# 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, 2001

# OR

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

# For the transition period from      to

# Commission file number 0-1282-3

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

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

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

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

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

Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file
such reports) and (2) has been subject to such filing requirements for the past 90 days.

YesXNo

The number of
shares of Registrant's Common Stock, $.10 par value, outstanding on August 13, 2001, was 8,171,458 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, 2001 (unaudited) and December 31, 2000                                                     | 3 - 4    | 
|           | Consolidated Statements of Operations for the
Three and Six Months Ended June 30, 2001 and 2000 (unaudited)                           | 5        | 
|           | Consolidated Statements of Stockholders' Equity and

Comprehensive Income for the Six Months Ended June 30, 2001 and 2000 (unaudited) | 6        | 
|           | Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 2001 and 2000 (unaudited)                                     | 7        | 
|           | Notes to Consolidated Financial Statements                                                                                            | 8 - 10   | 
|Item 2.    | MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS                                                 | 11 - 13  | 
|Item 3.    | QUANTITATIVE AND QUALITATIVE DISCLOSURES
 ABOUT MARKET RISK                                                                           | 13       | 
|Part II:   | OTHER INFORMATION                                                                                                                     |          | 
|Item 4.    | SUBMISSION OF MATTERS TO A VOTE OF
SECURITY HOLDERS                                                                                   | 14       | 
|Item 6.    | EXHIBITS AND REPORTS ON FORM 8-K                                                                                                      | 15       | 
|Signatures |                                                                                                                                       | 15       | 

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

|                                                                                               | June 30,
                      
                      
      2001         
                      
                   (unaudited) | December 31,2000 | 
|---------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------- | ---------------- | 
|Current assets:                                                                                |                                                                                                                                  |                  | 
|Cash and cash equivalents                                                                      | $ 948                                                                                                                            | $ 5,002          | 
|Accounts receivable, less
       allowance for doubtful accounts       of $1,260,
respectively | 22,009                                                                                                                           | 34,173           | 
|Inventories                                                                                    | 40,970                                                                                                                           | 33,461           | 
|Deferred income taxes                                                                          | 2,824                                                                                                                            | 1,887            | 
|Prepaid and other                                                                              | 5,666                                                                                                                            | 4,089            | 
|Total current
 assets                                                                          | 72,417                                                                                                                           | 78,612           | 
|Deferred income taxes                                                                          | 697                                                                                                                              | 675              | 
|Property, plant and equipment, net                                                             | 6,636                                                                                                                            | 7,506            | 
|Investments                                                                                    | 8,540                                                                                                                            | 8,274            | 
|Intangible assets, net                                                                         | 11,758                                                                                                                           | 12,595           | 
|Other assets, net                                                                              | 16,863                                                                                                                           | 16,787           | 
|Total Assets                                                                                   | $116,911                                                                                                                         | $124,449         | 

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

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

|                                                                                                                                                            | June 30,      
                      
      2001             
                      
      (unaudited) | December 31,2000 | 
|----------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------ | ---------------- | 
|Current liabilities:                                                                                                                                        |                                                                                                        |                  | 
|Current portion of long-term
debt                                                                                                                           | $ 1,461                                                                                                | $ 1,493          | 
|Accounts Payable                                                                                                                                            | 11,417                                                                                                 | 11,057           | 
|Accrued liabilities                                                                                                                                         | 8,704                                                                                                  | 8,452            | 
|Total current liabilities                                                                                                                                   | 21,582                                                                                                 | 21,002           | 
|Long-term liabilities:                                                                                                                                      |                                                                                                        |                  | 
|Long-term debt                                                                                                                                              | 12,475                                                                                                 | 16,038           | 
|Other                                                                                                                                                       | 675                                                                                                    | 675              | 
|Total Liabilities                                                                                                                                           | 34,732                                                                                                 | 37,715           | 
|Minority interest                                                                                                                                           | 4,837                                                                                                  | 6,050            | 
|Commitments and contingencies                                                                                                                               |                                                                                                        |                  | 
|Stockholders' equity:     Preferred
stock, par value $.10 per share:  shares         authorized 
2,000,000;  no shares issued                              |                                                                                                       |                 | 
|Common stock, par value $.10 per
         share:  shares authorized     
    18,000,000;  shares issued    9,077,192 and    
     8,971,080, respectively | 908                                                                                                    | 897              | 
|Additional paid-in capital                                                                                                                                  | 48,994                                                                                                 | 49,005           | 
|Accumulated other comprehensive
income (loss)                                                                                                               | 189                                                                                                    | 1,234            | 
|Retained earnings                                                                                                                                           | 35,256                                                                                                 | 37,589           | 
|                                                                                                                                                            | 85,347                                                                                                 | 88,725           | 
|Less:  Treasury stock:
  905,734 for both periods,                                                                                                          | (8,003)                                                                                                | (8,003)          | 
|Deferred compensation                                                                                                                                       | (2)                                                                                                    | (38)             | 
|Total stockholders' equity                                                                                                                                  | 77,342                                                                                                 | 80,684           | 
|Total Liabilities and Stockholders' Equity                                                                                                                  | $116,911                                                                                               | $124,449         | 

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

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

|                                                                                                  | Three Months EndedJune 30,2001 
             2000 | Six Months EndedJune 30,2001  
            2000 |         
|------------------------------------------------------------------------------------------------- | ------------------------------------------------- | ----------------------------------------------- | --------
|Net revenues                                                                                      | $27,577                                           | $29,345                                         | $48,850 
|Cost of sales                                                                                     | 15,961                                            | 17,595                                          | 29,248  
|Gross profit                                                                                      | 11,616                                            | 11,750                                          | 19,602  
|Selling, general and administrative       
                      
                      
expenses | 11,568                                            | 11,295                                          | 23,228  
|Operating income                                                                                  | 48                                                | 455                                             | (3,626) 
|Interest expense and other, net                                                                   | (237)                                             | (345)                                           | (455)   
|Investment gain (loss), net                                                                       |                                                  | 164                                             |        
|Total other income (expense), net                                                                 | (237)                                             | (181)                                           | (455)   
|Income (loss) before income taxes                                                                 | (189)                                             | 274                                             | (4,081) 
|Income tax provision (benefit)                                                                    | (44)                                              | 119                                             | (1,629) 
|Minority interest                                                                                 | (71)                                              |                                                | (119)   
|Net income (loss)                                                                                 | $ (74)                                            | $155                                            | ($2,333)
|Earnings per share:                                                                               |                                                   |                                                 |         
|Basic                                                                                             | ($0.01)                                           | $0.02                                           | ($0.28) 
|Diluted                                                                                           | ($0.01)                                           | $0.02                                           | ($0.28) 
|Weighted average number of shares outstanding:                                                    |                                                   |                                                 |         
|Basic                                                                                             | 8,278                                             | 7,940                                           | 8,278   
|Diluted                                                                                           | 8,278                                             | 8,153                                           | 8,278   

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

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

|                                                                                                | Common StockPar Value  $.10
Shares      Amount | AdditionalPaid-InCapital | AccumulatedOtherComprehensiveIncome
(Loss) | RetainedEarnings | TreasuryStock | ComprehensiveIncome (Loss) |         
|----------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ------------------------------------------ | ---------------- | ------------- | -------------------------- | --------
|BALANCE                                                                                         |                                                |                          |                                            |                  |               |                            |         
|December 31, 1999                                                                               | 8,866,218                                      | $886                     | $49,137                                    | ($401)           | $35,576       | ($8,711)                   |         
|Comprehensive income:
  Net income for the six   months ended   June 30, 2000                   |                                               |                         |                                           |                 | 431           |                           | $431    
|Foreign currency
   translation adjustment                                                      |                                               |                         |                                           | 208              |              |                           | 208     
|Change in unrealized gain
   in marketable securities                                           |                                               |                         |                                           | 603              |              |                           | 603     
|Comprehensive Income                                                                            |                                                |                          |                                            |                  |               |                            | $1,242  
|Issuance of common stock                                                                        | 106,112                                        | 11                       | (11)                                       |                 |              |                           |         
|Cancellation of stock grant                                                                     | (1,250)                                        |                         | (10)                                       |                 |              |                           |         
|BALANCE                                                                                         |                                                |                          |                                            |                  |               |                            |         
|June 30, 2000 (unaudited)                                                                       | 8,971,080                                      | $897                     | $49,116                                    | $410             | $36,007       | ($8,711)                   |         
|BALANCE                                                                                         |                                                |                          |                                            |                  |               |                            |         
|December 31, 2000                                                                               | 8,971,080                                      | $897                     | $49,005                                    | $1,234           | $37,589       | ($8,003)                   |         
|Comprehensive Loss:  Net loss
for the six months   ended June 30, 2001                          |                                               |                         |                                           |                 | (2,333)       |                           | ($2,333)
|Cumulative effect   
transition adjustment   for derivatives, net of tax                        |                                               |                         |                                           | (415)            |              |                           | (415)   
|Change in unrealized gain  
 on marketable securities                                           |                                               |                         |                                           | 266              |              |                           | 266     
|Fair value adjustment  
 for derivatives for the six   months ended June 30,   2001, 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)                   |         

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

|                                                                                                      | Six Months EndedJune 30,2001    2000 |          | 
|----------------------------------------------------------------------------------------------------- | ------------------------------------ | -------- | 
|Cash flows from operating activities:                                                                 |                                      |          | 
|Net income (loss)                                                                                     | ($2,333)                             | $431     | 
|Adjustments to reconcile net income (loss)
to net cash    provided by (used in) operating activities: |                                      |          | 
|Depreciation and
amortization                                                                         | 2,115                                | 1,788    | 
|Minority interest                                                                                     | (119)                                |         | 
|Investment (gain)
loss, net                                                                           |                                     | (1,583)  | 
|Stock compensation
expense                                                                            | 36                                   | 37       | 
|Deferred income
taxes                                                                                 |                                     | 7        | 
|Changes in other current assets and liabilities:                                                      |                                      |          | 
|Accounts receivable                                                                                   | 14,195                               | 7,951    | 
|Inventories                                                                                           | (8,009)                              | (11,148) | 
|Prepaid and other                                                                                     | (1,618)                              | (1,208)  | 
|Accounts payable                                                                                      | (1,882)                              | 4,962    | 
|Accrued liabilities                                                                                   | (1,971)                              | (1,959)  | 
|Net
cash provided by (used in) operating activities                                                   | 414                                  | (722)    | 
|Cash flows from investing activities:                                                                 |                                      |          | 
|Capital expenditures                                                                                  | (612)                                | (693)    | 
|Additions to other assets                                                                             | (320)                                | (457)    | 
|Net
cash provided by (used in) investing activities                                                   | (932)                                | (1,150)  | 
|Cash flows from financing activities:                                                                 |                                      |          | 
|Borrowings under bank agreements                                                                      | 23,330                               | 26,630   | 
|Repayments under bank agreements                                                                      | (26,588)                             | (25,457) | 
|Net
cash provided by (used in) financing activities                                                   | (3,258)                              | 1,173    | 
|Effect of exchange rate changes on cash                                                               | (278)                                | (25)     | 
|Net increase (decrease) in cash                                                                       | (4,054)                              | (724)    | 
|Cash and cash equivalents, beginning of
period                                                        | 5,002                                | 1,302    | 
|Cash and cash equivalents, end of period                                                              | $948                                 | $578     | 
|Cash paid during the period:                                                                          |                                      |          | 
|Interest                                                                                              | $446                                 | $607     | 
|Income taxes                                                                                          | $676                                 | $1,056   | 

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

# CONSOLIDATED FINANCIAL STATEMENTS

The consolidated  financial
statements included in this Form 10-Q have been prepared by Swiss Army Brands, Inc.("Swiss  Army" or the  "Company")  without audit.
Certain  information  and note  disclosures  normally  included in financial  statements prepared in accordance with accounting
principles  generally accepted in the United States 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, 2000. In the opinion of management of the Company,  the interim financial  statements  included herein reflect all
adjustments, consisting  only of normal  recurring  adjustments,  necessary  for a fair  presentation  of the  financial  position,
results of operations and cash flows for the interim periods  presented.  The  preparation of financial  statements in conformity
with accounting  principles  generally accepted in the United States 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 first-in,  first-out (FIFO) method). Inventories principally consist of finished
goods.

# INVESTMENTS

Investments consist of the
following:

|                                                                      | June 30,2001   | December 31, 2000 | 
|--------------------------------------------------------------------- | -------------- | ----------------- | 
|                                                                      | (in thousands) |                   | 
|Preferred units of Highgate
            Capital LLC (A)               | $3,613         | $3,613            | 
|Common stock of John Hancock
            Financial Services, Inc. (B) | 4,064          | 3,798             | 
|Preferred units of 
           Victory Ventures LLC (C)               | 851            | 851               | 
|Common stock of Chaparral
Resources,                   Inc.
(D)       | 12             | 12                | 
|Total investments                                                     | $8,540         | $8,274            | 

1. Highgate  Capital LLC,  ("Highgate"),  is a private equity firm  specializing
in middle market  acquisitions, re-capitalization  and expansion  capital  investments.  The Company  accounts for this  investment
on the cost basis,  subject  to  review  for  permanent  impairment.   Since  this  investment  does  not  have  a  readily
determinable fair value, the valuation is subject to uncertainty.
2. John Hancock  Financial  Services,  Inc. (John  Hancock),  a
publicly  traded company,  is a life insurance company.  In the three and six month  periods ended June 30, 2000,  the Company
recorded  investment  gains of $164,000 and $1,761,000, respectively, related to the demutualization of John Hancock.
3. Victory  Ventures  LLC is a private  equity firm  specializing  in small
venture  capital  investments.  The Company  accounts for this  investment  on the cost basis,  subject to review for permanent
impairment.  Since this investment does not have a readily determinable fair value, the valuation is subject to uncertainty.
4. Chapparal Resources, Inc. (Chapparal), a publicly traded company,
is an independent oil and gas exploration and production company.   In the three months ended March 31, 2000, the Company recorded a
non-cash write-down of $208,000 of its investment in Chapparal due to the other than temporary impairment in the value of the
investment.

# EARNINGS PER SHARE

For the periods 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.

# INCOME TAXES

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

# ACCOUNTING FOR DERIVIATIVE INSTRUMENTS AND HEDGING ACTIVITIES

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

The Company is exposed to foreign  currency risks
relating to purchases of inventories as part of its ongoing business  operations  and uses  derivative  financial  instruments,
where  appropriate,  to manage  these  risks.  In general,  instruments  used as hedges must be effective at reducing the risk
associated with the exposure being hedged and must be  designated as a hedge at the  inception of the  contract.  At the inception
of the contract,  the Company has  designated its use of derivatives  for foreign  currency  forecasted  transactions  as cash flow
hedges.  At such time that inventory is received,  the position is  re-designated  from a cash flow hedge to a fair value hedge.
Gains and losses on  derivatives  qualifying  as cash flow hedges are recorded in other  comprehensive  income to the extent that
hedges are effective  until the underlying  transactions  are recognized in earnings.  Gains and losses from fair value hedges are
included in  earnings.  It is expected  that  approximately  $1.3 million (net of tax) of  unrealized losses  included in other
comprehensive  income at June 30,  2001,  will be  reclassified  into  earnings in the next twelve months.  The Company hedges its
exposure to  variability  in future cash flows for forecasted  transactions  up to a  maximum  of 24  months.  Net  losses  included
in  comprehensive  income  as of June 30,  2001,  including  the transition  adjustment,  were  approximately  $1.4 million (net of
tax).  Gains and losses related to the  ineffective portion of hedging  instruments,  which are  included in net income,  and gains
and losses from fair value hedges were insignificant during the first quarter of 2001.

# RECENT ACCOUNTING PROUNCEMENTS

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

Amortization of goodwill for the six months ended
June 30, 2001 was approximately $499,000 with a similar charge expected for the last half of 2001.  The Company is currently
evaluating other impacts of adopting Statement No. 142, but has not yet quantified the impact on its consolidated financial
position.

# Item 2.         
      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONAND RESULTS OF OPERATIONS
(unaudited)

FORWARD LOOKING STATEMENTS

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

RESULTS OF OPERATIONS

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

Net revenues consist of the following (in
thousands):

|                   | 2001    | 2000    | 
|------------------ | ------- | ------- | 
|Product sales, net | $26,951 | $29,105 | 
|Royalty income     | 626     | 240     | 
|                   | $27,577 | $29,345 | 

Product sales for the three months ended June 30,
 2001 were $27.0  million  compared with $29.1 million for the same period in 2000,  representing  a decrease of $2.2  million or
7.4%.  The sales  decrease was  primarily  due to a decrease in sales related to the Companys  corporate  markets  business,
attributable to the slowdown in general economic conditions, and Bear Cutlery,  Inc.  (Bear) where sales to one
customer declined significantly,  offset in part by an  increase  in sales  related  to Xantia,  S.A.  (Xantia),  in
which the Company acquired a  controlling interest  in July 2000. Royalty  income  relates to the  licensing  program of  Victorinox
®Travel  Gear, which was introduced in the fourth quarter of 1999.

Gross  profit of $11.6  million for the three
months  ended June 30, 2001  decreased  $0.1 million or 1.1% from 2000.  The gross profit  margin  percentage  for the second
quarter of 2001 of 42.1% was higher than the gross profit margin  percentage of 40.0%  reported for the same period in 2000
primarily  due to an increase in royalty  revenues, which have a higher  gross  margin than  product  sales,  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 the third quarter of
2002.  However,  such hedging  activity  cannot  eliminate  the long-term  adverse  impact on the Company's competitive  position
and results of  operations  that would  result  from a  sustained  decrease in the value of the dollar versus the Swiss franc. These
hedging  transactions,  which are meant to reduce foreign  currency  risk,  also reduce the beneficial  effects to the Company if
the dollar  increases  relative to the Swiss franc. The Company plans to  continue  to engage in  hedging  transactions;  however,
it is  uncertain  of the  extent to which  such  hedging transactions will reduce the effect of adverse currency fluctuations.

Selling,  general and  administrative  expenses
for the three months ended June 30, 2001 of $11.6  million were $0.3  million or 2.4% higher than the  comparable  period in 2000
due to expenses related to Xantia, which entity's results were not included in the year 2000 amounts.  As a percentage of net sales,
total selling general and administrative expenses increased from 38.4% in 2000 to 41.9% in 2001.

Interest  expense and other, net was $237,000 for
the three months ended June 30, 2001 compared to $345,000 for the comparable period in 2000 primarily due to decreased borrowings
and lower effective interest rates.

Investment gain (loss), net was $0 in the three
months ended June 30, 2001 compared to a gain of $164,000 for the comparable period in 2000, which was attributable to the common
stock received in the demutualization of John Hancock Financial Services, Inc.

As a result of these changes,  income (loss)
before income taxes for the three months ended June 30, 2001 was a loss of $189,000 versus income of $274,000 for the same period in
2000, a change of $463,000.

Income  tax  expense  (benefit)  was  provided at
an  effective  rate of 23.2%  and  43.4%  in 2001 and  2000, respectively.

Minority interest income of $71,000 for the three
month period ended June 30, 2001 related to Xantia.

As a result of these  changes,  net  income
(loss)  for the three  months  ended  June 30,  2001 was a loss of $74,000  ($0.01 per share - basic and  diluted)  versus  income
of $155,000  ($0.02 per share - basic and diluted) for the same period in 2000, a change of $229,000.

Comparison for the Six Months Ended June 30, 2001 and 2000

Net revenues consist of the following (in
thousands):

|                   | 2001    | 2000    | 
|------------------ | ------- | ------- | 
|Product sales, net | $47,667 | $54,415 | 
|Royalty income     | 1,183   | 466     | 
|                   | $48,850 | $54,881 | 

Product  sales for the six months ended June 30,
2001 were $47.7  million  compared  with $54.4 million for the same period in 2000,  representing  a decrease of $6.7 million or
12.4%.  The sales  decrease was  primarily  due to a decrease in sales  related to the  Companys  corporate  markets  business
due to the decline in general economic conditions,  a decrease in sales  related to a special promotion  program  with one  customer
and Bear  Cutlery, Inc., which experienced a significant decrease in sales to one customer, offset in part by an increase  in sales
related to Xantia.  Royalty income relates to the licensing program of Victorinox®Travel Gear.

Gross profit of $19.6  million for the six months
ended June 30, 2001  decreased by $1.9 million or 8.9% from 2000.  The gross  profit  margin  percentage  for the six  months of
2001 of 40.1% was  higher  than the gross  profit margin  percentage of 39.2%  reported for the same period in 2000  primarily  due
to an increase in royalty  revenues, which have a higher  gross  margin that  product  sales,  and also due to an increase in the
value of the U.S.  dollar versus the Swiss franc, offset in part by a decrease in watch sales and charges related to discontinued
products.

Selling,  general and administrative expenses for
the six months ended June 30, 2001 of $23.2 million were $1.4 million or 6.6%  higher  than the  amount  for the  comparable  period
in 2000.  The  increase  was primarily  due to operating  expenses of Xantia,  which was not included in the financial statements in
2000, and special charges of $0.8 million for personnel costs  related to senior  management realignments and asset write-downs.  As
a percentage of net sales,  total selling general and administrative  expenses increased from 39.7% in 2000 to 47.5% in 2001.

Interest  expense and other, net was $455,000 for
the three months ended June 30, 2001 compared to $559,000 for the comparable period in 2000, primarily due to decreased borrowings
and lower effective interest rates.

Investment gain (loss), net was $0 in 2001 and a
gain of $1,583,000 in 2000 due to a $1,791,000 gain attributable to the common stock received in the demutualization of John Hancock
Financial Services, Inc. offset in part by a $208,000 loss related to the write-down of the Companys common stock investment
in Chapparal Resources, Inc.

As a result of these  changes,  income  (loss)
before income taxes for the six months ended June 30, 2001 was a loss of $4,081,000 versus income of $761,000 for the same period in
2000, a change of $4,842,000.

Income  tax  expense  (benefit)  was  provided at
an  effective  rate of 39.9%  and  43.4%  in 2001 and  2000, respectively.

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

As a result,  net income  (loss) for the six
months  ended June 30,  2001 was a loss of  $2,333,000  ($0.28 per share - basic and  diluted)  versus  income of $431,000  ($0.05
per share  basic and  diluted) for the same period in 2000, a change of $2,764,000.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30,  2001,  the  Company had  working
capital of $50.5  million  compared  with $57.6  million as of December  31,  2000,  a  decrease  of $7.1  million.  Uses of
working  capital  included  repayment  of debt,  capital expenditures  of $0.6 million and  additions to other assets of $0.3
million.  The Company  currently  has no material commitments for capital expenditures.

Cash provided from operating  activities was $0.4
million in the six months ended June 30, 2001 compared to cash used in operating  activities of  approximately  $0.7 million in the
comparable  period in 2000.  The change  resulted from a larger  decrease  in accounts  receivable  in 2001  compared  to 2000,
offset in part by a decrease in accounts payable in 2001 compared to an increase in 2000, and a smaller decrease in inventory in
2001 compared to 2000.

The Company meets its short-term liquidity needs
with cash generated from operations, and, when necessary, bank borrowings under its revolving credit agreement.  At June 30, 2001,
the Company had $3,647,000 of outstanding borrowings under its line of credit agreement.  Also, the Company has approximately
$10,289,000 of outstanding term loans and debt related to the acquisitions of Bear and Xantia. At June 30, 2001, the Company has a
$16.0 million credit line, of which $12,353,000 is available for borrowings, which expires in June 2003. The Companys
short-term liquidity is affected by seasonal changes in inventory levels, payment terms and seasonality of sales.  The Company
believes its current liquidity levels and financial resources will be sufficient to meet its operating needs in the near-term. The
Company's credit facility includes various financial convenants, including maintenance of a leverage coverage ratio and interest
coverage ratio based on operating results for the previous four quarters. The Company was not in compliance with these convenants at
June 30, 2001. The bank has waived the existing non-compliance. In addition, the bank has amended certain convenants for the
remainder of 2001 to levels the Company believes it will attain, and the Company's principal suppliers have granted the Company
extended payment terms in order to permit such compliance for the third and fourth quarters of 2001. However, as compliance may
depend upon sales levels, general economic conditions and other factors not in the Company's control, no assurance can be given to
such attainment. At the present time there is insufficient information to determine whether further adjustment of covenants will be
required to achieve compliance in 2002, and the Company and its lender plan to discuss any appropriate further revision of covenants
at the end of this year.

# Item 3.           
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

# Foreign Exchange Risk

The Company is exposed to market risk from
changes in foreign exchange rates as the Company imports 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 accounted for under the
provisions of SFAS No. 133 and are generally recognized when the related inventory is sold.  At June 30, 2001, the Company had
entered into foreign currency contracts and options to purchase approximately 93.3 million Swiss francs in 2002 and 2001 at a
weighted average rate 1.711 Swiss franc/dollar.  The Companys ultimate 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, 2001, 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.

# PART II.           
    - OTHER INFORMATION

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

The annual meeting of the stockholders of the
Company was held on May 24, 2001, pursuant to notice, at which meeting shareholders elected the following directors:

|NAME                   | NUMBER OF VOTES     
  FOR | NUMBER OF VOTESWITHHELD | 
|---------------------- | -------------------------- | ----------------------- | 
|A. Clinton Allen       | 6,386,888                  | 15,752                  | 
|Clarke H. Bailey       | 6,386,888                  | 15,742                  | 
|Herbert M. Friedman    | 6,386,888                  | 15,742                  | 
|Peter W. Gilson        | 6,386,888                  | 15,742                  | 
|Louis Marx, Jr.        | 6,386,888                  | 15,742                  | 
|Robert S. Prather, Jr. | 6,386,888                  | 15,742                  | 
|Stanley R. Rawn, Jr.   | 6,386,802                  | 15,838                  | 
|John Spencer           | 6,386,802                  | 15,838                  | 
|A. Jeffrey Turner      | 6,386,802                  | 15,838                  | 
|John V. Tunney         | 6,386,802                  | 15,838                  | 

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

A.)            
   Exhibits

(10.1)        
   Lease agreement dated June 27, 2001 between Swiss Army Retail, Inc., and 130 Prince LLC.

(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)          
   Not Applicable

B.)            
   There were no reports on Form 8-K for the three months ended June 30, 2001.

# 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 17, 2001
                     
                      
                      
                      
                      
       By /s/ Thomas M. Lupinski
                     
                      
                      
                      
                      
       Title:Senior Vice President,
                     
                      
                      
                      
                      
       Chief Financial Officer,
                     
                      
                      
                      
                      
       Secretary and Treasurer