# SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

# FORM 10-K

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

# For the fiscal year ended December 31, 2001

# OR

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

# 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

# Securities registered pursuant to Section 12(b) of the Act:

Title of each class                
     Name of each exchange on which registered
                      
                      
                      
      None              
                      
            
Not applicable

# Securities registered pursuant to Section 12(g) of the Act:

# Common Stock, $.10 par value per share

(Title of Class)

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.

YesX    No

Indicate by check
mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation  S-K is not contained  herein,  and will not be
contained,  to the best of registrant's  knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendments to this Form 10-K.  [x]

The  aggregate
market  value of voting stock held by  non-affiliates  of the  registrant  on March 19,  2002,  was  approximately $14,800,000.  On
such  date,  the  closing  price of  registrant's  common  stock was $6.10 per  share.  Solely  for  purposes  of this calculation,
shares beneficially owned by directors,  executive officers and stockholders of the registrant that beneficially own more than 10%
of the  registrant's  common  stock have been  excluded,  except  shares with  respect to which such  directors  and  officers
disclaim  beneficial  ownership.  Such  exclusion  should  not be deemed a  determination  or  admission  by the  registrant  that
such individuals are, in fact, affiliates of the registrant.

The number of
shares of Registrant's Common Stock, $.10 par value, outstanding on March 19, 2002, was 8,167,699 shares.

# DOCUMENTS INCORPORATED BY REFERENCE

Portions of the
registrant's definitive Proxy Statement to be filed in connection with the Annual Meeting of Stockholders of registrant to be held
on May 30, 2002 are incorporated by reference in Part III herein.

---

PART I

FORWARD LOOKING STATEMENTS

The following
discussion contains, in addition, to historical information, forward  looking statements. The forward looking statements were
prepared on the basis of certain assumptions which relate, among other things, to the demand for and cost of purchasing and
marketing the Company's products; the prices at which such products may be sold; new product development; seasonal selling trends;
the strength of the retail market; the Swiss franc- U.S. dollar exchange rates; the extent to which the Company is able to
successfully manage the effects of foreign  currency fluctuations through financial instruments; the continued ability to obtain
satisfactory payment terms from the  Company's principal supplier; future compliance with bank covenants; and the Company's
anticipated credit needs and ability to obtain such credit.  Even if the assumptions upon which the forward looking statements are
based prove accurate and appropriate, the actual results of the Company's operations in the future may vary widely from financial
projections due to the effects of a possible continuation of the national economic decline and its impact on retail sales,
continuing effects of the terrorist attacks of September 11, 2001 on sales of knives, luggage and other items sold or licensed by
the Company, increased competition, changes in consumer tastes and other factors not yet known, evaluated or anticipated.
Accordingly, the actual results of the Company's operations in the future may vary widely from the forward-looking statements
included herein.

Item 1.Business.

Swiss Army Brands,
Inc. ("SABI" or the "Company") imports, manufactures and distributes consumer products, including watches, pocketknives, cutlery,
multi-tools and sunglasses.  The Company is the exclusive distributor in the United States, Canada (with one minor exception for
cutlery) and the Caribbean of the Victorinox® Original Swiss Army Knife, Victorinox® SwissTool, Victorinox®
SwissCard and Victorinox® Cutlery.  SABI also markets its own line of Swiss Army® Brand Watches, Swiss Army® Brand
Sunglasses and Swiss Army® Brand Writing Instruments under the Swiss Army brand in North America and the Victorinox Swiss Army
brand outside North America. Also, the Company manufactures and distributes Bear MGC knives and multi-tools.  The Company has
been marketing Victorinox Original Swiss Army Knives and Victorinox Cutlery for over sixty years and has been the exclusive United
States distributor of such products since 1972 under agreements with SABI's principal supplier of pocketknives and cutlery,
Victorinox A.G. ("Victorinox"), a Swiss corporation and Europe's largest cutlery producer.  In December 2000, Victorinox and its
affiliates, long-time stockholders of the Company purchased sufficient shares of SABI common stock in private and open market
transactions to acquire majority control of the Company.  As of February 28, 2002, Victorinox owned approximately 69% of the
Company's outstanding common stock.  See "Victorinox Distribution Agreements" for further information.

In October 2001,
the Company opened a flagship retail store in the Soho section in New York City.

In July 2000, the
Company purchased a controlling interest in Xantia, S.A., ("Xantia") which designs and manufactures watches.  Xantia is the
principal supplier of watches to the Company, and in addition it also manufactures watches for third party customers.  See Note 4 to
the Company's Consolidated Financial Statements included herein for further information.

The Company is
engaged in one line of business - the importation, manufacture and distribution of consumer products, including watches,
pocketknives, cutlery, multi-tools and sunglasses. Total SABI revenues for the calendar years 2001, 2000 and 1999 were $114,629,000,
$132,022,000, and $129,546,000, respectively.  Sales of Victorinox Original Swiss Army Knives, Victorinox SwissTools, Victorinox
SwissCards and Bear MGC products, accounted for approximately 37% of SABI's 2001 revenues while watches and other Swiss Army Brand
products accounted for approximately 43%.  Sales of professional and consumer cutlery accounted for approximately 16% of SABI's 2001
revenues while other products and licensing accounted for approximately 4%. No customer accounted for more than 10% of net sales
during any year in the three-year period ended December 31, 2001.  See Note 17 to the Company's Consolidated Financial Statements
included herein for further information.

The Company was
incorporated in Delaware on December 12, 1974 as a successor to a New York corporation.  SABI's principal executive offices are
located at One Research Drive, Shelton, Connecticut 06484 and its telephone number is (203) 929-6391.  As of December 31, 2001, SABI
and its subsidiaries had 310 full-time employees, including 10 in Canada and 25 in Switzerland, and 10 part time employees in
Switzerland.

Products

Victorinox Original
Swiss Army Knives are multiblade pocketknives containing implements capable of more functions than standard pocketknives. For
example, SABI's most popular Victorinox Original Swiss Army Knife model, the Classic, with a suggested retail price of $16, features
a blade, scissors, nail file with screwdriver tip, toothpick and tweezers.  SABI markets more than 70 different models of Victorinox
Original Swiss Army Knives containing up to 35 different implements (with up to 45 separate functions), with suggested retail prices
primarily in the range of  $10 to $100.  SABI also offers multi-function lockblade knives designed for the hunting and outdoor
market, the Victorinox® SwissCard, a credit card shaped, ten-function instrument, and the Victorinox® SwissTool,
a multi-tool with 24 features, including full size pliers.

SABI's line of
Swiss Army Brand products currently includes 30 models of Swiss Army Brand Watches with over 150 SKUs ranging from the Active
Collection, starting at a suggested retail price of $85, to the Professional Collection, which tops out at a suggested retail price
of $1,395. The Company purchases substantially all of its Swiss Army Brand Watches from Xantia.  SABI's line of Swiss Army Brand
Sunglasses includes four models with suggested retail prices ranging from $60 to $80 and its line of Swiss Army Brand writing
instruments includes six SKUs at a suggested retail price of $95.

The Company also
sells stainless steel  professional  cutlery products primarily  manufactured by Victorinox.  The majority of SABI's  professional
cutlery  products are marketed  under the  trademarks  "Forschner"  and "R.H.  Forschner."  Professional  cutlery imported from
Switzerland  is generally more expensive  than domestic  United States  products.  SABI believes that it has the largest market
share of imported  professional  cutlery  products  sold in the United  States and that it has the second  largest  share of all
professional  cutlery,  foreign and domestic,  sold in this country. SABI believes that it has achieved and maintained its market
share due to the quality of its products.

The Company's line
of Bear MGC knives and multi-tools include over 50 models with suggested retail  prices primarily in the range of $20 to $60.

The Company
distributes its products throughout the United States, Canada and the Caribbean through independent sales representatives and its
direct sales force to over 3,800 wholesalers and retailers, including department stores, specialty stores, high-end jewelers,
sporting goods stores, cutlery shops, catalog showrooms, mass merchandisers and mail order houses, and through distributors to
corporations and other organizations for promotional purposes, premium and employee gift award programs and corporate identity
catalogs.  SABI imprints its products primarily at its own facilities with the customer's corporate name or logo. SABI's customers
for professional cutlery include distributors of hotel, restaurant, butcher, institutional, commercial fishing and slaughterhouse
supplies and retail cutlery stores located throughout the United States and Canada.

Sales of Victorinox
Original Swiss Army Knives and Swiss Army Brand products are generally seasonal with sales typically stronger during September
through December.

Although the
Company is the largest United States seller of Swiss Army Knives, it faces competition from Precise Imports Corp. ("Precise"), the
United States and Canadian distributor of Swiss Army Knives manufactured by Wenger S.A. ("Wenger"), the only company other than
Victorinox supplying knives to the Swiss armed forces. Precise imports a substantially smaller number of knives into the United
States than SABI. The Company also faces competition from the manufacturers and importers of other pocketknives and multi-tools
including importers that sell non Swiss-made pocketknives under the "Swiss Army Knife" name.

SABI is unable to
determine its competitive position with respect to the estimated seven major competitors in the general United States pocket knife
market.  SABI's direct competitors in the specialty advertising market are manufacturers of name brand products of similar price and
quality.  SABI has many competitors in the sale of watches and sunglasses at all price points.  Many of these competitors have
market shares and resources substantially greater than those of SABI.

International Watch Operations

On July 30, 2001,
the Company and Victorinox  announced an agreement on the formation of Victorinox Swiss Army Watch S.A. ("VSA") , a new watch
company that will combine the watch  businesses of the two companies  outside the United  States,  Canada and the Caribbean in order
to market and distribute a single unified brand of  Victorinox/Swiss  Army watches in  international  markets.  Each of the Company
and  Victorinox  have a 50% equity  interest  in VSA.  The VSA  agreement  contains  provisions  that secure the ongoing control of
VSA by the Company.  Each of the Company and  Victorinox  agreed to contribute up to 1,000,000  Swiss francs ("CHF")($598,000) in
cash and an equal  amount of its watch  inventory  outside the United  States,  Canada and  Caribbean.  Any  difference in the value
of the contributed inventory of Victorinox and the Company will be made up with an additional cash contribution.

On
November 1, 2001, VSA commenced  operations.  In 2001, each of the Company and Victorinox  contributed  300,000 CHF ($186,000)of
cash related to their 1,000,000 CHF ($598,000) commitment,  and the Company  contributed  approximately  2,221,000 CHF ($1,328,000)
in inventory and Victorinox contributed  approximately  2,015,000 CHF ($1,205,000) in inventory.  Due to the deficiency in the value
of the inventory contributed by Victorinox, Victorinox  paid to VSA 206,000 CHF ($123,000) in 2002. On November 1, 2002, the Company
and  Victorinox  will  determine  whether any additional contributions  must be made by either party based upon the gross  margins,
as defined,  created by businesses contributed  by each of Company and Victorinox.

Victorinox® Travel Gear

In March 2000, the
Company signed a license agreement with TRG Accessories, LLC ("TRG"), a United States based company, reflecting a prior informal
arrangement between the two companies.  Under the agreement, TRG develops, manufactures and markets a line of travel gear under the
Victorinox trademark and the famous Victorinox  Crest.  The collection, including luggage, backpacks and small leather goods
(wallets, PDA covers, etc.) was launched to select department stores and specialty retailers in late 1999.   The marks are
sub-licensed to TRG by the Company on a royalty basis in accordance with a license agreement between the Company and Victorinox
granting the Company the right to utilize and sub-license the Victorinox trademarks in conjunction with the development and
international marketing of a collection of travel gear.

Victorinox® Apparel

In October 2000,
the Company signed a license agreement with Tropical Sportswear International Corporation, ("TSI") a United States based company.
Under the agreement, TSI develops, manufactures and markets a line of apparel under the Victorinox trademark and the famous
Victorinox  Crest. The marks are sub-licensed to TSI by the Company on a royalty basis in accordance with a license agreement
between the Company and Victorinox, granting the Company the right to utilize and sub-license the Victorinox trademarks in
conjunction with the development and international marketing of a collection of apparel.  Victorinox Apparel, a complete collection
of menswear including shirts, pants, sweaters, fleece and high performance outerwear, was launched to select department stores and
specialty retailers in the third quarter of 2001.

Trademark Agreements

In 1992, in
connection with the settlement of litigation with Precise, SABI granted Precise a perpetual worldwide royalty-free license to use
the trademark Swiss Army in connection with Swiss-made non-knife goods, other than timepieces, sunglasses and compasses.  Under this
agreement, Precise acknowledged SABI's exclusive rights to the Swiss Army trademark for non-knife products including timepieces,
compasses and sunglasses.

The Company is the
owner of United States and certain foreign trademark registrations for "Swiss Army", as applied to watches and sunglasses and
actively defends its trademarks throughout the world.  Although the Company's registrations have been challenged, on the basis of
the advice of its trademark counsel, SABI expects to prevail in those proceedings.  The Company is dedicated to a vigorous
enforcement of these exclusive trademark rights.

No U.S. trademark
registrations have ever been issued for "Swiss Army" as applied to multi-bladed knives.  In 1994, in a case originally brought by
SABI against Arrow Trading Co., Inc. ("Arrow") in September 1992 in the District Court for the Southern District of New York, the
U.S. Court of Appeals for the Second Circuit reversed a judgment originally issued in the Company's favor and held that the use of
"Swiss Army" on Chinese-made knives could not be enjoined on grounds of geographic misdescriptiveness.  On remand, the District
Court ruled that Arrow had violated Section 43(a) of the Lanham Act and New York common law in connection with its sale of
Chinese-made multi-bladed pocketknives which Arrow called "Swiss Army Knives."  The court found that SABI had proved its contention
that Arrow engaged in unfair competition and held that Arrow, although free to use the phrase "Swiss Army Knife" to designate its
product, must amply distinguish it from the SABI product and prohibited Arrow from selling any multi-function pocketknives as "Swiss
Army Knives" unless the phrase "Swiss Army Knife" is immediately preceded or followed by Arrow's name in such a way as to clearly
designate its origin and that the size of the type designating origin be no smaller or less prominent than the type used in the
phrase "Swiss Army Knife".  The Company intends to utilize all reasonable means to safeguard the public from being misled by
inferior imitation products.

On
January 17, 1995, Victorinox and Wenger confirmed and memorialized in writing the grant of separate trademark licenses of Swiss Army
as applied to multi-function pocketknives to SABI and Precise.  The license to the Company is royalty-free and continues so long as
SABI is a distributor for Victorinox.  Victorinox and Wenger have filed with the U.S. Patent and Trademark Office a dual application
for "Swiss Army" as applied to multi-bladed knives, which application has been opposed by various third parties.

The Company
actively considers marketing other products under the "Swiss Army" trademark or under other trademarks.  However, no assurances can
be given that the Company will ever enter into any additional markets, or if entered into, that such activities will be profitable.

If the  Company's
efforts to protect  its owned and  licensed  trademarks  prove to be  unsuccessful,  the  Company may incur increased  competition
from  non-Swiss  made knives and other  products sold under the "Swiss Army" name.  No assurances  can be given that such
competition  from  non-Swiss  made products  would not have a material  adverse  effect on the business and prospects of the
Company.  In its capacity of licensor of certain  trademarks  the Company  might be exposed to  additional  costs should the
exclusive rights to such trademarks be challenged.

Swiss Confederation Trademarks

On
December 18, 1996, the Swiss Military Department representing the Swiss Confederation ("Swiss Confederation") and SABI entered into
a trademark agreement (the "Trademark Agreement") pursuant to which SABI was granted certain worldwide use and sublicensing rights
in connection with trademarks containing the words "Swiss Army" registered by the Swiss Confederation in Switzerland (the "Swiss
Confederation Trademarks").  The Swiss Confederation acknowledged SABI's exclusive right to use SABI's trademarks in the countries
of their registration or application and agreed to assist SABI in enforcing SABI's rights with respect to its  trademarks.  In
addition,  the Swiss  Confederation  stated its  intention  to assist  Victorinox,  Wenger,  SABI and  Precise in safeguarding their
rights with respect to "Swiss Army" as applied to knives.

The Trademark
Agreement grants SABI the right to an exclusive royalty-free license of the Swiss Confederation Trademarks as applied to watches and
sunglasses in the United States, Canada and the Caribbean.  SABI is also granted such rights with respect to certain designated
products that either it or its licensees sell in commercial  quantities  in the United  States,  Canada and the  Caribbean  within
designated  time  periods.  In the event SABI or its licensees  do not sell  commercial  quantities  of  product  categories  within
the  time  periods  set by the  agreement,  the  Swiss Confederation  shall have the right,  subject to certain  conditions,  to
license the Swiss  Confederation  Trademarks to a third party and,  in such  event,  SABI shall be  obligated  to offer such third
party a license of SABI's  appropriate  trademark.  Outside of the United States,  Canada and the Caribbean,  the Trademark
Agreement provides for the grant to SABI of the right to an exclusive license, subject to the existing  legal rights of others,  for
watches and sunglasses at a royalty rate, as defined.  In addition,  SABI has the right to a license for certain designated products
outside of the United States,  Canada and the Caribbean,  also at a royalty rate, as defined,  to use the Swiss  Confederation
Trademarks  provided that SABI commences the sale of commercial  quantities of such products within time periods  prescribed by the
Trademark  Agreement.  The  Trademark  Agreement  also provides that all products sold under the license must be of a quality at
least equal in workmanship and materials to the products  currently sold by SABI,  Victorinox or Wenger and that in the event SABI
discontinues  sales of goods in commercial  quantities in any category of goods for three consecutive years, the Swiss
Confederation  shall have the right to terminate the license as to that category after giving SABI notice and an opportunity to
resume  sales.  Except  for the  foregoing  limitation,  the  rights  of SABI with  respect  to the use of the Swiss  Confederation
Trademarks  under the  Trademark  Agreement  are  perpetual.  It is  anticipated  that the  right to  utilize  the Swiss
Confederation Trademarks on certain  products  other than  timepieces  and  sunglasses  will be made  available to Precise by SABI
on terms yet to be discussed.

Victorinox Distribution Agreements

All of SABI's
pocketknives and the majority of its cutlery, except for the Bear MGC products, are manufactured by Victorinox, which has
manufactured the Original Swiss Army Knife for the Swiss Army for more than 100 years.  The loss of this supplier would have a
material adverse effect on SABI's business.  SABI, Victorinox's largest customer, has been distributing Victorinox's
products since 1937.  Distribution was on a non-exclusive basis for more than 45 years when, as a result of understandings reached
on SABI's behalf by Mr. Louis Marx, Jr. and Mr. Stanley R. Rawn, Jr., both now SABI Directors, and Mr. Charles Elsener, Sr., Chief
Executive Officer of Victorinox, SABI became Victorinox's exclusive United States distributor of Victorinox Original Swiss Army
Knives under an agreement dated December 12, 1983 (as subsequently amended, the "U.S. Distribution Agreement").  In 1992 and 1993,
Messrs. Marx and Rawn held extensive conversations principally in Switzerland, with Victorinox looking to expand the scope of SABI's
exclusive territory.  This resulted in SABI obtaining exclusive distributorship rights first in Canada, and then in Bermuda and the
Caribbean areas.

The U.S.
Distribution Agreement, together with the Company's agreements with respect to the rights obtained in 1992 and 1993 (together, as
amended,  the "Victorinox Agreements"), provide:

- SABI is the
exclusive distributor in the United States, its territories and possessions,  Canada (with one minor exception),  Bermuda and the
Caribbean  (excluding  Cuba so long as SABI is prohibited by United States law from  operating  therein) (together,  the
"Territories"),  of Victorinox  Original  Swiss Army Knives and most other  Victorinox  cutlery products and Victorinox Swiss-made
watches (collectively, "Products").
- The U.S.
Distribution  Agreement was renewed in 1998 through  December 12, 2003 and is subject to renewal at five year  intervals at SABI's
option  unless,  in any two  consecutive  years,  purchases  of  Products by SABI fall below the average purchases for 1981 and
1982,  which was 19,766,035 CHF ($11,816,000).  SABI's  distribution  rights in Canada,  which were  renewed in 1999,  and the
Caribbean,  which were renewed in 2000,  were for initial  terms of seven years subject to renewal for successive five-year periods.
In the event that Victorinox  elects not to renew SABI's Canada distribution rights, Victorinox will be required to pay SABI
$3,500,000.
- During each
calendar  year,  SABI must purchase from  Victorinox at least 85% of the maximum  quantities of each of Swiss Army Knives and
cutlery  (expressed in Swiss francs)  purchased in any prior year.  The only remedy of Victorinox for SABI's failure to achieve
these goals would be the termination of SABI's U.S.  distribution  rights.  In the years 1996 through  2001,  Victorinox  agreed to
reduce  the  minimum  purchase  requirements  and the  Company  met these requirements.  The  Company is  currently  in negotiations
with  Victorinox  regarding  the  minimum  purchase requirement for 2002.
- In each  calendar
year  Victorinox  must, if  requested,  furnish SABI with up to 105% of each type of product  purchased  during the immediately
preceding year.  Victorinox has historically  been able to accommodate  SABI's supply  requirements even when they have exceeded
such amount.  However,  Victorinox's  plant has a finite capacity and no assurances can be given that Victorinox will continue to
meet any increased supply requirements of SABI.
- Pricing provisions
assure that the prices paid by SABI for products shipped to the United States will be as low or lower than those charged  to any
other  Victorinox  customer.  In  addition,  SABI is  granted a 4%  discount  on  purchases  of pocketknives.  For  products shipped
directly  to  Canada,  the  prices  paid by SABI  are Victorinox's regular export prices.
- SABI will not sell
any new cutlery items without the agreement of Victorinox.
- SABI will have
complete discretion as to advertising, packaging, pricing and other marketing matters.

In consideration of
the grant of the Canadian distribution rights in 1992, SABI issued to Victorinox 277,066 shares of common stock, par value $.10 per
share ("Common Stock").  In consideration for the grant of the Caribbean distribution rights in 1993, the Victorinox watch
distribution rights and the acquisition by SABI of Victorinox's 20% interest in a subsidiary of SABI, SABI issued to Victorinox a
five-year warrant to purchase 1,000,000 shares of Common Stock at a discount from the market price on the date of exercise.
Victorinox exercised the warrant in full in April 1994 at a price per share of $9.75, a discount of $4.25 per share from the then
current market price of SABI Common Stock.  All of the shares issued upon exercise of the warrant were subsequently sold to Brae
Group, Inc. ("Brae"), which is controlled by Louis Marx, Jr., a Director of SABI, in exchange for shares of the common stock of that
corporation.

In addition,
pursuant to agreements between the Company and Victorinox, Victorinox has granted the Company the right to utilize and sub-license
the Victorinox trademarks and the famous Victorinox  Crest to third parties with the development and marketing of Victorinox Travel
Gear and Apparel.

Investments

In 1994, SABI
invested a total of $7,002,990, paid in cash and in shares of stock of a publicly traded corporation, to acquire  Series A Preferred
Stock of Forschner Enterprises, Inc., a privately held corporation which was merged into Victory Capital LLC.  In 1996,
Victory Capital LLC changed its name to Hudson River Capital LLC ("Hudson River").  In 1996, SABI invested $2,000,209 to acquire
Series B Preferred Units of Hudson River.  In 2000, Hudson River changed its name to Highgate Capital LLC ("Highgate").  SABI's
interest in Highgate currently represents, in the aggregate, approximately 9.6% of the equity of Highgate.  Highgate is a private
equity firm specializing in middle market acquisitions, recapitalizations and expansion capital investments.

In 1996, Highgate
distributed pro-rata to its members all of its interest in Victory Ventures LLC ("Victory Ventures"), a private equity firm
specializing in small market venture capital investments.  SABI received in the distribution, and continues to hold, Series A
Preferred Units of Victory Ventures, currently representing approximately 1.2% of the equity of Victory Ventures.

In 2001, Victory
Ventures distributed pro-rata to its members all of its interest in East River Ventures I, LP ("East River I"), a private equity
firm specializing in small market venture capital investments.  SABI received in the distribution a 1.2% ownership interest in East
River I.

Brae Capital
Corporation ("Brae Capital"), a wholly-owned subsidiary of Brae, currently owns 490,000 of Highgate's common units and 2,279,763 of
Highgate's Series B Preferred Units (currently representing, in the aggregate, approximately 29.9% of Highgate's outstanding
equity).  Mr. Marx is the owner of 250 management units issued by ShipXact.com Holdings LLC, a shareholder of ShipXact.com, Inc.,
Highgate's  most significant investment.  These units entitle Mr. Marx to certain profit participation in ShipXact.com, Inc.

Brae Capital also
currently owns  7,407,035 of Victory Ventures' Series A Preferred Units (currently representing approximately 11.0% of Victory
Ventures' outstanding equity).  In addition, Brae Capital is the owner of approximately 23.3% of Victory Partners, LLC, which in
turn, owns approximately 2.3% of East River I.

Also, Mr. Marx is a
director and chairman of a private company that owns 6,841,785 Series A Preferred Units  of Victory Ventures (representing
approximately 10.2% of Victory Ventures outstanding equity), and 193,652.6 Series B Preferred Units of Highgate (representing
approximately 2.1% of Highgate's outstanding equity).  Mr. Marx does not own any units of Victory Ventures or Highgate directly. Mr.
Marx owns 33.3% of ERV Partners LLC which is the general partner of East River I.

Mr. Marx, a
Director of SABI, is a Co-Chairman of the Board, a director and an indirect equity holder of each of Highgate and Victory Ventures,
and a consultant to Victory Ventures.  Mr. Clarke H. Bailey, a Director of SABI, is a Co-Chairman of the Board, a Director and an
equityholder of Highgate .  Mr. Stanley R. Rawn, Jr., Senior Managing Director and a Director of SABI, and Mr. Herbert M. Friedman,
Vice President and General Counsel and Director of SABI, also serve as directors and are equityholders of  each of Highgate and
Victory Ventures.  Mr. Robert S. Prather, Jr. and Mr. John V. Tunney, directors of SABI, also serve as directors of Victory
Ventures.

Item 2.Properties.

The executive and
administrative offices of SABI occupy approximately 39,900 square feet of leased space in an office building located in Shelton,
Connecticut.  The lease on this space was renewed in 2001 and the term of the lease expires in December 2006, subject to renewal
options. The facility for warehousing, distribution, imprinting and assembly of SABI is located in Shelton, Connecticut in
approximately 85,000 square feet of leased space.  The lease was renewed in 2001 and the term on this space expires in December
2006, subject to renewal options.

SABI also leases
approximately 13,000 square feet in a building in Toronto, Canada that it uses for office space and warehousing of products. The
lease commenced in December 1992 and has been extended until December 2002.  The Company is currently exploring its options
regarding its facility needs for its Canadian location.  Also, the Company leases 40,000 square feet for a building in Jacksonville,
Alabama that Bear Cutlery, Inc. uses as its office, manufacturing and distribution facility.  This lease expires in April 2009. In
addition, Xantia owns a building in Bienne, Switzerland , which was constructed in 1997.  The building is 1,500 square meters and is
used as the office, warehouse and manufacturing facility for Xantia.  In July 2001, the Company entered into a ten year lease for
approximately 3,500 square feet of retail space in the SoHo section of New York City.

SABI believes its
properties are sufficient for the current and anticipated needs of its business.

Item 3.Legal Proceedings.

Except as set forth
or referenced below, the Company is not involved in any material pending legal proceedings.

K-Swiss filed on
December 30, 1996 petitions to cancel the Company's U.S. Trademark Reg. No. 1,734,665 for watches and Reg. No. 1,715,093 for
sunglasses for "Swiss Army".  The Company believes it has meritorious defenses to these petitions although their outcome cannot be
predicted at this time.

The Company is also
a  plaintiff  in several  proceedings  to enforce its  intellectual  property  rights.  In  addition,  see "Business - Trademark
Agreements".

Item 4.Submission of Matters to a Vote of Security Holders.

Not Applicable.

PART II

Item 5.Market for Registrant's Common Equity and Related Stockholder
Matters.

1. Market
Information.


Shares of SABI's
Common Stock trades on The Nasdaq Stock Market® under the symbol "SABI".  The high and low closing sales prices for shares of
Common Stock, which is the only class of capital stock of SABI outstanding, as reported by Nasdaq since the first quarter of 2000
were as follows:
2000
2001High
Low
High
LowFirst Quarter
$8 5/16
$4 7/8
$6 5/8
$5 3/4Second Quarter
6 7/8
5
7
6 3/32Third Quarter
6
4 1/8
8 1/32
6Fourth Quarter
6 7/16
5 3/16
6 15/16
6 5/32The public market
for Common Stock is limited and the foregoing quotations should not be taken as necessarily reflective of prices that might be
obtained in transactions involving substantial numbers of shares.
2. Holders.

On March 19, 2002,
shares of Common Stock were held of record by 261 persons, including several holders who are nominees for an undetermined number of
beneficial owners.
3. Dividends.

The Company has not
paid a cash dividend since its inception, and its present policy is to retain earnings for use in its business.  Payment of
dividends is dependent upon the earnings and financial condition of SABI and other factors that its Board of Directors may deem
appropriate.  Under SABI's revolving credit agreement, which expires on June 30, 2003, SABI agreed not to declare or pay any
dividends unless immediately following such payment SABI is in compliance with the financial covenants set forth in the revolving
credit agreement.

Item 6.  Selected Financial Data

The following
selected  financial data for the five years ended December 31, 2001 was derived from the consolidated  financial statements of the
Company.  This data should be read in conjunction with "Management's  Discussion and Analysis of Financial  Condition and Results of
Operations" and the Consolidated Financial Statements, related notes and other financial information included herein.

|(In thousands, except per share amounts)     | Year Ended December 31, |           
|-------------------------------------------- | ----------------------- | ----------
|Operating Data:                              | 2001                    | 2000      
|Net revenues                                 | $114,629                | $132,022  
|Gross profit                                 | 46,314                  | 50,706    
|Selling, general and administrative expenses | 50,054                  | 47,467    
|Operating income (loss)                      | (3,740)                 | 3,239     
|Investment gain (loss), net                  | 1,477                   | 1,508     
|Other income (expense), net                  | (973)                   | (1,204)   
|Income (loss) before income taxes            | (3,236)                 | 3,543     
|Income tax provision (benefit)               | (344)                   | 1,579     
|Minority interest                            | 260                     | (49)      
|Net income (loss)                            | ($  3,152)              | $   2,013 
|Income (loss) per share:                     |                         |           
|Basic                                        | ($0.39)                 | $ 0.25    
|Diluted                                      | ($0.39)                 | $ 0.25    
|Weighted avg. number of shares outstanding:  |                         |           
|Basic                                        | 8,139                   | 7,973     
|Diluted                                      | 8,139                   | 8,187     
|Balance Sheet Data ( at year-end)            |                         |           
|Current assets                               | $   73,109              | $   78,612
|Total assets                                 | 114,134                 | 124,449   
|Current liabilities                          | 24,647                  | 21,002    
|Long-term debt                               | 6,408                   | 16,038    
|Stockholders' equity                         | 75,760                  | 80,684    
|Cash dividends per common share              | $        -              | $        -

(1) The financial
results for 1997 include a $1.3 million  write-off of  discontinued  inventory  (included in cost of sales) and $0.8 million of
restructuring costs (included in selling, general and administrative expenses).

Item 7.Management's Discussion and Analysis of Financial Condition and
Results of Operations

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The Company has identified the following  policies and estimates as critical to
business  operations and the  understanding  of results of operations.  Note that the preparation of this Annual Report on Form
10-K requires the Company to make estimates and assumptions  that affect the  reported  amounts of assets  and  liabilities,
disclosure  of contingent  assets and  liabilities  at the date of the  financial statements,  and the reported  amounts of revenue
and  expenses during the  reporting  period.  There can be no assurance  that actual results will not differ from those estimates.

Revenue Recognition

The Company recognizes revenue upon shipment of product. Net sales are
comprised of gross revenues less returns, trade discounts and customer allowances. Revenues from licensing agreements are recognized
when earned.

The  Securities  and  Exchange  Commission  issued  Staff  Accounting  Bulletin
("SAB") No. 101,  "Revenue  Recognition  in  Financial Statements,"  in December 1999. The Company  adopted SAB No. 101, as amended,
in the fourth quarter of 2000. SAB No. 101 requires that four basic criteria be met before  revenue can be  recognized:  (1)
persuasive  evidence of an  arrangement  exists;  (2) delivery has occurred or  services  have been  rendered;  (3) the fee is fixed
and  determinable;  and (4)  collectibility  is  reasonably  assured. Determination  of criteria (3) and (4) are based on
management's  judgments  regarding the fixed nature of the fee charged for products delivered and services  rendered and the
collectibility  of those fees.  Should  changes in conditions  cause  management to determine these criteria are not met for certain
future transactions, revenue recognized for any reporting period could be adversely affected.

Sales Returns and Allowances and Allowance for Doubtful Accounts

Management makes estimates of potential  future product returns related to
current period product  revenues.  Management  analyzes historical  returns,  current  economic  trends,  and changes in customer
demand and  acceptance of products when  evaluating  the adequacy of the sales returns and allowances.  Significant  management
judgments and estimates must be made and used in connection with establishing  the sales returns and allowances in any accounting
period.  Material  differences may result in the amount and timing of revenue for any period if management  made different
judgments or utilized  different  estimates.  Similarly,  management must make estimates of the uncollectibility of the Company's
accounts receivable.  Management  specifically  analyzes accounts receivable,  historical bad debt experience,  customer
concentrations,  customer creditworthiness,  current  trends  and  changes  in customer  payment  terms when evaluating the adequacy
of the allowance for doubtful accounts.

Valuation of Long-Lived and Intangible Assets and Goodwill

The Company assesses  the  impairment  of  long-lived  assets,  identifiable
intangibles and  related  goodwill  whenever  events or  changes in circumstances  indicate  that the  carrying  value may not be
recoverable.  Factors the Company considers  important  which  could  trigger an impairment  include the following:  (1) significant
under  performance relative to expected  historical or projected future operating results;  (2)  significant  changes in the manner
of our use of the acquired assets or the strategy for our overall  business;  and (3) significant  negative  industry or economic
trends.

If the Company determines that the carrying value of long-lived  assets and
intangibles and related goodwill may not be recoverable  based on the existence of one or more of the above indicators of
impairment,  the Company measures any impairment  based on a projected  discounted cash flow method using a discount rate determined
by our management to be commensurate  with the risk inherent in our current  business  model. Long-lived assets, net intangible
assets and goodwill amounted to $18.4 million as of December 31, 2001.

On January 1, 2002, Statement of Financial Accounting Standards("SFAS") No.142,
"Goodwill and Other Intangible  Assets," became effective and as a result, the Company will cease to amortize  goodwill.  The
Company recorded  $534,000 of amortization of goodwill during 2001 and would have recorded  approximately the same amount of
amortization  during  2002.  In lieu of amortization,  the  Company is required to complete an initial  impairment assessment  of
goodwill  by no later than six months after the  adoption  of SFAS No.  142 and  perform  an annual  impairment  review thereafter.
The Company  expects to complete the initial  impairment  assessment of goodwill  before the end of the second  quarter of 2002. The
Company  believes that a significant impairment  will exist as determined under SFAS No. 142 related to the goodwill of Bear
Cutlery,  Inc.  ("Bear").  As of December 31, 2001, the net goodwill of Bear was approximately $7.3 million.

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

Accounting for Income Taxes

As part of the process of  preparing consolidated  financial  statements the
Company is required to estimate  the income  taxes in each jurisdiction in which the Company operates.  This process involves
estimating the Company actual current tax exposure together with assessing  temporary differences  resulting from the differing
treatment of items for tax and accounting purposes.  These differences result in deferred tax assets and  liabilities,  which are
included in the  consolidated balance sheet.  The Company must then assess the likelihood that the deferred tax assets will be
recovered  from future  taxable income and to the extent that the Company  believes  that  recovery is not likely, the Company must
establish a valuation allowance. If the Company establishes a valuation allowance or increase this allowance during any period,  the
Company must include this amount as an expense within the tax provision on the consolidated  statements of operations.  Significant
management  judgment is required in determining the provision for income taxes,  deferred tax assets and liabilities and any
valuation allowance  recorded against net deferred assets.  We have recorded a valuation  allowance of $144,000 as certain deferred
tax assets may not be recoverable.  In the event that actual results differ from these estimates or the Company adjusts these
estimates in future  periods,  the Company may need to establish a valuation allowance, which could materially impact the Company's
results of operation or financial condition.

RISKS AND UNCERTAINTIES

The Company
believes that revenues and net income were impacted negatively in 2001 by the economic downturn and by the terrorist attacks of
September 11, 2001 and their aftermath.  The majority of the Company's products and many of the products of the Company's licensees
are purchased by their ultimate consumers or by corporations from discretionary resources, making sales by the Company, including
sales at the Company's new flagship store in the SoHo neighborhood of New York City, and sales by its licensees vulnerable to
negative economic indicators. The Company believes that these adverse conditions have accounted for a significant portion of the
decreased revenues for 2001, particularly in the Company's corporate markets business.  In addition, the Company believes that
restrictions on the carrying of knives on airliners and similar restrictions have negatively affected sales of the Company's knife
and tool products and that such negative effects are likely to  continue.  These factors may also make it difficult for the Company
to replace sales lost by Bear resulting from a decrease in purchases from a single customer. The Company is  unable to determine the
extent to which these events and trends were responsible for reduced sales in 2001 but believes that such a connection exists. The
Company can not determine how long these negative trends will continue or  quantify their possible future effects.

Results of Operations

The following table
shows, as a percentage of net revenues, the Company's Consolidated Statements of Operations for each of the three years in the
period ended December 31, 2001:

|                                                         | Year Ended December 31, |       
|-------------------------------------------------------- | ----------------------- | ------
|
|Net revenues                                             | 100.0%                  | 100.0%
|Cost of sales                                            | 59.6                    | 61.6  
|Gross profit                                             | 40.4                    | 38.4  
|Selling, general and administrative
            expenses | 43.7                    | 36.0  
|Operating income (loss)                                  | (3.3)                   | 2.4   
|Interest income (expense), net                           | (0.8)                   | (0.8) 
|Investment gain (loss) , net                             | 1.3                     | 1.1   
|Other income, net                                        | -                       | -     
|Income (loss) before income taxes                        | (2.8)                   | 2.7   
|Income tax provision (benefit)                           | (0.3)                   | 1.2   
|Minority interest                                        | 0.2                     | -     
|Net income (loss)                                        | (2.7%)                  | 1.5%  

Comparison of the Years Ended December 31, 2001 and December 31, 2000

Net revenues
consist of the following:

|                   | 2001     | 2000     | 
|------------------ | -------- | -------- | 
|
|Product sales, net | $112,024 | $130,483 | 
|Royalty income     | 2,605    | 1,539    | 
|                   | $114,629 | $132,022 | 

Product sales for
the year ended  December 31, 2001 were $112.0  million  compared with $130.5  million for the same period in 2000,  representing  a
decrease  of $18.5  million or 14.1%.  The sales  decrease  was due to a 23%  decrease  in sales of  Victorinox® Original Swiss
Army Knives,  SwissCards and SwissTools,  due in part to a decrease in sales in the Corporate Markets business due to a
decline in general economic conditions, a sales decrease related to Bear where sales to one customer declined significantly, an 8%
decrease in sales of professional cutlery and a 6% decrease in sales of watches,  offset in part by an increase in sales related to
Xantia in which the Company  acquired a controlling  interest in July 2000. Royalty income relates  primarily to the licensing
program of Victorinox®  Travel Gear,  which was introduced in the fourth quarter of 1999 and the licensing of Victorinox®
Apparel, which was introduced in the third quarter of 2001.

Gross profit for
the year ended December 31, 2001 was $46.3 million, 8.7% lower than in 2000. The decrease in gross profit was primarily due to a
significant decrease in product sales offset in part by the increase in the value of the U.S. dollar versus the Swiss franc, and an
increase in royalty income, which has a higher gross margin than product sales.  The Company's gross profit margin is a function of
both product mix 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. Increases in the value of the Swiss
franc versus the dollar may effectively increase the cost of these products to the Company.  The increase in the cost of products to
the Company may result in either higher prices charged to customers or reductions in gross profit, both of which may have an adverse
effect on the Company's results of operations.  The Company enters into foreign currency contracts and options to hedge the exposure
associated with foreign currency fluctuations.  Based upon current estimated Swiss franc requirements, the Company believes it is
hedged through the fourth 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 of any increase in the dollar relative to the Swiss franc.  The Company plans to continue to engage in
hedging transactions; however, the extent to which such hedging transactions will reduce the effect of adverse currency fluctuations
is uncertain.

Selling,  general
and  administrative  expenses for the year ended December 31, 2001 were $50.1 million,  $2.6 million or 5.5% higher  than in 2000.
The  expense  increase  resulted  primarily  from a full year of  expenses  related to Xantia,  $0.6  million in severance  costs,
an increase in expenses related to the Company's  international  operations and expenses of $0.6 million related to the Company's
retail  store which  opened in New York City in October  2001.  As a  percentage  of net sales,  selling,  general and
administrative expenses increased to 43.7% in 2001 from 36.0% in 2000.

As a result of the
above,  the Company  reported an operating loss of $3,740,000 for the year ended December 31, 2001 compared to operating income of
$3,239,000 in 2000.

Interest  expense
of $1,019,000 for the year ended December 31, 2001 was $255,000 lower than interest  expense in 2000, due to reduced debt and lower
interest rates.

Interest income of
$46,000 for the year ended December 31, 2001 was $3,000 higher than interest income in 2000.

Investment  gain
(loss),  net for the year ended  December 31, 2001 was income of $1,477,000  compared to income of $1,508,000 for the year ended
December  31, 2000.  The gain in 2001 was due to a $2.1  million  gain from the sale of the John Hancock  Financial Services.,  Inc.
("John  Hancock")  common stock  offset in part by a $630,000  write-down  of the  Company's  investment  in Highgate Capital,  LLC
("Highgate"),  due to the other than temporary  impairment in the value of the investment.  The gain in 2000 was due to a $1,716,000
gain from the common  stock  received  related to the  demutualization  of John Hancock  offset in part by a $208,000 write-down  of
the  Company's  common stock  investment in Chaparral  Resources,  Inc. due to the other than  temporary impairment in the value of
the investment.

As a result of the
above,  income (loss) before  income taxes was a loss of  $3,236,000  for the year ended  December 31, 2001 compared to income of
$3,543,000 in 2000.

Income taxes were
provided at an effective  rate of 10.6% for the year ended  December 31, 2001 compared to 44.6% for the year ended  December 31,
2000.  The  difference  between the effective  rate and the statutory  rate was due to state and foreign income tax expense.

Minority interest
related to Xantia and Victorinox Swiss Army Watch S.A. was an expense of $260,000 for the year ended December 31, 2001 compared to
income of $49,000 in 2000.

As a result of the
above,  the net income  (loss) for the year ended  December  31, 2001 was a loss of  $3,152,000  ($0.39 per share-basic and diluted)
compared to income of $2,013,000  ($0.25 per share-basic and diluted) in 2000.

Comparison of the Years Ended December 31, 2000 and December 31, 1999

Net revenues
consist of the following:

|                   | 2000     | 1999     | 
|------------------ | -------- | -------- | 
|
|Product sales, net | $130,483 | $129,452 | 
|Royalty income     | 1,539    | 94       | 
|                   | $132,022 | $129,546 | 

Product sales for
the year ended  December 31, 2000 were $130.5  million  compared with $129.5  million for the same period in 1999,  representing
an increase of $1.0 million or 0.8%.  The sales  increase was primarily due to an increase in sales of Victorinox® Original
Swiss Army  Knives and  Victorinox®  SwissCards  and sales  related to Xantia in which the Company  acquired a
controlling interest in July 2000,  offset in part by a decrease in sales of Swiss Army Brand®  Watches.  Royalty income relates
to the licensing program of Victorinox® Travel Gear, which was introduced in the fourth quarter of 1999.

Gross profit for
the year ended December 31, 2000 was $50.7 million, 0.5% lower than in 1999. The decrease in gross profit was primarily due to a
decrease in Swiss Army Brand Watch sales offset in part by the increase in the value of the U.S. dollar versus the Swiss franc, an
increase in total sales and an increase in royalty income, which has a higher gross margin than product sales.

Selling,  general
and  administrative  expenses for the year ended December 31, 2000 were $47.5 million,  $1.2 million or 2.5% higher than in 1999.
The expense increase  resulted  primarily from increased  advertising and  merchandising  expense related to Swiss Army Brand
Watches. As a percentage of net sales,  selling,  general and administrative  expenses increased to 36.0% in 2000 from 35.7% in
1999.

As a result of the
above,  the Company  reported  operating income of $3,239,000 for the year ended December 31, 2000 compared to $4,635,000 in 1999.

Interest  expense
of $1,274,000 for the year ended December 31, 2000 was $526,000  greater than interest  expense in 1999, due to the debt issued in
connection with the acquisitions of Bear in April 1999 and Xantia in July 2000.

Interest income of
$43,000 for the year ended December 31, 2000 was $1,000 less than interest income in 1999.

Investment  gain
(loss),  net for the year ended  December 31, 2000 was income of $1,508,000  compared to a loss of $2,280,000 for the year ended
December 31,  1999.  The gain in 2000 was due to a $1,716,000  gain from the common stock  received  related to the demutualization
of John Hancock offset in part by a $208,000 write-down of the Company's common stock investment in Chaparral Resources,  Inc. due
to the other than temporary  impairment in the value of the  investment.  The loss in 1999 consisted of a $2.7 million non-cash
write-down of the Company's  investment in Highgate due to the other than temporary  impairment in the value of the investment,
offset in part by a $420,000 gain related to the sale of the Company's investment in Iron Mountain, Inc.

As a result of the
above,  income  before  income  taxes was  $3,543,000  for the year ended  December  31,  2000  compared to $1,651,000 in 1999.

Income taxes were
provided at an effective  rate of 44.6% for the year ended  December 31, 2000 compared to 92.7% for the year ended  December 31,
1999.  The change in the effective  rate was the result of the Company  taking  limited tax benefits in 1999 on the capital loss
write-down of the Highgate Capital LLC investment.

As a result of the
above,  the net income for the year ended  December  31, 2000 was  $2,013,000  ($0.25 per  share-basic  and diluted) compared to
$120,000  ($0.02 per share-basic, $0.01 per share-diluted) in 1999.

Liquidity and Capital Resources

The table below
presents summary cash flow information for the years indicated (in thousands):

|                                                     | 2001     | 2000    | 
|---------------------------------------------------- | -------- | ------- | 
|Net cash provided by operating
activities            | $7,483   | $4,034  | 
|Net cash provided by (used in)
 investing activities | 106      | (5,789) | 
|Net cash provided by (used in)
 financing activities | (9,813)  | 5,212   | 
|Total change in cash and cash equivalents(a)         | ($2,224) | $3,457  | 

(a) Before exchange
rate effects

Operating Activites

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

As of December 31,
2001,  the Company had working  capital of $48.5  million  compared  with $57.6  million as of December 31, 2000, a decrease of $9.1
million.  Working  capital principally decreased due to the repayment of debt.  Significant  sources of working  capital included
$3.8 million from the sale of the  Company's  investment in John Hancock.  Significant  uses of working  capital  consisted of
additions to other assets  of $1.7  million  and  capital  expenditures  of $2.0  million.  The  Company  currently  has no material
commitments for capital expenditures.

Cash provided from
operating  activities was  approximately  $7.5 million in the year ended December 31, 2001 compared to $4.0 million in the year
ended  December  31,  2000.  The change  primarily  resulted  from a  significantly  larger  decrease  in  accounts receivable  in
2001  compared to 2000, a decrease in inventory in 2001 compared to an increase in 2000, a decrease in prepaid and other assets in
2001 compared to an increase in 2000, an increase in accrued  liabilities in 2001 compared to a decrease in 2000,  offset in part by
a significantly  smaller  decrease  in accounts  payable in 2001  compared to 2000 and a net loss in 2001 as compared to net income
in 2000.

Investing Activities

Investing
activities during 2001 consisted of the proceeds of approximately $3.8 million from the sale of the Company's investment in John
Hancock, capital expenditures of $2.0 million and additions to other assets of $1.7 million.

Investing
activities during 2000 consisted of the acquisition of Xantia, capital expenditures of 1.4 million and additions to other assets of
$2.6 million.

The Company
anticipates that its capital expenditures and additions to other assets during 2002 will be similar to the amounts spent in 2001.

Financing Activities

During 2001 and
2000, the Company's principal financing activities consisted of the borrowing and repayment of bank debt and debt owed to the former
owners of Xantia.

The Company meets
its short-term  liquidity needs with cash generated from  operations,  and, when necessary,  bank borrowings under its bank
agreement.  As of December 31, 2001, the Company had a $16.0 million credit line, of which  $1,060,000 was  outstanding and
$14,940,000  was available for  borrowing.  Also,  the Company has  approximately  $6,612,000 of  outstanding  term loans and debt
related to the  acquisitions of Bear and Xantia.  The line of credit expires in June 2003. The Company  believes its current
liquidity levels and  financial  resources  will be  sufficient  to meet its operating  needs in the next twelve  months.  The
Company's  credit facility includes various  financial  covenants,  including  maintenance of a leverage coverage ratio and interest
coverage ratio based on operating  results for the previous four quarters.  The Company was not in compliance  with its bank
covenants at December 31, 2001. The bank has waived the  existing  non-compliance.  For the year ending December 31, 2002,  the bank
has amended  certain  covenants to levels the Company believes it can attain.  However,  as compliance depends upon sales,
flexibility in obtaining extended payment terms from its largest supplier,  Victorinox,  general economic conditions and other
factors not in the Company's control, no assurance can be given to such attainment.

Material Obligations and Commitments

|                            | Payments Due by Period |       
|--------------------------- | ---------------------- | ------
|
|Bank debt                   | $4,429                 | $875  
|Other debt                  | 3,243                  | 389   
|Operating leases            | 16,417                 | 2,095 
|Split dollar life insurance | 12,487                 | 1,076 
|Total                       | $36,576                | $4,435

Recently Issued Accounting Standards

In June 1998, the
Financial  Accounting  Standards Board ("FASB") issued  Statement of Financial  Accounting  Standard No. 133 ("SFAS 133"),  as
amended in June 2000 by SFAS No. 138 ("SFAS 138"),  "Accounting for Derivative  Instruments and Hedging  Activities," which
standardizes the accounting for derivative  instruments,  including certain derivative  instruments  embedded in other contracts.
This standard  requires that an entity  recognize  those items as assets or  liabilities  in the balance sheet and measure them at
fair value,  resulting in an offsetting  adjustment to income or other comprehensive  income,  depending on effectiveness of the
hedge. SFAS 133, as amended by SFAS 138, was effective for the Company  beginning  January 1, 2001. The Company  adopted this
statement  effective January  1,  2001.  Based upon the  estimated  fair  value of the  Company's  derivative  instruments,  at
January 1, 2001  derivative liabilities of approximately  $415,000,  net tax, were recognized in the balance sheet with an
offsetting amount in other comprehensive income (loss).

The FASB Emerging
Issues Task Force recently  reached a consensus on topics  relating to the  classification  of various types of sales  incentives
and  promotional  expenses.  The Company will adopt the new  accounting  requirements  effective  January 1, 2002. The impact of the
new accounting will result in the  reclassification  of certain sales incentives and promotional  expenses from selling  general and
administrative  expenses to either a reduction of net revenues or an increase of cost of sales,  but will have no impact on the
Company's financial position or net income.  Based on historical  information,  annual net revenues as currently reported for 2001
and 2000 will be reduced by approximately 1% with a corresponding  reduction in selling,  general and  administrative  expenses. The
impact on annual  cost of sales as reported  is not  material.  In 2002, the consolidated  financial statements and all
comparative periods will be reclassified to conform to the new requirements.

Item 7a.  Quantitative and Qualitative Disclosures About Market Risk

Foreign Exchange Risk

The Company is
exposed to significant  market risk from changes in foreign exchange rates as the Company imports  virtually all its products  from
Switzerland.  To minimize the risks  associated  with  fluctuations  in the value of the Swiss franc versus the U.S. dollar,  the
Company  enters into foreign  currency  contracts and options.  Pursuant to guidelines  approved by its Board of Directors, the
Company is to engage in these  activities only as a hedging  mechanism  against foreign exchange rate  fluctuations  associated with
specific inventory purchase  commitments to protect gross margin and is not to engage in speculative  trading.  Gains or losses on
these contracts  and options are deferred in accumulated other comprehensive income (loss) and  recognized in cost of sales when the
related  inventory  is sold.  At December 31, 2001,  the Company entered into foreign  currency  contracts and options to purchase
approximately  65.7 million Swiss francs in 2002 at a weighed average  rate of $1.698  Swiss  franc/dollar.  The  Company's ultimate
unrealized  gain or loss on these contracts  and options  will primarily  depend on the currency  exchange  rates in effect at the
time the contracts  and options mature.  At December 31, 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. See Notes to Consolidated  Financial  Statements for further discussion of the
Company's accounting policies and other information related to it foreign exchange instruments.

Interest Rate Risk

The Company has
entered into interest rate protection  agreements to manage its exposure to  fluctuations in earnings  related to changes in
interest  rates on its  variable  rate debt.  At December  31,  2001,  a 50 basis  point  increase or decrease in market interest
rates, principally LIBOR, would not materially increase or decrease interest expense or cash flows.

Item 8.Financial Statements and Supplementary Data

The financial
information required by Item 8 is included elsewhere in this report.  See Part IV, Item 14.

Item 9.Changes In and Disagreements with Accountants on Accounting and
Financial Disclosure

None.

PART III

Item 10. Directors and Executive Officers of the Registrant

Incorporated herein
by reference to the information under the heading "Election of Directors" in the Company's Proxy Statement with respect to the
Company's Annual Meeting of Stockholders scheduled to be held on May 30, 2002.

Item 11. Executive Compensation

Incorporated herein
by reference to the information under the headings "Compensation of Directors", "Compensation Committee Interlocks and Insider
Participation", "Management Compensation", "Option Grants in Last Fiscal Year", "Option Exercises and Year-End Value Table" and
"Compensation Committee Report on Executive Compensation" in the Company's Proxy Statement with respect to the Company's Annual
Meeting of Stockholders scheduled to be held on May 30, 2002.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Incorporated
herein by reference to the information  under the heading "Security  Ownership of Certain  Beneficial Owners and Management" in the
Company's Proxy Statement with respect to the Company's  Annual Meeting of Stockholders  scheduled to be held on May 30, 2002.

Item 13. Certain Relationships and Related Transactions

Incorporated herein
by reference to the information under the headings "Compensation Committee Interlocks and Insider Participation" in the Company's
Proxy Statement with respect to the Company's Annual Meeting of Stockholders scheduled to be held on May 30, 2002.

PART IV

Item 14.Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a)  Documents filed as part of this report:

|                           |                                                                                                                                | Page(s)     | 
|-------------------------- | ------------------------------------------------------------------------------------------------------------------------------ | ----------- | 
|(1)  Financial Statements: |                                                                                                                                |             | 
|                           | Report of Independent Public Accountants                                                                                       | F-1         | 
|                           | Consolidated Balance Sheets - December 31, 2001 and 2000                                                                       | F-2 to F-3  | 
|                           | Consolidated Statements of Operations for the Years Ended December
31, 2001, 2000 and 1999                                     | F-4         | 
|                           | Consolidated Statements of Stockholders' Equity and Comprehensive
 Income for the Years Ended December 31, 2001, 2000 and 1999 | F-5         | 
|                           | Consolidated Statements of Cash Flows for the YearsEnded
December 31, 2001, 2000 and 1999                                      | F-6         | 
|                           | Notes to Consolidated Financial Statements                                                                                     | F-7 to F-23 | 
|(2)  Schedule:             |                                                                                                                                |             | 
|                           | Schedule II -- Valuation and Qualifying Accounts for the Years
Ended. December 31, 2001, 2000 and 1999                         | F-24        | 

All other schedules
called for under Regulation S-X are not submitted  because they are not applicable or not required,  or because the required
information is included in the financial statements or notes thereto.

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Swiss Army Brands, Inc.:

We have audited the accompanying  consolidated  balance sheets of Swiss Army
Brands, Inc. (a Delaware  corporation) and subsidiaries as of December 31, 2001 and 2000, and the related consolidated  statements
of operations,  stockholders' equity and comprehensive  income, and cash flows for each of the three  years in the period  ended
December  31,  2001.  These  financial  statements  and the  schedule referred to below are the  responsibility of the Company's
management.  Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

We conducted our audits in accordance with auditing  standards  generally
accepted in the United States.  Those standards require that we plan  and  perform  the  audit to  obtain  reasonable  assurance
about  whether  the  financial  statements  are  free of  material misstatement.  An audit  includes  examining,  on a test  basis,
evidence  supporting  the amounts and  disclosures  in the  financial statements.  An audit also includes assessing the accounting
principles used and significant  estimates made by management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements referred to above present fairly, in
all material respects,  the financial position of Swiss Army Brands,  Inc. and  subsidiaries  as of December 31, 2001 and 2000,  and
the results of their  operations  and their cash flows for each of the three years in the period ended  December 31, 2001, in
conformity  with  accounting  principles  generally  accepted in the United States.

As explained in Note 2 to the consolidated financial statements, effective
January 1, 2001, the Company changed its method of accounting for financial instruments.

Our audits were made for the purpose of forming an opinion on the basic
financial  statements  taken as a whole. The schedule listed in Item 14(a)(2) is presented for purposes of complying with the
Securities and Exchange  Commission's  rules and is not part of the basic financial  statements.  This  schedule  has been subjected
to the auditing  procedures  applied in our audits of the basic  financial statements  and, in our  opinion,  fairly  states in all
material  respects  the  financial  data  required to be set forth  therein in relation to the basic financial statements taken as a
whole.

ARTHUR ANDERSEN LLP

Stamford, Connecticut
March 28, 2002

F-1

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

|December 31,                                                                                              
|----------------------------------------------------------------------------------------------------------
|                                                                                                          
|Current assets:                                                                                           
|Cash and cash equivalents                                                                                 
|Accounts receivable, less
       allowance for doubtful accounts       of $1,310,
and $1,260, respectively
|Inventories                                                                                               
|Deferred income taxes                                                                                     
|Prepaid and other                                                                                         
|Total current assets                                                                                      
|Deferred income taxes                                                                                     
|Property, plant and equipment, net                                                                        
|Investments                                                                                               
|Intangible assets, net                                                                                    
|Other assets, net                                                                                         
|Total Assets                                                                                              

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

F-2

# SWISS ARMY
BRANDS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
LIABILITIES AND STOCKHOLDERS' EQUITY

|December 31,                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                           
|Current liabilities:                                                                                                                                       
|Current portion of long-term
debt                                                                                                                          
|Accounts payable                                                                                                                                           
|Accrued liabilities                                                                                                                                        
|Total current liabilities                                                                                                                                  
|Long-term liabilities:                                                                                                                                     
|Long-term debt                                                                                                                                             
|Other                                                                                                                                                      
|Total Liabilities                                                                                                                                          
|Minority interest                                                                                                                                          
|Commitments and contingencies(Note 16)                                                                                                                     
|Stockholders' equity:     Preferred
stock, par value $.10 per share:  shares         authorized 
2,000,000;  no shares issued                             
|Common stock, par value $.10 per
         share:  shares authorized     
    18,000,000;  shares issued    9,076,442 and    
     8,866,218, respectively
|Additional paid-in capital                                                                                                                                 
|Accumulated other comprehensive
income (loss)                                                                                                              
|Retained earnings                                                                                                                                          
|                                                                                                                                                           
|Less:  Treasury stock:
  908,743 and 1,014,108 shares,              
      respectively                                                                    
|Deferred compensation                                                                                                                                      
|Total stockholders' equity                                                                                                                                 
|Total Liabilities and Stockholders' Equity                                                                                                                 

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

F-3

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

|                                                                                                  | Year Ended December 31, |         
|------------------------------------------------------------------------------------------------- | ----------------------- | --------
|
|Net revenues                                                                                      | $114,629                | $132,022
|Cost of sales                                                                                     | 68,315                  | 81,316  
|Gross profit                                                                                      | 46,314                  | 50,706  
|Selling, general and administrative       
                      
                      
expenses | 50,054                  | 47,467  
|Operating income (loss)                                                                           | (3,740)                 | 3,239   
|Interest expense                                                                                  | (1,019)                 | (1,274) 
|Interest income                                                                                   | 46                      | 43      
|Investment gain (loss), net                                                                       | 1,477                   | 1,508   
|Other income, net                                                                                 | -                       | 27      
|Total interest and other income (expense), net                                                    | 504                     | 304     
|Income (loss) before income taxes                                                                 | (3,236)                 | 3,543   
|Income tax provision (benefit)                                                                    | (344)                   | 1,579   
|Minority interest                                                                                 | 260                     | (49)    
|Net income (loss)                                                                                 | ($3,152)                | $2,013  
|Earnings (loss) per share:                                                                        |                         |         
|Basic                                                                                             | ($0.39)                 | $0.25   
|Diluted                                                                                           | ($0.39)                 | $0.25   
|Weighted average number of shares outstanding:                                                    |                         |         
|Basic                                                                                             | 8,139                   | 7,973   
|Diluted                                                                                           | 8,139                   | 8,187   

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

F-4

# SWISS ARMY BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999
(in thousands, except share data)

|                                                                                                                                                                                                                                                                                                                                                                          | Common StockPar Value  $.10
Shares      Amount | AdditionalPaid-InCapital | AccumulatedOtherComprehensiveIncome
(Loss) | RetainedEarnings          | TreasuryStock   | ComprehensiveIncome (Loss) |                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------- | ------------------------ | ------------------------------------------ | ------------------------- | --------------- | -------------------------- | ------------------------------------
|BALANCEDecember 31, 1998                                                                                                                                                                                                                                                                                                                                                  | 8,858,218                                      | $885                     | $46,472                                    | $177                      | $35,456         | ($8,194)                   |                                     
|Comprehensive Income:                                                                                                                                                                                                                                                                                                                                                     |                                                |                          |                                            |                           |                 |                            |                                     
|Net Income  Foreign currency 
    translation adjustment  Unrealized gain in     marketable securities
Comprehensive LossAcquisition of Bear MGC Cutlery, Inc.Stock options exercisedCancellation of stock grantRepurchase
of common stock                                                                                                                                | 10,000
(2,000)                            | 1
                 | 2,63053
(18)                           | 233(811)
            | 120
      | 
(517)               | $120233(811)($458)                  
|BALANCE                                                                                                                                                                                                                                                                                                                                                                   |                                                |                          |                                            |                           |                 |                            |                                     
|December 31, 1999                                                                                                                                                                                                                                                                                                                                                         | 8,866,218                                      | $886                     | $49,137                                    | ($401)                    | $35,576         | ($8,711)                   |                                     
|Comprehensive Income:  Net Income
  Foreign currency      translation adjustment  Unrealized gain in
      marketable securitiesComprehensive IncomeIssuance of common stockCancellation of
stock grantAcquisition of Xantia, S.A.                                                                                                                                        | 
106,112(1,250)                            | 11
                 | (11)
(11)(110)                          | (655)2,290
           | 2,013
     | 
708                  | $2,013(655)2,290$3,648              
|BALANCE                                                                                                                                                                                                                                                                                                                                                                   |                                                |                          |                                            |                           |                 |                            |                                     
|December 31, 2000                                                                                                                                                                                                                                                                                                                                                         | 8,971,080                                      | $897                     | $ 49,005                                   | $1,234                    | $37,589         | ($8,003)                   |                                     
|Comprehensive Loss:  Net loss  
Cumulative effect      transition adjustment for      
derivatives, net of tax  Foreign currency      translation adjustment 
 Unrealized gain in      marketable securities  Fair value adjustment 
     for derivatives, net of taxComprehensive LossCancellation of stock grantIssuance of common
stockRepurchase of      common stock | 
(750)106,112                            | 
11               | 
(6)(11)                             | (415)(245)(2,082)958
 | (3,152)
 | 
(20)               | ($3,152)(415)(245)(2,082)958($4,936)
|BALANCE                                                                                                                                                                                                                                                                                                                                                                   |                                                |                          |                                            |                           |                 |                            |                                     
|December 31, 2001                                                                                                                                                                                                                                                                                                                                                         | 9,076,442                                      | $908                     | $48,988                                    | ($550)                    | $34,437         | ($8,023)                   |                                     

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

F-5

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

|                                                                                                                                                                                                                                                                                                                          | Year Ended December 31,               |                                    
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------- | -----------------------------------
|
|Cash flows from operating activities:   
 Net income (loss)   Adjustments to reconcile net income (loss) to cash    
provided from operating activities:        Minority interest    
   Depreciation and amortization        Stock compensation expense
        Deferred income taxes       
Investment (gain) loss, net | ($3,152)2603,96432(451)(1,477)        | $2,013(49)3,50458543(1,508)        
|                                                                                                                                                                                                                                                                                                                          | (824)                                 | 4,561                              
|Changes in other current assets and liabilities: 
   Accounts receivable     Inventories     Prepaid and other 
   Accounts payable     Accrued liabilities                                                                                                                                                               | 6,9629668871,094                      | 1,625(727)(630)1,366(2,161)        
|Net
cash provided from operating activities                                                                                                                                                                                                                                                                               | 7,483                                 | 4,034                              
|Cash flows from investing activities:   
 Acquisition of Bear MGC Cutlery, Inc., net of cash acquired    Acquisition of Xantia, S.A., net of
cash acquired    Capital expenditures    Additions to other assets  
  Proceeds from sale of investments          Net cash used in
investing activities                      |     
        (2,010)(1,716)3,832106 |     
(1,751)(1,433)(2,605)(5,789)
|Cash flows from financing activities:   
 Borrowings under bank agreements    Repayments under debt agreements    
Repurchase of common stock    Proceeds from exercise of stock options and warrants   
       Net cash provided from (used in) financing activities                                                     | 47,941(57,734)(20)(9,813)            | 58,103(52,891)     
   5,212     
|Effect of exchange rate changes on cashNet increase
(decrease) in cash and cash equivalents    Cash and cash equivalents, beginning of period  
  Cash and cash equivalents, end of period                                                                                                                                | (139)(2,363)5,002$2,639               | 2433,7001,302$5,002                
|Cash paid during the period:    
Interest    Income taxes                                                                                                                                                                                                                                                                 | $840$890                              | $1,109$1,961                       

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

F-6

SWISS ARMY BRANDS, INC. AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF
BUSINESS

Swiss Army Brands, Inc. ("Swiss Army" or the "Company") is the exclusive
distributor in the United States,  Canada (with one minor  exception  for  cutlery)  and the  Caribbean  of the  Victorinox®
Original  Swiss Army  Knife,  Victorinox® SwissTool,  Victorinox®  SwissCard  and Victorinox  Cutlery.
Swiss Army also markets its own line of Swiss Army® Brand Watches, Swiss Army® Brand Sunglasses and Swiss Army® Brand
Writing Instruments under its Swiss Army Brand in North America and the Victorinox Swiss Army brand outside North America.
In addition,  the Company manufactures and distributes  Bear MGC knives and multi-tools.  Swiss Army has only one business
segment - the importation, manufacture and distribution of consumer products, including watches, pocketknives,  cutlery, multi-tools
and  sunglasses.  No customer  accounted  for greater  than 10% of net sales in any of the three years ended December 31, 2001.

In December 2000,  Victorinox  A.G., a Swiss  Corporation  and a principal
supplier to and long-time  stockholder of the Company ("Victorinox"),  and its affiliates purchased sufficient shares of the
Company's common stock in private and open market  transactions to acquire majority  control of the Company.  At December 31, 2001,
Victorinox owned approximately 69% of the outstanding common stock of the Company.
2. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Principles of consolidation

The  consolidated  financial  statements  include the accounts of the Company
and its subsidiaries in which it has a controlling interest.  All significant inter-company transactions have been eliminated.

Revenue recognition

The Company  recognizes  revenue upon shipment of product.  Net sales are
comprised of gross  revenues less returns, trade discounts and customer allowances.  Revenues from licensing agreements are
recognized when earned.

Use of estimates

The  preparation  of financial  statements in conformity  with United States
generally  accepted accounting  principles  requires management  to make  estimates  and  assumptions  that  affect the  reported
amounts of assets and liabilities  and disclosures of contingent 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.

Foreign currency translation and transactions

Assets and liabilities of the Company's  foreign  operations are translated
into U.S. dollars using the exchange rate in effect at the  balance  sheet  date.  Results  of  operations  are  translated  using
the average exchange  rate prevailing  throughout the period.  The effects of exchange rate fluctuations on translating  foreign
currency assets and  liabilities  into U.S.  dollars  are  included in the  foreign  currency  translation  adjustment  component of
stockholders' equity, while gains and losses resulting from foreign currency transactions are included in net income.

F-7
The vast  majority  of the  Company's  products  are  imported  from
Switzerland  and are paid for in Swiss  francs. Increases in the value of the Swiss franc versus the dollar may  effectively
increase the cost of these products to the  Company.  The  increase in the cost of products to the  Company may result in either
higher  prices  charged to customers  or  reductions  in gross  margin,  both of which may have an adverse  effect on the  Company's
results of operations. 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 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.  Gains and  losses on these  contracts  are  deferred  in  accumulated  other comprehensive  income  (loss) and
recognized  in cost of sales when the related  inventory  is sold.  These  hedging transactions,  which are meant to reduce foreign
currency risk, also reduce the beneficial  effects to the Company of any  increase  in the  dollar  relative  to the Swiss  franc.
The  Company  plans to  continue  to engage in hedging transactions;  however, it is uncertain as to the extent to which such
hedging transactions will reduce the effect of adverse currency fluctuations.

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS
No. 133, as amended in June 2000 by SFAS No. 138,  "Accounting  for Derivative  Instruments and Hedging  Activities,"  which
standardizes  the accounting for derivative  instruments,  including  certain  derivative  instruments embedded  in other contracts.
This  standard requires that an entity  recognize those items as assets or liabilities in the balance sheet and measure them at fair
value,  resulting in an offsetting adjustment to income or other comprehensive income,  depending on effectiveness of the hedge.
SFAS 133, as amended by SFAS 138, was effective for the Company  beginning  January 1, 2001.  The Company adopted this statement
effective January 1, 2001.  Based upon the estimated fair value of the Company's  derivative instruments,  at January 1, 2001
derivative liabilities of approximately $415,000, net of tax, were recognized in the balance sheet with an offsetting amount in
other comprehensive income (loss).

The Company is exposed to foreign currency risks relating to purchases of
inventories as part of its ongoing business operations and uses derivative financial instruments, where appropriate, to manage these
risks. In general, instruments used as hedges must be effective at reducing the risk associated with the exposure being hedged and
must be designated as a hedge at the inception of the contract. At the inception of the contract, the Company has designated its use
of derivatives for foreign currency forecasted transactions as cash flow hedges. The Company hedges its exposure to variability in
future cash flows for forecasted transactions up to a maximum of 24 months. At such time that inventory is received, the position is
re-designated from a cash flow hedge to a fair value hedge. Gains and losses on derivatives qualifying as cash flow hedges are
recorded in other comprehensive income to the extent that hedges are effective until the underlying transactions are recognized in
earnings. Gains and losses from fair value hedges are included in earnings. It is expected that approximately $543,000 (net of tax)
of unrealized gains included in other comprehensive income at December 31, 2001, will be reclassified into earnings in the next
twelve months. Gains and losses related to the ineffective portion of hedging instruments, which are included in net income, and
gains and losses from fair value hedges were insignificant.

Cash and cash equivalents

Cash and cash  equivalents  consist of all highly  liquid  investments  with
original maturities of three months or less.  Investments with maturities between three and twelve months are considered short-term
investments.

Inventories

Domestic  inventories are valued at the lower of cost determined by the
last-in, first-out (LIFO) method or market. Had the first-in,  first-out (FIFO) method been used to value domestic  inventories as
of December 31, 2001 and 2000, the amount at which inventories are stated would have been $4,758,000 and $4,246,000 greater,
respectively.  Foreign inventories are valued at the lower of cost or market  determined by the FIFO method.  Inventories  primarily
consist of finished goods and packaging materials.
F-8
Property, plant and equipment

Property,  plant and equipment are stated at cost. Major  improvements that add
to productive  capacity or extend the life of an asset are capitalized  while repairs and maintenance are charged to expense as
incurred.  Property,  plant and equipment are comprised of the following:

December 31,2001
2000Leasehold improvements
$1,453
$1,158Building and building
                      
        improvements
2,232
2,282Equipment
9,141
9,966Furniture and fixtures
2,210
1,63515,036
15,041Accumulated depreciation
(7,883)
(7,535)$7,153
$7,506Depreciation  is computed  principally by use of the  straight-line  method
based on the following  estimated  useful lives:

YearsEquipment
3 to 10Building and building
improvements
40Furniture and fixtures
3 to 10The provision for  amortization of leasehold  improvements  is provided on a
straight-line basis over the estimated useful  lives of the assets or terms of the leases,  whichever  is shorter.  For the years
ended  December 31, 2001, 2000, and 1999, depreciation expense of property, plant and equipment was approximately $2,310,000,
$1,710,000,  and $1,594,000, respectively.

Long-lived assets

The Company follows Statement of Financial  Accounting  Standard ("SFAS") No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of". The Company  continually
reviews the  recoverability of the carrying value of these assets using the  provisions of SFAS No. 121.  Based upon the Company's
review of its long-lived assets, no impairment exists at December 31, 2001.

On January 1, 2002,  SFAS No. 142,  "Goodwill and Other  Intangible  Assets,"
became effective and as a result,  the Company will cease to amortize  goodwill.  The Company recorded  $534,000 of amortization
on goodwill during 2001 and would have recorded  approximately  the same amount of amortization  during 2002. In lieu of
amortization, the Company is required to complete an initial  impairment  assessment  of goodwill no later than six months after the
adoption of SFAS No. 142 and perform an annual  impairment  review  thereafter.  The Company  expects to complete the initial
impairment assessment of goodwill  before the end of the second quarter of 2002. The Company believes that a significant impairment
as determined by SFAS No. 142  will exist related to the goodwill of Bear Cutlery,  Inc. As of December 31, 2001,  the net goodwill
of Bear Cutlery, Inc. was approximately $7.3 million.

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

Investments

Investments in preferred units are accounted for at cost, subject to review for
impairment.  Since these investments do not have a readily determinable fair value, the valuation of these investments is subject to
uncertainty.
F-9
Investments  in common stock of companies  in which the Company owns less than
20% are accounted  for at fair value, subject to review for impairment.  Changes in fair value are reflected as a component of
stockholders' equity.  Any write-down of the cost due to impairments that are considered other than temporary is reflected in
income.

Earnings per share

Basic  earnings  per share is computed  by dividing  net income  (loss) by the
number of weighted  average  number of common  shares  outstanding.  Diluted  earnings per share is computed by dividing  net income
by the weighted average number of common shares and dilutive common share  equivalents  outstanding  during the period.
Common share equivalents are calculated using the treasury stock method.

Stock-based compensation

The Company  accounts for stock options and warrants under Accounting
Principles  Board Opinion No. 25,  "Accounting for Stock Issued to Employees".  Disclosures  required by SFAS No. 123,  "Accounting
for  Stock-Based Compensation", are included in Note 15.



Income taxes

The provision for income taxes,  as determined  using the liability  method,
includes deferred taxes resulting from temporary  differences in income for financial and tax purposes.  Such temporary  differences
primarily  result from differences  between the tax bases of assets and  liabilities  and their  carrying  amounts for  financial
reporting purposes.



Recent Accounting Pronouncement

The FASB Emerging Issues Task Force recently reached a consensus on topics
relating to the classification of various types of sales  incentives  and  promotional  expenses.  The  Company  will  adopt  the
new  accounting requirements effective January 1, 2002. The impact of the new accounting will result in the  reclassification  of
certain revenues incentives and  promotional  expenses from selling general and  administrative  expenses to either a reduction of
net revenues or an increase  of cost of  sales,  but will have no impact on the  Company's  financial  position  or net income.
Based on historical information,  annual net sales as reported for 2001 and 2000 will be reduced by approximately  1% with a
corresponding reduction in selling,  general and  administrative  expenses.  The impact on annual cost of sales as currently
reported is not material.  In 2002, the consolidated  financial  statements and all comparative periods will be reclassified to
conform to the new requirements.

Reclassifications

Certain  reclassifications  have been made to the prior year  financial
statements  to conform with the current year presentation.
3. INTANGIBLE
ASSETS

Intangible assets are comprised of the following:

December 31,2001
2000(in thousands)Goodwill (A)
$9,432
$9,990Foreign distribution rights
(B)
869
1,538Trademark rights (C)
945
1,067$11,246
$12,595F-10
Represents the goodwill  related to the  acquisition  of Xantia,  S.A.
("Xantia")  and Bear MGC Cutlery,  Inc. The goodwill is being amortized on a straight-line basis over 20 years. See Notes 2 and 4
for further discussion.Represents foreign  distribution  rights with Victorinox.  The foreign
distribution rights are being amortized on a straight-line basis over 10 years. See Note 6 for further discussion.On August 17, 1999, the Company purchased all the rights in and trademarks
containing Swiss Martial Terms, as defined, from S.A.W. Company S.A.  These trademark rights are being amortized as a straight-line
basis over 10 years.For the years ended December 31, 2001,  2000, and 1999,  amortization  expense
was  $1,325,000,  $1,265,000 and $916,000, respectively.
4. Represents the goodwill  related to the  acquisition  of Xantia,  S.A.
("Xantia")  and Bear MGC Cutlery,  Inc. The goodwill is being amortized on a straight-line basis over 20 years. See Notes 2 and 4
for further discussion.
5. Represents foreign  distribution  rights with Victorinox.  The foreign
distribution rights are being amortized on a straight-line basis over 10 years. See Note 6 for further discussion.
6. On August 17, 1999, the Company purchased all the rights in and trademarks
containing Swiss Martial Terms, as defined, from S.A.W. Company S.A.  These trademark rights are being amortized as a straight-line
basis over 10 years.
7. ACQUISITIONS

On July 24, 2000,  the Company and  Victorinox  each acquired 50% of the issued
and outstanding  capital stock of Xantia from its  stockholders ( the  "Sellers")  pursuant to an agreement,  dated June 23, 2000,
as amended by agreements  dated July 10, 2000 and July 24, 2000  (collectively,  the "Agreement").  The Agreement contains
provisions that secure ongoing control of Xantia by the Company.

Pursuant to the Agreement,  at closing the Company paid 2,250,000 Swiss Francs
("CHF") ($1,345,500) and delivered 108,374 shares of the Company's  common stock  ("Common  Stock"),  such shares being valued at
1,000,000 CHF  ($598,000).  At the closing,  Victorinox paid to the Sellers 3,250,000 CHF ($1,943,500).  In addition,  in accordance
with the Agreement,  in November  2000,  the Company and  Victorinox  each paid an  additional  500,000 CHF  ($299,000)  as an
adjustment to the purchase price. Each of the Company and Victorinox also agreed to pay an additional  6,000,000 CHF  ($3,670,200),
in the years 2001 through 2008, plus interest.

The  purchase  method of  accounting  was used to account for the  acquisition.
The aggregate  purchase  price has been allocated to the assets and liabilities of Xantia based on estimates of fair market value.
The purchase price,  including acquisition  costs,  amounts  paid and owed by  Victorinox  and the issuance of the Common Stock has
resulted in acquired goodwill of approximately  $2.3 million,  which is being amortized on a straight-line  basis over 20 years. The
following is a summary of the allocation (in thousands):

Cash
$3,724Accounts receivable
2,015Inventory
3,156Other current assets
428Plant and equipment
2,868Goodwill
2,270Accrued expenses and other
liabilities
(2,557)Total
liabilities
$11,904On April 16, 1999, Swiss Army and Bear Cutlery,  Inc. ("Bear"), a Delaware
corporation and a wholly-owned  subsidiary of Swiss Army  (collectively,  the "Buyer"),  entered into an Asset Purchase Agreement
(the "Bear Agreement") with Bear MGC Cutlery,  Inc. ("Bear MGC") and the shareholders (the  "Shareholders")  of Bear MGC, pursuant
to which the Buyer acquired substantially  all of the  assets  and  assumed  certain  of the  liabilities  of  Bear  MGC.  In
consideration  for the acquisition  of the assets,  the Buyer paid Bear MGC $6,970,000 in cash and repaid debt of $298,000 upon
execution of the Bear Agreement.  In further  consideration of the acquired assets,  on each of April 16, 2000, 2001 and 2002, the
Company shall  transfer to Bear MGC 52,868 shares of Common Stock.  In addition,  pursuant to the Bear Agreement,  in April 2000,
Swiss Army paid $1.0 million in cash, and in April 2000 and 2001 issued  $377,000 of Common Stock of Swiss Army,  respectively,  and
will issue an additional  $377,000 of Common Stock of Swiss Army in April 2002, because Bear attained certain earnings targets for
the year ended December 31, 1999.

F-11


The purchase method of accounting  was used to account for the acquisition. The
aggregate purchase  price,  including acquisition  costs,  has been  allocated to the assets and  liabilities  of Bear based on
estimates of fair market value.  The  purchase  price has resulted in acquired  goodwill of  approximately  $8.4  million,  which is
being amortized on a straight-line basis over 20 years.  The following is a summary of the allocation (in thousands):

Cash
$16Accounts receivable
1,175Inventory
1,497Other current assets
13Plant and equipment
1,025Goodwill
8,368Accrued expenses and other
liabilities
(466)Total
liabilities
$11,628The  unaudited  pro forma results of operations for the years ended  December
31, 2000 and 1999,  respectively,  had the acquisition  of Xantia  occurred  on January  1, 2000 and 1999 of the  respective periods
and the acquisition  of Bear occurred on January 1, 1999,  are provided in the  following  table.  These pro forma  results  include
adjustments  for depreciation  and  amortization of assets acquired based on their fair market values at the acquisition  date,
increased interest on debt,  additional  issuance of Common  Stock,  and the related  income tax effect.  For purposes of computing
income taxes, an effective tax rate of 40% was used. The unaudited pro forma  information does not necessarily  represent what the
results of operations would have been in such periods and is not intended to be indicative of future results.

Year Ended December 31,2000
1999(Unaudited, in thousandsexcept per
share data)Net revenues
$132,641
$132,953Net income
2,445
629Earnings per sharebasic
0.31
0.08Earnings per share
diluted
0.30
0.07
8. INTERNATIONAL
OPERATIONS

On July 30, 2001, the Company and Victorinox  announced an agreement on the
formation of Victorinox Swiss Army Watch S.A. ("VSA"),  a new watch  company that will combine the watch  businesses of the two
companies outside the United  States, Canada and the Caribbean in order to market and  distribute a single  unified brand of
Victorinox/Swiss Army watches in international  markets.  Each of the  Company  and  Victorinox  have a 50%  equity interest in VSA.
The VSA agreement contains  provisions that secure the ongoing control of VSA by the Company.  Each of the Company and Victorinox
agreed to contribute up to 1,000,000 CHF ($598,000) in cash and an an equal amount of its watch  inventory  outside the United
States,  Canada and Caribbean.  Any difference in the value of the  contributed  inventory of Victorinox and the Company will be
made up with an additional cash contribution.
F-12

On November 1, 2001, VSA commenced  operations.  In 2001, each of the Company
and Victorinox  contributed  300,000 CHF ($186,000)of cash related to their 1,000,000 CHF ($598,000) commitment,  and the Company
contributed approximately 2,221,000 CHF ($1,328,000) in inventory and Victorinox  contributed  approximately  2,015,000 CHF
($1,205,000) in inventory.  Due to the  deficiency in the value of the inventory contributed  by Victorinox,  Victorinox  paid to
VSA 206,000 CHF ($124,000) in 2002. On November 1, 2002, the Company and Victorinox will  determine  whether any  additional
contributions  must be made by either  party based upon the gross  margins,  as defined, created by businesses contributed by each
of Company and Victorinox.
9. PRINCIPAL
SUPPLIERS

Swiss Army  imports  for  resale  all of its Swiss Army  Knives,  SwissTools,
SwissCards and most of its other  cutlery products from Victorinox.  Effective December 12, 1998, Swiss Army renewed a five-year
agreement with Victorinox,  which appoints Swiss Army as exclusive distributor of Victorinox Original Swiss Army Knives, Victorinox
SwissTools,  Victorinox SwissCards and  Victorinox  Cutlery and which gives Swiss Army  exclusive  rights to use Victorinox
trademarks and trade names in the United States with respect to those  products.  The  agreement is subject to renewal at five year
intervals at the  Company's  option and  remains in effect as long as Swiss Army  continues  to purchase  quantities  of Swiss Army
Knives and cutlery (based on the Swiss franc purchase  price) at least equal to 85% of the maximum amount of purchases of each in
any  preceding  year.  In the  years  1999  through  2001,  Victorinox  agreed  to reduce  the  minimum  purchase requirements and
the Company met those purchase  requirements.  In the years ended December 31, 2001 and 2000, the Company purchased from Victorinox,
knives and tools of approximately $23,940,000 and $29,300,000, respectively. On December 31, 2001 and 2000, the Company owed
Victorinox approximately $5,930,000 and $3,720,000, respectively, related to the purchase of knives and tools. The Company is
currently in negotiations with Victorinox regarding the 2002 minimum purchase  requirement.  Pursuant to this  agreement,  Swiss
Army must  obtain  Victorinox's permission  to sell new cutlery  items. All of the Swiss Army  Knives and  certain of the cutlery
items that Swiss Army sells in Canada and the Caribbean also are supplied by Victorinox.

Foreign distribution rights with Victorinox are
comprised of the following:

December 31,2001
2000(in thousands)Canadian distribution rights
(A)
$3,483
$3,483Caribbean distribution rights
(B)
3,261
3,2616,744
6,744accumulated amortization
(5,875)
(5,206)$869
$1,538In April 1992, Swiss Army entered into an agreement with Victorinox under
which it received the exclusive  distribution  rights for Victorinox  Original  Swiss  Army  Knives in Canada  and was  appointed
the  principal  distributor  of  Victorinox professional  cutlery in  Canada.  In  exchange  for the grant of these  rights,  Swiss
Army  issued to  Victorinox 277,066  shares of its  common  stock from  treasury.  The rights  received  were  awarded to Swiss Army
for a fixed seven-year term, which were renewed in April 1999, with a continuous  five-year renewal  arrangement upon expiration of
the fixed term.  Victorinox has the right not to renew the agreement;  however,  should  Victorinox choose not to renew the
agreement, Victorinox is required to pay Swiss Army $3,500,000.In December 1993,  Swiss Army entered into an agreement with Victorinox under
which it received the exclusive  distribution  rights for Victorinox  Original Swiss Army Knives and  professional  cutlery in the
Caribbean. The Caribbean  distribution  rights  received were awarded to Swiss Army for a fixed seven-year term, which were renewed
in December 2000, with a continuous  five-year  renewal  arrangement  upon  expiration of the fixed term periods unless either party
notifies the other at least six months prior to expiration of such period of its intent not to renew.F-13


The Company imports virtually all of its pocketknives,  multi-tools, cutlery,
and watches, except for items manufactured by Bear.  The  Company's  business is subject to certain risks related to its
arrangements  with its foreign  suppliers, including possible restrictions on transfer of funds, the risk of  imposition  of quotas
on the amount of products  that may be  imported  into the United  States  (although  no quota currently  exists),  maritime union
strikes and political  instability.  The exclusive  distributorship  agreements  with Victorinox  provides for certain minimum
annual purchases of products by the Company,  and failure to achieve these goals would result in Victorinox  having the right to
terminate the agreements.  Although the Company has a contractual  right to receive minimum  quantities of Swiss Army Knives from
Victorinox, were this source of supply to fail for any reason, the Company  probably would be unable to find an alternative  source.
Any termination or substantial  disruption of the Company's  relationships  with Victorinox  would have a material adverse effect on
its operation and results.  Virtually all of the Company's imported products are subject to United States custom duties.
10. In April 1992, Swiss Army entered into an agreement with Victorinox under
which it received the exclusive  distribution  rights for Victorinox  Original  Swiss  Army  Knives in Canada  and was  appointed
the  principal  distributor  of  Victorinox professional  cutlery in  Canada.  In  exchange  for the grant of these  rights,  Swiss
Army  issued to  Victorinox 277,066  shares of its  common  stock from  treasury.  The rights  received  were  awarded to Swiss Army
for a fixed seven-year term, which were renewed in April 1999, with a continuous  five-year renewal  arrangement upon expiration of
the fixed term.  Victorinox has the right not to renew the agreement;  however,  should  Victorinox choose not to renew the
agreement, Victorinox is required to pay Swiss Army $3,500,000.
11. In December 1993,  Swiss Army entered into an agreement with Victorinox under
which it received the exclusive  distribution  rights for Victorinox  Original Swiss Army Knives and  professional  cutlery in the
Caribbean. The Caribbean  distribution  rights  received were awarded to Swiss Army for a fixed seven-year term, which were renewed
in December 2000, with a continuous  five-year  renewal  arrangement  upon  expiration of the fixed term periods unless either party
notifies the other at least six months prior to expiration of such period of its intent not to renew.
12. RELATED PARTY
TRANSACTIONS

Four of Swiss Army's  directors  serve as  directors of Highgate Capital LLC
("Highgate"),  including  two who serve as Co-Chairmen.  Five of Swiss Army's directors serve as directors of Victory Ventures LLC
("Victory Ventures") , including one who serves as Co-Chairmen.  See Note 8 for further discussion.

On May 1, 1998,  the Company  entered into an agreement  with an  affiliated
company whereby this company  would supply Swiss  Army  with  legal  services.  The fees  incurred  for the  years  ended  December
31,  2001,  2000 and 1999  were approximately  $180,000,  $172,000,  and $179,000,  respectively.  This  agreement can be terminated
by either party upon thirty days written notice.
13. INVESTMENTS

Investments are comprised of the following:

December 31,2001
2000(in thousands)Preferred units of Highgate             
              Capital LLC (A)
$2,983
$3,613Preferred units of             
              Victory Ventures LLC (B)
556
851Preferred units of East River Ventures I, LP (C)
295
Common stock of John Hancock Financial             
              Services, Inc. (D)

3,798Common stock of Chaparral Resources, Inc. (E)

12Total investments
$3,834
$8,274Highgate  is a private  equity  firm  specializing  in middle  market
acquisitions,  re-capitalization  and expansion capital  investments.  In 2001, the Company recognized a $630,000  write-down of its
investment in Highgate due to the other than temporary  impairment in the value of the investment.  At December 31, 2001 and 2000,
the Company owned 890,776 preferred units of Highgate,  which represented  approximately  9.6% of the outstanding  equity of
Highgate.  The preferred  units in Highgate owned by the Company carry a preference on liquidation  equal to their per unit cost as
well as, in certain  instances,  an annual  preferred  return.  The Company  accounts for this  investment  on the cost basis,
subject to review for impairment.  Since this investment does not have a readily  determinable  fair value, the valuation of this
investment is subject to uncertainty.

F-14Victory  Ventures is a private equity firm  specializing  in small market
venture  capital  investments.  At December  31,  2001  and  2000,  the  Company  owned  890,776  preferred  units of  Victory
Ventures  which  represented approximately 1.2% of the outstanding  equity of Victory Ventures,  respectively.  In 2001, Victory
Ventures  distributed to its members its  ownership  interest in East River  Ventures I, LP ("East  River I").  The event was
non-taxable  and resulted  in no gain or loss to the  Company.  The  preferred  units in Victory  Ventures  owned by the  Company
carry a preference on liquidation  equal to their per unit cost as well as, in certain  instances,  an annual  preferred  return.
The Company  accounts for this  investment on the cost basis,  subject to review for  impairment.  Since this  investment does not
have a readily determinable fair value, the valuation of this investment is subject to uncertainty.East River I is a private equity firm specializing in small market venture
capital investments.  As the result of the distribution from Victory Ventures, the Company owned approximately 1.2% of the
outstanding equity of East River I.  The Company accounts for this investment on the cost basis, subject to review for impairment.
Since this investment does not have a readily determinable fair value, the valuation of this investment is subject to uncertainty.John Hancock Financial  Services,  Inc. ("John Hancock"),  a publicly traded
company,  is a life insurance  company.  In 2001, the Company sold its entire investment in John Hancock and recorded a gain of
approximately  $2.1 million.  In 2000, the Company received 100,938 shares of common stock related to the  demutualization  of John
Hancock.  As a result, in 2000, the Company recorded an investment gain of  $1,716,000.Chaparral Resources, Inc., ("Chapparal"), is an independent oil and gas
exploration and production company. In 2001, the Company sold its entire investment in Chapparal and realized a loss of $9,000.  In
2000, the Company recorded a non-cash write-down of $208,000 of its investment in Chaparral due to the other than temporary
impairment in the value of the investment.
14. Highgate  is a private  equity  firm  specializing  in middle  market
acquisitions,  re-capitalization  and expansion capital  investments.  In 2001, the Company recognized a $630,000  write-down of its
investment in Highgate due to the other than temporary  impairment in the value of the investment.  At December 31, 2001 and 2000,
the Company owned 890,776 preferred units of Highgate,  which represented  approximately  9.6% of the outstanding  equity of
Highgate.  The preferred  units in Highgate owned by the Company carry a preference on liquidation  equal to their per unit cost as
well as, in certain  instances,  an annual  preferred  return.  The Company  accounts for this  investment  on the cost basis,
subject to review for impairment.  Since this investment does not have a readily  determinable  fair value, the valuation of this
investment is subject to uncertainty.

F-14
15. Victory  Ventures is a private equity firm  specializing  in small market
venture  capital  investments.  At December  31,  2001  and  2000,  the  Company  owned  890,776  preferred  units of  Victory
Ventures  which  represented approximately 1.2% of the outstanding  equity of Victory Ventures,  respectively.  In 2001, Victory
Ventures  distributed to its members its  ownership  interest in East River  Ventures I, LP ("East  River I").  The event was
non-taxable  and resulted  in no gain or loss to the  Company.  The  preferred  units in Victory  Ventures  owned by the  Company
carry a preference on liquidation  equal to their per unit cost as well as, in certain  instances,  an annual  preferred  return.
The Company  accounts for this  investment on the cost basis,  subject to review for  impairment.  Since this  investment does not
have a readily determinable fair value, the valuation of this investment is subject to uncertainty.
16. East River I is a private equity firm specializing in small market venture
capital investments.  As the result of the distribution from Victory Ventures, the Company owned approximately 1.2% of the
outstanding equity of East River I.  The Company accounts for this investment on the cost basis, subject to review for impairment.
Since this investment does not have a readily determinable fair value, the valuation of this investment is subject to uncertainty.
17. John Hancock Financial  Services,  Inc. ("John Hancock"),  a publicly traded
company,  is a life insurance  company.  In 2001, the Company sold its entire investment in John Hancock and recorded a gain of
approximately  $2.1 million.  In 2000, the Company received 100,938 shares of common stock related to the  demutualization  of John
Hancock.  As a result, in 2000, the Company recorded an investment gain of  $1,716,000.
18. Chaparral Resources, Inc., ("Chapparal"), is an independent oil and gas
exploration and production company. In 2001, the Company sold its entire investment in Chapparal and realized a loss of $9,000.  In
2000, the Company recorded a non-cash write-down of $208,000 of its investment in Chaparral due to the other than temporary
impairment in the value of the investment.
19. OTHER ASSETS
Other assets are comprised of the following :

December 31,
Amortization2001
2000
Period(in thousands)
2000Cash surrender value of             
              life insurance (see Note 16)
$17,456
$16,019
N/AOther, net of accumulated             
              amortization of $2,895,000             
              and $3,015,000,
respectively
440
768
1-5 years$17,896
$16,787
1-5 yearsFor the years ended December 31, 2001, 2000 and 1999,  amortization  expense
related to other assets was  approximately $329,000, $529,000 and $720,000, respectively.


F-15
20. ACCRUED
LIABILITIES

Accrued liabilities are comprised of the following:

December 31,2001
2000(in thousands)Sales, marketing and promotional
$3,639
$3,014Payroll related
1,191
1,499Other
4,519
3,939$9,349
$8,452
21. DEBT AGREEMENTS

On September 28, 2001,  Swiss Army entered into an amended and restated
commercial  loan  agreement  which,  among other things,  consisted of a $16.0 million line of credit for working capital  purposes
and $8.6 million in term loans related to the  acquisitions  of Bear MGC and Xantia.  The term loans were reduced by $3.0 million
from a portion of the proceeds from the Company's  sale of its  investment in John Hancock.  The  outstanding  term loan was
$3,369,000 at December 31, 2001.  At December  31,  2001,  the Company  had  $1,060,000  outstanding  under its line of credit and
$14,940,000  was available for borrowing.  The line of credit and term loan carries  interest at one of three  interest rate
options:  (i) LIBOR plus the applicable margin; (ii) Base Rate, as defined; or (iii) Cost of Funds rate, as defined.  The interest
rate also varies  dependent on the  Company's  financial  performance.  The line of credit is due to expire in June 2003.  The line
of credit is secured by substantially all the assets of the Company.  The Company's credit facility includes various financial
covenants,  including  maintenance of a leverage coverage ratio and interest coverage ratio based on operating results for the
previous four quarters.  The Company was not in compliance  with its bank covenants at December 31, 2001. The bank has waived the
existing  non-compliance.  For the year ending  December 31,  2002,  the bank has amended  certain covenants  to levels the Company
believes it can attain.  However,  as  compliance  depends upon sales,  flexibility  in receiving  extended payment terms from its
largest supplier,  Victorinox,  general economic  conditions and other factors not in the  Company's  control no assurance  can be
given to such  attainment.  The fair value of the amount  outstanding under the line of credit approximates book value as the
interest rate is adjusted on a quarterly basis.

In addition,  the Company has 5,425,000 CHF  ($3,243,000)  of debt related to
the acquisition of Xantia due to the former stockholders of Xantia. The debt is payable over seven years and bears interest at 3.5%
per annum.

The Company has entered into an interest rate cap agreement to provide interest
rate  protection on $5.0 million of debt to the maximum rate of 7.0% (before  applicable  margin) expiring in November 2004. Also,
the Company has entered into an interest rate collar  agreement to provide  interest rate protection on $3.5 million of debt in the
range of 5.5% to 7.0% (before  applicable  margin)  expiring  in June 2006.  At  December  31,  2001,  the fair value of these
agreements  was a liability of approximately $89,000.

Scheduled principal payments due on debt in the next five years are as follows
(in thousands):

2002
$  1,2642003
2,3392004
2,1122005
5682006 and thereafter
1,389F-16
22. INCOME TAXES
The income tax provision (benefit) for the years ended December 31, 2001, 2000
and 1999, consists of the following:

December 31,2001
2000
1999(in thousands)CurrentFederal
$ (469)
$ 632
$1,681Foreign
389
99
State
187
305
285Total
current
107
1,036
1,966DeferredFederal
(864)
492
(600)Foreign
73

State
340
51
165Total
deferred
(451)
543
(435)Provision (benefit) for income taxes
($344)
$1,579
$1,531The significant components of the deferred tax asset as of December 31, 2001
and 2000 are as follows:

2001
2000(in thousands)Sales and marketing reserves
$ 972
$ 945Inventory related reserves
824
590Depreciation and amortization
373
526Capital gains and losses
638
194Accrued employee benefits
248
270Financial instruments
(361)
Other, net
114
4982,808
3,023Valuation allowance
(144)
(461)Total
$2,664
$2,562At December 31, 2001 and 2000, a valuation  allowance of $144,000 and $461,000,
respectively, had been recorded against a portion of the  Company's  deferred tax assets related to state and capital loss
carryfowards.

A  reconciliation  of the income tax  provision  (benefit)  calculated at the
federal  income tax statutory  rate and the Company's effective income tax rate for 2001, 2000 and 1999 is as follows:

2001
2000
1999Statutory federal income tax rate
(34.0%)
34.0%
34.0%State income taxes, net of         
                  federal income tax
benefit
20.9
6.3
11.4Foreign taxes
13.1
4.9
19.7Valuation allowance
(9.8)
(4.5)
38.9Other
(0.8)
3.9
(11.3)Effective income tax rate
(10.6%)
44.6%
92.7%F-17
23. COMPREHENSIVE
INCOME

Accumulated other comprehensive income (loss) activity for the three years
ended December 31, 2001 is as follows:

Foreign CurrencyTranslation
FinancialInstrument
Unrealized Gain(Loss) OnMarketableSecurities
AccumulatedOtherComprehensiveIncome
(Loss)(in thousands)December 31, 1998
($426)

$603
$1771999 activity
233

(811)
(578)December 31, 1999
(193)

(208)
(401)2000 activity
(655)

2,290
1,635December 31, 2000
(848)

2,082
1,2342001 activity
(245)
543
(2,082)
(1,784)December 31, 2001
($1,093)
$543
$    
($550)
24. EMPLOYEE BENEFITS

The Company  maintains a  non-contributory  defined benefit pension plan.
Benefits are based on years of service and the employee's  compensation  during the five highest  consecutive  compensation  years.
Costs under the plan are accrued and funded on the basis of accepted actuarial methods.  Total pension expense approximated
$483,000,  $342,000 and $405,000, for the years ended  December  31,  2001,  2000 and 1999,  respectively.  The net  periodic
pension cost of Swiss Army's pension plan in 2001, 2000 and 1999 includes the following components:

2001
2000
1999(in thousands)Service cost  benefits earned during the period
$ 393
$ 326
$367Interest cost on projected benefit obligation
234
162
182Expected return on assets
(148)
(120)
(141)Amortization of net transition asset
(14)
(14)
(14)Amortization of unrecognized  prior service cost
(12)
(12)
(13)Amortization of net loss
30

24Net periodic pension cost
$483
$342
$405F-18

The changes in benefit obligations and plan assets and the funded status
reconciliation as of December 31, 2001 and 2000 for Swiss Army's pension plan are shown below:

2001
2000(in thousands)Change in Benefit ObligationBenefit obligation, January 1
$3,124
$2,618Service cost
393
326Interest cost
234
162Actuarial (gain) loss
249
116Benefits paid  expected
(59)
(98)Benefit obligation, December 31
$3,941
$3,124Change in Plan AssetsFair value of plan assets, January 1
$1,775
$1,430Actual return on plan assets
12
90Company contributions
386
307Benefits paid - actual
(263)
(52)Fair value of plan assets December 31
$1,910
$1,775Funded Status ReconciliationFunded status, December 31
($2,031)
($1,349)Unrecognized net acturial loss
1,119
560Unrecognized prior service costs
(205)
(217)Unrecognized transition amount
(14)
(28)Accrued pension cost, December 31
$1,131
$1,034Rates used in determining the actuarial present value of the projected benefit
obligation are as follows:

December 31,2001
2000Discount rate
7.00%
7.00%Rate of increase in future compensation levels
4.50%
4.50%Expected long-term rate of return on plan assets
8.00%
8.00%Plan assets consist principally of investments in fixed income securities,
short-term investments and common stock.

The Company  maintains a 401(k) employee benefit plan pursuant to which
participants can defer a certain  percentage of their annual  compensation in order to receive certain  benefits upon  retirement,
death,  disability or termination of employment.  The Company  can elect to make a matching  contribution  of up to 6% of annual
eligible  compensation  per employee.  The determination to make a matching  contribution is made at the beginning of each fiscal
year. During 2001, 2000 and 1999, the Company incurred expenses of approximately $151,000,  $168,000, and $173,000,  respectively,
related to this plan.

The Company offers no other post retirement benefits.
25. STOCKHOLDERS'
EQUITY

The Swiss Army Brands,  Inc. 1996 Stock Option Plan provides for the grant of
options to employees,  including  officers of the Company,  and members of the Board of Directors.  Under this plan and previous
stock option plans, 498,343 shares of common  stock are reserved  and  available  for  issuance.  Options  expire no later than ten
years after the date of grant.  Option  prices equal at least 100% of the fair market  value of Swiss Army's  common stock on the
date of grant. The vesting of options is determined  by the Stock Option and  Compensation  Committee of the Board of Directors,
which administers the plan, and for options  outstanding as of December 31, 2001,  vesting ranges from  immediately upon grant to
three years.

F-19
The following table summarizes stock option plan and warrant activity for the
three years ended December 31, 2001:
Number        
                  of Shares
Option PriceOutstanding at December 31, 1998
2,515,751Granted
3,000
$8.75Exercised
(10,000)
$5.38Cancelled
(274,501)
$8.75  $14.00Outstanding at December 31, 1999
2,234,250
$5.25  $14.50Granted  (A)
727,000
$4.47  $6.38Cancelled
(201,500)
$6.38  $14.00Outstanding at December 31, 2000
2,759,750
$4.47  $14.50Cancelled
(375,750)
$6.38  $14.00Outstanding at December 31, 2001
2,384,000
$6.38  $14.50Of the options and warrants  outstanding at December 31, 2001,  2,133,500 are
exercisable  at a weighted  average option price of $10.67 per share.

(A) In 2000, the Company issued 727,000  options to purchase  common stock at a
weighted  average price of $6.30 per share to various  employees,  directors  and  officers.  Of these  options,  105,000  options
were granted to directors  and are exercisable  immediately,  and 622,000  options were granted to employees and officers and are
exercisable  in four equal installments over three years starting with the grant date.

The  weighted-average  fair value of the stock options  granted in 2000 and
1999 was  approximately  $4.04 and $4.81, respectively.  The weighted-average  fair value of the options was estimated using the
Black-Scholes  option-pricing model with the  following  assumptions:  expected  volatility  of 61% in 2000 and 51% in 1999;
expected  life of options of six years; dividend yield of 0%; and risk free interest rate of 6.68% in 2000 and 5.26% in 1999,
respectively.

The Company  accounts for stock options and warrants under  Accounting
Principles  Board Opinion No. 25,  "Accounting for Stock Issued to Employees",  under which no compensation  cost has been
recognized.  Had  compensation  cost for the three years ending December 31, 2001 been  determined  under the principles of SFAS No.
123, the Company's net income (loss) and earnings per share would have been the following:

2001
2000
1999(in thousands, except per share data)Net Income (loss)
As reported:
($3,152)
$2,013
$120Pro forma:
($3,756)
$1,201
($348)Earnings per share
As reported:Basic
($0.39)
$0.25
$0.02Diluted
($0.39)
$0.25
$0.01Pro forma:Basic
($0.46)
$0.15
($0.04)Diluted
($0.46)
$0.15
($0.04)The effects of applying  SFAS No. 123 in this pro forma  disclosure  are not
indicative  of future  amounts as SFAS No. 123 does not apply to stock options and warrants  granted prior to 1995, and  additional
options and warrants may be granted in future years.

F-20

In September  1998,  the Company  issued  25,000 shares of its common stock to
certain  employees  and officers.  The common stock vested in four equal  installments  over three years  beginning with the grant
date. The Company  recognized  $32,000, $58,000 and $73,000 for the years ended  December 31,  2001,  2000 and 1999,  respectively,
in stock  compensation  expense related to this grant.
26. COMMITMENTS AND
CONTINGENCIES

The Company has minimum purchase requirements under an agreement with
Victorinox (see Note 6).

At December 31, 2001,  minimum rental payment  commitments for office,
warehouse,  manufacturing and retail space leased by the Company under operating leases were, as follows (in thousands):

2002
$  2,0952003
2,1492004
2,1952005
2,2392006 and thereafter
7,739During the years ended  December  31,  2001,  2000 and 1999,  rent  expense was
approximately  $1,922,000,  $1,508,000  and $1,487,000, respectively.

At December  31,  2001,  the Company has open  contracts to purchase
approximately  65.7 million  Swiss francs in 2002 as a hedge at a weighed average rate of $1.698 Swiss franc/dollar.

The Company  maintains  split dollar life insurance  agreements  covering two
members of the Board of Directors.  Primarily, these  policies can only be canceled upon the mutual  agreement of the Company and
the insured.  However,  if these policies were canceled at December 31, 2001,  the Company  would receive in cash an amount equal to
the lesser of the cash  surrender value or cumulative premiums paid to date on these policies,  which was approximately  $7,855,000.
Under the terms of these life insurance  policies,  the Company will make approximate  future premium  payments,  if the policies
remain in force, as follows (in thousands):

2002
$  4722003
4722004
4242005
4102006 and thereafter
1,224In 1993,  the  Company's  Board of  Directors  adopted a  charitable  insurance
program  that enables the Company to make a commitment  to the  Victorinox-Swiss  Army  Knife  Foundation  (the  "Foundation"),  a
foundation  that  engages in various charitable  activities  including the promotion of athletic events for underprivileged  urban
youth. Under the program,  the Company  owns, is the  beneficiary  of and pays all the premiums for life  insurance  policies on the
lives of certain Board members.  Pursuant to the program,  upon the death of each Director,  the Company retains a share of the
insurance  proceeds equal to the  cumulative  premiums paid by the Company for the policy on that  Director's  life.  One half of
any additional insurance  proceeds  received upon the death of an insured Director will be used to fulfill  charitable  pledges made
to the Foundation.  The remaining half of the additional  proceeds will be used to fulfill  charitable  pledges  recommended by the
individual  Directors.  Swiss Army is  generally  bound to continue to pay all premiums on the policies for the lives of the insured
Directors or, in the case of the Chairman of the Executive Committee, as long as he is an officer or a board proceeds member or
agrees to serve as a consultant to the will make

F-21

Company,  the Company approximate future premium payments related to these
programs as follows (in thousands):

2002
$  6042003
6042004
6042005
6042006 and thereafter
7,069Under  existing federal tax laws,  the receipt by the Company of the from an
insurance  policy upon the death of a director  would not result in regular  taxable  income to the Company;  however,  the Company
may be subject to  alternative minimum tax on a portion of the receipts.  When the Company makes cash  contributions  to a
designated  charity,  it will be entitled to a tax deduction equivalent to the sum of those  contributions.  The extent of the
utilization  of this  deduction in that year will depend upon the Company's taxable  income,  since the Company is  entitled to
claim as  charitable  deductions  only 10% of its taxable  income in any year.  However, these deductions may be carried forward for
tax purposes for a period of five years.

Based upon estimates  prepared by the Company's  insurance  agent,  the
anticipated  earnings impact related to the policies for both the Foundation and the two members of the Board of Directors is not
expected to be significant.

In addition,  the Company is involved in certain legal matters  relating to
trademark,  patent,  and other general  business matters.  Management  believes  that the  outcome of these  legal  matters will not
have a material  adverse  effect on the financial position and results of operations of the Company.
27. SEGMENT REPORTING

The  Company is engaged in one line of business - the  importation,
manufacture  and  distribution  of  consumer  products, including watches,  pocketknives,  cutlery,  multi-tools and sunglasses.
Summarized  financial  information  concerning the Company's  reportable  segment and geographic areas is shown in the following
table. The "Other" column includes  corporate related items.

United States
Canada
International
Other
Total2001Revenues
$99,112
$7,685
$7,832
$  
    
$114,629Operating    income (loss)
15,154
874
1,050
(20,818)
(3,740)Identifiable    assets
61,109
3,651
18,947
30,427
114,1342000Revenues
$114,314
$8,419
$9,289
$  
    
$132,022Operating    income (loss)
22,567
827
(98)
(20,057)
3,239Identifiable    assets
58,014
4,106
13,941
48,388
124,4491999Revenues
$114,856
$8,573
$6,117
$  
    
$129,546Operating    income (loss)
26,218
1,168
187
(22,938)
4,635Identifiable    assets
58,045
3,557
3,376
42,626
107,604F-22
28. QUARTERLY
FINANCIAL DATA (Unaudited)

|                                     | Quarter Ended |        
|------------------------------------ | ------------- | -------
|
|
|2001                                 |               |        
|Net revenues                         | $21,273       | $27,577
|Gross profit                         | 7,986         | 11,616 
|Income (loss) before    income taxes | (3,892)       | (189)  
|Net income (loss)                    | (2,259)       | (74)   
|Earnings per share - basic           | ($0.27)       | ($0.01)
|Earnings per share - diluted         | ($0.27)       | ($0.01)

|                              | Quarter Ended |        
|----------------------------- | ------------- | -------
|
|
|2000                          |               |        
|Net revenues                  | $25,540       | $29,385
|Gross profit                  | 9,724         | 11,741 
|Income before    income taxes | 487           | 276    
|Net income                    | 276           | 155    
|Earnings per share - basic    | $0.03         | $0.02  
|Earnings per share - diluted  | $0.03         | $0.02  

F-23

SWISS ARMY BRANDS, INC. AND SUBSIDIARIES



SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS



FOR THE YEARS ENDED DECEMBER 31, 2001, 2000 AND 1999



(in thousands)

|Column A                        | Column B | Column C | Column D | Column E | 
|------------------------------- | -------- | -------- | -------- | -------- | 
|
|Year Ended December 31, 2001:   |          |          |          |          | 
|Allowance for Doubtful Accounts | $1,260   | $ 50     | $       | $1,310   | 
|Inventory Reserve               | $1,171   | $ 494    | $       | $1,665   | 
|Year Ended December 31, 2000:   |          |          |          |          | 
|Allowance for Doubtful Accounts | $1,060   | $ 200    | $       | $1,260   | 
|Inventory Reserve               | $1,215   | $       | ($44)    | $1,171   | 
|Year Ended December 31, 1999:   |          |          |          |          | 
|Allowance for Doubtful Accounts | $975     | $ 85     | $       | $1,060   | 
|Inventory Reserve               | $1,163   | 51       | $       | $1,215   | 

F-24

Exhibits.

Exhibit Title         
                     
                     
                     
                     
                     
              Exhibit No.

1. Reports on Form 8-K

None

1. (A)  Articles of  Incorporation,  as amended,  incorporated by reference to
the Exhibits to Quarterly Report on Form 10-Q for the fiscal year ended June 30, 1997.(B) Amended-and  restated  by-laws of Swiss Army  Brands,  Inc.  as of
February  15,  1995,  as further  amended as of March 1, 2001, incorporated by reference to the Exhibits to Annual Report on Form
10-K for the year ended December 31, 2000.

(10)  Material Contracts

1. Letter  Agreement  dated December 12, 1983 between  Victorinox  Cutlery
Company and The Forschner  Group.,  Inc.,  incorporated by reference to the    Exhibits to Annual Report on Form 10-K for the fiscal
year ended December 31, 1994.
2. Mutual Agreement dated as of October 20, 1986 between  Victorinox  Cutlery
Company and The Forschner Group,  Inc.,  incorporated by reference to the    Exhibits to Annual Report on Form 10-K for the fiscal
year ended December 31, 1994.
3. Letter Agreement dated as of October 20, 1986 between  Victorinox  Cutlery
Company and The Forschner Group,  Inc.,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
4. Life insurance  agreement dated as of December 7, 1991 between The Forschner
Group,  Inc. and Stanley R. Rawn, Jr., as Trustee u/a dtd.  December 9, 1986 between Louis Marx, Jr. and Stanley R. Rawn,  Jr.,
incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
5. License Agreement dated June 30, 1992 between The Forschner Group, In., and
Precise Imports  Corporation,  incorporated by reference to the Exhibits to Annual report on Form 10-K for the Fiscal year ended
December 31, 1992.
6. Life insurance  agreement dated December 24, 1992 between The Forschner Group,
Inc. and Louis Marx, Jr., as Trustee u/a dtd.,  as of October 24, 1988  between  Stanley R. Rawn,  Jr. and Barbara  Rawn and Louis
Marx,  Jr.,  incorporated  by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year ended December 31, 1992.
7. Mutual Agreement dated April 6, 1992 between The Forschner Group,  Inc. and
Victorinox  Cutlery Company,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year ended
December 31, 1992.
8. 1993 Stock Option Plan,  incorporated by reference to the Exhibits to Annual
Report on Form 10-K for the fiscal year ended December 31, 1993.19
9. Lease dated May 3, 1993 between One Research Drive Associates Limited
Partnership and The Forschner Group, Inc.,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal
year ended December 31, 1993.
10. Life  insurance  agreement  dated as of December  24, 1992  between The
Forschner  Group,  Inc.  and Louis Marx,  Jr., incorporated by reference to the Exhibits to Annual Report on Form 10-K for the
fiscal year ended December 31, 1993.
11. Life insurance  agreement dated as of September 24, 1993 between The Forschner
Group,  Inc. and Louis Marx,  Jr.,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
12. Life insurance  agreement as of September 24, 1993 between The Forschner
Group,  Inc. and James D. Rawn, as Trustee u/a dtd. as of June 4, 1992 between Louis Marx, Jr., Grantor and James D. Rawn, Trustee,
incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year ended December 31, 1993.
13. Mutual  Agreement  dated  December 21, 1993 between The Forschner  Group, Inc.
and Victorinox  Cutlery  Company,  incorporated  by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.
14. 1994 Stock Option Plan,  incorporated by reference to the Exhibits to
Registration Statement on Form S-8, No. 33-87078 filed by The Forschner Group, Inc.
15. Non-Incentive  Stock  Option  Agreement  dated as of July 29, 1994  between
The  Forschner  Group,  Inc.  and Brae  Group,  Inc., incorporated  by reference to the Exhibits to Quarterly  Report on Form 10-Q
for the fiscal quarter ended September 30, 1994.
16. Consulting  Agreement dated as of December 7, 1991 by and between The
Forschner  Group,  Inc. and Louis Marx, Jr.,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal
year ended December 31, 1994.
17. First Amendment to Lease dated June 16, 1994 between The Forschner Group, Inc.
and Pefran Trap Falls  Associates,  incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year
ended December 31, 1994.
18. Life  insurance  agreement  dated as of April 15, 1994 between The  Forschner
Group,  Inc. and Lawrence T. Warble,  as Trustee u/a dtd.  as of March 21,  1994  between  Stanley R. Rawn,  Jr.,  Grantor  and
Lawrence  T.  Warble,  Trustee, incorporated by reference to the Exhibits to Annual Report on Form 10-K for the fiscal year ended
December 31, 1994.
19. 1996 Stock Option Plan incorporated by reference to the Exhibits on Form 10-K
for the fiscal year ended December 31, 1996.
20. Trademark  Agreement  dated as of  December  18, 1996 by and between the
Swiss Confederation  represented  by the Federal  Military Department  represented by the Federal Defense Production Group and Swiss
Army Brands,  Inc.  incorporated by reference to the Exhibits on Form 10-K for the fiscal year ended December 31, 1996.*
21. Letter Agreement dated September 27, 1996 between Swiss Army Brands, Inc. and
Victorinox Cutlery Company.20
22. Asset Purchase Agreement dated April 16, 1999 by and among Swiss Army Brands,
Inc., Bear Cutlery,  Inc., and Bear MGC Cutlery, Inc. and its Shareholders incorporated by reference on Form 8-K dated April 16,
1999.
23. Amended and Restated Trademark License Agreement,  dated as of
February 17,2000,  between the Registrant and TRG Accessories,  LLC, incorporated by reference to Exhibit 10.1 to the Registrant's
Form 10-Q for the quarter ended March 31, 2000.*
24. Share Purchase Agreement, dated as of June 23, 2000 (the "Xantia Agreement"),
by and among the Company, Swiss Army Brands CH, Inc. (the "Buyer") and Michel and Irene Thievent (collectively,  the "Sellers") with
respect to Xantia S.A.; incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on
August 7, 2000.
25. Amendment  to the  Xantia  Agreement,  dated  as of July  10,  2000,  by and
among  the the  Buyer,  and the  Sellers; incorporated by reference to Exhibit 2.2 to the Company's Current Report on Form 8-K filed
on August 7, 2000.
26. Second Amendment to the Xantia Agreement,  dated as of July 24, 2000, by and
among the Company,  the Buyer, the Sellers and  Victorinox  AG;  incorporated  by reference to Exhibit 2.3 to the  Company's Current
Report on Form 8-K filed on August 7, 2000.
27. Trademark  License  Agreement,  dated as of October 13,  2000  between  the
Registrant  and  Tropical  Sportswear  International Corporation,  incorporated  by reference to the Exhibits to Annual Report on
Form 10-K for the year ended  December 31, 2000.*
28. Lease agreement dated June 27, 2001 between Swiss Army Retail,  Inc. and 130
Prince LLC  incorporated by reference to the Exhibit 10.1 to the Registrant's Form 10-Q for the quarter ended September 30, 2001.
29. Consulting and Severance Agreement dated April 1, 2001 between Swiss Army
Brands, Inc. and J. Merrick Taggart.
30. The 2001 Amended and Restated  Commercial Loan Agreement dated September 28,
2001 between Fleet National Bank and Swiss Army Brands,  Inc. (A list of exhibits and  schedules to the  Agreement  is set forth
therein.  The Company  agrees to furnish to the Commission  supplementally,  upon request,  a copy of any such exhibit or schedules
not otherwise  filed herewith.)

* Confidential treatment has been received for portions of this exhibit.

(21) Subsidiaries of Registrant.         
                     
                     
                     
                     
                     
            
21

(23) Consent of Arthur Andersen LLP.         
                     
                     
                     
                     
                     
23

(99) Letter responsive to Temporary Note 3T to Article of Regulation S-X.

21

# SIGNATURES

Pursuant to the  requirements  of Section 13 or 15(d) 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.             
                      
                      
                      
                      
         (Registrant)

/s/ Peter W. Gilson
                     
                      
                      
                      
                      
       Peter W. Gilson
                     
                      
                      
                      
                      
       Chief Executive Officer and Director

/s/ A. Jeffrey Turner
                     
                      
                      
                      
                      
       A. Jeffrey Turner
                     
                      
                      
                      
                      
       President and Director

/s/ Thomas M. Lupinski
                     
                      
                      
                      
                      
       Thomas M. Lupinski
                     
                      
                      
                      
                      
       Senior Vice President, Chief Financial
                     
                      
                      
                      
                      
       Officer, Secretary and Treasurer

/s/ Marc A. Gold
                     
                      
                      
                      
                      
       Marc A. Gold
                     
                      
                      
                      
                      
       Vice President and Controller

Date:  March 29, 2002

22

Pursuant to the  requirements of the Securities  Exchange Act of 1934,  this
report has been signed by the following  persons on behalf of the Registrant and in the capacities and on the dates indicated.

/s/ A. Clinton Allen        
                      
                      
                      
                      
             
March 29, 2002Clarke H. BaileyDirector

/s/ Clarke H. Bailey        
                      
                      
                      
                      
             
March 29, 2002A. Clinton AllenDirector

/s/ Herbert M. Friedman        
                      
                      
                      
                      
    
March 29, 2002Herbert M. FriedmanDirector

/s/ Peter W. Gilson        
                      
                      
                      
                      
             
March 29, 2002Peter W. GilsonChief Executive Officer and Director

/s/ Louis Marx, Jr.        
                      
                      
                      
                      
               
March 29, 2002Louis Marx, Jr.Director

/s/ Robert S. Prather, Jr        
                      
                      
                      
                      
     
March 29, 2002Robert S. Prather, Jr.Director

/s/ Stanley R. Rawn, Jr        
                      
                      
                      
                      
     
March 29, 2002Stanley R. Rawn, Jr.Director

/s/ John Spencer        
                      
                      
                      
                      
                   
March 29, 2002John SpencerDirector

/s/ John V. Tunney        
                      
                      
                      
                      
              
March 29, 2002John V. TunneyDirector

/s/ A. Jeffrey Turner        
                      
                      
                      
                      
             
March 29, 2002A. Jeffrey TurnerPresident and Director

23