected  by both the spot rate of  exchange  and by its  foreign  currency
     hedging  program.  The Company enters into foreign  currency  contracts and
     options  to  hedge  the   exposure   associated   with   foreign   currency
     fluctuations. However, such hedging activity cannot eliminate the long-term
     adverse  impact  on the  Companys  competitive  position  and  results  of
     operations that would result from a sustained  decrease in the value of the
     dollar versus the Swiss franc. These hedging transactions,  which are meant
     to reduce foreign currency risk, also reduce the beneficial  effects to the
     Company if the dollar  increases  relative to the Swiss franc.  The Company
     plans to  continue  to  engage  in  hedging  transactions;  however,  it is
     uncertain as to what extent to which such hedging  transactions will reduce
     the effect of adverse currency fluctuations.

          Selling,  general and  administrative  expenses  for the three  months
     ended  September  30, 1996 of $10.8 million were $1.2 million or 12% higher
     than the amount for the comparable period in 1995. The increase in expenses
     resulted primarily from increases in selling expenses and merchandising and
     promotional expenses.  As a percentage of net sales,  selling,  general and
     administrative expenses decreased from 31.9% in 1995 to 31.3% in 1996.

          Interest  expense of $62,000 for the three months ended  September 30,
     1996 was  $24,000  lower than in the  comparable  period of 1995 due to the
     interest  expense  on a  deferred  payment  to a large  supplier  in  1995,
     slightly offset by higher levels of debt outstanding in 1996.

          Due to  lower  invested  cash  balances  in  the  three  months  ended
     September 30, 1996 than in the comparable  period of 1995,  interest income
     of $5,000 in 1996 is lower than the  $107,000  recorded in the year earlier
     period.

          Other income of $28,000 for the quarter  ended  September 30, 1996 was
     $339,000  more  favorable  compared to the $311,000 of expense for the same
     period in 1995, due to recognition of the Companys  share of net losses in
     1995 in its equity investments.
                                       
          As a result of these  changes,  net income before income taxes for the
     quarter ended  September  30, 1996 was $1.1 million  versus $0.5 million of
     income for the same period in 1995, for an increase of $0.6 million.

          Income tax expense was provided at an effective  rate of 43.7% for the
     three  months ended  September  30,  1996,  versus 63.6% in 1995,  with the
     decrease related primarily to the  non-deductibility of the Companys share
     of losses and amortization of goodwill  relating to its equity  investments
     in 1995.

          Net income was $0.6 million for the three months ended  September  30,
     1996 versus net income of $0.2  million in the  comparable  period of 1995,
     representing an increase of $0.4 million.
                                       10
<PAGE>

          On a per share basis for the quarter  ended  September  30, 1996,  net
     income was $0.08 compared with net income of $0.02 in 1995.

Comparison of the Nine Months Ended September 30, 1996 and 1995
---------------------------------------------------------------

          Sales for the nine months ended  September 30, 1996 were $89.4 million
     compared with $85.5 million for the same period a year ago, representing an
     increase of $3.9  million or 4.6%.  Sales  comparisons  with the first nine
     months of 1995 are  significantly  impacted by the exceptional  promotional
     program for a single customer of the Corporate Markets Division which began
     in 1994  and  concluded  at the  end of the  first  quarter  of  1995.  The
     promotional  program  accounted for 9% of the Companys  sales for the first
     three  quarters  of 1995  versus 0% in 1996.  Excluding  the impact of this
     promotional program on results for the 1995 period,  sales increased 15% in
     the nine months ended September 30, 1996. Sales of Swiss Army Brand Watches
     and  cutlery  increased  from the same  period a year ago while  Victorinox
     Original Swiss Army Knife sales decreased.

          Gross profit of $26.0 million for the nine months ended  September 30,
     1996  decreased  $3.9  million  or 13.1% from 1995.  The  decrease  relates
     principally to a $4.5 million inventory write-off in the second quarter and
     the negative  impact of a weaker U.S. dollar against the Swiss franc in the
     first quarter of 1996. The gross profit margin for the first nine months of
     1996 of 29.1%  was down  from the  margin  of 35.0%  reported  for the same
     period of 1995. Excluding the inventory write-off,  the gross profit margin
     for 1996 would have been  34.1%.  The  Company's  gross  profit  margin may
     fluctuate  due to changes in product  mix and Swiss franc  exchange  rates.
     Since the Company imports  virtually all of its products from  Switzerland,
     its costs are affected by both the spot rate of exchange and by its foreign
     currency hedging program.

                                       11
<PAGE>

          Selling, general and administrative expenses for the nine months ended
     September  30, 1996 of $29.5 million were $2.7 million or 10.1% higher than
     the  amount  for the  comparable  period  in  1995.  This  increase  is due
     primarily to higher merchandising and promotional costs. As a percentage of
     net sales,  selling,  general and  administrative  expenses  increased from
     31.3% in 1995 to 33.0% in 1996. Excluding sales associated with the special
     promotion  program in 1995, the percentage  decreased in 1996 to 31.3% from
     34.5% in 1995.

          The Company  recorded a special  charge in the second  quarter of $2.1
     million relating to the write-off of obsolete displays,  goodwill and other
     intangible  assets.   There  were  no  special  charges  recorded  for  the
     comparable period in 1995.

          Due to lower invested cash balances in the nine months ended September
     30, 1996 than in the comparable period of 1995, interest income of $107,000
     in 1996 was lower than the $523,000  recorded in the year  earlier  period.
     The Company  recorded a $0.8 million charge  associated with the impairment
     of a non-strategic investment.  There were no comparable investment charges
     for the same period in 1995.

          Other income of $156,000 for the nine months ended  September 30, 1996
     was  $414,000  more  favorable  than the  $258,000  of expense for the same
     period in 1995, due to recognition of the Companys  share of net losses in
     its equity investments.

          As a result of these  changes,  loss before  income taxes for the nine
     months  ended  September  30, 1996 was $6.3 million  versus  income of $3.3
     million for the same period in 1995, a decrease of $9.6 million or 290%.

          Income tax expense was provided at an effective  rate of 41.7% for the
     nine months  ended  September  30,  1996,  versus  48.5% in 1995,  with the
     decrease related primarily to the  non-deductibility of the Companys share
     of losses and amortization of goodwill relating to its equity investments.

          Net loss was $3.7 million for the nine months ended September 30, 1996
     versus  net  income  of $1.7  million  in the  comparable  period  of 1995,
     representing a decrease of $5.4 million or 318%.

          On a per share basis for the nine months ended September 30, 1996, net
     loss was $0.44  compared  with net income of $0.20 in 1995, a 320% decrease
     in earnings per share.

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

          As of  September  30, 1996,  the Company had working  capital of $53.1
     million  compared with $58.1 million as of December 31, 1995, a decrease of
     $5.0 million  principally  due to  investments  the Company made during the
     nine months ended September 30, 1996.  Sources of working capital  included
     depreciation and amortization of $2.3 million.  Significant uses of working
     capital included the Company's $2.0 million increase in the preferred units
     of Hudson River Capital LCC and capital expenditures and additions to other
     assets of $3.7 million.  The Company currently has no material  commitments
     for capital expenditures.

                                       12
<PAGE>


          Cash provided from operating activities was approximately $6.2 million
     in the nine months ended  September 30, 1996 compared with $14.8 million of
     cash  used in the  comparable  period  in  1995.  The  cash  provided  from
     operations  resulted  primarily  from a smaller  increase in inventories in
     1996 than in the  prior  year and a larger  increase  in  accounts  payable
     versus 1995.

          The Company meets its short-term  liquidity  needs with cash generated
     from operations,  and, when necessary,  bank borrowings under its revolving
     credit agreement. As of September 30, 1996, the Company had $0.7 million of
     outstanding  borrowings  under its  revolving  line of  credit,  leaving an
     unused line of $19.3 million.  Of the $20 million aggregate line of credit,
     the expiration date for a $15 million facility has been extended to January
     31,  1997.  The  Company's  short-term  liquidity  is  affected by seasonal
     changes in inventory  levels,  payment terms and seasonality of sales.  The
     Company  believes that cash generated from operations and borrowings  under
     its credit  facility will be  sufficient to meet the Companys  anticipated
     operating and capital needs.

                                       13
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PART II.          OTHER INFORMATION

Item 6.           Exhibits and Reports on Form 8-K

         A.)      Exhibits

                   (2)     Not Applicable

                   (3)     Not Applicable

                   (4)     Not Applicable

                  (10)     Extension of Revolving Line of Credit

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

                  (15) Not Applicable

                  (18)     Not Applicable

                  (19)     Not Applicable

                  (22)     Not Applicable

                  (23)     Not Applicable

                  (24)     Not Applicable

                  (27)     Financial Data Schedule

                  (99)     Not Applicable

B.)  There were no reports or  exhibits  on Form 8-K filed for the three  months
     ended September 30, 1996.
                                       14
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               Pursuant to the  requirements  to the Securities  Exchange Act of
          1934,  the  Registrant has duly caused this report to be signed on its
          behalf by the undersigned thereunto duly authorized.

                             SWISS ARMY BRANDS, INC.
                            (Registrant)
  
Date:  November  9, 1996     By /s/ Thomas D. Cunningham
                             Name:  Thomas D. Cunningham
                             Title: Executive Vice President,
                             Principal Financial Officer
                             and a Director

                             By /s/ Thomas M. Lupinski
                             Name:  Thomas M. Lupinski

                             Title:  Senior Vice President, Controller
                                       15
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