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, 1997 or

   [ ]   Transition  Report  Pursuant  to Section 13 or 15(d) of The  Securities
         Exchange Act Of 1934

   Commission File Number 0-21952
                                   ----------

                          AMERICAN SAFETY RAZOR COMPANY
             (Exact name of registrant as specified in its charter)

                 Delaware                        54-1050207
        (State or other jurisdiction of        (IRS Employer
        incorporation or organization)         Identification No.)

                                  P.O. Box 500
                         Strauton, Virginia 24402-0500
          (Address of principal executive offices, including zip code)

                                   ----------

               Registrant's telephone number, including area code:
                                 (540) 248-8000

                                   ----------


  Securities registered pursuant to Section 12(b) of the Act:  None

  Securities registered pursuant to Section 12(g) of the Act:  Common Stock, par
                                                               value $.01 per
                                                               share

                                   ----------

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

         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
amendment to this Form 10-K. [X]

         As of March 9, 1998, 12,106,449 shares of the Registrant's Common Stock
were outstanding.  The aggregate market value of the Registrant's  Common Stock,
which  is  the  only  class  of  voting  stock  of  the   Registrant,   held  by
non-affiliates  was approximately  $212,192,139 based on the closing sales price
of March 9, 1998.  Determination  of affiliate  status for this purpose is not a
determination of affiliate status for any other purpose.

                       DOCUMENT INCORPORATED BY REFERENCE

         Portions of the Registrant's  definitive proxy statement for the Annual
Meeting  of  Shareholders  to be held  on May  19,  1998,  are  incorporated  by
reference into Part III of this Report on Form 10-K.


<PAGE>



                                Table of Contents

                                     Part I

                                                                          Page

Item 1.    Business....................................................      1

           General.....................................................      1
           Products....................................................      3
           Sales and Marketing.........................................      4
           Manufacturing...............................................      5
           Raw Materials...............................................      5
           Competition.................................................      6
           Other Factors Affecting the Business of the Company.........      6

Item 2.    Properties..................................................      9

Item 3.    Legal Proceedings...........................................     10

Item 4.    Submission of Matters to a Vote of Security Holders.........     10

           Executive Officers of the Registrant........................     10

                                     Part II

Item 5.    Market for Registrant's Common Equity and Related
           Stockholder Matters.........................................     11

Item 6.    Selected Financial Data.....................................     12

Item 7.    Management's Discussion and Analysis of Financial
           Condition and Results of Operations.........................     13

Item 8.    Financial Statements and Supplementary Data.................     17

Item 9.    Changes in and Disagreements with Accountants
           on Accounting and Financial Disclosure......................     17

                                    Part III

Item 10.   Directors and Executive Officers of the Registrant..........     18

Item 11.   Executive Compensation......................................     18

Item 12.   Security Ownership of Certain Beneficial Owners
           and Management..............................................     18

Item 13.   Certain Relationships and Related Transactions..............     18

                                     Part IV

Item 14.   Exhibits, Financial Statement Schedule and Reports
           on Form 8-K.................................................     18

-----------------------
Market  share and  product  distribution  data shown  throughout  were  obtained
through  Information  Resources  Incorporated,  a nationally  recognized  market
research  firm based in Chicago,  Illinois,  which  provides  the  Company  with
scanner based product  movement  data from U.S.  grocery  stores with annual all
commodity  volume of at least $2  million  and data from  drug  stores  and mass
merchandisers in major U.S. markets.

<PAGE>
                                     PART I

ITEM 1 - Business

General

         American  Safety Razor Company  (together  with its  subsidiaries,  the
"Company"),  established  in  1875,  is a  leading  designer,  manufacturer  and
marketer of high quality store, value and premium-brand  consumer products.  The
Company's  principal  products consist of razors and blades,  sales of which are
broken into three broad categories, shaving razors and blades, bladed hand tools
and blades,  and  specialty  industrial  and medical  blades.  The Company  also
manufactures  cotton and foot care  products  and custom bar soaps.  The Company
distributes  its  products to the retail and  professional  trades in the United
States and in selected international markets.

         The  Company  is  the  largest   manufacturer  in  terms  of  units  of
store-brand and value-brand  shaving razors and blades in the United States, and
has the fourth  largest  domestic  unit  volume  share of the  overall  domestic
shaving razor and blade market (based on market  research data for 1997 prepared
by an independent  market research firm). Total shaving razor and blade products
which  generated  1997 net  sales of $120.8  million  provide  consumers  with a
value-priced alternative to more heavily advertised premium national brands. The
Company's  shaving razor and blade products are sold both under a retailer's own
store  label and under the  Company's  value-brand  names  such as  Personna(R),
GEM(R), Flicker(R),  PFB(R), Treet(R), Blue Star(R), Pal(R), MBC(TM), Royal(TM),
and premium-brand names such as Revlon Perfect Finish(TM),  Bump Fighter(R), and
Burma Shave(R).  The Company  provides both total shaving systems and components
which can be used alone or with most other nationally  recognized premium priced
brands.  These  products are sold to major national  mass-merchandise,  drug and
supermarket chains. The Company believes that its products have achieved product
quality  equivalency by using  substantially the same materials and processes as
those used by  manufacturers  of  competing  premium  brand-name  products.  The
Company attributes its leadership in the store-brand and value-brand  markets to
its  long  history  of  dedication  to  quality,   customer  service,   low-cost
manufacturing and competitive pricing.

         The Company is also the largest  manufacturer in terms of units of both
premium  and  value-priced  bladed  hand  tools and  blades  (based on  publicly
available  information and Company estimates) which are sold primarily under its
Personna(R),  American Line(TM) and Ardell(TM) brand names. These products which
generated 1997 net sales of $45.4 million, capitalize on the Company's precision
shaving blade  technology and include such items as single edge blades,  utility
blades and knives,  carpet blades and knives and paint  scrapers.  The Company's
bladed hand tools and blades are sold to  consumers  and  professionals  through
home-improvement  centers,  retail  paint  chains  and  hardware  stores  and to
professionals through wholesalers, distributors and specialty supply jobbers.

         The Company has  developed a line of specialty  industrial  and medical
blades. The specialty industrial blades perform many of the cutting, slicing and
chopping functions involved in manufacturing  processes employed by a variety of
industries including food-processing, fiber cutting, automotive and printing. In
addition,  the Company  manufactures  and  markets  carbon and  stainless  steel
surgical  blades,  disposable  scalpels  and  surgical  prep blades for the U.S.
health care markets  under the  Personna(R)  brand name to  customers  including
Allegiance  Health  Care,  General  Medical  and Owens & Minor.  In 1997,  these
products generated net sales of $16.4 million.

         The Company intends to strengthen its relationships  with retailers who
carry  store-brand and value-brand  consumer products by expanding its offerings
of personal care consumer products.  Consistent with this strategy,  the Company
acquired  Megas  Beauty  Care,  Inc.  on June 10,  1994,  and  Sterile  Products
Corporation,  d.b.a.  Absorbent Cotton Company ("ACCO") on March 3, 1995. During
March 1996,  Megas Beauty  Care,  Inc. was merged into ACCO and ACCO changed its
name to Megas Beauty Care, Inc. ("Megas"). In addition, on April 22, 1997, Megas
purchased certain assets of the American White Cross Cotton Business ("AWC") for
net consideration of approximately  $10.3 million including  acquisition related
expenses.  Since the date of acquisition through December 31, 1997, AWC's cotton
products generated net sales of $21.1 million.  Megas manufactures cotton swabs,
cotton balls,  puffs,  cosmetic pads,  pharmaceutical  and beauty coils,  pocket
tissue,  and foot  care  products.  As a  result,  the  Company  believes  it is
currently one of the largest  store-brand  manufacturers of cotton and foot care
products in the United States.  For 1997,  Megas had combined net sales of $80.4
million. The products of Megas are sold both under retailers'  store-brand names
as well as the Company's own value-priced Megas(R),  ACCO(R),  Cottonette(R) and
Crystal(R) brands.

         The  Company  believes  it  is  a  leading  domestic   manufacturer  of
cosmetic/skin  care, bath,  pharmaceutical and specialty custom bar soaps. These
products,  which  generated  1997  net  sales  of $33.6  million,  are  marketed
primarily under customers' store

                                        1

<PAGE>



brands  and  also  under  the   Company's   brand  names  such  as   Omnibus(R),
Centurion(R),  Kensington(R),  Lavender  &  Old  Lace(R),  Satinet  Rosewater  &
Glycerine(R), Sandalwood(R) and Fashion IV(R).


Operating Strategy

         The Company's operating strategy is founded in four key areas:

        o   Expand  offerings  of  store-brand  and  value-brand  personal  care
            consumer  products  through  strategic  acquisitions.   The  Company
            believes that store-brand and value-brand  products  generally offer
            higher  margins to retailers  and  significant  savings to consumers
            over  premium-brand  products.  Consistent  with this strategy,  the
            Company  acquired  Megas  Beauty Care,  Inc. on June 10,  1994,  and
            expanded  its product  offerings  to include  cotton  balls,  swabs,
            cosmetic squares and rounds as well as foot care products. Follow on
            acquisitions  of ACCO on March 3, 1995,  and AWC on April 22,  1997,
            further  solidified  the  Company's  position  as one of the largest
            store-brand and value-brand  cotton personal care products supplier.
            In  addition,  these  acquisitions  expanded  the  Company's  cotton
            product  selection to include cotton beauty coil and  pharmaceutical
            coil.  To  continue  to  increase  its  sales  of  store-brand   and
            value-brand  products,  the Company is focusing  on  developing  its
            partnerships   with  major   retailers,   developing   product  line
            extensions  that build on the Company's  reputation for high quality
            products,  expanding its package design  capabilities  and marketing
            support,  and  expanding  its existing  distribution  channels.  The
            Company intends to leverage its existing distribution  strengths and
            relationships  with  retailers  who carry  store-brand  products  to
            obtain  incremental  distribution  for an expanded array of personal
            care consumer products.  This strategy has led in part to the growth
            in sales of the Company's  store-brand and value-brand shaving razor
            and  blade  products  to  $120.8  million  in 1997 and  sales of the
            Company's  store-brand and value-brand cotton and foot care products
            to $80.4 million in 1997.

        o   Increase  penetration  of  markets  currently  served  and enter new
            markets.  The Company's  efforts to increase market  penetration are
            focused on international markets for shaving razors and blades which
            are  estimated to be over three times the size of the United  States
            market.   The  Company   intends  to   continue   to  increase   the
            international  sales of its shaving razor and blade products through
            its existing strategy of developing  distributors in selected target
            markets,  expanding its sales base in  established  markets  through
            local sales offices and improving its  cost-competitiveness  in more
            mature markets through local manufacturing  activities and increased
            local promotion. Consistent with this strategy, the Company acquired
            Bond on March 29, 1996,  which has a manufacturing  facility located
            in Nazareth Illit,  Israel.  The Company's  international  net sales
            (including  export  sales and sales  within  Puerto Rico) were $54.0
            million in 1997.

        o   Develop new  products and product  line  extensions.  The Company is
            focusing its product  development  efforts on designing new products
            and product line extensions  that build on the Company's  reputation
            for high quality products,  packaging and service, and which utilize
            the Company's existing  distribution  channels.  Recent examples are
            the Company's  introduction  of a long handle twin blade  disposable
            razor  designed to compete  with  Gillette's  Custom  Plus(TM),  the
            Revlon  Perfect  Finish(TM)shaving  system for women which  combines
            innovation  and  functionality  with  the  Revlon(R)brand   name  to
            revolutionize  the way women shave,  the Company's  patented  moving
            blade cartridge,  a shaving system sold under the MBC(TM)trade  name
            which has its own handle and fits the  Sensor(R)handle  manufactured
            by The Gillette Company  ("Gillette"),  the introduction of the Lady
            MBC(TM)shaving system, the addition of Burma Shave(R)line extensions
            including a shaving  mug and soap set, a shaving  system with refill
            cartridges,  shaving cream and aftershave skin conditioner,  and the
            Bump  Fighter(R)shaving  system, with an accessory line, including a
            shaving gel, cleanser,  beard relaxer,  skin conditioner,  treatment
            mask and aftershave skin  conditioner,  designed to meet the shaving
            needs of African-American  men. The Company sells its shaving razors
            and  blades  under a number  of  nationally  recognized  names.  The
            Company  believes that it can increase  sales of its shaving  razors
            and blades by introducing  additional niche premium brands which can
            be sold through its existing  sales and  distribution  channels.  By
            concentrating on niche markets, the Company believes it will be able
            to compete more effectively with its larger competitors.

            The  Company is also  expanding  sales of its  consumer  bladed hand
            tools and blades to home-improvement  centers and hardware chains by
            introducing new products.  Several large, national  home-improvement
            centers and hardware

                                        2

<PAGE>



            chains  offer the  Company's  bladed hand tools and blades as one of
            their featured lines in this class of merchandise.

        o   Reduce  operating  costs and improve  productivity.  The Company has
            implemented  several programs to reduce operating costs and increase
            productivity  and efficiency.  The Company operates  efficient,  low
            cost  manufacturing and packaging  operations for shaving razors and
            blades in  Obregon,  Mexico,  and  Knoxville,  Tennessee,  which has
            resulted  in  significant  savings to the  Company,  primarily  as a
            result  of  lower  payroll  costs.  In  addition,   the  Company  is
            continuing  to invest  capital  resources  to improve  productivity,
            efficiency and operating  capabilities  as evidenced by (i) the late
            1996 expansion of manufacturing  capacity in Obregon,  Mexico,  (ii)
            the   completion  in  1996  of  the  expansion  of  synthetic   soap
            manufacturing  capabilities  in  a  new  manufacturing  facility  in
            Columbus,  Indiana, (iii) the expansion of manufacturing capacity in
            the  Knoxville,  Tennessee,  facility  and moving the shaving  blade
            grinders  into this facility  from the Verona,  Virginia,  facility,
            (iv) the integration in 1997 of the industrial blade business into a
            single   facility  in  Verona,   Virginia,   closing   manufacturing
            facilities in Union and Maplewood,  New Jersey,  and (v) the opening
            of a new  cotton  facility  in  Nogales,  Mexico,  and  the  current
            expansion  program  of  doubling  the size of the  Cleveland,  Ohio,
            cotton  and foot  care  manufacturing  facility.  In  addition,  the
            Company  continues to institute a total quality  management  program
            and  invest  a  significant  portion  of its  capital  resources  in
            labor-saving equipment and employee training.

         Through the implementation of its operating  strategy,  the Company has
maintained  strong  cash flow  growth and  increased  net sales.  For 1997,  the
Company's  net sales grew to $296.6  million and EBITDA  grew to $48.0  million.
EBITDA for any relevant period represents operating income plus depreciation and
amortization of goodwill and other intangibles.

Products

         The  following  table sets forth net sales and  percentage of total net
sales by class of products for the years ended December 31, 1997, 1996 and 1995.
Information  with  respect to industry  segments is presented on page 35 of this
Report.

<TABLE>
<CAPTION>

                                                       1997                 1996                 1995
                                                  --------------       --------------       -------------
                                                                        (In millions)
<S>                                                 <C>     <C>          <C>     <C>          <C>     <C>


Shaving razors and blades(1)                      $120.8   40.8%       $114.4   43.9%       $ 97.1   42.2%
Bladed hand tools and blades                        45.4   15.3          40.7   15.6          39.2   17.0
Specialty industrial and medical blades             16.4    5.5          16.5    6.4          15.8    6.8
                                                  ------  -----        ------  -----        ------  -----
      Total                                        182.6   61.6         171.6   65.9         152.1   66.0
Cotton and foot care(2)                             80.4   27.1          55.8   21.4          48.7   21.1
Custom bar soap                                     33.6   11.3          33.2   12.7          29.7   12.9
                                                  ------  -----        ------  -----        ------  -----
      Total                                       $296.6  100.0%       $260.6  100.0%       $230.5  100.0%
                                                  ======  =====        ======  =====        ======  ===== 
</TABLE>

Shaving Razors and Blades. The Company designs,  manufactures and markets a full
line of shaving  razors  and  blades,  including  single-edge,  double-edge  and
injector blades,  twin-blade  fixed and pivoting head  cartridges,  moving blade
cartridges, disposables,  single-edge razors, women's shaving razors and special
purpose  shaving  blades.  The Company  provides both total shaving  systems and
components  which  can be used  alone or with most  other  nationally-recognized
premium  brands.  These  shaving  products are marketed  under the Company's own
brands (i.e., Personna(R),  GEM(R), Flicker(R),  PFB(R), Treet(R), Blue Star(R),
Pal(R), MBC(TM) Royal(TM), Revlon Perfect Finish(TM), Bump Fighter(R), and Burma
Shave(R)) or under the store brands of the Company's private-brand shaving razor
and blade customers.

Bladed Hand Tools and  Blades.  The Company  designs,  manufactures  and markets
bladed hand tools and blades,  such as single edge  blades,  utility  blades and
knives,  carpet  blades  and  knives  and  paint  scrapers  primarily  under its
Personna(R),  American  Line(TM) and Ardell(TM) brand names. The majority of the
Company's  bladed  hand tools and blades  are sold to retail  customers  through
home-


--------
(1)   The year ended  December  31,  1996,  includes  net sales of Bond of $11.2
      million since its March 29, 1996, acquisition date.

(2)   The year  ended  December  31,  1997,  includes  net sales of AWC of $21.1
      million  since  its April  22,  1997,  acquisition  date,  the year  ended
      December 31, 1995,  includes net sales of ACCO of $16.6  million since its
      March 3, 1995,  acquisition  date and the year ended  December  31,  1994,
      includes  net sales of Megas of $18.7  million  since  its June 10,  1994,
      acquisition date.

                                        3

<PAGE>



improvement   centers,   retail  paint   chains  and  hardware   stores  and  to
professionals through wholesalers, distributors and specialty supply jobbers.

Specialty  Industrial and Medical Blades. The Company designs,  manufactures and
markets disposable blades for both the industrial and medical markets.  Although
the  specialty  industrial  blade  market is large and  diverse,  the  Company's
products  are  specially  designed  for  niche  industrial  applications.  These
specialty  industrial  blades  perform many of the cutting,  slicing or chopping
functions  involved  in  manufacturing   processes  employed  by  a  variety  of
industries  including food processing,  fiber cutting,  automotive and printing.
The Company manufactures and markets carbon and stainless steel surgical blades,
disposable  scalpels and surgical  prep blades for the U.S.  health care markets
under the Personna(R) brand name.

Cotton and Foot Care. The Company believes it is one of the largest  store-brand
manufacturers  and  distributors  of cotton  swabs,  cotton  balls and puffs and
cotton cosmetic pads. In addition, the Company also manufactures  pharmaceutical
and beauty coils and foot care products.  All of the foregoing products are sold
under  retailers'  store-brand  names as well as the Company's own  value-priced
brands Megas(R),  ACCO(R),  Cottonette(R)  and Crystal(R).  The Company believes
that it is one of the few large cotton and foot care products  manufacturers and
distributors  which  can  bleach  its  own  cotton--a  process  integral  to the
production of cotton products.

Custom Bar Soap.  The Company  manufactures  custom  designed and formulated bar
soap for  sale to a broad  variety  of  pharmaceutical,  cosmetic/skin-care  and
department store customers, primarily under such customers' own brand names. The
Company's  flexible  manufacturing  equipment,  product  design and  development
capabilities and reputation for high quality allow it to compete successfully in
all major custom bar soap market segments. The Company also develops and markets
seasonal gift soap products.


Sales and Marketing

          The  Company's  products  are  sold  through  all  major  distribution
channels through internal sales and marketing resources,  as well as third party
distributors and manufacturer's  representatives.  The Company's sales personnel
receive  a fixed  salary  plus a bonus  based on sales  performance  or  Company
earnings.

          The Company's  store-brand and  value-brand  shaving razors and blades
and cotton and foot care  products are sold through  mass-merchandise,  drug and
supermarket  chains.  The Company's sales of consumer and personal care products
is managed by a senior vice  president  who  oversees a number of division  vice
presidents of sales and related personnel. Marketing support for the value-brand
shaving  razors and blades and cotton and foot care  products  focuses on direct
mail advertisements, temporary price reductions and point of sale promotions. To
assist  stores in  promoting  their  store-brand  shaving  razors and blades and
cotton and foot care products,  the Company helps customers  develop  customized
marketing  programs,  including  managing product  introductions and promotional
planning  support.  In  addition,  such  merchandising  vehicles  as trial  size
programs, floor displays,  point of purchase advertising,  bonus sizes, coupons,
rebates,  store signs and promotional  packs are available and incorporated into
individual customers' programs.  The Company also provides customers with market
research to assist the  customer in  determining  the  effectiveness  of various
marketing programs.

          The Company's  international shaving razors and blades sales effort is
headed by a vice  president who reports to the senior vice president of consumer
and personal products.  The vice president of international  sales directs daily
activities through group managers  responsible for specific  geographic regions.
The Company uses a variety of sales strategies and organizations, depending upon
the specific country to sell its products.  The Company has a manufacturing  and
packaging  facility  in  Mexico,  a  manufacturing,  warehousing  and  packaging
facility in Nazareth  Illit,  Israel,  warehousing  and packaging  operations in
Puerto Rico and the United  Kingdom,  and  warehousing  facilities  in Canada to
further its penetration in those markets.

          The  Company  sells  bladed  hand  tools and  blades to  national  and
regional chains of home improvement  centers and  paint/decorating  retailers as
well as hardware co-op,  wholesale buying groups,  and industrial  distributors.
Specialty  industrial  blades  are  sold to  direct  users,  original  equipment
manufacturers  and to a wide variety of distributors  who service  professionals
and niche segments. Overall management of the industrial division is headed by a
vice  president with specific  responsibilities  assigned to a director of field
sales, director of market development and a general manager in Europe. Marketing
needs for the entire  division  are  overseen  by a  marketing  manager who also
reports to the vice president.

                                        4

<PAGE>




          The Company  distributes  medical blades to hospitals,  nursing homes,
doctors'  offices and other health care  practitioners.  The  Company's  medical
blade sales  efforts  are headed by a vice  president  who  oversees a number of
regional  managers.  The Company  focuses its medical  blade  marketing  efforts
through  targeted trade journal  advertising,  direct mail  promotions,  medical
trade shows and a volume rebate program.

          The  Company's  soap sales  effort is headed by the vice  president  -
general  manager  who  oversees a number of sales  people and  national  account
representatives  who work with  customers  to custom  design soap  products  and
programs. The Company also utilizes  manufacturers'  representatives to sell its
products to customers in the hospitality industry, such as hotels, and to market
its line of industrial and corporate promotional products.


Manufacturing

          The Company is a fully integrated  manufacturer performing all aspects
of the manufacture of shaving razors and blades, blades for use with bladed hand
tools and specialty industrial and medical blades from metal forming and plastic
injection  molding to assembly and  packaging.  Blades are  manufactured  at the
Company's facilities in Verona,  Virginia,  Knoxville,  Tennessee,  and Nazareth
Illit,  Israel.  The Company  operates a low-cost,  highly  efficient  injection
molding,  packaging and assembly facility in Obregon,  Mexico. In July 1995, the
Company  purchased a new facility in  Knoxville,  Tennessee,  to develop a fully
integrated shaving razors and blades manufacturing  operation.  During 1997, the
Company  completed  the second full year of a three-year  manufacturing  plan to
develop a fully  integrated  facility to perform  all  operations  attendant  to
manufacture,  mold, assemble and package shaving razors and blades. In addition,
the Company has restructured its industrial blade business moving  substantially
all of its operations  into a single facility in Verona,  Virginia,  closing its
manufacturing facilities in Union and Maplewood, New Jersey.

          Proprietary  manufacturing  processes  allow the  Company to produce a
wide  variety of products of different  quantities,  sizes and  packaging  while
maintaining  a high level of  quality.  The  Company is  continually  working to
improve  its  blade  making  productivity  by  adding  new  technologies  and/or
manufacturing processes, i.e., improved grinding,  slitting or automatic package
loading.  Most of the processes  which the Company uses to manufacture  products
are unique and proprietary.

          The production of the Company's  cotton and foot care products  starts
with the  receipt  of cotton  fibers in bales.  The cotton is  bleached,  either
internally  or through the use of contract  bleachers.  Once the cotton has been
bleached,  the cotton is  processed  into yarn which is then used  either in the
production  of (i) cotton balls,  (ii) cotton swabs,  (iii) cotton pads, or (iv)
other  cotton  products.  The  Company's  cotton  and  foot  care  products  are
manufactured  at its  facilities  in  Cleveland,  Ohio,  Valley Park,  Missouri,
Sparks,  Nevada,  Dayville,  Connecticut,  Canavanas,  Puerto Rico, and Nogales,
Mexico.

          The  manufacture  of soap is a specialized  process which involves the
reaction  between  tallow  (animal  fat),  vegetable  oil or a fatty acid with a
caustic  substance (called an alkaline) and water. The resulting soap mixture is
then treated with  additives to decrease the  harshness of the  substance and to
give the soap functional or cosmetic  applications.  The Company has the ability
to produce soap  through four  different  manufacturing  processes,  producing a
variety of soap products with different characteristics.
The  Company  manufactures  soap  in its  Dayton,  Ohio  and  Columbus,  Indiana
facilities.


Raw Materials

          The principal raw materials used by the Company in the  manufacture of
blade products are stainless and carbon steel,  plastics and packaging supplies,
all of which are normally readily  available in the  marketplace.  While all raw
materials are purchased from outside sources,  the Company is not dependent upon
any  single  supplier  in its  operations  for any  materials  essential  to its
business or not otherwise commercially available to the Company. The Company has
been able to obtain an adequate supply of raw materials,  and no shortage of raw
materials is currently anticipated.

          The principal raw materials used by the Company in the  manufacture of
its fiber and foot care products include cotton fiber,  plastic and paper sticks
for cotton swabs, foam insoles and packaging supplies. The Company has developed
several  different  qualified  sources for its key  material  requirements.  The
Company  bleaches  cotton for the majority of its production  requirements.  The
Company  also  maintains  a  relationship  with  several  qualified  sources for
additional  contract  bleaching.  The  prices of  certain  of the raw  materials
purchased by Megas are subject to commodity price volatility,  particularly with
respect to cotton fiber and

                                        5

<PAGE>



paper sticks,  which may affect  profitability  of the Company's cotton and foot
care  products.  The Company has been able to obtain an adequate  supply of high
quality  raw   materials,   and  no  shortage  of  raw  materials  is  currently
anticipated.

          The principal raw materials used by the Company in the  manufacture of
its custom bar soap products are tallow,  various chemicals,  coconut oil, fatty
acids,  fragrances  and  packaging  supplies.  The  prices of certain of the raw
materials  used  by the  Company,  such as  coconut  oil and  fatty  acids,  are
volatile, which may affect the profitability of the Company's soap products. The
Company  has  been  able to  obtain  an  adequate  supply  of high  quality  raw
materials, and no shortage of raw materials is currently anticipated.


Competition

          The shaving  razor and blade market is  competitive  and  sensitive to
changing consumer preferences and demands.  The Company's principal  competitors
in the  shaving  razor and blade  market are  Gillette,  the Schick  Division of
Warner-Lambert and Societe Bic, S.A. These competitors are substantially  larger
and have substantially greater resources than the Company.

          The Company is the leading  producer of  store-brand  and  value-brand
shaving  razors and  blades in the United  States  where the  Company's  primary
competitors  are smaller,  privately held  companies.  Periodically,  one of the
premium-brand shaving razor and blade manufacturers  mentioned above attempts to
compete with the Company by lowering prices or entering the store-brand  market.
The  Company  believes  that it is unlikely  that a new shaving  razor and blade
manufacturer will appear in the near future given the proprietary  nature of the
manufacturing processes used by the Company and each of its competitors.

          In the bladed hand tools and blades and  specialty  industrial  blades
markets,  competition  is based on  quality,  price and  customer  service.  The
Company  believes  that it  competes  favorably  on these bases and is a leading
producer of bladed hand tools and blades and specialty  industrial blades in the
United  States.  The Company has a number of smaller  competitors in bladed hand
tools and blades such as I.B.U.  and U.S.  Blades.  The medical  blade market is
dominated by a division of Becton Dickinson and Company.

          Megas  competes in  store-brand  cotton swabs,  cotton  balls,  puffs,
cotton cosmetic pads, pharmaceutical and beauty coils and foot care products, on
the basis of producing equal or better quality  products than the national brand
equivalents and offering a complete  program of products in both store-brand and
value-brand products. The market for these products is highly competitive, often
attracting  large  national  brand  manufacturers  seeking  to  add  incremental
store-brand business.  Kimberly-Clark,  in particular, has become very active in
the  store-brand  pocket  tissue  category.  In  addition,   companies  such  as
Chesebrough-Pond's,   Johnson  &  Johnson  and  Dr.   Scholl's  are  continually
re-investing  in their premium  brands,  partly in an attempt to reclaim  market
share lost to store-brand and value-brand products.

          The  custom  bar  soap  market  is  very   fragmented   with  numerous
participants, some of which have greater resources than the Company. Competition
in the custom bar soap market is based primarily on quality,  price and customer
service.


Other Factors Affecting the Business of the Company

Trademarks and Patents

  The Company owns all of the rights to the large number of  trademarks  used in
its blade,  cotton and foot care and soap businesses.  Such trademarks  include,
among others, "Personna", "MBC", "GEM", "Flicker", "PFB", "Bump Fighter", "Burma
Shave",  "Megas",  "ACCO",  "Cottonette",   "Crystal",  "Omnibus",  "Centurion",
"Kensington",   "Lavender  &  Old  Lace",   "Satinet   Rosewater  &  Glycerine",
"Sandalwood"  and "Fashion IV".  Trademarks  are registered in the United States
and in many other countries,  and the Company considers such trademarks,  in the
aggregate, to be material to its business. In addition, the Company owns various
patents and  licenses  related to the design and  manufacture  of certain of its
products.  The Company  considers  such patents to be important to its business,
and the "MBC"  patent is  considered  material to the  conduct of the  Company's
business.  There are no trademarks,  patents or licenses  expiring in 1998 which
the Company expects would have a material effect on its business.

         The  Company   considers  many  of  the  processes  which  it  uses  to
manufacture its products unique and proprietary. The

                                        6

<PAGE>



Company has not, however,  applied for patent or copyright protection for any of
these processes. The Company relies on non-disclosure and non-compete agreements
with  many  of its  employees  and  with  the  former  owners  of the  Company's
predecessor to protect its  proprietary  rights in these  patents,  licenses and
processes.


Employees and Labor Relations

          As of December 31, 1997, the Company employed 2,257 people  worldwide,
including 1,796 hourly employees and 461 salaried employees.

          Four collective  bargaining  agreements cover certain of the Company's
employees:  the first, at the Verona,  Virginia plant,  covers 425 employees and
expires on September 25, 2000; the second, at the Company's Dayton,  Ohio plant,
covers 157 employees and expires on March 24, 1999; the third,  at the Company's
St. Louis plant,  covers 213 employees and expires on September 1, 1999, and the
fourth at the Company's Nazareth Illit,  Israel plant,  covers 148 employees and
expires on April 1, 1999.  In addition to the foregoing  employees,  the Company
employs  an  aggregate  of 853 hourly  employees  at its  Knoxville,  Tennessee;
Cleveland,  Ohio;  Sparks,  Nevada;  Dayville,  Connecticut;   Nogales,  Mexico;
Canavanas,  Puerto Rico;  Nottingham,  England;  Obregon,  Mexico; and San Juan,
Puerto Rico  facilities,  none of whose  employees  are covered by a  collective
bargaining agreement.  The Company considers its relations with its employees to
be satisfactory.


Environmental Matters

          The   Company  is  subject  to  various   federal,   state  and  local
environmental laws and regulations and the environmental laws and regulations of
the various  foreign  jurisdictions  in which the  Company  does  business.  The
Company  anticipates  that such laws and  regulations  will become  increasingly
stringent in the future.

          In December  1986,  the Company  entered into a Special Order with the
predecessor agency of the Virginia Department of Environmental  Quality ("VDEQ")
pursuant  to which the Company  agreed to  investigate  and cleanup  groundwater
contamination  at the  Company's  Verona,  Virginia,  razor blade  manufacturing
facility.  Pursuant to a plan of  remediation  approved by the VDEQ's  executive
director on February 18, 1988, and fully  implemented in 1989, the Company built
and  currently   operates  a  groundwater   treatment   facility  to  treat  the
contaminated   groundwater.   The  Company  regularly   monitors  the  level  of
contamination  in the  groundwater.  The Company is not  presently  aware of any
additional  contamination  that is required to be remediated at this time at the
Verona site.

          In October  1996,  the  Company's  review of safety and  environmental
compliance  at its razor  blade  manufacturing  facility  in  Verona,  Virginia,
revealed that  modifications  to the facility in 1994 may have violated  federal
and state air  regulations.  The Verona  facility  uses a  halogenated  solvent,
trichloroethylene  ("TCE") in the blade cleaning  machines attached to its blade
grinders.  In December 1994, pursuant to the federal Clean Air Act ("CAA"),  the
United  States  Environmental  Protection  Agency  ("EPA")  adopted a rule which
regulates the emissions from  halogenated  solvent  cleaning  machines (the "HSC
Rule").  The HSC Rule includes  reporting  requirements,  emission  controls and
compliance  deadlines.  Existing  machines  were to  comply  with  the  emission
controls by December 2, 1997, and new machines  (those  installed after November
29, 1993) were to be constructed to comply with the emission controls. Owners or
operators of the machines were to submit an initial  notification  report to the
EPA for new  machines by January 31, 1995,  and for existing  machines by August
29, 1995. The initial notification reports were to identify each machine used by
a facility,  its date of  installation  and the  emission  controls  used in new
machines or to be retrofitted onto existing machines.

          The Company's blade cleaning machines are halogenated solvent cleaning
machines  covered  by the HSC  Rule  and its  October  1996,  compliance  review
discovered that two of the Verona facility's twenty-four blade cleaning machines
had been  installed  in 1994  without the  requisite  new  machine air  emission
controls.  The review also  revealed  that,  although the Company had  submitted
notice of the new and existing blade cleaning  machines as sources of TCE to the
VDEQ in 1994, it had not submitted the initial  notification to the EPA required
by the HSC Rule.  The Company  promptly  reported the findings of the compliance
review to the EPA and to the VDEQ. The Company's report to the agencies enclosed
the initial  notification  report for the blade cleaning  machines,  proposed to
shut down the two "new"  blade  cleaning  machines  and  proposed  to  install a
facility-wide  solvent vapor recovery system designed to reduce TCE emissions to
well below that  required by the HSC Rule.  By the end of May 1997,  the Company
had taken both new machines off line and, by November  1997,  had  installed the
solvent vapor recovery system.

                                        7

<PAGE>



In June  1997,  the EPA  Region III filed an  administrative  complaint  seeking
$147,000  in  penalties.  The Company  contested  the penalty and has reached an
agreement  in  principle  with  the  EPA  for  a  penalty   payment  of  $6,250.
Negotiations of the consent order to finalize the settlement are underway.

          In June 1997,  the VDEQ  issued the Company a notice of  violation  of
state air permitting  requirements for the construction of a number of its blade
cleaning  machines  without a permit to  construct at the Verona  facility.  The
Company and the VDEQ  resolved the notice of violation by agreeing to enter into
a consent order and having the Company file a facility-wide  state air operating
permit application. The Company submitted the application in September 1997, and
anticipates  receiving the permit in March 1998.  The Company  expects to file a
major source air operating  permit  application  in May 1998, to comply with the
new air operating permit program adopted by Virginia  pursuant to Title V of the
CAA. Once issued, the major source air operating permit will supersede the state
operating permit.

          When the Company purchased the Maplewood, New Jersey, facility as part
of the Ardell acquisition, the Company and the previous owners of Ardell entered
into an  Administrative  Consent  Order on March 31,  1989,  with the New Jersey
Department of Environmental  Protection and Energy ("NJDEPE")  pursuant to which
the previous owners of Ardell agreed to perform soil and groundwater remediation
under the New Jersey  Environmental  Cleanup  and  Responsibility  Act.  Through
September  1996,  the previous  owners had assumed full  financial and oversight
responsibility  for  remediation  of the site.  At that time,  in  settlement of
claims by Ardell under its  insurance  policies with Federal  Insurance  Company
covering the periods March 6, 1979 to March 6, 1987,  Federal  Insurance Company
assumed primary financial and oversight responsibility for the remediation.  The
costs to complete the remediation are being borne by Federal  Insurance  Company
and the previous owners of Ardell. The previous owners have posted the requisite
financial  assurance bond with NJDEPE securing such remediation  obligations and
have provided the Company with evidence of having  obtained the bond.  They also
agreed to the delay of payments  totaling  approximately  $1 million due them by
the Company  under the  acquisition  agreement for Ardell until such time as the
remediation  achieves certain defined  benchmarks.  The first partial  principal
payment of $0.3 million has been paid  leaving  $0.7 million  still owed them by
the Company. The Company has the right to offset these amounts against any costs
incurred to ensure remediation.  Additionally,  as security,  a letter of credit
was  obtained  by the  sellers in favor of NJDEPE in the amount of $0.6  million
which  remains  intact.  The Company has  incurred  only  limited  costs to date
regarding this matter and does not expect to incur any material future costs.

          The Valley  Park,  Missouri,  plant  facility of the  Company's  Megas
subsidiary,  which was acquired on March 3, 1995, is located on a parcel of land
which is the  subject of a CERCLA  investigation.  This  investigation  is being
undertaken in response to a release of "hazardous  substances"  from  upgradient
industries.  The affected area, which includes the groundwater beneath a segment
of the plant  site,  has been found to be  contaminated  by various  chlorinated
solvents  including  trichloroethylene  (TCE) and  trichloromethane  (TCA).  The
contaminated  aquifer had been the source of municipal  water supply wells.  The
results of a limited remedial  investigation  completed for EPA and the State of
Missouri in January 1988,  indicate that the source of the TCE contamination was
located  to the  northwest  of  the  Megas  facility.  The  EPA  and  the  State
subsequently  developed a remediation plan to address the TCE  contamination and
have executed a Consent Order with a potentially  responsible party to implement
the plan. The focus of their  investigation has now turned to the remediation of
the TCA  contamination  which the limited remedial  investigation  concluded was
originating  west southwest of the Megas facility  between Marshall Road and the
Merrimac River. Megas does not use or have records of having used the identified
"hazardous  substances"  in  its  facility  and  has  not  been  found  to  be a
potentially  responsible  party.  The  Company  has  reviewed  the  EPA  limited
remediation  investigation  report and  performed  limited  soil gas analysis on
site. The results of the testing did not indicate soil  contamination that could
have contributed to the underlying plume.  Based on the Company's  investigation
to date,  results of the soil gas analyses  performed on site,  and  discussions
held with the Missouri Attorney  General's office,  the Company believes that it
is unlikely that Megas will be identified as a potentially  responsible party in
connection  with the EPA Superfund  site. In the unlikely event that the Company
is  identified  as a potentially  responsible  party,  the sellers of Megas have
agreed to indemnify the Company,  until March 3, 2000, for certain environmental
matters, including costs incurred in connection with the Valley Park site, in an
amount not to exceed $300,000.

          The Company,  after  consultation with its advisors,  does not believe
that  any  of  these  matters  will  have a  material  effect  on the  Company's
consolidated  financial  position or results of  operations,  regardless  of any
claims to indemnification.


                                        8

<PAGE>



ITEM 2 - Properties

          As of  March 9,  1998,  the  Company  owned or  leased  the  following
facilities:
<TABLE>
<CAPTION>

                                                                                                                Lease            
                                                                                    Approximate   Owned or   Termination
Products                   Location                  Type of Facility               Square Feet    Leased        Date
--------                   --------                  ----------------               -----------    ------     ----------
<S>                           <C>                            <C>                        <C>         <C>          <C>
                                                     
Shaving razors and         Verona, Virginia          Industrial/medical             307,000       Owned
   blades, bladed hand                                 manufacturing, packaging,
   tools and blades and                                distribution, sales,
   specialty industrial                                shaving manufacturing and
   and medical blades                                  corporate offices
                                                     
                           Knoxville, Tennessee      Manufacturing, packaging       125,000       Owned
                                                        and distribution
                                                     
                           Obregon, Mexico           Manufacturing and packaging    94,000        Leased     April 2006
                                                     
                           Nazareth Illit, Israel    Manufacturing, packaging       65,000        Leased     July 2002
                                                        distribution and sales
                                                     
                           Nottinghamshire,          Packaging, distribution        36,000        Leased     July 2012
                             United Kingdom            and sales
                                                     
                           Rio Grande,               Manufacturing, packaging,      26,000        Leased     June 2000
                             Puerto Rico               distribution and sales
                                                     
                                                     
Cotton and foot care       Cleveland, Ohio           Manufacturing, packaging,      123,000(1)    Leased     February 1999
                                                       distribution and sales
                                                     
                           Valley Park, Missouri     Manufacturing and packaging    107,000       Owned
                                                     
                           Nogales, Mexico           Manufacturing, packaging       84,000        Leased     March 2000
                                                       and distribution
                                                     
                           Dayville, Connecticut     Manufacturing and packaging    43,000        Leased     September 2002
                                                     
                           Sparks, Nevada            Manufacturing and packaging    36,000        Leased     November 1998
                                                     
                           Canavanas, Puerto Rico    Manufacturing, packaging       22,000        Leased     November 1998
                                                       and distribution
                                                     
Soap                       Dayton, Ohio              Manufacturing, packaging,      270,000       Owned
                                                       distribution and sales
                                                     
                           Columbus, Indiana         Manufacturing, packaging,      20,000        Leased     September 2005
                                                        distribution and sales
</TABLE>


(1)   Currently expanding facility to 250,000 square feet. New lease term begins
      in May 1998, with a lease termination date of April 2013.

          The Company supplements its distribution  capabilities  through public
warehouse  facilities.  In  addition,  the Company  uses  contract  packagers in
selected  domestic and  international  markets.  The Company  believes  that the
variety of domestic  and  international  locations  give the  Company  operating
flexibility.

          The Company  considers all of its  facilities to be in good  operating
condition and adequate for their  present  purposes.  The  Company's  production
facilities  are  capable  of being  utilized  at a higher  capacity  to  support
increased demand, if necessary.


                                                                9

<PAGE>



ITEM 3 - Legal Proceedings

          The Company is party to routine  litigation  incidental to the conduct
of its  business,  the  disposition  of which is not expected to have a material
effect  on  the  Company's   consolidated   financial  position  or  results  of
operations.


ITEM 4 - Submission of Matters to a Vote of Security Holders

          No matter  was  submitted  to a vote of  stockholders  of the  Company
during the fourth quarter of the fiscal year ended December 31, 1997.


Executive Officers of the Registrant

         Set forth below are the  executive  officers of the Company as of March
13, 1998, their ages, positions, and a description of their business experiences
for the last five years.  Except for Mr. Heim, Mr. Casner,  Mr. Paterson and Mr.
Piron,  all of the below named  executive  officers  have been  employees of the
Company for more than the last five years.

<TABLE>
<CAPTION>

Name                           Age           Position with Company
<S>                             <C>          <C>

Thomas H. Quinn                 50           Chairman and Chief Executive Officer
William C. Weathersby           56           President, Chief Operating Officer
James V. Heim                   44           Senior Vice President - Consumer and Personal Products
Thomas G. Kasvin                50           Senior Vice President - Chief Financial Officer
Michael M. Casner               53           Vice President - International
John R. Lupton                  56           Vice President - Operations, Cotton and Foot Care
John W. Paterson                55           Vice President - Medical
Michael J. Piron                57           Vice President - Technical and Logistics Operations
Gary R. Moorhead                49           Vice President - General Manager, Custom Bar Soap
William L. Robbins              57           Vice President - Consumer Products Sales
Gary S. Wade                    49           Vice President - Industrial
</TABLE>


         Mr. Quinn  became  Chairman of the Board of Directors of the Company in
April 1989, in connection with the  acquisition of the Company.  Since 1988, Mr.
Quinn has been  President,  Chief  Operating  Officer  and a director  of Jordan
Industries,  Inc., a diversified industrial holding company, and Chairman of the
Board and Chief  Executive  Officer of Welcome  Home,  Inc.,  and a director  of
Ameriking, Inc., and Motors and Gears, Inc.

         Mr.  Weathersby  joined the Company in January 1990,  and has served as
President  and a director  since that time.  Prior to joining the  Company,  Mr.
Weathersby  held senior  executive  positions with Revlon Health Care and Squibb
Corporation.  From 1985 through 1989, Mr. Weathersby was Group President, Squibb
Corporation, and a member of its Executive Committee.

         Mr. Heim joined the Company in June 1996, and has served as Senior Vice
President - Consumer and Personal  Products since that time.  From November 1985
through May 1996,  Mr. Heim held various  executive  positions  with  Maybelline
Corporation.  From September 1994 through May 1996, Mr. Heim was General Manager
of Maybelline  Canada,  Inc./The Yardley Company,  and from January 1992 through
August 1994, he was Senior Vice President, Maybelline Sales.

         Mr.  Kasvin  joined the Company in August 1991,  and has served as Vice
President - Chief  Financial  Officer since that time until August 1996, when he
became Senior Vice President - Chief  Financial  Officer.  From May 1982 through
July 1991, Mr. Kasvin was corporate controller for the Marmon Group, a privately
held, diversified manufacturing company.

         Mr.  Casner  joined the  Company  in June 1997,  and has served as Vice
President -  International  since that time.  Prior to joining the Company,  Mr.
Casner held  various  international  marketing  positions  with  Helene  Curtis,
Gillette and Johnson & Johnson.


                                       10

<PAGE>




         Mr.  Lupton has been  employed  in various  positions  with the Company
since 1982. Currently, Mr. Lupton serves as Vice President - Operations,  Cotton
and Foot Care. Prior to joining the Company,  Mr. Lupton spent eighteen years in
various production and engineering positions with General Electric.

         Mr.  Paterson  joined the Company in July 1993,  and has served as Vice
President - Medical since that time. From 1990 through 1992, Mr. Paterson served
as Vice President,  Marketing and Sales of Cryomedical  Sciences.  Prior to that
time,  Mr.  Paterson  held various sales and  marketing  positions  where he was
responsible  for the  marketing  of medical  devices  with Johnson & Johnson and
Abbott Laboratories.

         Mr. Piron has been Vice President - Technical and Logistics  Operations
of the Company since January 1994.  Prior to joining the Company,  Mr. Piron was
Vice  President of Operations  for the Consumer  Products Group at Bristol Myers
Squibb.  From 1963  through  1987,  Mr.  Piron held  various  manufacturing  and
logistics positions in consumer products with Johnson & Johnson,  Warner-Lambert
and Hoechst Celanese.

         Mr.  Moorhead  joined  the  Company  in 1980,  in  connection  with the
acquisition  of the Hewitt Soap  Company and held  various  sales and  marketing
positions until April 1997, when he became Vice President - General Manager.

         Mr. Robbins has been Vice President - Store-Brands of the Company since
1983 and has been  employed  by the  Company  since  1973.  Prior to joining the
Company, Mr. Robbins held various positions with  Chesebrough-Pond's and Johnson
& Johnson.

         Mr. Wade has been employed in various sales  positions in the Company's
industrial  blade  division  since 1978. In 1990,  Mr. Wade was  appointed  Vice
President - Industrial.  Prior to joining the Company,  Mr. Wade was employed in
various sales positions by Philip Morris U.S.A.


                                     PART II

ITEM 5 - Market for Registrant's Common Equity and Related Stockholder Matters

         The  Company's  common  stock,  par value $.01 per share  (the  "Common
Stock") is traded in the  over-the-counter  market and has been  included in the
NASDAQ  National  Market under the symbol  "RAZR" since the  Company's  Form S-1
registration  statement  relating to the initial  public  offering of its Common
Stock  became  effective  on June 8, 1993.  Information  with  respect to market
prices  of the  Common  Stock  for  each of the  quarters  in 1996  and  1997 is
presented under Item 8 of this Report.

         As of March 9, 1998, the Company's  shares of Common Stock were held by
approximately  3,100 shareholders of record (including brokers,  dealers,  banks
and other nominees participating in The Depository Trust Company).

         The  Company  has not  paid and does  not  anticipate  paying  any cash
dividends on the Common Stock in the foreseeable  future. From time to time, the
Board of Directors intends to review the Company's  dividend policy. Any payment
of dividends  will be at the  discretion  of the Board of Directors  and will be
dependent on the earnings and  financial  requirements  of the Company and other
factors,  including the restrictions  imposed by the General  Corporation Law of
the State of Delaware on the payment of dividends and covenants in the Company's
revolving  credit  facility  and the  indenture  related to the 9 7/8%  Series B
Senior Notes described in Note 5 of Notes to Consolidated  Financial  Statements
under Item 8 of this Report.



                                       11

<PAGE>



ITEM 6 - Selected Financial Data

         The following data (in thousands, except per share data) should be read
in  conjunction  with  the  consolidated  financial  statements  of the  Company
included under Item 8 of this Report and management's discussion and analysis of
financial  condition  and results of  operations  included  under Item 7 of this
Report.

<TABLE>
<CAPTION>
                                                                                    Year ended December 31,
Statement of Income Data:                                        1997 (1)     1996 (2)   1995 (3)    1994 (4)      1993
                                                                ---------  ----------- ----------   ----------   ---------
<S>                                                                <C>          <C>       <C>            <C>         <C>

Net sales                                                        $296,607     $260,636  $230,453      $192,573    $158,141
Costs and expenses
   Cost of sales                                                  196,991      169,949   149,994       119,192      95,884
   Selling, general and administrative expenses                    60,206       54,867    48,487        43,366      35,593
   Amortization of intangible assets                                2,501        2,503     2,341         3,219       7,110
   Termination of consulting agreement                                  -            -         -             -       1,969
   Litigation settlement expense                                        -            -       947             -           -
                                                               ----------   ---------- ---------    ----------  ----------

Operating income                                                   36,909       33,317    28,684        26,796      17,585

Interest expense                                                   12,270       11,719    10,582         7,580      12,056
                                                               ----------   ---------- ---------    ----------  ----------

Income before income taxes and
   extraordinary items                                             24,639       21,598    18,102        19,216       5,529
Income taxes                                                        9,570        8,425     7,241         7,895       1,961
                                                               ----------   ---------- ---------    ----------  ----------

Income before extraordinary items                                  15,069       13,173    10,861        11,321       3,568
Extraordinary items, net of income tax benefit (5)                      -            -      (980)            -      (3,197)
                                                               ----------   ---------- ---------    ----------   ---------

Net income                                                        $15,069     $ 13,173  $  9,881      $ 11,321   $     371
                                                               ==========   ========== =========    ==========   =========

Basic earnings per share:
   Income before extraordinary items                                $1.25        $1.09     $0.90         $0.94       $0.34
   Extraordinary items                                                  -            -     (0.08)            -       (0.34)
                                                               ----------   ---------- ---------    ----------  ----------

Net income                                                          $1.25        $1.09     $0.82         $0.94      $    -
                                                               ==========   ========== =========    ==========  ==========

Weighted average number of shares outstanding                      12,094       12,093    12,093        12,093       9,550
                                                               ==========   ========== =========    ==========  ==========

Diluted earnings per share:
   Income before extraordinary items                                $1.23        $1.09     $0.90         $0.93       $0.34
   Extraordinary items                                                  -            -     (0.08)            -       (0.34)
                                                               ----------   ---------- ---------    ----------  ----------

Net income                                                          $1.23        $1.09     $0.82         $0.93      $    -
                                                               ==========   ========== =========    ==========  ==========

Weighted average number of shares outstanding                      12,255       12,139    12,135        12,125       9,554
                                                               ==========   ========== =========    ==========  ==========

                                                                                      December 31,
Balance Sheet Data:                                                1997        1996       1995          1994        1993
                                                               ----------   ---------- ---------    ----------  ----------

Total assets                                                     $254,081     $229,997  $208,263      $180,000    $146,643
Long-term obligations, including
   current portion                                                123,612      112,181   109,789        99,577      94,297
Stockholders' equity                                               59,439       44,523    30,898        21,139       9,592
</TABLE>

(1)  The Company's results of operations include results for the Cotton Division
     of American White Cross, Inc. ("AWC") since its April 22, 1997, acquisition
     date.  Results for the period ended December 31, 1997, include net sales of
     AWC of $21.1 million.

                                       12

<PAGE>



(2)  The Company's results of operations include results for Bond-America Israel
     Blades,   Ltd.,  and  its  wholly-owned   subsidiary,   A.I.  Blades,  Inc.
     (collectively,  "Bond") since its March 29, 1996, acquisition date. Results
     for the period ended December 31, 1996,  include net sales of Bond of $11.2
     million.
(3)  The Company's  results of operations  include results for Absorbent  Cotton
     Company ("ACCO") since its March 3, 1995, acquisition date. Results for the
     period ended December 31, 1995, include net sales of ACCO of $16.6 million.
(4)  The Company's results of operations  include results for Megas Beauty Care,
     Inc., ("Megas") since its June 10, 1994,  acquisition date. Results for the
     period  ended  December  31,  1994,  include  net  sales  of Megas of $18.7
     million.
(5)  Extraordinary items relate to the early  extinguishment of debt (see Note 5
     to the Consolidated Financial Statements).


ITEM 7 - Management's Discussion and Analysis of Financial Condition and Results
         of Operations

The  following  table  sets forth  information  with  respect  to the  Company's
business segments:
<TABLE>
<CAPTION>

                                                                    Year ended December 31,
                                                   ----------------------------------------------------
                                                         1997              1996              1995
                                                   ---------------    ---------------   ---------------
                                                                  (Dollars in millions)
<S>                                                   <C>      <C>      <C>       <C>     <C>      <C>

Net Sales:
   Razors and blades
      Shaving razors and blades (1)                 $120.8    40.8%   $114.4    43.9%   $ 97.1    42.2%
      Bladed hand tools and blades                    45.4    15.3      40.7    15.6      39.2    17.0
      Specialty industrial and medical blades         16.4     5.5      16.5     6.4      15.8     6.8
                                                    ------   ------   ------    -----   ------   ------
        Total                                        182.6    61.6     171.6    65.9     152.1    66.0
   Cotton and foot care (2)                           80.4    27.1      55.8    21.4      48.7    21.1
   Custom bar soap                                    33.6    11.       33.2    12.7      29.7    12.9
                                                    ------   ------   ------    -----   ------   ------
      Total                                         $296.6   100.0%   $260.6   100.0%   $230.5   100.0%
Operating Income:
   Razors and blades                                $ 26.5    14.5%   $ 26.4    15.4%   $ 24.1    15.9%
   Cotton and foot care                                6.3     7.8       4.1     7.3       3.0     6.2
   Custom bar soap                                     4.1    12.3       2.8     8.4       1.6     5.3
                                                    ------            ------            ------         
      Total                                         $ 36.9    12.4%   $ 33.3    12.8%   $ 28.7    12.4%
</TABLE>


(1)      The year ended  December 31, 1996,  includes net sales of Bond of $11.2
         million since its March 29, 1996, acquisition date.


(2)      The year ended  December 31,  1997,  includes net sales of AWC of $21.1
         million  since its April 22,  1997,  acquisition  date,  the year ended
         December 31, 1995,  includes net sales of ACCO of $16.6  million  since
         its March 3, 1995,  acquisition  date and the year ended  December  31,
         1994,  includes net sales of Megas of $18.7  million since its June 10,
         1994, acquisition date.


GENERAL

The following  discussion of results of  operations  and financial  condition is
based upon and should be read in  conjunction  with the  Consolidated  Financial
Statements  of the  Company  and notes  thereto  included  under  Item 8 of this
Report.

Forward-Looking Statements
Management's  discussion  and  analysis of  financial  condition  and results of
operations  and other  sections of this annual  report  contain  forward-looking
statements  relating  to future  results of the  Company.  Such  forward-looking
statements are identified by use of forward-looking words such as "anticipates",
"believes",  "plans", "estimates",  "expects", and "intends" or words or phrases
of similar expression.  These forward-looking  statements are subject to various
assumptions,  risks and uncertainties,  including but not limited to, changes in
political and economic conditions, demand for the Company's products, acceptance
of new products, technology developments affecting the Company's products and to
those  discussed  in the  Company's  filings  with the  Securities  and Exchange
Commission.  Accordingly,  actual  results  could differ  materially  from those
contemplated by the forward-looking statements.

In 1997,  the  Company  posted  record  net sales of $296.6  million.  Net sales
benefited  from the Company's  purchase on April 22, 1997, of certain  assets of
the Cotton Division of American White Cross,  Inc.  ("AWC"),  a manufacturer and
distributor  of  store-brand  and  value-brand  cotton swabs,  cotton rounds and
squares, cotton balls and puffs,  pharmaceutical coil and cotton rolls. Sales by
AWC since its  acquisition  date were $21.1  million.  The  Company's  operating
income of $36.9 million or 12.4% of net sales was also a record.  Net income for
1997 of $15.1  million  set another  record,  rising  14.4%,  or $1.25 for basic
earnings per share compared to net income of $13.2  million,  or $1.09 for basic
earnings  per  share  for 1996.  Diluted  earnings  per share for 1997 was $1.23
compared to diluted earnings per share for 1996 of $1.09.

                                       13

<PAGE>




The Company is a leading  designer,  manufacturer  and  marketer of high quality
store,  value and  premium-brand  consumer  products.  The  Company's  principal
products  consist of razors  and  blades,  sales of which are broken  into three
broad categories,  shaving razors and blades,  bladed hand tools and blades, and
specialty  industrial and medical blades.  The Company also manufactures  cotton
and foot care  products  and custom  bar  soaps.  The  Company  distributes  its
products  to the retail  and  professional  trades in the  United  States and in
selected international markets.

The  Company's  operating  strategy  consists of four key  elements:  (i) expand
offerings of store-brand and value-brand personal care consumer products through
strategic acquisitions; (ii) increase penetration of markets currently served by
the Company and enter new markets;  (iii)  develop new products and product line
extensions;  and (iv)  reduce  operating  costs and improve  productivity.  This
strategy  contemplates  that the Company will  acquire or dispose of  businesses
that assist the Company in attaining its strategic goals.


YEAR ENDED DECEMBER 31, 1997, COMPARED TO YEAR ENDED DECEMBER 31, 1996

Net Sales.
Net  sales  for  1997  and  1996  were  $296.6   million  and  $260.6   million,
respectively,  an increase of $36.0 million,  or 13.8%.  Sales by AWC, since its
April 22, 1997,  acquisition  date,  contributed  $21.1 million to the net sales
increase  and  sales by Bond,  since  its  March  29,  1996,  acquisition  date,
contributed  $1.9 million to the net sales increase.  The impact of increases in
unit volume and new product offerings within the Company's other operating units
accounted for  substantially  all of the remaining $13.0 million increase in net
sales.

Net sales of the  Company's  shaving  razors  and  blades for 1997 and 1996 were
$120.8 million and $114.4 million,  respectively, an increase of $6.4 million or
5.6%.  Net sales of  domestic  private-brand  shaving  products  increased  8.2%
primarily  benefiting  from continued  growth in sales of the Company's  MBC(TM)
products and increased  promotional support of products by major customers.  Net
sales of  international  shaving  products  increased 5.1%  reflecting  stronger
sales, primarily in Canada, Latin America,  Mexico, the United Kingdom,  Russia,
and Asia.  International net sales were negatively impacted  approximately 4% by
unfavorable  exchange rates. Net sales of domestic branded shaving products were
up marginally for the year.

Net sales of bladed  hand tools and blades for 1997 and 1996 were $45.4  million
and $40.7  million,  respectively,  an increase of $4.7  million or 11.6%.  This
strong growth  primarily  reflects  increased  sales of the  Company's  American
Line(TM)  and  Personna(R)  brands of products  as a result of new  distribution
gains and product line extensions.

Net sales of  specialty  industrial  and  medical  blades for 1997 and 1996 were
$16.4 million and $16.5 million,  respectively,  a decrease of $0.1 million,  or
0.8%.  Sales of specialty  industrial  products  decreased 5.6% due primarily to
cyclical  usage and purchasing  patterns by certain  customers and mix shifts to
lower priced blade products.  Sales of medical products increased 4.6% due to an
expanding customer base and new product offerings.

Net sales of cotton and foot care  products,  excluding  AWC,  for 1997 and 1996
were $59.3 million and $55.8 million, respectively, an increase of $3.5 million,
or 6.1%.  Cotton  and foot care  experienced  sales  growth  across  most of its
product lines due primarily to increased distribution of products.

Net sales of the Company's custom bar soap products for 1997 and 1996 were $33.6
million and $33.2 million,  respectively,  an increase of $0.4 million, or 1.4%.
This increase  primarily reflects the continued growth in sales of the Company's
pharmaceutical/skin care products.

Gross Profit.
Gross profit increased $8.9 million to $99.6 million for 1997 from $90.7 million
for 1996.  As a  percentage  of net sales,  gross  profit was 33.6% for 1997 and
34.8% for 1996.  This decrease was primarily due to the lower margins  earned in
the newly acquired AWC cotton  operations and the negative impact of unfavorable
exchange rates.  This decrease was somewhat offset by lower  production costs in
the shaving blades and synthetic soap operations and lower material costs in the
cotton operations.

Operating and Other Expenses.
Selling,  general and administrative  expenses were 20.3% of net sales for 1997,
compared to 21.1% for 1996. This decrease

                                       14

<PAGE>



primarily reflects spreading these costs over an increased sales base due to the
AWC  acquisition.  Amortization  of  goodwill  and other  intangible  assets was
unchanged at $2.5 million for 1997 and 1996.  Interest expense increased in 1997
to $12.3  million  from $11.7  million in 1996  primarily  reflecting  increased
borrowings to finance the AWC acquisition.

The Company's  effective  income tax rate for 1997 and 1996 was 38.8% and 39.0%,
respectively. (See Note 9 to the Consolidated Financial Statements.)


YEAR ENDED DECEMBER 31, 1996, COMPARED TO YEAR ENDED DECEMBER 31, 1995

Net Sales.
Net  sales  for  1996  and  1995  were  $260.6   million  and  $230.5   million,
respectively,  an increase of $30.1 million,  or 13.1%. Sales by Bond, since its
March 29, 1996,  acquisition  date,  contributed  $11.2 million to the net sales
increase.  The impact of increases in unit volume and new product  introductions
within the Company's other operating  units accounted for  substantially  all of
the remaining $18.9 million increase in net sales.

Net sales of the Company's  shaving razors and blades for 1996 (excluding  Bond)
and 1995 were $103.2  million and $97.1  million,  respectively,  an increase of
$6.1 million or 6.3%. Net sales of domestic branded shaving  products  increased
10.7%,  primarily  benefiting from increased  promotional programs and continued
strength in the MBC(TM),  Lady MBC(TM) and Burma Shave(R) shaving system line of
products. Net sales of international shaving products (excluding Bond) increased
6.6%, primarily  benefiting from increased  distribution of the MBC(TM) and Lady
MBC(TM) line of products and from increased sales  primarily in Canada,  Mexico,
Europe and the Far East. In addition,  international  net sales during 1996 were
negatively  impacted  by  exchange  rate  fluctuations.  Net  sales of  domestic
private-brand  shaving products increased 1.5% and also benefitted from sales of
the Company's MBC(TM) and Lady MBC(TM) products.

Net sales of bladed  hand tools and blades for 1996 and 1995 were $40.7  million
and $39.2  million,  respectively,  an  increase of $1.5  million or 3.8%.  This
increase  primarily  reflects increased sales of the Company's American Line(TM)
and Personna(R) line of products and increased product promotions.

Net sales of  specialty  industrial  and  medical  blades for 1996 and 1995 were
$16.5 million and $15.8 million,  respectively,  an increase of $0.7 million, or
5.0%.  Sales of specialty  industrial  products  decreased 5.2% due primarily to
inventory  adjustments at major original equipment  manufacturers and other user
customers.  Sales  of  medical  products  increased  19.7%  due to  new  product
introductions and an expanding customer base.

Net sales of cotton and foot care  products for 1996 and 1995 were $55.8 million
and $48.7 million,  respectively,  an increase of $7.1 million,  or 14.7%.  On a
fully  comparable  basis (including 1995 net sales of ACCO of $3.1 million prior
to its acquisition date), net sales increased $4.1 million,  or 7.9%. Cotton and
foot care experienced sales growth across all of its product lines, particularly
in cotton pads,  swabs, and tissues  primarily  resulting from increased product
promotions and increased sales to certain customers.

Net sales of the Company's custom bar soap products for 1996 and 1995 were $33.2
million and $29.7 million,  respectively, an increase of $3.5 million, or 11.6%.
This  increase  primarily  reflects the strong  growth in sales of the Company's
pharmaceutical/skin care products.

Gross Profit.
Gross  profit  increased  $10.2  million  to $90.7  million  for 1996 from $80.5
million for 1995. As a percentage of net sales,  gross profit was 34.8% for 1996
and 34.9% for 1995.  This decrease was primarily due to the lower margins earned
on sales of Bond  products  and  higher  depreciation  expense,  related  to the
Company's capacity expansion projects. This decrease was substantially offset by
lower production costs resulting from increased output from the Company's Mexico
operations and the Columbus,  Indiana, synthetic soap operations and from cotton
and foot care's efforts to control  manufacturing  costs while  increasing sales
volume,  lower material costs and lower shipping costs primarily  resulting from
negotiating lower shipping rates with carriers.

Operating and Other Expenses.
Selling,  general and administrative  expenses were  substantially  unchanged at
21.1% of net sales for 1996 compared to 21.0% for

                                       15

<PAGE>



1995. Amortization of goodwill and other intangible assets increased for 1996 to
$2.5  million from $2.3 million for 1995,  primarily  reflecting  an increase in
amortization of goodwill relating to the ACCO and Bond acquisitions.

Litigation settlement expense of $0.9 million,  including legal fees, relates to
the American Medical Manufacturing, Inc. suit which was settled in June 1995.

Interest  expense  increased in 1996 to $11.7 million from $10.6 million in 1995
primarily  reflecting the higher interest rate resulting from the Company's debt
offering in August 1995, and from  increased  borrowings to finance the ACCO and
Bond acquisitions.

The Company's  effective  income tax rate for 1996 and 1995 was 39.0% and 40.0%,
respectively. (See Note 9 to the Consolidated Financial Statements.)


LIQUIDITY AND CAPITAL RESOURCES

The  Company's  principal  sources of funds are cash  generated  from  operating
activities and borrowings under its revolving credit facility. Net cash provided
by operating activities amounted to $12.0 million and $25.5 million for 1997 and
1996,  respectively.  The  decrease  of $13.5  million in net cash  provided  by
operating  activities  for 1997 as compared to 1996 was due  primarily to (i) an
increase in trade  accounts  receivable  for the  Company's  newly  acquired AWC
operations,  (ii) the timing of customer  payments,  (iii) strong year end sales
which  increased trade accounts  receivable,  (iv) an increase in inventories to
improve customer service, and (v) the payment of certain tax liabilities.

In connection with the April 22, 1997,  acquisition of AWC, the Company borrowed
$9.8  million  under its  revolving  credit  facility.  At  December  31,  1997,
long-term indebtedness amounted to $123.6 million (including the current portion
of $2.1 million),  and the Company had approximately $32.0 million available for
future borrowings and letters of credit under its revolving credit facility. The
weighted-average  interest rate incurred by the Company with respect to its debt
obligations in 1997 was approximately 9.5%.

The  Company's  liquidity  requirements  are  primarily  the  funding of working
capital  needs,  which  consist  of  inventory  and trade  receivables,  capital
expenditures  and  scheduled  principal and interest  payments on  indebtedness.
Capital expenditures in 1997 totaled $13.8 million, as compared to $11.3 million
in  1996  and  $12.4  million  in  1995.   The  Company   anticipates   spending
approximately $13.1 million in 1998 for capital expenditures.

Management  believes that the  Company's  cash on hand,  anticipated  funds from
operations and the amounts  available to the Company under its revolving  credit
facility will be sufficient to cover its working capital,  capital expenditures,
debt  service  requirements  and  tax  obligations  as  well  as  the  Company's
growth-oriented  strategy  for its  existing  business  for at least the next 12
months. The Company anticipates that funding of any additional acquisitions will
require additional  borrowings under its revolving credit facility.  The Company
intends to maintain  and further  strengthen  its  financial  condition  and, in
connection   therewith,   may  from  time  to  time  consider   other   possible
transactions,  including other capital  markets  transactions or dispositions of
businesses  that no longer meet  strategic  objectives.  The Company has engaged
Paine  Webber,  Inc. to explore  strategic  alternatives  which could  involve a
recapitalization,  merger or sale of the Company. Currently, the Company has not
entered into any agreement or commitments concerning any such alternatives.

New Accounting Standards
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial  Accounting  Standards  ("FAS") No. 130,  "Reporting  Comprehensive
Income."  FAS  130   establishes   standards   for   reporting  and  display  of
comprehensive  income,  its components and accumulated  balances.  Comprehensive
income  includes all changes in equity  during a period  except those  resulting
from investments by owners and  distributions  to owners.  FAS 130 requires that
all items that are  required to be  recognized  under  accounting  standards  as
components of comprehensive  income be reported in a financial statement that is
displayed with the same prominence as other financial statements.

In June 1997,  the FASB issued FAS No. 131,  "Disclosures  About  Segments of an
Enterprise and Related Information." FAS 131 establishes standards for reporting
information  about  operating  segments.   It  also  establishes  standards  for
disclosures about products and services, geographic areas, and major customers.


                                       16

<PAGE>



In February 1998,  the FASB issued FAS No. 132,  "Employers'  Disclosures  About
Pension and Other  Postretirement  Benefits." FAS 132 establishes  standards for
disclosure of pension and postretirement benefit information.

These new standards are effective for periods beginning after December 15, 1997,
and require  comparative  information  for  earlier  years to be  restated.  The
implementation  of these new standards will not affect the Company's  results of
operations  or financial  position,  but may impact future  financial  statement
disclosures.


ITEM 8 - Financial Statements and Supplementary Data

          The consolidated  financial statements of the registrant are submitted
as a separate section of this Report starting on page 20. Information related to
"Quarterly Data (Unaudited)" is summarized below:


                                                  1997
                           -----------------------------------------------------
                           First          Second        Third          Fourth
                           -----          ------        -----          ------
                          (In thousands, except per share and market price data)

Net sales                  $63,103        $75,683       $79,061        $78,760
Gross profit                21,678         24,272        26,588         27,078
Net income                   2,554          3,385         4,438          4,692
Earnings per share
   Basic                       .21            .28           .37            .39
   Diluted                     .21            .28           .36            .38
Market price
   High                      15.75          18.13         19.38          20.75
   Low                       12.88          13.38         16.00          16.25



                                                  1996
                          ------------------------------------------------------
                           First          Second        Third          Fourth
                           -----          ------        -----          ------
                          (In thousands, except per share and market price data)

Net sales                  $57,460        $64,862       $71,052        $67,262
Gross profit                19,917         22,377        24,638         23,755
Net income                   2,267          2,850         4,092          3,964
Earnings per share
   Basic                       .19            .24           .34            .33
   Diluted                     .19            .23           .34            .33
Market price
   High                       9.75          12.25         12.25          14.00
   Low                        7.50           9.00          9.88          11.50


ITEM 9 - Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure

          None


                                       17

<PAGE>




                                    PART III

ITEMS 10, 11, 12, AND 13.

          The  information  required by these Items,  other than the information
set  forth in Part I under  the  Section  entitled  "Executive  Officers  of the
Registrant",  is hereby incorporated by reference from the Company's  definitive
proxy statement to be filed pursuant to Regulation 14A for its Annual Meeting of
Stockholders to be held on May 19, 1998.



                                     PART IV

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

(a) (1), (2) and (3)--The  response to this portion of Item 14 is submitted as a
separate section of this Report starting on page 20.

(b)  Reports on Form 8-K filed in the fourth quarter of 1997.

     None

(c)  Exhibits--The  response  to  this  portion  of Item  14 is  submitted  as a
     separate section of this Report starting on page 47.

(d)  Financial  Statement  Schedule--The  response to this portion of Item 14 is
     submitted as a separate section of this Report on page 46.



                                       18

<PAGE>



                                   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,  as of the 17th day of
March 1998.

                             AMERICAN SAFETY RAZOR COMPANY



                             /s/Thomas H. Quinn
                             -----------------------------
                             Thomas H. Quinn
                             Chairman of the Board and Chief Executive Officer

                                Power of Attorney

Each person  whose  signature  appears  below  hereby  constitutes  and appoints
William C.  Weathersby  and Jonathan F. Boucher,  and each of them, the true and
lawful  attorneys-in-fact  and  agents of the  undersigned,  with full  power of
substitution  and  resubstitution,  for and in the name,  place and stead of the
undersigned  and to file the same,  with all  exhibits  thereto,  in any and all
capabilities,  to sign any and all amendments (including post-effective exhibits
thereto,  and other  documents in connection  therewith) with the Securities and
Exchange Commission, and hereby grants to such attorneys-in-fact and agents, and
each of them,  full power and authority to do and perform each and every act and
thing  requisite  and necessary to be done, as fully to all intents and purposes
as the undersigned might or could do in person,  hereby ratifying and confirming
all that said  attorneys-in-fact  and  agents,  or any of them,  or their or his
substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Report
has been signed below by the following  persons on behalf of the  Registrant and
in the capacities as of the 17th day of March 1998.


        Signature                              Title

/s/ Thomas H. Quinn                           Chairman of the Board and
    --------------------------                 Chief Executive Officer
    Thomas H. Quinn                            (Principal Executive Officer)

/s/ William C. Weathersby                     Director, President and
    --------------------------                 Chief Operating Officer
    William C. Weathersby

/s/ Thomas G. Kasvin                          Senior Vice President
    --------------------------                 Chief Financial Officer
    Thomas G. Kasvin                           (Principal Financial Officer and
                                                Principal Accounting Officer)

/s/ Jonathan F. Boucher                       Director, Vice President and
    --------------------------                  Assistant Secretary
    Jonathan F. Boucher

/s/ John W. Jordan II                         Director
    --------------------------
    John W. Jordan II

/s/ David W. Zalaznick                        Director
    --------------------------
    David W. Zalaznick

/s/ John R. Lowden                            Director
    --------------------------
    John R. Lowden

/s/ Paul D. Rhines                            Director
    --------------------------
    Paul D. Rhines

/s/ D. Patrick Curran                         Director
    --------------------------
    D. Patrick Curran

/s/ William C. Ballard, Jr.                   Director
    --------------------------
    William C. Ballard, Jr.

                                       19

<PAGE>




                           ANNUAL REPORT ON FORM 10-K

                   ITEM 8, ITEM 14(a)(1) and (2), (c) and (d)

                   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

          LIST OF FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

                                CERTAIN EXHIBITS

                          FINANCIAL STATEMENT SCHEDULE

                          YEAR ENDED DECEMBER 31, 1997

                          AMERICAN SAFETY RAZOR COMPANY

                               STAUNTON, VIRGINIA


                                       20

<PAGE>



FORM 10-K--ITEM 14(a)(1) AND (2)

American Safety Razor Company

List of Financial Statements and Financial Statement Schedule

The following consolidated financial statements of American Safety Razor Company
are included in Item 8:

         Consolidated Balance Sheets--December 31, 1997 and 1996

         Consolidated  Statements of Income--Years ended December 31, 1997, 1996
         and 1995

         Consolidated  Statements of Cash Flows--Years  ended December 31, 1997,
         1996 and 1995

         Notes to Consolidated Financial Statements--December 31, 1997

The following consolidated financial statement schedule of American Safety Razor
Company is included in Item 14(d):

         Schedule II Valuation and Qualifying Accounts

All other  schedules for which  provision is made in the  applicable  accounting
regulation of the Securities and Exchange  Commission are not required under the
related instructions or are inapplicable and therefore have been omitted.


                                       21

<PAGE>



AMERICAN SAFETY RAZOR COMPANY
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

                                                           December 31,
                                                         1997        1996
                                                      ----------   ---------


Assets
Current assets:
    Cash and cash equivalents .....................   $   1,434    $   1,979
    Trade receivables, less allowances of .........      45,277       37,904
     $3,461 in 1997, and $2,558 in 1996
    Inventories ...................................      51,488       43,866
    Income taxes receivable .......................         896         --
    Deferred income taxes .........................       2,803        3,760
    Prepaid expenses ..............................       1,410        1,833
                                                      ---------    ---------

Total current assets ..............................     103,308       89,342

Property and equipment, net .......................      72,943       61,022

Intangible assets, net:
    Goodwill ......................................      68,978       70,678
    Other .........................................       4,258        5,055
                                                      ---------    ---------
                                                         73,236       75,733

Prepaid pension cost and other ....................       4,594        3,900
                                                      ---------    ---------

Total assets ......................................   $ 254,081    $ 229,997
                                                      =========    =========

Liabilities and stockholders' equity
 Current liabilities:
    Accounts payable ..............................   $  15,704    $  14,212
    Accrued expenses ..............................      10,772       10,195
    Payroll and related liabilities ...............       5,720        5,220
    Accrued interest ..............................       4,269        4,234
    Income taxes payable ..........................        --            370
    Current maturities of long-term obligations ...       2,107        1,419
                                                      ---------    ---------

Total current liabilities .........................      38,572       35,650

Long-term obligations .............................     121,505      110,762
Retiree health and insurance benefits .............      22,966       22,292
Pension and other liabilities .....................       2,017        3,383
Deferred income taxes .............................       9,582       13,387
                                                      ---------    ---------

Total liabilities .................................     194,642      185,474
                                                      ---------    ---------

Contingent liabilities and commitments

Stockholders' equity:
    Common Stock, $.01 par value, 25,000,000
        shares authorized; 12,098,049 shares issued
        and outstanding in 1997, 12,092,849 in 1996         121          121
Additional capital ................................      65,801       65,756
Deficit ...........................................      (5,645)     (20,714)
Foreign currency translation ......................        (838)        (640)
                                                      ---------    ---------
                                                         59,439       44,523

Total liabilities and stockholders' equity ........   $ 254,081    $ 229,997
                                                      =========    =========

See accompanying notes.


                                       22

<PAGE>



AMERICAN SAFETY RAZOR COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share data)
<TABLE>
<CAPTION>


                                                            Year ended December 31,
                                                       1997       1996         1995
                                                    ---------   ---------    ---------
<S>                                                     <C>        <C>          <C>

Net sales .......................................   $ 296,607   $ 260,636   $ 230,453
Cost of sales ...................................     196,991     169,949     149,994
                                                    ---------   ---------   ---------

Gross profit ....................................      99,616      90,687      80,459

Selling, general and administrative expenses ....      60,206      54,867      48,487
Amortization of intangible assets ...............       2,501       2,503       2,341
Litigation settlement expense ...................        --          --           947
                                                    ---------   ---------   ---------

Operating income ................................      36,909      33,317      28,684
Interest expense ................................      12,270      11,719      10,582
                                                    ---------   ---------   ---------

Income before income taxes and extraordinary item      24,639      21,598      18,102
Income taxes ....................................       9,570       8,425       7,241
                                                    ---------   ---------   ---------

Income before extraordinary item ................      15,069      13,173      10,861
Extraordinary item, net of income
 tax benefit of $654 in 1995 ....................        --          --          (980)

Net income ......................................   $  15,069   $  13,173   $   9,881
                                                    =========   =========   =========

Basic earnings per share:
    Income before extraordinary item ............   $    1.25   $    1.09   $     .90
    Extraordinary item ..........................        --          --          (.08)
                                                    ---------   ---------   ---------

    Net income ..................................   $    1.25   $    1.09   $     .82
                                                    =========   =========   =========

    Weighted average number of shares outstanding      12,094      12,093      12,093
                                                    =========   =========   =========

Diluted earnings per share:
    Income before extraordinary item ............   $    1.23   $    1.09   $     .90
    Extraordinary item ..........................        --          --          (.08)
                                                    ---------   ---------   ---------

    Net income ..................................   $    1.23   $    1.09   $     .82
                                                    =========   =========   =========

    Weighted average number of shares outstanding      12,255      12,139      12,135
                                                    =========   =========   =========

</TABLE>


See accompanying notes.

                                       23

<PAGE>



AMERICAN SAFETY RAZOR COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>

                                                             Year ended December 31,
                                                          1997          1996        1995
                                                       ---------    ---------    ---------
<S>                                                       <C>           <C>          <C>


Operating activities
Net income .........................................   $  15,069    $  13,173    $   9,881
Adjustments to reconcile net income to net
    cash provided by operating activities:
        Extraordinary charge .......................        --           --            980
        Depreciation ...............................       8,624        8,081        6,592
        Amortization ...............................       2,501        2,503        2,341
        Interest and financing costs ...............         540          727          997
        Deferred income taxes ......................       1,834          273        1,446
        Retiree health and insurance benefits ......         674          684          858
        Pension and other ..........................      (2,023)         254          301
        Changes in operating assets and
        liabilities net of effects of acquisitions:
            Trade receivables ......................      (7,685)      (1,213)      (3,210)
            Inventories ............................      (3,619)        (171)      (3,445)
            Income taxes receivable ................        (896)        --           --
            Prepaid expenses .......................         423         (119)        (244)
            Accounts payable .......................       1,492          666         (889)
            Accrued and other expenses .............         (70)         998        2,061
            Income taxes payable ...................      (4,827)        (343)         539
                                                       ---------    ---------    ---------

Net cash provided by operating activities ..........      12,037       25,513       18,208

Investing activities
Capital expenditures (net of disposals of $84
   in 1997, $74 in 1996 and $268 in 1995) ..........     (13,714)     (11,269)     (12,109)
Acquisitions, net of cash acquired .................     (10,300)     (16,673)      (7,704)
Deferred loan costs and other ......................          (3)          62       (4,452)
                                                       ---------    ---------    ---------

Net cash used in investing activities ..............     (24,017)     (27,880)     (24,265)

Financing activities
Repayment of long-term obligations .................        (553)     (11,225)    (118,269)
Proceeds from borrowings ...........................      11,943       13,424      125,795
Proceeds from exercise of stock options ............          45         --           --
                                                       ---------    ---------    ---------

Net cash provided from financing activities ........      11,435        2,199        7,526
                                                       ---------    ---------    ---------

Net increase (decrease) in cash and cash equivalents        (545)        (168)       1,469
Cash and cash equivalents, beginning of period .....       1,979        2,147          678
                                                       ---------    ---------    ---------

Cash and cash equivalents, end of period ...........   $   1,434    $   1,979    $   2,147
                                                       =========    =========    =========


</TABLE>


See accompanying notes.

                                       24

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company
American Safety Razor Company and its subsidiaries  (the "Company") is a leading
designer,   manufacturer   and  marketer  of  high  quality  store,   value  and
premium-brand  consumer  products.  The Company's  principal products consist of
shaving razors and blades,  bladed hand tools and blades,  specialty  industrial
and  medical  blades,  cotton  and foot  care  products,  and  custom  bar soaps
principally sold to the retail and professional  trades in the United States and
in selected international markets.

Basis of Presentation
The  consolidated  financial  statements  have been prepared in accordance  with
generally  accepted  accounting  principles  which  require  management  to make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and disclosure of contingent  assets and liabilities at the dates of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the  reporting  periods.  Accordingly,  actual  results could differ from
those estimates.

Principles of Consolidation
The consolidated  financial  statements  include the accounts of American Safety
Razor  Company  and  its  subsidiaries,  all  of  which  are  wholly-owned.  The
consolidated  financial  statements  also  include  the  accounts  of The Cotton
Division of American White Cross,  Inc.,  ("AWC"),  Bond-America  Israel Blades,
Ltd., and its wholly-owned U.S.  subsidiary,  A.I. Blades,  Inc.  (collectively,
"Bond") and Megas Beauty Care,  Inc.,  ("Megas") since their  acquisition  dates
(see Note 13).  During  March 1996,  Megas Beauty  Care,  Inc.,  was merged into
Absorbent Cotton Company ("ACCO"), which was acquired on March 3, 1995, and ACCO
changed  its  name  to  Megas  Beauty  Care,  Inc.  ("Megas").  All  significant
intercompany accounts and transactions have been eliminated in consolidation.

Inventories
Inventories are stated at the lower of cost or market. Cost for approximately 61
percent  and 56  percent  of  inventories  for 1997 and 1996,  respectively,  is
determined  by the last-in,  first-out  ("LIFO")  method.  Cost of the remaining
inventories,  operating supplies and inventories of foreign and certain domestic
subsidiaries, is determined by the first-in, first-out method.

Long-Lived Assets
Property  and  equipment  are  stated  on the  basis of cost.  Expenditures  for
renewals and  betterments  are  capitalized,  and  expenditures  for repairs and
maintenance   are  expensed  as  incurred.   Depreciation  is  computed  by  the
straight-line  method over the  estimated  useful  lives of the related  assets,
which are as follows:

        Land improvements                          5-20 years
        Buildings and improvements                15-40 years
        Machinery and equipment                    3-15 years

Intangible  assets are stated on the basis of cost.  Goodwill is being amortized
on a  straight-line  basis over a forty-year  period.  The Company  periodically
reviews its long-lived  assets to assess  recoverability  or impairment based on
expectations of undiscounted  cash flows and the assets'  carrying  amount.  Any
impairment  in carrying  value would be  recognized  in  operating  results if a
permanent  decline  in value  were to  occur.  Noncompete  agreements  are being
amortized  using  the  straight-line  method  over  the  terms  of  the  related
agreements.  Deferred loan costs are amortized  using the  straight-line  method
over the term of the related long-term obligations.

Advertising Expenses
Advertising  costs are expensed  when  incurred and  approximated  $2,318,000 in
1997, $732,000 in 1996, and $1,161,000 in 1995.

Foreign Currency Translation
The accounts of the Company's foreign  subsidiaries are generally measured using
local currency as the functional currency.  Accordingly,  assets and liabilities
are translated into U.S.  dollars at period-end  exchange rates,  and income and
expense are translated at average monthly  exchange rates. Net exchange gains or
losses  resulting  from such  translations  are  excluded  from net earnings and
accumulated as a separate  component of stockholders'  equity.  Gains and losses
from  foreign  currency  transactions  are  included in net earnings and are not
significant in amount.  The effect of exchange rate changes on cash flows is not
material.


                                       25

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Financial Instruments
The Company's financial instruments include cash and cash equivalents,  accounts
receivable,  accounts  payable,  debt  obligations and foreign  currency forward
contracts. Because of their short maturity, the carrying amount of cash and cash
equivalents,  accounts receivable and accounts payable  approximates fair value.
Fair value of debt  obligations is based on quoted market prices for the same or
similar issues.  Fair value of foreign  currency  forward  contracts is based on
quoted market prices. The Company  periodically  hedges certain foreign currency
exposures  through a hedging  program.  Gains and losses on these  contracts are
deferred and offset against  foreign  exchange gains or losses on the underlying
hedged transaction. At December 31, 1997, there were no foreign exchange forward
contracts outstanding. At December 31, 1996, there were approximately $2,370,000
of foreign  exchange  forward  contracts  outstanding and the carrying values of
these contracts approximated their fair values.

Concentration of Credit Risk
Financial  instruments that potentially  subject the Company to concentration of
credit  risk  consist   primarily  of  cash  and  cash   equivalents  and  trade
receivables.  The Company  restricts its cash and cash  equivalents to financial
institutions  with high credit  ratings and credit risk on trade  receivables is
minimized  due  to  the  diverse  geographic  areas  covered  by  the  Company's
operations and its diverse customer base.

Earnings Per Share
In February  1997, the Financial  Accounting  Standards  Board  ("FASB")  issued
Statement of Financial  Accounting Standards No. 128, "Earnings Per Share" ("FAS
128").  FAS 128 replaced the  calculation of primary and fully diluted  earnings
per share with basic and diluted earnings per share. Unlike primary earnings per
share,  basic  earnings  per share  exclude  any  dilutive  effects of  options,
warrants and  convertible  securities.  Diluted  earnings per share  include the
dilutive effects of options, warrants and convertible securities.

The Company  adopted FAS 128  effective  December 31,  1997.  Earnings per share
amounts  for all periods  prior to  December  31,  1997,  have been  restated as
required to comply with FAS 128. The  difference  between the  weighted  average
number of shares  outstanding for computing basic earnings per share and diluted
earnings per share relates to the Company's  employee stock options  outstanding
which are assumed to be converted for the diluted earnings per share calculation
when the  average  market  price of the  Company's  common  stock for the period
exceeds the exercise price of the employee stock options which are outstanding.

Statement of Cash Flows
The Company  considers  all highly liquid  investments  with a maturity of three
months or less at the time of purchase to be cash equivalents.  The Company paid
income taxes of $13,516,000 in 1997, $8,750,000 in 1996, and $4,296,000 in 1995.
The Company paid  interest of  $11,706,000  in 1997,  $11,123,000  in 1996,  and
$5,610,000 in 1995.

Stock Options
The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related  Interpretations in accounting
for its employee stock options.  Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of  grant,  no  compensation  expense  is  recognized.  The  Company
provides  additional pro forma  disclosures  of the  fair-value  based method in
accordance with Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation" (See Note 10).

New Accounting Standards
In June 1997, the FASB issued FAS No. 130, "Reporting Comprehensive Income." FAS
130 establishes standards for reporting and display of comprehensive income, its
components and accumulated  balances.  Comprehensive income includes all changes
in equity during a period except those resulting from  investments by owners and
distributions to owners. FAS 130 requires that all items that are required to be
recognized under accounting  standards as components of comprehensive  income be
reported in a financial  statement that is displayed with the same prominence as
other financial statements.

In June 1997,  the FASB issued FAS No. 131,  "Disclosures  About  Segments of an
Enterprise and Related Information." FAS 131 establishes standards for reporting
information  about  operating  segments.   It  also  establishes  standards  for
disclosures about products and services, geographic areas, and major customers.

In February 1998,  the FASB issued FAS No. 132,  "Employers'  Disclosures  About
Pension and Other  Postretirement  Benefits." FAS 132 establishes  standards for
disclosure of pension and postretirement benefit information.


                                       26

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


These new standards are effective for periods beginning after December 15, 1997,
and require  comparative  information  for  earlier  years to be  restated.  The
implementation  of these new standards will not affect the Company's  results of
operations  or financial  position,  but may impact future  financial  statement
disclosures.


2. INVENTORIES

Inventories consisted of:
                                                         December 31,
                                                      1997         1996
                                                    --------     --------
                                                        (In thousands)
                                                    
     Raw materials                                  $20,352      $15,463
     Work in process                                  5,596        5,951
     Finished goods                                  23,128       20,289
     Operating supplies                               3,107        2,819
                                                    --------     --------
                                                     52,183       44,522
     Excess of current cost
     over LIFO inventory value                          695          656
                                                    --------     --------
                                                    $51,488      $43,866
                                                    ========     ========

3. PROPERTY AND EQUIPMENT

     Property and equipment consisted of:

                                                         December 31,
                                                      1997         1996  
                                                    --------     --------
                                                        (In thousands)   
                                                    
     Land and land improvements                     $ 1,872     $  1,817
     Buildings and improvements                       9,959        9,843
     Machinery and equipment                         92,965       73,158
     Construction in progress                         9,853       10,216
                                                    --------     --------
                                                    114,649       95,034
     Less accumulated depreciation                  (41,706)     (34,012)
                                                    --------     --------
                                                    $72,943      $61,022
                                                    ========     ========

4. INTANGIBLE ASSETS

     Intangible assets consisted of:
                                                         December 31,
                                                      1997         1996
                                                    --------     --------
                                                        (In thousands)
                                                    
     Goodwill                                       $84,396      $83,996
     Noncompete agreements                            2,522        2,422
     Deferred loan costs and other                    4,256        4,250
                                                    -------      -------
                                                     91,174       90,668
     Less accumulated amortization                  (17,938)     (14,935)
                                                    -------      -------
                                                    $73,236      $75,733
                                                    =======      =======


                                       27

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5. LONG-TERM OBLIGATIONS

     Long-term obligations consist of
      the following:
                                                         December 31,
                                                      1997         1996
                                                   ---------    --------
                                                      (In thousands)
                                                   
     Revolving loans, due August 2000              $ 17,300   $    6,100

     9 7/8% Series B Senior Notes, due
      August 2005                                   100,000      100,000

     9% subordinated note, due June 2000              2,500        2,500

     Other:
     3% Industrial Development Authority
      note, due March 30, 2002                        1,767        2,078
     Other obligations                                2,045        1,503
                                                   ---------    --------
                                                    123,612      112,181
     Less current maturities                          2,107        1,419
                                                   ---------    --------
                                                   $121,505     $110,762
                                                   =========    ========

The Company's revolving credit facility requires payment of an annual commitment
fee of .31% on the average daily unborrowed amounts under the facility. Interest
is based on the  bank's  prime rate or the London  Interbank  offered  rate plus
1.25%. The weighted-average interest rate on the Company's outstanding revolving
loans was  approximately  7.3% at  December  31,  1997.  Borrowings  under  this
facility  mature on August 3, 2000.  At  December  31,  1997,  the  Company  had
approximately  $32,000,000 available for future borrowings and letters of credit
under its revolving credit facility. The weighted-average interest rate incurred
by the Company with respect to its debt obligations,  was approximately 9.5% and
9.6% during the years ended December 31, 1997 and 1996, respectively.

The 9 7/8% Series B Senior Notes require semi-annual interest payments on August
1 and February 1 of each year and a principal  payment of $100,000,000 on August
1, 2005.  The 9 7/8% Series B Senior Notes are  guaranteed  by certain  domestic
subsidiaries of the Company.

The 9%  subordinated  note was issued to the seller in connection with the Megas
acquisition and is due in equal installments on June 10, 1999 and June 10, 2000.

The  industrial  development  authority  note requires  semi-annual  payments of
$185,000 through September 2001 with a final payment of $435,000 due March 2002.
Other  obligations   include  debt  obligations  of  several  of  the  Company's
subsidiaries.

Maturities of long-term obligations subsequent to December 31, 1997, approximate
$2,107,000 in 1998,  $1,710,000 in 1999,  $19,016,000 in 2000, $350,000 in 2001,
$429,000 in 2002 and $100,000,000 thereafter.

The  Company's  trade  receivables,  inventories  and property and equipment are
pledged as collateral  for the industrial  development  authority note and trade
receivables and  inventories are pledged as collateral for the revolving  credit
facility.  The revolving credit facility  contains certain  financial  covenants
which require the Company,  among other requirements,  to meet certain financial
ratios relating to interest coverage and indebtedness.  The indenture related to
the 9 7/8% Series B Senior Notes limits the ability of the Company,  among other
limitations,  to pay dividends,  make certain other restricted payments or incur
certain additional  indebtedness  unless it meets a cash flow coverage ratio, as
defined.  In addition,  the Company may be required to offer to purchase  Senior
Notes  equal to 100% of the  principal  amount  thereof,  with the  proceeds  of
certain asset sales, as defined.

In August 1995,  in connection  with the repayment of its bank credit  agreement
and subordinated  notes, the Company wrote-off deferred financing costs and paid
a prepayment premium in the aggregate amount of approximately $1,634,000.  These
costs have been presented as an extraordinary charge for early extinguishment of
debt of $980,000 (net of a tax benefit) in the results of operations  during the
year ended December 31, 1995.


                                       28

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


6. FINANCIAL INSTRUMENTS

At December 31, 1997 and 1996,  the carrying  value of the  Company's  financial
instruments  approximate their fair values except for the 9 7/8% Series B Senior
Notes which have a fair value of approximately  $108,000,000 and $105,000,000 at
December 31, 1997 and 1996, respectively.


7. RETIREMENT PLANS

The Company and certain subsidiaries have defined benefit pension plans covering
substantially  all employees.  Benefits are generally based on employee years of
service and  compensation.  The Company's  funding policy is to contribute  such
amounts as are necessary to provide assets sufficient to meet the benefits to be
paid to plan members.

The following  table sets forth the funded status and amounts  recognized in the
consolidated balance sheets for the Company's defined benefit pension plans:

                                                             December 31,
                                                          1997          1996
                                                         --------     --------
                                                            (In thousands)
  Actuarial present value of benefit obligation:
       Vested benefit obligation                         $ 79,380     $ 75,123
                                                         ========     ========

       Accumulated benefit obligation                    $ 85,750     $ 81,261
                                                         ========     ========

  Projected benefit obligation                             96,685       91,863
  Plan assets at fair value                               117,777      102,059
                                                          -------      -------

  Projected benefit obligation less than plan assets       21,092       10,196
       Unrecognized net gain                              (18,660)      (9,450)
       Unrecognized prior service cost                        682          865
                                                         --------     --------
  Net pension asset                                      $  3,114     $  1,611
                                                         ========     ========


The significant  assumptions used in determining the actuarial  present value of
the projected benefit obligation were as follows:

                                                             December 31,
                                                      1997      1996     1995
                                                      -----     -----    -----

   Weighted-average discount rates                    7.25%      7.5%     7.5%
   Rates of increases in compensation levels           5.0%      5.0%     5.0%
   Expected long-term rates of return on assets       11.0%     11.0%    11.0%

Effective December 31, 1997, the weighted-average discount rate was decreased to
7.25%  which  increased  the  projected  benefit   obligation  by  approximately
$3,146,000.  Effective December 31, 1995, the weighted-average discount rate was
decreased  to  7.5%  which  increased  the  projected   benefit   obligation  by
approximately  $8,726,000.  The net  pension  asset is  comprised  of a  prepaid
pension  asset of  $4,034,000  in 1997  and  $3,560,000  in 1996 and an  accrued
pension  liability of $920,000 in 1997 and $1,949,000 in 1996.  Amortization  of
unrecognized  prior  service  cost is based on the  expected  future  service of
active employees  expected to receive  benefits.  The plan assets were primarily
invested in listed common stocks, cash equivalents, corporate bonds and U.S.
government debt securities.


                                       29

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


A summary of the components of net periodic  pension cost of the defined benefit
plans follows:

                                                          December 31,
                                                1997       1996         1995
                                              -------   ---------     --------
                                                        (In thousands)

  Service cost                               $  2,238    $  2,285    $  1,841
  Interest cost                                 6,662       6,309       6,017
  Actual return on plan assets                (20,977)    (14,734)    (17,677)
  Net amortization and deferral                10,670       6,013      10,154
                                             --------    --------    --------
  Net periodic pension (income) cost          $(1,407)   $   (127)   $    335
                                             ========    ========    ========

The Company and certain  subsidiaries sponsor defined contribution benefit plans
for substantially all U.S.  employees.  The plans permit employees to contribute
up to 15% of their salary to the plan. The Company also makes  contributions  to
the plans which approximated  $173,000 in 1997, $159,000 in 1996 and $121,000 in
1995.


8. RETIREE HEALTH AND INSURANCE BENEFITS

The Company  sponsors  several defined benefit  postretirement  medical and life
insurance  plans  providing  benefits  to certain  employees  who have  worked a
minimum of five years and attained age 55 while in service with the Company. The
Company  requires  salaried  employees  retiring after April 1, 1993, to have 20
years of  service  after age 40 to receive  full  benefits  and has  implemented
maximum payments for certain of its hourly employees.  Salaried  employees hired
after May 1, 1991,  are not  eligible  to  participate  in these  postretirement
benefit plans. The plans are contributory,  with retiree contributions  adjusted
annually,  and contain  other  cost-sharing  features  such as  deductibles  and
coinsurance. The Company's policy is to fund the costs of these medical and life
insurance benefit plans as they become due.

The  following  table  presents the plans'  accumulated  postretirement  benefit
obligation  reconciled  with amounts  recognized in the  Company's  consolidated
balance sheets:
                                                               December 31,
                                                          1997          1996
                                                         -------      -------
                                                            (In thousands)

  Accumulated postretirement benefit obligation:
       Retirees                                          $11,918      $10,133
       Fully eligible active plan participants             5,096        3,320
       Other active plan participants                      7,801        7,936
                                                         -------      -------
                                                          24,815       21,389
  Unrecognized reduction of prior service cost             1,368        1,854
  Unrecognized net loss                                   (3,217)        (951)
                                                         -------      -------
  Accrued postretirement benefit cost                    $22,966      $22,292
                                                         =======      =======

Effective  December  31,  1997,  the  weighted-average  discount  rate  used  in
determining the accumulated  postretirement  benefit obligation was decreased to
7.25%  from  7.5%  which  increased  the  accumulated   postretirement   benefit
obligation  by  approximately   $594,000.   Effective  December  31,  1995,  the
weighted-average   discount   rate   used   in   determining   the   accumulated
postretirement  benefit  obligation  was decreased to 7.5% from 8.5% in 1994 and
the ultimate  health care cost trend rate was changed to 5.75% in 2000 from 6.5%
in 2000 which increased the  accumulated  postretirement  benefit  obligation by
approximately $2,330,000.


                                       30

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Net periodic postretirement benefit cost includes the following components:

                                                       Year Ended December 31,
                                                  1997        1996        1995
                                                 ------      ------      ------
                                                           (In thousands)

  Service cost                                   $  548      $  617      $  542
  Interest cost                                   1,739       1,533       1,568
  Net amortization and deferral                    (486)       (419)       (486)
                                                 ------      ------      ------
  Net periodic postretirement benefit cost       $1,801      $1,731      $1,624
                                                 ======      ======      ======

The  weighted-average  annual assumed rate of increase in the per capita cost of
covered  benefits (i.e.,  health care cost trend rate) is 7.5% for 1998, (8% for
1997) and is assumed to decline gradually to 5.75% for 2000 and thereafter.  The
health care cost trend rate  assumption has a significant  effect on the amounts
reported.  An  increase  in the  assumed  health  care cost  trend  rates by one
percentage  point in each year would  increase  the  accumulated  postretirement
benefit obligation as of December 31, 1997, by $983,000 and the aggregate of the
service and interest cost components of net periodic postretirement benefit cost
for 1997 by $167,000.


9. TAXES ON INCOME

The provision for taxes on income is comprised of the following:

                                                Year Ended December 31,
                                             1997          1996        1995
                                           -------       -------      ------
                                                     (In thousands)

  Current:
  Federal                                   $6,869        $6,784      $4,972
  State and local                              493           393         476
  Foreign                                      374           975         347
                                           -------       -------     -------
  Total current                              7,736         8,152       5,795
                                           -------       -------     -------

  Deferred:
  Federal                                    1,708           277         944
  State and local                              233            26         530
  Foreign                                     (107)          (30)        (28)
                                           -------       -------     -------
  Total deferred                             1,834           273       1,446
                                           -------       -------     -------
  Total provision for income taxes          $9,570        $8,425      $7,241
                                            ======        ======      ======

The provision  for income taxes in 1995  applicable  to the  extraordinary  item
consisted  of current  federal and state  income tax  benefits  of $576,000  and
$78,000,  respectively.  The Company  has not  provided  taxes of  approximately
$868,000  on the  undistributed  pre-tax  earnings  of  $10,196,000  of  foreign
subsidiaries  as it is the intent of the Company to support  these  subsidiaries
with  such  earnings.   Income  before  income  taxes  and  extraordinary   item
attributable  to foreign  operations for 1997,  1996 and 1995 was  approximately
$1,134,000, $2,818,000 and $3,120,000, respectively.


                                       31

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The Company's  effective income tax rate varies from the United States statutory
rate as follows:

                                                         Year Ended December 31,
                                                         1997     1996    1995
                                                         ----     ----    ----

   United States rate                                     35%      35%     35%
   Foreign taxes in excess of (less than) U.S. rate        -        3      (1)
   State income taxes, net of federal tax benefit          2        4       4
   Goodwill amortization                                   3        3       4
   Interest on tax basis adjustments                       -       11       -
   Employee benefits and other provisions                  -        4       -
   Reduction of valuation allowance                        -      (23)      -
   Other--net                                             (1)       2      (2)
                                                         -----    -----   ----
   Effective income tax rate                              39%      39%     40%
                                                         =====    =====   ====


At December  31, 1997 and 1996,  the Company had deferred  tax  liabilities  and
assets which have been netted by tax jurisdiction for presentation purposes. The
significant  components  of these  amounts at December  31, 1997 and 1996 are as
follows:

                                                   December 31,
                                             1997             1996
                                            -------          -------
                                                 (In thousands)
Deferred tax liabilities:
Property and equipment                      $ 7,636          $ 7,352
Employee benefits                             1,967            1,657
Other                                         9,720           14,183
                                            -------          -------
Total deferred tax liabilities               19,323           23,192

Deferred tax assets:
Employee benefits                            10,143           10,135
Selling and promotion costs                     513            1,172
Inventories                                   1,284            1,102
Restructuring costs                             134              669
Net operating loss carryforward                 216               89
Other                                           254              398
                                            -------          -------
Total deferred tax assets                    12,544           13,565
                                            -------          -------
Net deferred tax liabilities                $ 6,779          $ 9,627
                                            =======          =======

The  deferred  tax  liabilities  and assets are  disclosed  in the  consolidated
balance sheets at December 31, 1997 and 1996 as follows:

                                                   December 31,
                                             1997             1996
                                            -------          -------
                                                 (In thousands)
                                           
Noncurrent deferred income tax              $9,582           $13,387
liabilities
Current deferred income tax assets           2,803             3,760
                                            ------           -------
Net deferred tax liabilities                $6,779           $ 9,627
                                            ======           =======

During 1996,  management  determined,  based on the Company's  recent history of
earnings and its expectations  for future earnings,  that operating income would
more likely than not be sufficient to fully recognize the Company's deferred tax
assets.  Accordingly, in 1996 the Company reversed its valuation allowance of $5
million  relating to its  deferred  tax assets.  Included  in the  deferred  tax
liabilities-other  are the Company's  estimated tax liabilities  relating to the
ultimate outcome of its current Internal Revenue Service (IRS)  examinations and
other tax issues.  Upon favorable  ultimate  settlement of these matters,  up to
approximately  $5  million  of  such  estimated  tax  liabilities  would  reduce
goodwill.


                                       32

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


The  Company's  federal  income  tax  returns  for 1989  through  1994 have been
examined by the IRS. During 1996, the Company provided  additional taxes related
to its IRS examinations.  The Company acquired certain  intangible assets at the
time of  acquisition  of the Company and of Ardell for $29 million,  and to date
the Company has claimed  federal  income tax  deductions  of $29 million for the
amortization of those assets. In June 1997, the IRS issued a statutory notice of
deficiency   disallowing   substantially  all  of  the  Company's   amortization
deductions  relating to the intangible  assets.  The Company  disagrees with the
IRS's  disallowances  and in September  1997,  petitioned  the U.S. Tax Court to
review and  redetermine  such  disallowances.  The outcome of these  proceedings
cannot be predicted  at this time and the Company will  continue to evaluate the
potential  impact  on its tax  reserves  for this  case.  However,  the  Company
believes  that the  ultimate  outcome of these issues will not have a materially
adverse impact on the consolidated  financial  position or results of operations
of the Company.


10. STOCKHOLDERS' EQUITY

The Company has an incentive  stock option plan whereby  incentive stock options
may be granted to  directors,  officers  and other key  employees  to purchase a
specified  number of  shares  of common  stock at a price not less than the fair
market  value on the date of grant and for a term not to  exceed  10 years.  The
plan  provides for the  granting of options to purchase up to 750,000  shares of
Common  Stock.  Grants of options for 10,000  shares of Common Stock for each of
two new  directors  issued  in  June  1993  become  exercisable  in  five  equal
installments  commencing  one year  from the date of grant.  Grants  of  options
issued to key management  employees  become 40%  exercisable two years following
the date of grant and the remainder  are  exercisable  over the following  three
years in equal annual  installments.  The plan also provides for the granting of
stock  appreciation  rights ("SARs") to officers and key employees with terms of
ten  years.  The terms of the SARs are  determined  at the time of  grant.  Upon
exercise, holders of SARs are paid, at the option of the Company, cash or Common
Stock in an  amount  equal to the  appreciation  in market  value of such  stock
between grant date and the exercise  date.  At December 31, 1997,  there were no
SARs granted.

On February 22, 1996,  the  compensation  committee of the Board of Directors of
the Company  approved the repricing of all  outstanding  stock options under the
incentive  stock option plan based on the market price of the  Company's  Common
Stock at the close of  business on  February  22,  1996 of $8.63 per share.  The
stock  option  data below has been  updated for each  period  presented  to give
effect to the repricing.

The Company follows Accounting  Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees" ("APB 25") and related  Interpretations in accounting
for its employee stock options.  Under APB 25, because the exercise price of the
Company's employee stock options equals the market price of the underlying stock
on the date of grant, no compensation expense is recognized.

Pro forma information regarding net income and earnings per share is required by
FASB Statement No. 123, "Accounting for Stock-Based  Compensation," and has been
determined as if the Company had accounted for its employee  stock options under
the fair value method of that  Statement.  The fair value for these  options was
estimated  at the date of grant using the  Black-Scholes  option-pricing  model.
Significant  weighted-average  assumptions  used in the model for valuing  stock
options granted during 1997 and 1996 are as follows:

                                                  1997            1996
                                                  ----            ----

Risk-free interest rate                           6.9%            6.6%
Expected life of the option                  7.9 years       8.0 years
Expected volatility of stock                      .268            .261
Expected dividend yield                             0%              0%


                                       33

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



For purposes of pro forma  disclosures,  the estimated fair value of the options
is amortized to expense over the options vesting period. The Company's pro forma
information follows (in thousands, except for earnings per share data):

                                                1997            1996
                                                ----            ----
Net income
      As reported                            $15,069         $13,173
      Pro forma                               14,608          12,955

Earnings per share
      As reported
        Basic                                  $1.25           $1.09
        Diluted                                 1.23            1.09
      Pro forma
        Basic                                   1.21            1.07
        Diluted                                 1.19            1.07

Stock options  granted  during 1997 and 1996 (net of  forfeitures  and including
stock  options  issued prior to 1996 which were  repriced on February 22, 1996),
aggregated 121,500 and 365,900 shares, respectively,  and their weighted-average
estimated  fair  value  at the  date of grant is  $7.47  and  $4.54  per  share,
respectively.

Stock option plan activity is summarized below:

                                           Exercise Price Per Share
                                 Number of                         Weighted
                                 Shares           Range             Average
                                 --------    --------------          ------

Outstanding at 12-31-94           222,000    $         8.63          $ 8.63
Cancelled in 1995                  (6,000)             8.63            8.63
                                 --------    --------------          ------
Outstanding at 12-31-95           216,000              8.63            8.63
Granted in 1996                   154,000        8.63-11.00           10.84
Cancelled in 1996                  (2,500)             8.63            8.63
                                 --------    --------------          ------
Outstanding at 12-31-96           367,500        8.63-11.00            9.56
Granted in 1997                   121,500             15.38           15.38
Exercised in 1997                  (5,200)             8.63            8.63
Cancelled in 1997                  (1,600)       8.63-11.00           10.11
                                 --------     -------------          ------
Outstanding at 12-31-97           482,200      $8.63-$15.38          $11.03
                                  =======      ============          ======

Stock options  outstanding at December 31, 1997,  aggregated  482,200 shares and
have  a  weighted-average   remaining  contractual  life  of  7.9  years  and  a
weighted-average  exercise price of $11.03 per share. Stock options  exercisable
at December 31, 1997, 1996 and 1995 totaled 142,460,  103,400 and 35,800 shares,
respectively.   Stock  options   exercisable  at  December  31,  1997,   have  a
weighted-average  exercise price of $8.63 per share.  Stock options reserved for
future grant at December 31, 1997 and 1996 totaled  262,600 and 132,500  shares,
respectively.


                                       34

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Changes in the components of stockholders' equity are as follows:
<TABLE>
<CAPTION>

                                                    Common Stock
                                       ----------------------------------                   Foreign
                                                        Par    Additional                   Currency
                                            Shares     Value    Capital        Deficit      Translation   Total
                                       -------------  ------   ----------    ---------      ----------- --------
                                                     (In thousands, except share data)
<S>                                          <C>         <C>         <C>         <C>             <C>        <C>

Balance at December 31, 1994              12,092,849    $121      $65,756     $(43,768)      $  (970)    $21,139
     Foreign currency translation                  -       -            -            -          (122)       (122)
     Net income                                    -       -            -        9,881             -       9,881
                                       -------------  ------   ----------    ---------      --------    --------
Balance at December 31, 1995              12,092,849     121       65,756      (33,887)       (1,092)     30,898
     Foreign currency translation                  -       -            -            -           452         452
     Net income                                    -       -            -       13,173             -      13,173
                                       -------------  ------   ----------    ---------      --------     -------
Balance at December 31, 1996              12,092,849     121       65,756      (20,714)         (640)     44,523
     Exercise of stock options                 5,200       -           45            -             -          45
     Foreign currency translation                  -       -            -            -          (198)       (198)
     Net income                                    -       -            -       15,069             -      15,069
                                      --------------  ------   ----------      -------       -------    --------
Balance at December 31, 1997              12,098,049    $121      $65,801      $(5,645)        $(838)    $59,439
                                      ==============  ======   ==========      =======       =======    ========
</TABLE>


11. SEGMENT INFORMATION

The Company's  products are reported in three industry segments which consist of
Razors and  Blades,  Cotton  and Foot Care and  Custom Bar Soap.  The razors and
blades segment includes  store-brand and value-brand  shaving razors and blades,
and value-brand  disposable and cartridge razors,  bladed hand tools and blades,
and specialty  industrial and medical  blades.  The cotton and foot care segment
includes  cotton  swabs,  cotton  balls  and  puffs,   cosmetic  pads,  tissues,
pharmaceutical  and beauty  coil,  and foot care  products.  The custom bar soap
segment includes  cosmetic/skin care, bath,  pharmaceutical and specialty custom
bar soaps.
<TABLE>
<CAPTION>

                                                                  Industry Segments
                                                                  -----------------
                                         Net Sales                Operating Income                Year-End Assets
                                         ---------                ----------------                ---------------
                                  1997       1996    1995      1997     1996     1995          1997     1996     1995
                                --------   ------- --------  -------- -------- --------      -------- -------- --------
                                                                  (In thousands)
<S>                                <C>       <C>      <C>        <C>     <C>      <C>           <C>      <C>      <C>

Razors and Blades               $182,615  $171,611 $152,036   $26,506  $26,474  $24,111      $178,331 $167,468 $143,367
Cotton and Foot Care              80,350    55,856   48,708     6,278    4,074    3,007        49,366   36,126   37,714
Custom Bar Soap                   33,642    33,169   29,709     4,125    2,769    1,566        26,384   26,403   27,182
                               --------- --------- --------  -------- --------  --------     -------- -------- --------
                                $296,607  $260,636 $230,453    36,909   33,317   28,684      $254,081 $229,997 $208,263
                                ========  ======== ========                                  ======== ======== ========


Interest expense                                               12,270   11,719   10,582
                                                              -------  -------  -------
Income before income taxes and
  extraordinary item                                          $24,639  $21,598  $18,102
                                                              =======  =======  =======

                                                                 Capital Expenditures        Depreciation and Amortization
                                                             ------------------------------  -----------------------------
                                                               1997     1996     1995          1997     1996     1995
                                                             -------- -------- --------      -------- -------- --------

Razors and Blades                                             $11,064  $ 9,372  $10,110       $ 7,415  $ 7,503   $6,079
Cotton and Foot Care                                            1,777      972      856         2,625    1,985    1,901
Custom Bar Soap                                                   957      999    1,411         1,085    1,096      953
                                                             -------- -------- --------      --------  -------  -------
                                                              $13,798  $11,343  $12,377       $11,125  $10,584   $8,933
                                                              =======  =======  =======       =======  =======   ======
</TABLE>

Summarized data for the Company's foreign operations (principally in Canada, the
United Kingdom, Europe, Israel, Asia Pacific and the Caribbean) are as follows:

                                      1997         1996          1995
                                    --------     --------      ---------
                                              (In thousands)

          Net sales                  $47,169      $41,948       $32,299
          Operating income             1,817        3,335         3,261
          Year-end assets             34,850       32,913        16,499

                                       35

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Export sales from the Company's United States operations  aggregated  $6,798,000
in  1997,  $4,816,000  in 1996  and  $4,705,000  in  1995.  Sales  to one of the
Company's  customers in 1997 amounted to  approximately  10% of consolidated net
sales.


12. COMMITMENTS, CONTINGENCIES AND OTHER

The Company leases  buildings,  office space and equipment under operating lease
agreements  which expire on various dates through 2013.  Certain  leases contain
renewal or purchase  options  which may be exercised  by the  Company.  Rent for
leases  amounted to  approximately  $3,033,000  in 1997,  $2,697,000 in 1996 and
$2,199,000 in 1995. Future minimum rental  commitments under all  noncancellable
operating leases at December 31, 1997 approximate $3,413,000 in 1998, $3,059,000
in 1999, $2,619,000 in 2000, $2,391,000 in 2001 and $2,159,000 in 2002.

The Company is subject to  litigation  incidental to the conduct of its business
and is also subject to government agency  regulations  relating to its products,
environmental  matters,  taxes  and other  aspects  of its  business.  While the
ultimate  outcome of  proceedings  against the Company  cannot be predicted with
certainty, management does not expect that these matters will have a significant
effect on the  consolidated  financial  position or results of operations of the
Company.

During May 1994, American Medical Manufacturing,  Inc. ("AMMI") sued the Company
based on a group of claims  involving  the  failure by the Company to fulfill an
alleged  nationwide  distribution  agreement  relating to AMMI's  products.  The
Company denied the existence of any such agreement. In January 1995, the Company
won a motion for summary  judgement on certain of the claims and filed an appeal
to dismiss the remaining  claims which was denied.  The case was settled in June
1995,  for  $947,000  ($568,000  after  taxes),   including  legal  fees.  These
litigation  settlement  expenses have been  reflected in the statement of income
for the year ended December 31, 1995.

At  December  31,  1997 and 1996,  outstanding  checks  less  amounts on deposit
amounted  to  $1,690,000  and  $1,051,000,  respectively,  which is  included in
accounts payable in the accompanying  consolidated  balance sheets. In addition,
at December  31, 1997 and 1996,  accrued  health  insurance  claims  amounted to
$600,000, which is included in accrued expenses in the accompanying consolidated
balance sheets.

In connection with the Company's  restructuring of Ardell,  at December 31, 1997
and  1996,   the  unexpended   costs   amounted  to  $357,000  and   $1,782,000,
respectively,   and  are  included  in  accrued  expenses  in  the  accompanying
consolidated balance sheets.


13. ACQUISITIONS

On April 22, 1997, the Company  purchased  certain assets of The Cotton Division
of American White Cross,  Inc.  ("AWC") for net  consideration  of approximately
$10,300,000,  including acquisition related expenses.  AWC is a manufacturer and
distributor  of  store-brand  and  value-brand  cotton swabs,  cotton rounds and
squares,  cotton  balls and puffs,  pharmaceutical  coil and cotton  rolls.  The
acquisition  was  financed  by  borrowings  of  $9,800,000  under the  Company's
revolving  credit  facility and has been accounted for under the purchase method
of accounting.

On March 29,  1996,  the  Company  purchased  certain  assets  of  Israel  based
Bond-America  Israel Blades,  Ltd., and its wholly-owned U.S.  subsidiary,  A.I.
Blades,  Inc.  (collectively,  "Bond") for net  consideration  of  approximately
$16,673,000,  net of  cash,  including  acquisition  related  expenses.  Bond is
engaged in the  manufacture  and  distribution  of store-brand  and  value-brand
shaving  razors and  blades.  The  acquisition  was  financed by  borrowings  of
$12,718,000  under  the  Company's  revolving  credit  facility  and  internally
generated  funds  and has been  accounted  for  under  the  purchase  method  of
accounting.  Goodwill of $2,786,000 is being amortized on a straight-line  basis
over a forty-year period.

On March 3, 1995,  the Company  purchased  all of the  capital  stock of Sterile
Products  Corporation,   d.b.a.   Absorbent  Cotton  Company  ("ACCO")  for  net
consideration of approximately  $10,400,000 including assumed debt, net of cash,
and  acquisition  related  expenses.  ACCO is a manufacturer  and distributor of
store-brand  and  value-brand  cotton  squares,  cotton  balls  and  puffs,  and
pharmaceutical  coil. The  acquisition  was financed by borrowings of $8,800,000
under the Company's  revolving  credit facility and has been accounted for under
the purchase method of accounting.  Goodwill of $2,746,000 is being amortized on
a  straight-line  basis over a forty-year  period and two noncompete  agreements
aggregating  $422,000  with the  former  owners  are being  amortized  using the
straight-line  method over the terms of the agreements  which expire in December
2005 and August 2007.

                                       36

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


AWC's,  Bond's  and ACCO's  results  of  operations  have been  included  in the
consolidated statement of income since their date of acquisition.

Pro forma results of operations  for the years ended December 31, 1997 and 1996,
as if  the  AWC  and  Bond  acquisitions  occurred  as of the  beginning  of the
respective periods, are not presented as the effects are not material.


14. SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

The  Company's  $100,000,000  of  Series  B Senior  Notes  due  2005  have  been
guaranteed, on a joint and several basis by certain domestic subsidiaries of the
Company, which guarantees are senior unsecured obligations of each guarantor and
will rank pari passu in right of  payment  with all other  indebtedness  of each
guarantor.  However,  the guarantee of one of the guarantor  subsidiaries  ranks
junior to its outstanding subordinated note.

The following condensed consolidating financial information presents:

     (1) Condensed  consolidating  financial  statements as of December 31, 1997
and 1996, and for the years ended December 31, 1997,  1996 and 1995, of American
Safety Razor  Company - the parent  company,  the  guarantor  subsidiaries,  the
non-guarantor  subsidiaries,  and elimination  entries necessary to combine such
entities on a consolidated basis, and

     (2) The investment in  subsidiaries  carried on the cost basis for purposes
of the supplemental financial information. Earnings (losses) of subsidiaries are
therefore not reflected in the related investment accounts.

During 1997, Ardell  Industries,  Inc., a non-guarantor  subsidiary,  was merged
into American Safety Razor Company - the parent company.

                                       37

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>


                                              Condensed Consolidating Balance Sheets

                                                         December 31, 1997

                                                                                    Non-
                                                                     Guarantor      guarantor
                                                          ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                       ---------     ------------   ------------   ------------   ------------
                                                                                 (In thousands)
<S>                                                         <C>            <C>            <C>            <C>            <C>

Assets
Current assets:
     Cash and cash equivalents .....................     $     356      $     433      $     637      $       8      $   1,434
     Trade receivables, net ........................        20,172         13,283         11,822           --           45,277
     Advances receivable--subsidiaries .............        33,608           --            4,299        (37,907)          --
     Inventories ...................................        29,106         12,603         10,724           (945)        51,488
     Income taxes and prepaid expenses .............         5,730           (982)           361           --            5,109
                                                         ---------      ---------      ---------      ---------      ---------

          Total current assets .....................        88,972         25,337         27,843        (38,844)       103,308

Property and equipment, net ........................        39,836         23,135          9,972           --           72,943
Intangible assets, net .............................        51,205         21,585            446           --           73,236
Prepaid pension cost and other .....................           297          4,277             20           --            4,594
Investment in subsidiaries .........................        39,026           --              900        (39,926)          --
                                                         ---------      ---------      ---------      ---------      ---------

          Total assets .............................     $ 219,336      $  74,334      $  39,181      $ (78,770)     $ 254,081
                                                         =========      =========      =========      =========      =========

Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable, accrued expenses
       and other ...................................     $  19,540      $  13,346      $   3,576      $       3      $  36,465
     Advances payable--subsidiaries ................          --           37,851           --          (37,851)          --
     Current maturities of long-term obligations ...         1,020            138            949           --            2,107
                                                         ---------      ---------      ---------      ---------      ---------

          Total current liabilities ................        20,560         51,335          4,525        (37,848)        38,572

Long-term obligations ..............................       118,748          2,757           --             --          121,505
Retiree health and insurance benefits and other ....        14,988          9,995           --             --           24,983
Deferred income taxes ..............................         7,035          2,492             55           --            9,582
                                                         ---------      ---------      ---------      ---------      ---------

          Total liabilities ........................       161,331         66,579          4,580        (37,848)       194,642
                                                         ---------      ---------      ---------      ---------      ---------

Stockholders' equity
     Common Stock ..................................           121            485             85           (570)           121
     Additional capital ............................        65,801         15,662         23,694        (39,356)        65,801
     Deficit .......................................       (10,407)        (8,392)        14,147           (993)        (5,645)
     Dividends .....................................         2,452           --           (2,452)          --             --
     Foreign currency translation ..................            38           --             (873)            (3)          (838)
                                                         ---------      ---------      ---------      ---------      ---------
                                                            58,005          7,755         34,601        (40,922)        59,439
                                                         ---------      ---------      ---------      ---------      ---------
          Total liabilities and stockholders' equity     $ 219,336      $  74,334      $  39,181      $ (78,770)     $ 254,081
                                                         =========      =========      =========      =========      =========
</TABLE>


                                                                38

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>


                                              Condensed Consolidating Balance Sheets

                                                         December 31, 1996

                                                                                    Non-
                                                                     Guarantor      guarantor
                                                          ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                       ---------     ------------   ------------   ------------   ------------
                                                                                 (In thousands)
<S>                                                         <C>            <C>            <C>            <C>            <C>
Assets
Current assets:
     Cash and cash equivalents .....................     $     201      $      12      $   1,766      $    --        $   1,979
     Trade receivables, net ........................        13,923         10,691         13,290           --           37,904
     Advances receivable--subsidiaries .............        49,343           --             --          (49,343)          --
     Inventories ...................................        24,030          8,954         11,371           (489)        43,866
     Deferred income taxes and prepaid expenses ....         4,224            851            518           --            5,593
                                                         ---------      ---------      ---------      ---------      ---------

          Total current assets .....................        91,721         20,508         26,945        (49,832)        89,342

Property and equipment, net ........................        35,995         15,707          9,320           --           61,022
Intangible assets, net .............................        52,760         22,472            501           --           75,733
Prepaid pension cost and other .....................            73          3,806             21           --            3,900
Investment in subsidiaries .........................        29,581           --              900        (30,481)          --
                                                         ---------      ---------      ---------      ---------      ---------

          Total assets .............................     $ 210,130      $  62,493      $  37,687      $ (80,313)     $ 229,997
                                                         =========      =========      =========      =========      =========

Liabilities and Stockholders' Equity
Current liabilities:
     Accounts payable, accrued expenses
       and other ...................................     $  20,299      $   8,470      $   5,462      $    --        $  34,231
     Advances payable--subsidiaries ................          --           34,103         15,206        (49,309)          --
     Current maturities of long-term obligations ...         1,011            202            206           --            1,419
                                                         ---------      ---------      ---------      ---------      ---------

          Total current liabilities ................        21,310         42,775         20,874        (49,309)        35,650

Long-term obligations ..............................       107,867          2,895           --             --          110,762
Retiree health and insurance benefits and other ....        15,515         10,160           --             --           25,675
Deferred income taxes ..............................        10,956          2,431           --             --           13,387
                                                         ---------      ---------      ---------      ---------      ---------

          Total liabilities ........................       155,648         58,261         20,874        (49,309)       185,474
                                                         ---------      ---------      ---------      ---------      ---------

Stockholders' equity
     Common Stock ..................................           121            484             77           (561)           121
     Additional capital ............................        65,756         15,662         14,257        (29,919)        65,756
     Deficit .......................................       (13,496)       (11,914)         5,217           (521)       (20,714)
     Dividends .....................................         2,063           --           (2,063)          --             --
     Foreign currency translation ..................            38           --             (675)            (3)          (640)
                                                         ---------      ---------      ---------      ---------      ---------
                                                            54,482          4,232         16,813        (31,004)        44,523
                                                         ---------      ---------      ---------      ---------      ---------
          Total liabilities and stockholders' equity     $ 210,130      $  62,493      $  37,687      $ (80,313)     $ 229,997
                                                         =========      =========      =========      =========      =========
</TABLE>


                                       39

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


<TABLE>
<CAPTION>

                                              Condensed Consolidating Statements of Income
                                                       Year Ended December 31, 1997


                                                                              Non-
                                                               Guarantor      guarantor
                                                    ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                 ---------     ------------   ------------   ------------   ------------
                                                                                 (In thousands)
<S>                                                 <C>            <C>            <C>            <C>            <C>

Net sales ..................................     $152,784      $114,365       $ 48,467        $(19,009)      $296,607
Cost of sales ..............................       87,037        91,503         36,988         (18,537)       196,991
                                                 --------      --------       --------        --------       --------

Gross profit ...............................       65,747        22,862         11,479            (472)        99,616

Selling, general and administrative expenses       37,853        12,269         10,084            --           60,206
Amortization of intangible assets ..........        1,456           990             55            --            2,501
                                                 --------      --------       --------        --------       --------

Operating income ...........................       26,438         9,603          1,340            (472)        36,909

Interest expense ...........................        9,387         3,923         (1,040)           --           12,270
                                                 --------      --------       --------        --------       --------
Income (loss) before income taxes ..........       17,051         5,680          2,380            (472)        24,639
Income taxes ...............................        6,390         2,158          1,022            --            9,570
                                                 --------      --------       --------        --------       --------

Net income (loss) ..........................     $ 10,661      $  3,522       $  1,358        $   (472)      $ 15,069
                                                 ========      ========       ========        ========       ========
</TABLE>
<TABLE>
<CAPTION>


                                              Condensed Consolidating Statements of Income
                                                       Year Ended December 31, 1996



                                                                              Non-
                                                               Guarantor      guarantor
                                                    ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                 ---------     ------------   ------------   ------------   ------------
                                                                                 (In thousands)
<S>                                                 <C>            <C>            <C>            <C>            <C>

Net sales ..................................      $138,685      $ 89,025         $ 52,710       $(19,784)      $260,636
Cost of sales ..............................        79,920        70,313           39,309        (19,593)       169,949
                                                  --------      --------         --------       --------       --------

Gross profit ...............................        58,765        18,712           13,401           (191)        90,687

Selling, general and administrative expenses        33,153        11,447           10,267           --           54,867
Amortization of intangible assets ..........         1,481           980               42           --            2,503
                                                  --------      --------         --------       --------       --------

Operating income ...........................        24,131         6,285            3,092           (191)        33,317

Interest expense ...........................         8,477         3,622             (380)          --           11,719
                                                  --------      --------         --------       --------       --------
Income (loss) before income taxes ..........        15,654         2,663            3,472           (191)        21,598
Income taxes ...............................         6,089         1,105            1,231           --            8,425
                                                  --------      --------         --------       --------       --------

Net income (loss) ..........................      $  9,565      $  1,558         $  2,241       $   (191)      $ 13,173
                                                  ========      ========         ========       ========       ========
</TABLE>



                                       40

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


                                              Condensed Consolidating Statements of Income
                                                       Year Ended December 31, 1995


                                                                                        Non-
                                                                        Guarantor       guarantor
                                                              ASR       Subsidiaries    Subsidiaries    Eliminations   Consolidated
                                                           ---------    ------------    ------------    ------------   ------------
                                                                                 (In thousands)
<S>                                                            <C>            <C>            <C>            <C>            <C>

Net sales ...........................................      $ 126,275       $  78,418       $  40,215       $ (14,455)     $ 230,453
Cost of sales .......................................         72,425          63,229          28,816         (14,476)       149,994
                                                           ---------       ---------       ---------       ---------      ---------

Gross profit ........................................         53,850          15,189          11,399              21         80,459

Selling, general and administrative expenses ........         30,176           9,999           8,255              57         48,487
Amortization of intangible assets ...................          1,399             942            --              --            2,341
Litigation settlement expense .......................            947            --              --              --              947
                                                           ---------       ---------       ---------       ---------      ---------

Operating income ....................................         21,328           4,248           3,144             (36)        28,684

Interest expense ....................................          7,166           3,981            (565)           --           10,582
                                                           ---------       ---------       ---------       ---------      ---------
Income (loss) before income taxes
   and extraordinary item ...........................         14,162             267           3,709             (36)        18,102
Income taxes ........................................          6,340             321             601             (21)         7,241
                                                           ---------       ---------       ---------       ---------      ---------
Income (loss) before extraordinary item .............          7,822             (54)          3,108             (15)        10,861
Extraordinary item, net of income tax benefit of $654           (980)           --              --              --             (980)
                                                           ---------       ---------       ---------       ---------      ---------

Net income (loss) ...................................      $   6,842       $     (54)      $   3,108       $     (15)     $   9,881
                                                           =========       =========       =========       =========      =========
</TABLE>


                                       41

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                              Condensed Consolidating Statements of Cash Flows

                                                          Year Ended December 31, 1997


                                                                          Non-
                                                           Guarantor      guarantor
                                                ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                             ---------     ------------   ------------   ------------   ------------
                                                                          (In thousands)
<S>                                              <C>            <C>            <C>            <C>            <C>


Operating activities
Net cash (used in) provided by
 operating activities ..................      $   (588)      $  9,941       $  2,697       $    (13)      $ 12,037
Investing activities
Capital expenditures ...................        (8,115)        (2,724)        (2,875)          --          (13,714)
Purchase of AWC, net of cash acquired ..          --          (10,300)          --             --          (10,300)
Other ..................................          --               (3)          --             --               (3)
Investment in subsidiaries .............        (9,445)          --            9,445           --             --
Advances from (to) subsidiaries ........         6,979           --             --           (6,979)          --
                                              --------       --------       --------       --------       --------

     Net cash (used in) provided from
      investing activities .............       (10,581)       (13,027)         6,570         (6,979)       (24,017)

Financing activities
Repayment of long-term obligations .....          (310)          (243)          --             --             (553)
Proceeds from borrowings ...............        11,200           --              743           --           11,943
Proceeds for exercise of stock options .            45           --             --             --               45
Advances from (to) subsidiaries ........          --            3,750        (10,750)         7,000           --
Dividends ..............................           389           --             (389)          --             --
                                              --------       --------       --------       --------       --------

     Net cash provided from (used in)
      financing activities .............        11,324          3,507        (10,396)         7,000         11,435
                                              --------       --------       --------       --------       --------

Net increase (decrease) in cash and cash
   equivalents .........................           155            421         (1,129)             8           (545)
Cash and cash equivalents, beginning of
  period ...............................           201             12          1,766           --            1,979
                                              --------       --------       --------       --------       --------
     Cash and cash equivalents, end of
        period .........................      $    356       $    433       $    637       $      8       $  1,434
                                              ========       ========       ========       ========       ========
</TABLE>


                                       42

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



<TABLE>
<CAPTION>

                                              Condensed Consolidating Statements of Cash Flows

                                                          Year Ended December 31, 1996



                                                                                 Non-
                                                                  Guarantor      guarantor
                                                       ASR        Subsidiaries   Subsidiaries   Eliminations   Consolidated
                                                    ---------     ------------   ------------   ------------   ------------
                                                                                  (In thousands)
<S>                                                     <C>            <C>             <C>           <C>            <C>

Operating activities
Net cash provided by operating activities .....      $ 16,109       $  7,822       $  1,580       $      2       $ 25,513

Investing activities
Capital expenditures ..........................        (8,711)        (1,912)          (646)          --          (11,269)
Purchase of Bond, net of cash acquired ........       (16,673)          --             --             --          (16,673)
Other .........................................            62           --             --             --               62
Investment in subsidiaries ....................        (2,301)          --             --            2,301           --
Advances from (to) subsidiaries ...............         7,037           --             --           (7,037)          --
                                                     --------       --------       --------       --------       --------

     Net cash used in investing activities ....       (20,586)        (1,912)          (646)        (4,736)       (27,880)

Financing activities
Repayment of long-term obligations ............       (10,949)          (276)          --             --          (11,225)
Proceeds from borrowings ......................        13,218           --              206           --           13,424
Advances from (to) subsidiaries ...............          --           (5,672)           938          4,734           --
Dividends .....................................         2,063           --           (2,063)          --             --
                                                     --------       --------       --------       --------       --------

     Net cash provided from (used in) financing
      activities ..............................         4,332         (5,948)          (919)         4,734          2,199
                                                     --------       --------       --------       --------       --------

Net increase (decrease) in cash and cash
   equivalents ................................          (145)           (38)            15           --             (168)
Cash and cash equivalents, beginning of
  period ......................................           346             50          1,751           --            2,147
                                                     --------       --------       --------       --------       --------
     Cash and cash equivalents, end of
        period ................................      $    201       $     12       $  1,766       $   --         $  1,979
                                                     ========       ========       ========       ========       ========


                                       43
</TABLE>

<PAGE>


AMERICAN SAFETY RAZOR COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                                              Condensed Consolidating Statements of Cash Flows

                                                          Year Ended December 31, 1995


                                                                           Non-
                                                            Guarantor      guarantor
                                                 ASR        Subsidiaries   Subsidiaries     Eliminations   Consolidated
                                              ---------     ------------   ------------     ------------   ------------
                                                                          (In thousands)
<S>                                              <C>            <C>            <C>            <C>            <C>
Operating activities
Net cash provided by (used in) operating
   activities ..........................      $  18,041       $  (1,154)      $   1,359       $     (38)      $  18,208

Investing activities
Capital expenditures ...................         (9,721)         (2,000)           (388)           --           (12,109)
Purchase of ACCO, net of cash acquired .         (7,704)           --              --              --            (7,704)
Other ..................................         (4,452)           --              --              --            (4,452)
Investment in subsidiaries .............        (11,295)           --              (900)         12,195            --
Advances from (to) subsidiaries ........          6,101            --              --            (6,101)           --
                                              ---------       ---------       ---------       ---------       ---------

     Net cash (used in) provided from
      investing activities .............        (27,071)         (2,000)         (1,288)          6,094         (24,265)

Financing activities
Repayment of long-term obligations .....       (116,837)         (1,432)           --              --          (118,269)
Proceeds from borrowings ...............        125,795            --              --              --           125,795
Advances from (to) subsidiaries ........           --             4,633           1,423          (6,056)           --
                                              ---------       ---------       ---------       ---------       ---------

     Net cash provided from (used in)
      financing activities .............          8,958           3,201           1,423          (6,056)          7,526
                                              ---------       ---------       ---------       ---------       ---------

Net increase (decrease) in cash and cash
   equivalents .........................            (72)             47           1,494            --             1,469
Cash and cash equivalents, beginning of
  period ...............................            418               3             257            --               678
                                              ---------       ---------       ---------       ---------       ---------
     Cash and cash equivalents, end of
        period .........................      $     346       $      50       $   1,751       $    --         $   2,147
                                              =========       =========       =========       =========       =========
</TABLE>




                                       44

<PAGE>



                        Report of Independent Accountants






Stockholders and Board of Directors
American Safety Razor Company


We have audited the accompanying  consolidated balance sheets of American Safety
Razor Company and subsidiaries as of December 31, 1997 and 1996, and the related
consolidated  statements of income and cash flows for each of the three years in
the period ended December 31, 1997. We have also audited the financial statement
schedule listed in Item 14(a) of this Form 10-K. These financial  statements and
financial statement schedule are the responsibility of the Company's management.
Our  responsibility  is to express an opinion on the  financial  statements  and
financial statement schedule based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  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 consolidated  financial position of American Safety
Razor  Company  and  subsidiaries  as of  December  31,  1997 and 1996,  and the
consolidated  results of their  operations  and their cash flows for each of the
three years in the period ended December 31, 1997, in conformity  with generally
accepted  accounting  principles.  In addition,  in our opinion,  the  financial
statement  schedule  referred to above, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material respects,
the information required to be included therein.




                                               Coopers and Lybrand L.L.P.



Richmond, Virginia
February 4, 1998


                                       45

<PAGE>


<TABLE>
<CAPTION>

                                          SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

                                                    AMERICAN SAFETY RAZOR COMPANY

                                                           (IN THOUSANDS)


                                                                                  Additions
                                                                             --------------------
                                                                Balance      Charged to   Charged                      Balance
                                                                Beginning    Costs and    to Other                     End of
Description                                                     of Period    Expenses     Accounts     Deductions      Period
-----------                                                     ---------    --------     --------     ----------      -------
<S>                                                                <C>          <C>         <C>            <C>           <C>

Year ended 12-31-97

     Reserves and allowances deducted from asset accounts:
          Allowance for doubtful accounts ................      $ 1,252      $   595      $  --          $   484 (2)   $ 1,363
          Allowance for discounts and other deductions ...        1,306        4,820         --            4,028 (3)     2,098
                                                                -------      -------       -------       -------       -------
                                                                $ 2,558      $ 5,415       $  --         $ 4,512       $ 3,461
                                                                =======      =======       =======       =======       =======

Year ended 12-31-96

     Reserves and allowances deducted from asset accounts:
          Allowance for doubtful accounts ................      $ 1,026      $   593      $     3 (1)    $   370 (2)   $ 1,252
          Allowance for discounts and other deductions ...          986        3,223           32 (1)      2,935 (3)     1,306
                                                                -------      -------       -------       -------       -------
                                                                $ 2,012      $ 3,816       $    35       $ 3,305       $ 2,558
                                                                =======      =======       =======       =======       =======

Year ended 12-31-95

     Reserves and allowances deducted from asset accounts:
          Allowance for doubtful accounts ................      $   794      $   594      $    71 (1)    $   433 (2)   $ 1,026
          Allowance for discounts and other deductions ...          633        3,534          235 (1)      3,416 (3)       986
                                                                -------      -------       -------       -------       -------
                                                                $ 1,427      $ 4,128       $   306       $ 3,849       $ 2,012
                                                                =======      =======       =======       =======       =======

</TABLE>

(1) Allowance  balance of subsidiary at  acquisition  date
(2) Accounts  written off, net of recoveries
(3) Discounts taken by customer

                                       46

<PAGE>
<TABLE>
<CAPTION>



                                                          INDEX TO EXHIBITS
                                                                                                                 Sequentially
Exhibit                                                                                                            Numbered
Number          Description                                                                                          Page
-------         -----------                                                                                      ------------
<S>             <C>                                                                                                <C>

2.1             Stock Sale and Purchase Agreement for the Registrant, dated April 12, 1989,
                  by, between, and among J. Gray Ferguson, Arthur J. Gajarsa, Joseph F. Hackett
                  and William L. Robbins, III, the Registrant and ASR Acquisition Corp. (1)...............              **

2.2             Agreement for Purchase and Sale of Stock, dated April 17, 1989, by and among
                  Howard E. Strauss, Bert Ghavami, and Ardell Acquisition Corp.(1)........................              **

2.3             Amendment No. 1 to Agreement for Purchase and Sale of Stock, dated April
                  28, 1989, by and among Howard E. Strauss, Bert Ghavami, and Ardell
                  Acquisition Corp........................................................................              **

2.4             Agreement for Purchase and Sale of Stock of Megas Beauty Care, Inc. dated
                  May 16, 1994 between Megas Holdings, Inc. and Robert Bender (1).........................             ***

2.5             Stock Purchase Agreement dated February 7, 1995, by and among Sterile Products
                  Holdings, Inc. and C. C. (Jack) Van Noy, George P. Goemans, Tamalpais
                  Capital, and Newtek Venture (1).........................................................            ****

2.6             Asset Purchase Agreement, dated as of March 6, 1996, by and among
                MLO Razor Company (1996) Ltd. ("Purchaser"), and Bond-America
                Israel Blades Ltd. ("Seller"), Nostrum Establishment and Kaftor
                VePerach Ltd., the stockholders of Seller (individually each an
                "Owner" and collectively, the "Owners") and Robert Mandel, Daniel
                Mandel, Alfred Mernone, Shulamit Weiman, Noam Weiman, Efrat
                Gershoni and Ayin Mor Ltd. (individually each a "Beneficial Owner"
                and collectively the "Beneficial Owners" and together with the
                Owners, the "Stockholders"). (1)..........................................................         *******

2.7             Amendment No. 1 to Asset Purchase Agreement (the "Amendment"),
                dated as of March 25, 1996, by and among Bond Blades International
                Ltd. (formerly known as MLO Razor Company (1996) Ltd.), ("Purchaser"),
                and Bond-America Israel Blades Ltd., ("Seller"), Nostrum Establishment
                and Kaftor VePerach Ltd., the stockholders of Seller (individually each
                an "Owner" and collectively, the "Owners") and Robert Mandel,
                Daniel Mandel, Alfred Mernone, Shulamit Weiman, Noam Weiman, Efrat
                Gershoni and Ayin Mor Ltd. (individually each a "Beneficial Owner"
                and collectively the "Beneficial Owners" and together with the
                Owners, the "Stockholders")...............................................................         *******

2.8             Asset Purchase Agreement, dated as of March 6, 1996, by and among
                American Safety Razor Company ("Purchaser"), and A.I. Blades, Inc.
                ("Seller") and Bond-America Israel Blades, Ltd., the sole stockholder
                of Seller ("Bond"), Nostrum Establishment and Kaftor VePerach Ltd.,
                Robert Mandel, Daniel Mandel, Alfred Mernone, Shulmait Weiman,
                Noam Weiman, Efrat Gershoni and Ayin Mor Ltd. (individually each
                a "Beneficial Owner" and collectively the "Beneficial Owners" and
                together with Bond, the "Stockholders").  (1).............................................         *******


                                       47

<PAGE>



                                                                                                                Sequentially
Exhibit                                                                                                            Numbered
Number          Description                                                                                          Page
-------         -----------                                                                                      ------------

2.9             Amendment No. 1 to Asset Purchase Agreement (the "Amendment"),
                dated as of March 25, 1996, by and among American Safety Razor
                Company ("Purchaser"), and A.I. Blades, Inc. ("Seller") and
                Bond-America Israel Blades Ltd., the sole stockholder of Seller
                ("Bond"), Nostrum Establishment and Kaftor VePerach Ltd.,
                Robert Mandel, Daniel Mandel, Alfred Mernone, Shulamit Weiman,
                Noam Weiman, Efrat Gershoni and Ayin Mor Ltd. (individually each
                a "Beneficial Owner" and collectively the "Beneficial Owners" and
                together with Bond, the "Stockholders")...................................................         *******

3.1             Amended and Restated Certificate of Incorporation of the Registrant.......................               *

3.2             Amended and Restated By-laws of the Registrant............................................               *

4.1             Specimen of Stock Certificate.............................................................              **

4.2             Recapitalization Agreement, dated May 24, 1993, among the Registrant and its
                  Stockholders............................................................................               *

4.3             Subscription Agreement, dated April 28, 1989, by and among the Registrant, JZCC
                  and Allsop..............................................................................              **

4.4             Registration Rights Agreement, dated as of August 3, 1995, among the Registrant,
                  the Guarantors and the Initial Purchasers, relating to the Senior Notes.................          ******

4.5             Indenture governing the Senior Notes, dated as of August 3, 1995, by and among
                  the Registrant, the Guarantors and the Trustees.........................................           *****

4.6             Preferred Stock Exchange Agreement, dated June 14, 1993, among the Registrant and
                  the holders of Preferred Stock..........................................................               *

4.7             Common Stock Conversion Agreement, dated May 24, 1993, among the Registrant and
                  the holders of Common Stock.............................................................               *

4.8             Stockholders Agreement, dated April 14, 1989, between the Registrant and its
                  Stockholders............................................................................              **

4.9             First Amendment to the Stockholders Agreement, dated April 28, 1989, between the
                  Registrant and its Stockholders.........................................................              **

4.10            Second Amendment to the Stockholders Agreement, dated December 29, 1992, between
                  the Registrant and its Stockholders ....................................................              **

4.11            Third Amendment to the Stockholders Agreement, dated June 15, 1993, among the
                  Registrant and certain of its Stockholders..............................................               *

4.12            $2,500,000 Subordinated Secured Note, due June 10, 2000, executed by Megas
                  Holdings, Inc. in favor of Robert Bender................................................             ***

4.13            Junior Security Agreement, dated June 10, 1994, by Megas Beauty Care, Inc. (formerly
                  Megas Holdings, Inc.) in favor of Robert Bender.........................................            ****

4.14            Multicurrency Credit Agreement, dated as of August 3, 1995, among the Registrant, the
                  Guarantors and First National Bank of Chicago, as agent, including exhibits.............           *****


                                       48

<PAGE>



                                                                                                                Sequentially
Exhibit                                                                                                            Numbered
Number          Description                                                                                          Page
-------         -----------                                                                                      ------------

4.15            Guarantees of the Guarantors pursuant to the Multicurrency Credit Agreement...............          ******

4.16            Security Agreement, dated August 3, 1995, between the Registrant and First National
                  Bank of Chicago, as agent, including schedules..........................................          ******

4.17            Guarantor Security Agreements, dated August 3, 1995, by and among the Guarantors
                  and First National Bank of Chicago, as agent, including schedules.......................          ******

10.1(a)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and William C. Weathersby (2)................................................               *

10.1(b)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and William L. Robbins (2)...................................................               *

10.1(c)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and George L. Pineo (2)......................................................               *

10.1(d)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and Gary S. Wade (2).........................................................               *

10.1(e)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and Joseph F. Hackett (2)....................................................               *

10.1(f)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and Thomas G. Kasvin (2).....................................................               *

10.1(g)         Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and Thomas B. Boyd (2).......................................................               *

10.1.(h)        Non-Disclosure/Non-Compete Agreement, dated June 15, 1993, between the
                  Registrant and Bruce L. Stichter (2)....................................................               *

10.2(a)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  Thomas H. Quinn (2).....................................................................               *

10.2(b)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  William C. Weathersby (2)...............................................................               *

10.2(c)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  Jonathan F. Boucher (2).................................................................               *

10.2(d)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  John W. Jordan, II (2)..................................................................               *

10.2(e)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  David W. Zalaznick (2)..................................................................               *

10.2(f)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  John R. Lowden (2)......................................................................               *

10.2(g)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  Paul D. Rhines (2)......................................................................               *

10.2(h)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  D. Patrick Curran (2)...................................................................               *

                                       49

<PAGE>




                                                                                                                Sequentially
Exhibit                                                                                                            Numbered
Number          Description                                                                                          Page
-------         -----------                                                                                      ------------

10.2(i)         Indemnification Agreement, dated June 15, 1993, between the Registrant and
                  William C. Ballard, Jr. (2).............................................................               *

10.3            Financial Advisory Agreement, dated July 12, 1995, between the Registrant and
                  TJC Management..........................................................................          ******

10.4            Settlement Agreement, dated June 5, 1992, by and between Warner-Lambert
                  Company and the Registrant..............................................................              **

10.5            Administrative Consent Order, dated March 13, 1989, between the Registrant
                  and the New Jersey Department of Environmental Protection and Energy....................              **

10.6            Employment Agreement, dated March 3, 1995, by and between Sterile Products
                Holdings, and Sterile Products Corporation and C. C. Van Noy (2)..........................            ****

10.7            The American Safety Razor Company Stock Option Plan.......................................               *

16              Letter re Change in Certifying Accountant.................................................            ****

21              List of Subsidiaries of the Registrant....................................................              51

23              Consent of Coopers & Lybrand L.L.P........................................................              52

27              Financial Data Schedule...................................................................              53

-----------------------
*        Incorporated  by reference to the exhibits filed with the  Registrant's
         Form 10-K for the fiscal year ended December 31, 1993.

**       Incorporated  by reference to the exhibits filed with the  Registrant's
         Form S-1 Registration Statement (No. 33-60298).

***      Incorporated  by reference to the exhibits filed with the  Registrant's
         Form 8-K/A,  dated June 10, 1994 relating to the  acquisition  of Megas
         Beauty Care, Inc.

****     Incorporated  by reference to the exhibits filed with the  Registrant's
         Form 10-K for the fiscal year ended December 31, 1994.

*****    Incorporated  by reference to the exhibits filed with the  Registrant's
         Form 8-K, dated August 15, 1995.

******   Incorporated  by reference to the exhibits filed with the  Registrant's
         Form S-4 Registration Statement (No. 33-96046).

*******  Incorporated  by reference to the exhibits filed with the  Registrant's
         Form 10-Q for the quarter ended March 31, 1996.

(1)      Disclosure  schedules  relating to the  representations  and warranties
         have not been filed; such schedules will be filed  supplementally  upon
         the request of the Securities and Exchange Commission.

(2)      This  exhibit  is  a  management   contract  or  compensatory  plan  or
         arrangement  required to be  identified  in this Form 10-K  pursuant to
         Item 14(c) of this Report.
</TABLE>


                                       50

<PAGE>



                                                  Exhibit 21


LIST OF SUBSIDIARIES OF THE REGISTRANT (1):

Subsidiary

ACME Chaston Puerto Rico, Inc.

American Safety Razor Corporation

American Safety Razor of Canada Limited

ASR Holdings, Inc.

Bond Blades International, Ltd.

The Hewitt Soap Company, Inc.

Industrias Manufactureras ASR de Puerto Rico, Inc.

Megas Beauty Care, Inc.

Personna International de Mexico, S.A. de C.V.

Personna International Limited

Personna International UK Limited

Personna International (Deutschland) GmbH

Personna International de Puerto Rico, Inc.

Valley Park Realty, Inc.




(1) Each subsidiary is 100% owned by the Company or certain of its subsidiaries.

                                       51

<PAGE>



                                                        Exhibit 23


                       CONSENT OF INDEPENDENT ACCOUNTANTS



We consent to the  incorporation by reference in the  registration  statement of
American Safety Razor Company and  subsidiaries on Form S-8 (File No.  33-73982)
of our  report  dated  February  4,  1998,  on our  audits  of the  consolidated
financial  statements and financial  statement schedule of American Safety Razor
Company and  subsidiaries  as of December  31, 1997 and 1996,  and for the years
December  31,  1997,  1996,  and 1995,  which  report is included in this Annual
Report on Form 10-K.









                                      Coopers and Lybrand L.L.P.



Richmond, Virginia
March 13, 1998



                                       52