UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


[x]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934
         For the Quarter Ended September 30, 1999

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE  ACT OF 1934
         For  the  transition  period  from ________ to ___________


                        Commission File Number 000-21952


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



         Delaware                                     54-1050207
         --------                                     ----------
(State of incorporation)               (I.R.S. Employer Identification Number)


One Razor Blade Lane, P.O. Box 979,
   Verona, Virginia 24482-0979                      (540) 248-8000
   ---------------------------                      --------------
(Address of principal executive             Registrant's telephone number
  offices, including zip code)



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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of November 2, 1999.


            Class                            Outstanding at November 2, 1999
            -----                            -------------------------------

Common Stock, $.01 Par Value                          12,110,349



<PAGE>


                          AMERICAN SAFETY RAZOR COMPANY


                                      Index


                                                                    Page Number
                                                                    -----------

Part I.           Financial Information

    Item 1.       Financial Statements

                  Condensed Consolidated Balance Sheets                   1

                  Condensed Consolidated Statements of
                  Operations (Unaudited)                                  3

                  Condensed Consolidated Statements of
                  Comprehensive Income (Unaudited)                        4

                  Condensed Consolidated Statements of
                  Cash Flows (Unaudited)                                  5

                  Notes to Condensed Consolidated
                  Financial Statements (Unaudited)                        6

    Item 2.       Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                    21

    Item 3.       Quantitative and Qualitative Disclosure of
                  Market Risk                                            30


Part II.          Other Information

    Item 1.       Legal Proceedings                                      30

    Item 6.       Exhibits and Reports on Form 8-K                       30

Signatures                                                               31



<PAGE>





                          AMERICAN SAFETY RAZOR COMPANY
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                                                  (In thousands)




                                              Company           Predecessor
                                            ------------        -----------
                                            September 30,       December 31,
                                                1999               1998
                                            ------------        -----------
                                            (Unaudited)

ASSETS

Current assets:
    Cash and cash equivalents                 $   7,566          $  3,453
    Accounts receivable, net                     46,666            44,498
    Inventories                                  56,862            54,029
    Income taxes receivable                       1,399               989
    Deferred income taxes                         6,808             5,108
    Prepaid expenses                              1,876             2,340
                                            ------------        -----------
        Total current assets                    121,177           110,417

Property and equipment                           97,654           124,814
Less accumulated depreciation                    (5,211)          (50,149)
                                            ------------        -----------
                                                 92,443            74,665

Intangible assets, net:
    Goodwill, trademarks and patents            165,534            68,446
    Other                                         7,213             3,365
                                            ------------        -----------
                                                172,747            71,811

Prepaid pension cost and other                   23,812             6,004
                                            ------------        -----------



Total assets                                   $410,179          $262,897
                                            ============        ===========




See accompanying notes.

                                       -1-

<PAGE>



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




                                                   Company        Predecessor
                                                 ------------     -----------
                                                 September 30,    December 31,
                                                     1999            1998
                                                 ------------     -----------
                                                  (Unaudited)

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Accounts payable                              $  12,777        $ 14,269
    Accrued expenses and other                       24,778          19,968
    Current maturities of long-term obligations       8,205           3,852
                                                 ------------     -----------
        Total current liabilities                    45,760          38,089

Long-term obligations                               177,549         123,481
Retiree benefits and other                           26,144          25,163
Deferred income taxes                                33,493           6,610
                                                 ------------     -----------
Total liabilities                                   282,946         193,343
                                                 ------------     -----------

Stockholders' equity:
    Common Stock,  $.01 par  value,  25,000,000
        shares  authorized;  12,110,349
        shares issued and outstanding at
        September 30, 1999 (12,110,049 at
        December 31, 1998)                              121             121
    Additional paid-in capital                      172,843          65,905
    Advances to parent, net                         (42,938)              -
    Retained earnings (accumulated deficit)          (3,077)          4,457
    Accumulated other comprehensive income (loss)       284            (929)
                                                 ------------     -----------
                                                    127,233          69,554
                                                 ------------     -----------

Total liabilities and stockholders' equity         $410,179        $262,897
                                                 ============     ===========



See accompanying notes.

                                       -2-

<PAGE>





                          AMERICAN SAFETY RAZOR COMPANY
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (In thousands, except per share data)



<TABLE>
<CAPTION>
                                                      Company    Predecessor   Company      Predecessor
                                                     --------     --------    --------   -------------------
                                                                               Period     Period
                                                       Three       Three        from       from        Nine
                                                      Months       Months     April 24,  January 1,   Months
                                                       Ended       Ended       1999 to   1999 to      Ended
                                                     September    September   September  April 23,  September
                                                     30, 1999     30, 1998    30, 1999     1999     30, 1998
                                                     --------     --------    --------   --------   --------


<S>                                                   <C>         <C>         <C>        <C>        <C>
Net sales                                             $86,080     $80,171     $146,022   $87,591    $220,433
Cost of sales:
    Other costs                                        54,913      53,269       93,098    58,520     150,223
    Purchase accounting adjustment to inventory             -           -        9,008         -           -
                                                     --------     --------    --------   --------   --------
    Gross profit                                       31,167      26,902       43,916    29,071      70,210

Selling, general and administrative expenses           21,283      17,006       34,413    21,429      47,117
Amortization of intangibles                             1,266         632        2,185       835       1,896
Special charge                                              -           -            -         -       1,003
Transaction expenses                                        -           -            -    11,440           -
                                                     --------     --------    --------   --------   --------
    Operating income (loss)                             8,618       9,264        7,318    (4,633)     20,194

Interest expense                                        6,514       3,124       10,486     3,907       9,273
                                                     --------     --------    --------   --------   --------
    Income (loss) before income taxes
        and extraordinary item                          2,104       6,140       (3,168)   (8,540)     10,921

Income taxes (benefit)                                    845       2,438         (702)     (842)      4,336
                                                     --------     --------    --------   --------   --------
    Income (loss) before extraordinary item             1,259       3,702       (2,466)   (7,698)      6,585

Extraordinary item, net of income tax benefit               -           -          611        118          -
                                                     --------     --------    --------   --------   --------
Net income (loss)                                      $1,259      $3,702      $(3,077)  $(7,816)     $6,585
                                                     ========     ========    ========   ========   ========
Basic earnings per share:
    Income (loss) before extraordinary item             $0.10       $0.31       $(0.20)   $(0.64)      $0.54
    Extraordinary item                                      -           -        (0.05)    (0.01)          -
                                                     --------     --------    --------   --------   --------
    Net income (loss)                                   $0.10       $0.31       $(0.25)   $(0.65)      $0.54
                                                     ========     ========    ========   ========   ========
    Weighted average number of shares outstanding      12,110      12,110       12,110    12,110      12,107
                                                     ========     ========    ========   ========   ========

Diluted earnings per share:
    Income (loss) before extraordinary item             $0.10       $0.30       $(0.20)   $(0.63)      $0.54
    Extraordinary item                                      -           -        (0.05)    (0.01)          -
                                                     --------     --------    --------   --------   --------
    Net income (loss)                                   $0.10       $0.30       $(0.25)   $(0.64)      $0.54
                                                     ========     ========    ========   ========   ========
    Weighted average number of shares outstanding      12,110      12,169       12,116    12,198      12,246
                                                     ========     ========    ========   ========   ========
</TABLE>



See accompanying notes.


                                       -3-

<PAGE>



      CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                      Company    Predecessor   Company      Predecessor
                                                     --------     --------    --------   -------------------
                                                                               Period     Period
                                                       Three       Three        from       from        Nine
                                                      Months       Months     April 24,  January 1,   Months
                                                       Ended       Ended       1999 to   1999 to      Ended
                                                     September    September   September  April 23,  September
                                                     30, 1999     30, 1998    30, 1999     1999     30, 1998
                                                     --------     --------    --------   --------   --------

<S>                                                    <C>          <C>        <C>        <C>         <C>
Net income (loss)                                      $1,259       $3,702     $(3,077)   $(7,816)    $6,585
Other comprehensive income (loss):
   Foreign currency translation adjustments               594          442         284       (116)       391
                                                     --------     --------    --------   --------   --------
Comprehensive income (loss)                            $1,853       $4,144     $(2,793)   $(7,932)    $6,976
                                                     ========     ========    ========   ========   ========
</TABLE>




See accompanying notes.


                                       -4-

<PAGE>





                          AMERICAN SAFETY RAZOR COMPANY
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                                 (In thousands)


                                             Company           Predecessor
                                             -------     ----------------------
                                             Period        Period
                                              from          from         Nine
                                            April 24,     January 1,    Months
                                             1999 to       1999 to      Ended
                                            September     April 23,    September
                                            30, 1999        1999       30, 1998
                                            --------      --------     --------

Operating activities
Net income (loss)                            $(3,077)     $(7,816)      $6,585
Adjustments to reconcile net income
  (loss) to net cash provided by
    operating activities:
        Extraordinary item                       611          118            -
        Depreciation and amortization          7,324        4,105        9,000
        Amortization of financing costs        2,867          180          406
        Retiree benefits and other              (642)        (719)        (451)
        Deferred income taxes                 (3,438)         232        1,035
        Changes in operating assets
          and liabilities:
             Accounts receivables             (9,878)       7,710          206
             Inventories                      12,653       (7,748)      (2,799)
             Income taxes receivable           2,268       (2,252)        (335)
             Prepaid expenses                     90          205       (1,098)
             Accounts payable                 (3,215)       1,723        2,907
             Accrued and other expenses        4,022       (1,072)      (2,860)
             Income taxes payable                  -            -       (4,024)
                                            --------      --------     --------
Net cash provided by (used in)
  operating activities                         9,585       (5,334)       8,572

Investing activities
Capital expenditures                          (3,609)      (3,638)      (8,635)
Acquisitions, net of cash acquired                 -            -         (571)
Other                                            (74)          49          (34)
                                            --------      --------     --------
Net cash used in investing activities         (3,683)      (3,589)      (9,240)

Financing activities
Repayment of long-term obligations           (39,217)     (25,846)      (9,866)
Proceeds from borrowings                      57,797       65,337       11,818
Deferred loan fees                              (395)      (7,606)           -
Proceeds from exercise of stock options            -            2          104
Advances to parent, net                      (18,783)     (24,155)           -
                                            --------      --------     --------
Net cash (used in) provided
  from financing activities                     (598)       7,732        2,056
                                            --------      --------     --------
Net increase (decrease) in cash
  and cash equivalents                         5,304       (1,191)       1,388
Cash and cash equivalents,
  beginning of period                          2,262        3,453        1,434
                                            --------      --------     --------
Cash and cash equivalents, end of period      $7,566       $2,262       $2,822
                                            ========      ========     ========

See accompanying notes.

                                       -5-

<PAGE>





                          AMERICAN SAFETY RAZOR COMPANY

        Notes to Condensed Consolidated Financial Statements (Unaudited)


NOTE A - BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial  information and with the  instructions to Form 10-Q and Article 10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial statements.  In the opinion of management,  all adjustments considered
necessary for a fair presentation have been included.  Operating results for the
period January 1, 1999 to April 23, 1999 for American Safety Razor Company prior
to its  acquisition  by RSA  Acquisition  Corporation  (the  "Predecessor"),  an
affiliate of J.W. Childs Equity Partners II, L.P. ("J.W. Childs") and the period
April 24, 1999 to September 30, 1999 for the American  Safety Razor Company (the
"Company") subsequent to the acquisition,  are not necessarily indicative of the
results that may be expected for the year ended  December 31, 1999.  The balance
sheet at  December  31,  1998  has  been  derived  from  the  audited  financial
statements  at that  date  but  does  not  include  all of the  information  and
footnotes  required by generally  accepted  accounting  principles  for complete
financial  statements.  For  further  information,  refer  to  the  consolidated
financial  statements and footnotes thereto included in the Registrant's  Annual
Report on Form 10-K for the year ended December 31, 1998.

As a result of the acquisition and new basis of accounting  described in Note G,
the Company's financial  statements for the period subsequent to the acquisition
are not  comparable to the  Predecessor's  financial  statements  for the period
prior to the acquisition. With respect to inventories see Note B.


NOTE B - INVENTORIES

Classifications  of  inventories  under  LIFO as of  December  31,  1998  are as
follows:

                                                            December 31, 1998
                                                            -----------------
                                                              (In thousands)

Raw materials                                                    $18,797
Work-in-process                                                    6,612
Finished goods                                                    25,070
Operating supplies                                                 3,475
                                                                --------
                                                                  53,954
Excess of LIFO inventory value over current cost                      75
                                                                --------
                                                                 $54,029
                                                                ========

In  connection  with the  acquisition  the  Company's  new  owners  adopted  the
first-in,  first-out  ("FIFO")  method  of  valuation  of  inventories  and  the
classification of these inventories as of September 30, 1999, are as follows:

                                                         September 30, 1999
                                                         ------------------
                                                          (In thousands)

Raw materials                                                 $22,587
Work-in-process                                                 5,363
Finished goods                                                 25,302
Operating supplies                                              3,610
                                                              -------
                                                              $56,862
                                                              =======


                                       -6-

<PAGE>


NOTE C - SPECIAL CHARGES

In March 1998, the Company recorded a special charge of approximately $1,003,000
related to the shutdown of the Company's cotton operations in Sparks, Nevada and
employee terminations.

The  following  table  provides  information  about the changes in the Company's
accrued special charges,  including the special charges discussed above, for the
nine months ended September 30, 1999:

<TABLE>
<CAPTION>
                                            Remaining         Accruals                      Remaining
                                           Balance at       (Reversals)    Charges in       Balance at
                                         January 1, 1999      in 1999          1999      September 30, 1999
                                         ---------------    -----------    -----------   ------------------
<S>                                       <C>               <C>           <C>             <C>
Discontinuation of product line:
   Contract termination                   $   500,000       $        -    $ 517,000       $ (17,000)
   Excess inventory and deferred charges      500,000          200,000            -         700,000
Severance and employee benefits               603,000         (200,000)     337,000          66,000
                                          -----------       ----------    ---------       ---------
                                          $ 1,603,000       $        -    $ 854,000       $ 749,000
                                          ===========       ==========    =========       =========
</TABLE>


Amounts  remaining at September 30, 1999 are included in accrued expenses in the
accompanying  condensed  consolidated  balance sheets.  Substantially all of the
remaining  payments  and asset  write-offs  are  expected  to occur  during  the
remainder of 1999.

NOTE D - LONG TERM OBLIGATIONS

On April 23, 1999 and concurrent with the  Acquisition  described in Note G, the
Company entered into a $190,000,000  credit agreement (the "Credit  Agreement"),
which provided for term loan commitments in the aggregate amount of $165,000,000
(the "Term  Loan  Facility")  and a  revolving  credit  facility  commitment  of
$25,000,000,   and  terminated  its  existing  revolving  credit  facility  (the
"Terminated  Credit  Facility").  The Term Loan Facility  expires on January 31,
2005 and principal  payments  under this facility  begin on January 31, 2000 and
continue quarterly until the expiration date.  Principal payments are based on a
percentage of principal  balance  outstanding on the respective  payment date as
defined in the Credit  Agreement.  The revolving credit facility also expires on
January 31, 2005 and borrowings under this facility are required to be repaid by
the expiration date.

At June 30, 1999,  the Company had  outstanding  borrowings  under the Term Loan
Facility of $88,000,000 and outstanding  borrowings  under the revolving  credit
facility of  $5,000,000.  The  proceeds  from these  borrowings  and  internally
generated  funds of $1,986,000 were used to purchase  $30,700,000  face value of
the Company's 9 7/8 Series B Senior Notes (the "Senior Note") which were validly
tendered (see Note G), pay expenses and accrued interest of $1,402,000  incurred
in  connection  with the  purchase  of the  Senior  Notes,  pay the  outstanding
balances of $18,811,000  including  accrued  interest on the  Terminated  Credit
Facility and other short-term debt, pay fees and expenses of $19,918,000 related
to the acquisition  and financing and advance funds totaling  $24,155,000 to RSA
Acquisition  Corporation to fund a portion of the acquisition  described in Note
G.

The Credit Agreement limits the ability of the Company, among other limitations,
to incur certain  additional  indebtedness,  places certain  restrictions on the
payment of dividends and limits the amount of annual capital  expenditures.  The
Credit  Agreement also contains  certain  financial  covenants which require the
Company, among other requirements,  to meet certain financial ratios relating to
leverage, fixed charges and interest coverage.

In connection with the purchase of the Senior Notes,  the Company paid a premium
over par and wrote-off deferred financing costs in the aggregate gross amount of
$969,000.  These  expenses,  net of the  related tax  benefit of  $358,000,  are
reflected in the Company's  consolidated  statement of operations in the caption
"Extraordinary item" for the period from April 24, 1999 to September 30, 1999.

In addition,  the Company wrote-off  deferred  financing costs, in the aggregate
gross amount of $186,000 in connection  with the  termination  of the Terminated
Credit Facility.  These expenses, net of the related tax benefit of $68,000, are
also  reflected in the  Company's  consolidated  statement of  operations in the
caption  "Extraordinary  item" for the  period  from  April 1, 1999 to April 23,
1999.

At September 30, 1999,  the Company had  outstanding  borrowings  under the Term
Loan Facility of  $112,500,000  and no  borrowings  were  outstanding  under the
revolving credit facility. At September 30 1999, the Company had

                                       -7-

<PAGE>



approximately  $25 million  available for future  borrowings under its revolving
credit  facility.  Effective July 5, 1999, the Company  permanently  reduced the
amount  available  for future  borrowings  under its Term Loan Facility by $52.5
million to $112.5 million which represents the amount of borrowings  outstanding
under the Term Loan  Facility at September  30,  1999.  In  connection  with the
reduction in the Term Loan  Facility,  the Company wrote off deferred  financing
costs in the aggregate  amount of $2.2 million.  These expenses are reflected in
the Company's  consolidated  statement of  operations in the caption,  "Interest
expense" for the three months ended September 30, 1999.

In October 1999, the Company  entered into an interest rate cap agreement and an
interest  rate swap  agreement  with the bank.  The interest  rate cap agreement
covers  $28,125,000 of variable rate debt, has an interest rate cap of 6.5% over
a 3 month  LIBOR  period and expires in October  2001.  The  interest  rate swap
agreement  also covers  $28,125,000 of variable rate debt and expires in October
2001.  Under the terms of this  agreement,  the interest  rate is fixed at 5.98%
over a 3 month LIBOR period as long as the 3 month LIBOR  remains below 6.5%. If
the 3 month  LIBOR is greater  than or equal to 6.5%,  but less than or equal to
7.00% then no payment is  required  by the  Company or the bank.  If the 3 month
LIBOR is greater  than  7.00%,  the swap  becomes a cap at an  interest  rate of
7.00%.


NOTE E - EARNINGS PER SHARE

The difference  between the weighted  average number of shares  outstanding  for
computing basic earnings per share and diluted earnings per share related to the
Predecessor's  employee  stock  options  outstanding  which  were  assumed to be
converted for the diluted earnings per share calculation when the average market
price of the  Predecessor's  common  stock for the period  exceeded the exercise
price of the employee stock options which were outstanding.

In connection  with the acquisition  described in Note G, the Company,  on April
30,  1999,  redeemed all of its then  outstanding  stock  options for  aggregate
consideration of $1.2 million.


NOTE F - SEGMENT INFORMATION

                                     Company                 Predecessor
                                  ---------------          ----------------
                                   Three Months              Three Months
                                  Ended September           Ended September
                                     30, 1999                  30, 1998
                                  ---------------          ----------------
                                 Net       Operating       Net       Operating
                                Sales       Income        Sales       Income
                                -----       ------        -----       ------
                                                (In Thousands)

Razors and Blades               $54,727       $7,081     $51,361       $7,871
Cotton and Foot Care             23,468          650      22,357        1,140
Custom Bar Soap                   7,885          887       6,453          253
                                -------       ------     -------       ------
                                $86,080        8,618     $80,171        9,264
                                =======                  =======
Interest expense                               6,514                    3,124
                                              ------                   ------
Income before income taxes
   and extraordinary item                     $2,104                   $6,140
                                              ======                   ======


                                       -8-

<PAGE>


<TABLE>
<CAPTION>
                                                Company                             Predecessor
                                         ---------------------       ----------------------------------------------
                                              Period from                Period from              Nine months
                                           April 24, 1999 to          January 1, 1999 to        Ended September
                                          September 30, 1999             April 23, 1999             30, 1998
                                         ---------------------       --------------------    ----------------------
                                           Net       Operating        Net       Operating      Net       Operating
                                          Sales       Income         Sales       Income       Sales       Income
                                          -----       ------         -----       ------       -----       ------
                                                                        (In Thousands)

<S>                                      <C>          <C>            <C>         <C>         <C>           <C>
Razors and Blades                        $ 95,059     $ 5,220        $55,189     $(4,673)    $135,765      $15,883
Cotton and Foot Care                       37,034         499         25,551         258       65,841        3,384
Custom Bar Soap                            13,929       1,599          6,851        (218)      18,827          927
                                         --------    --------        -------     --------    --------      -------
                                         $146,022       7,318        $87,591      (4,633)    $220,433       20,194
                                         ========                    =======                 ========
Interest expense                                       10,486                      3,907                     9,273
                                                     --------                   --------                   -------
Income (loss) before income taxes
   and extraordinary item                             $(3,168)                   $(8,540)                  $10,921
                                                     ========                    =======                  ========
</TABLE>


                                                    Total Assets
                                                    ------------
                                                      September
                                                      30, 1999
                                                      --------

Razors and Blades                                     $308,480
Cotton and Foot Care                                    61,726
Custom Bar Soap                                         39,973
                                                      --------
                                                      $410,179
                                                      ========


NOTE G - MERGER

Effective  April 23,  1999,  RSA  Acquisition  Corporation  ("Acquisition"),  an
affiliate of "J.W. Childs", completed its $14.20 per share cash tender offer for
all outstanding shares of the Predecessor in accordance with a February 12, 1999
merger  agreement  upon the terms and subject to the conditions set forth in the
offer to purchase ("the Stock Tender Offer"). Following completion of the offer,
there remained  approximately  266,601 American Safety Razor shares outstanding.
On July 1, 1999, RSA  Acquisition  Corp. and American  Safety Razor  completed a
merger  transaction  pursuant  to which RSA  Acquisition  Corp.  acquired  these
remaining  shares of American  Safety Razor for $14.20 per share.  The aggregate
purchase price, including transaction costs of $1.0 million, paid for the common
stock  purchased in the Stock Tender  Offer  excluding  the cost to redeem stock
options,  including all of the common stock tendered,  was approximately  $173.0
million.

Following  the merger,  the Company  became the surviving  corporation  and is a
direct, wholly- owned subsidiary of RSA Holdings,  which is wholly-owned by J.W.
Childs, its affiliates and Company management.

Subsequent to the  acquisition  and pursuant to the terms of its Indenture,  the
Company made an offer to purchase all of its $100 million 9 7/8% Series B Senior
Notes due August 1, 2005 (the  "Existing  Notes").  In response  thereto,  $30.7
million of the Existing Notes were properly tendered and retired by the Company.

The Company has accounted for the  acquisition as a purchase.  The allocation of
the purchase price resulted in purchase  adjustments being applied to the assets
acquired and  liabilities  assumed.  The total purchase  price of  approximately
$172,964,000 was allocated to the acquired assets and assumed  liabilities based
on preliminary  estimates of their  respective  fair values at April 23, 1999 as
follows:

          Working capital                             $  77,054,000
          Property, plant and equipment                  93,973,000
          Intangible assets, including goodwill         177,967,000
          Prepaid pension and other assets               46,861,000
          Long-term debt                               (163,685,000)
          Other liabilities                             (59,206,000)
                                                       ------------
                                                       $172,964,000
                                                       ============

                                       -9-

<PAGE>

These  preliminary  estimates  are  subject  to  change  as they  are  based  on
preliminary  appraisals  and as certain of the Company's  business  plans become
finalized.

As a result  of the  acquisition  and new  basis of  accounting,  the  Company's
financial  statements  for the  period  subsequent  to the  acquisition  are not
comparable to the Predecessor's financial statements for the period prior to the
acquisition. As a result of the application of purchase accounting the Company's
depreciation  expense and  amortization of intangible  assets  increased and the
Company  adjusted the carrying  value of acquired  inventories  to reflect their
fair market  value,  which  adjustment  was written off in the April 24, 1999 to
September  30, 1999  reporting  period.  In addition,  certain fees and expenses
incurred relating to the above transactions were expensed in the period in which
the  transactions   were  completed  and  are  included  in  the   Predecessor's
consolidated statement of operations in the caption "Transaction expenses".

The primary components of this caption are (i) amounts paid to redeem all of the
outstanding  options to purchase  common  stock of the  Predecessor,  (ii) costs
incurred by or on behalf of the Predecessor in connection with the  acquisition,
including  legal and other  advisory  fees,  and (iii)  costs  incurred by or on
behalf of the Predecessor  related to payments made to certain  employees of the
Predecessor in connection with the change of control.


NOTE H - CONTINGENCIES

During 1998 the Company  purchased  bleached cotton from an outside supplier for
use in its pharmaceutical coil business.  The Company converted this cotton from
incoming bales into a coil, which was shipped to its pharmaceutical customers to
be used as filler in bottles of oral dosage forms of pharmaceutical  products to
prevent  breakage.  During the period from March through  November of 1998,  the
process by which the  Company's  supplier  bleached  this  cotton was changed by
introducing  an  expanded  hydrogen  peroxide   treatment.   Subsequent  testing
indicated  varying levels of residual  hydrogen peroxide in the cotton processed
during this time period and the supplier in November  1998 reduced the levels of
residual hydrogen peroxide in its bleaching process.  The Company,  to date, has
received  complaints from a number of customers  alleging  defects in the cotton
supplied  them  during the period and  asserting  these  defects may have led to
changes  in their  products  pharmaceutical  appearance,  and with  respect to a
limited number of products,  potency. The Company has received written notice of
claims for damages in the aggregate amount of  approximately  $2.5 million which
the Company  believes  primarily  relates to alleged lost sales and  merchandise
damage,  and has been advised by one customer that it intends to make claims for
damages  that "will run into the  millions  of  dollars."  It is  possible  that
additional  damage claims might be  forthcoming.  To date,  none of these claims
have been  substantiated.  On March 2, 1999, at the request of the Food and Drug
Administration,  the Company  notified all (numbering  approximately  85) of its
pharmaceutical  cotton coil  customers that it was  withdrawing  from the market
those  lots of  cotton  coil  which may  contain  elevated  levels  of  hydrogen
peroxide.

The Company has notified its supplier that, in the Company's  view, the supplier
is primarily responsible for damages, if any, that may arise out of this matter.
At this time, the Company's  supplier has agreed to be responsible  for the cost
of fiber,  bleaching and freight of returned  product,  but has not agreed to be
responsible  for any other  damages and has  expressed  an  intention  to assert
defenses  to our  claims.  The  Company's  insurance  carriers  have been timely
notified of the  existence of the claim and have agreed to provide  defense in a
reservation of rights letter,  but are continuing to evaluate  whether  coverage
would apply to all aspects of the claims.

The Company  has been  advised by its  general  counsel  that it has a number of
valid  defenses  to  potential  customer  claims as well as a third  party claim
against the  supplier  for damages,  if any,  incurred by the Company.  However,
management  is unable to make a  meaningful  estimate  of the amount or range of
loss that could  result from an  unfavorable  outcome  relating to this  overall
issue,  and  accordingly,  there can be no assurance that our exposure from this
matter might not exceed the combination of our insurance  coverage,  if any, and
our recourse to suppliers.  It is therefore  possible that the Company's results
of  operations  or cash flows in a particular  quarterly or annual period or its
financial  position could be significantly and adversely affected by an ultimate
unfavorable outcome of this matter.

Weston  Properties  Investments  III, Ltd. has filed a claim against the Company
for  damages  relating to delays in cost  overruns  attendant  to the  Company's
facility expansion in Cleveland, Ohio in the amount of $649,000.


                                      -10-

<PAGE>



Management  believes  that the  outcome of this  matter will not have a material
adverse effect on the Company's  consolidated  financial  position or results of
operations.

In June  1999,  the  Company  received  notice of the filing of a lawsuit by The
Gillette  Company  ("Gillette")  seeking  injunction and damages for (i) alleged
infringement  by the Company's  MBC(TM) moving blade shaving  cartridge  system,
introduced  by the  Company  during  the  fourth  quarter  of  1994,  and by the
Company's Tri-Flexxx(TM) three bladed shaving system,  introduced by the Company
during the second quarter of 1999, of certain patents held by Gillette, and (ii)
alleged unfair advertising and packaging  practices as well as alleged breach of
contract related to MBC(TM) and Tri-Flexxx(TM)  packaging.  The Company believes
the claims are without merit and does not believe it has any material  liability
with respect to the patent, unfair advertising or contract claims and intends to
vigorously  contest these claims.  However,  management and counsel at this time
are  unable to make a  meaningful  estimate  of the amount or range of loss that
could result from an unfavorable  outcome  relating to this matter.  The Company
will reassess this matter as new facts become available.


NOTE I - SUPPLEMENTAL GUARANTOR FINANCIAL INFORMATION

The  Company's  $69.3  million  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 condensed
consolidating  financial  statements  as of September 30, 1999 (the Company) and
December 31, 1998 (Predecessor), for the period from April 24, 1999 to September
30, 1999 (the  Company),  for the period from  January 1, 1999 to April 23, 1999
(Predecessor),  and for the nine months ended September 30, 1998  (Predecessor),
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.  Separate financial statements
and other  disclosures  concerning the guarantor  subsidiaries are not presented
because management has determined that such information would not be material to
the holders of the Series B Senior Notes.

                                      -11-

<PAGE>



               Condensed Consolidating Balance Sheets (Unaudited)

                               September 30, 1999

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                              Company
                                                   ---------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                   --------  ------------ ------------  ------------  ------------
<S>                                               <C>           <C>         <C>          <C>            <C>
Assets
Current assets:
   Cash and cash equivalents                      $   5,402     $     182   $   1,982    $        -     $   7,566
   Accounts receivables, net                         21,161        12,167      13,576          (238)       46,666
   Advances receivable--subsidiaries                 36,731             -       5,459       (42,190)            -
   Inventories                                       31,903        14,182      11,956        (1,179)       56,862
   Income taxes and prepaid expenses                  7,150         2,362         571             -        10,083
                                                  ---------     ---------   ---------    ----------     ---------
     Total current assets                           102,347        28,893      33,544       (43,607)      121,177

Property and equipment, net                          56,479        26,524       9,440             -        92,443
Intangible assets, net                              135,200        36,541       1,006             -       172,747
Prepaid pension cost and other                       15,571         8,220          21             -        23,812
Investment in subsidiaries                           62,898             -       3,222       (66,120)            -
                                                  ---------     ---------   ---------    ----------     ---------
     Total assets                                 $ 372,495     $ 100,178   $  47,233    $ (109,727)    $ 410,179
                                                  =========     =========   =========    ==========     =========

Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable, accrued expenses
     and other                                    $  21,571     $  11,365   $   4,620    $       (1)    $  37,555
   Advances payable--subsidiaries                         -        43,349           -       (43,349)            -
   Current maturities of long-term obligations        5,571         1,419       1,215             -         8,205
                                                  ---------     ---------   ---------    ----------     ---------
     Total current liabilities                       27,142        56,133       5,835       (43,350)       45,760

Long-term obligations                               177,347           202           -             -       177,549
Retiree benefits and other                           16,095        10,049           -             -        26,144
Deferred income taxes                                24,962         8,254         277             -        33,493
                                                  ---------     ---------   ---------    ----------     ---------
     Total liabilities                              245,546        74,638       6,112       (43,350)      282,946
                                                  ---------     ---------   ---------    ----------     ---------
Stockholders' equity
   Common Stock                                         121           485          88          (573)          121
   Additional paid-in capital                       172,843        24,940      39,834       (64,774)      172,843
   Advances to parent, net                          (42,938)            -           -             -       (42,938)
   Retained earnings (accumulated deficit)           (3,077)          115         918        (1,033)       (3,077)
   Accumulated other comprehensive
     income                                               -             -         281             3           284
                                                  ---------     ---------   ---------    ----------     ---------
                                                    126,949        25,540      41,121       (66,377)      127,233
                                                  ---------     ---------   ---------    ----------     ---------
     Total liabilities and stockholders' equity   $ 372,495     $ 100,178   $  47,233    $ (109,727)    $ 410,179
                                                  =========     =========   =========    ==========     =========
</TABLE>


                                      -12-

<PAGE>



                     Condensed Consolidating Balance Sheets
                                December 31, 1998
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                          Predecessor
                                                 ------------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                  ---------  ------------ ------------  ------------  ------------
<S>                                              <C>            <C>           <C>        <C>            <C>
Assets
Current assets:
   Cash and cash equivalents                      $     (17)    $    106     $  3,364     $       -     $   3,453
   Accounts receivables, net                         18,717       12,315       13,704          (238)       44,498
   Advances receivable--subsidiaries                 48,543            -            -       (48,543)            -
   Inventories                                       30,108       13,349       11,604        (1,032)       54,029
   Income taxes and prepaid expenses                  6,216        1,578          643             -         8,437
                                                  ---------     --------     --------     ---------     ---------

     Total current assets                           103,567       27,348       29,315       (49,813)      110,417

Property and equipment, net                          41,656       24,068        8,941             -        74,665
Intangible assets, net                               49,027       20,601        2,183             -        71,811
Prepaid pension cost and other                        1,133        4,850           21             -         6,004
Investment in subsidiaries                           39,458            -        4,218       (43,676)            -
                                                  ---------     --------     --------     ---------     ---------

     Total assets                                 $ 234,841     $ 76,867     $ 44,678     $ (93,489)    $ 262,897
                                                  =========     ========     ========     =========     =========
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable, accrued expenses
     and other                                    $  20,058     $  9,611     $  4,568     $       -     $  34,237
   Advances payable--subsidiaries                         -       43,283        4,703       (47,986)            -
   Current maturities of long-term obligations        1,030        1,380        1,442             -         3,852
                                                  ---------     --------     --------     ---------     ---------

     Total current liabilities                       21,088       54,274       10,713       (47,986)       38,089

Long-term obligations                               121,718        1,377          386             -       123,481
Retiree benefits and other                           15,169        9,994            -             -        25,163
Deferred income taxes                                 3,468        3,040          102             -         6,610
                                                  ---------     --------     --------     ---------     ---------

     Total liabilities                              161,443       68,685       11,201       (47,986)      193,343
                                                  ---------     --------     --------     ---------     ---------
Stockholders' equity
   Common Stock                                         121          485           87          (572)          121
   Additional paid-in capital                        65,905       15,662       27,173       (42,835)       65,905
   Retained earnings (accumulated deficit)            4,457       (7,965)      10,058        (2,093)        4,457
   Dividends                                          2,877            -       (2,877)            -             -
   Accumulated other comprehensive loss                  38            -         (964)           (3)         (929)
                                                  ---------     --------     --------     ---------     ---------
                                                     73,398        8,182       33,477       (45,503)       69,554
                                                  ---------     --------     --------     ---------     ---------
     Total liabilities and stockholders' equity   $ 234,841     $ 76,867     $ 44,678     $ (93,489)    $ 262,897
                                                  =========     ========     ========     =========     =========
</TABLE>

                                      -13-

<PAGE>


          Condensed Consolidating Statements of Operations (Unaudited)
            For the Period from April 24, 1999 to September 30, 1999
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                                Company
                                                    --------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                    -------  ------------ ------------  ------------  ------------
<S>                                                  <C>          <C>          <C>          <C>            <C>
Net sales                                           $77,406      $51,280      $27,890      $(10,554)     $146,022
Cost of sales:
     Other costs                                     40,310       42,103       21,239       (10,554)       93,098
     Purchase accounting adjustment
        to inventory                                  7,910          215          883             -         9,008
                                                   --------     --------     --------      --------       -------
Gross profit                                         29,186        8,962        5,768             -        43,916

Selling, general and
     administrative expenses                         23,413        6,299        4,701             -        34,413
Amortization of intangible assets                     1,606          565           14             -         2,185
                                                   --------     --------     --------      --------       -------
Operating income                                      4,167        2,098        1,053             -         7,318

Operating income (expense):
     Equity in earnings (losses) of affiliates        1,635            -         (602)       (1,033)            -
     Interest expense                                (9,477)      (1,874)         865             -       (10,486)
                                                   --------     --------     --------      --------       -------
Income (loss) before income taxes
     and extraordinary item                          (3,675)         224        1,316        (1,033)       (3,168)
Income taxes (benefit)                               (1,209)         109          398             -          (702)
                                                   --------     --------     --------      --------       -------

Income (loss) before extraordinary item              (2,466)         115          918        (1,033)       (2,466)
Extraordinary item                                      611            -            -             -           611
                                                   --------     --------     --------      --------       -------
Net income (loss)                                   $(3,077)        $115         $918       $(1,033)      $(3,077)
                                                   ========     ========     ========      ========       =======
</TABLE>


                                      -14-

<PAGE>


          Condensed Consolidating Statements of Operations (Unaudited)
              For the Period from January 1, 1999 to April 23, 1999
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                            Predecessor
                                                    --------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                    -------  ------------ ------------  ------------  ------------
<S>                                                 <C>          <C>          <C>           <C>           <C>
Net sales                                           $46,889      $32,731      $17,136       $(9,165)      $87,591
Cost of sales                                        26,237       28,514       12,934        (9,165)       58,520
                                                   --------     --------     --------      --------       -------
Gross profit                                         20,652        4,217        4,202             -        29,071

Selling, general and
     administrative expenses                         13,665        3,860        3,904             -        21,429
Amortization of intangible assets                       470          318           47             -           835
Transaction expenses                                 11,440            -            -             -        11,440
                                                   --------     --------     --------      --------       -------
Operating income (loss)                              (4,923)          39          251             -        (4,633)

Operating income (expense):
     Equity in earnings of affiliates                  (135)           -         (394)          529             -
     Interest expense                                (3,193)      (1,300)         586             -        (3,907)
                                                   --------     --------     --------      --------       -------
Income (loss) before income taxes
     and extraordinary item                          (8,251)      (1,261)         443           529        (8,540)
Income taxes (benefit)                                 (553)        (570)         281             -          (842)
                                                   --------     --------     --------      --------       -------
Income (loss) before extraordinary item              (7,698)        (691)         162           529        (7,698)
Extraordinary item                                      118            -            -             -           118
                                                   --------     --------     --------      --------       -------
Net income (loss)                                   $(7,816)    $   (691)    $    162       $   529       $(7,816)
                                                   ========     ========     ========      ========       =======
</TABLE>


                                      -15-

<PAGE>



            Condensed Consolidating Statements of Income (Unaudited)
                      Nine months Ended September 30, 1998
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                    Predecessor
                                           --------------------------------------------------------------
                                                                     Non-
                                                      Guarantor    guarantor
                                             ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                           -------  ------------ ------------  ------------  ------------
<S>                                       <C>           <C>          <C>          <C>           <C>
Net sales                                 $111,528      $85,134      $40,083      $(16,312)     $220,433
Cost of sales                               63,529       71,673       31,333       (16,312)      150,223
                                          --------      -------      -------      ---------     --------
Gross profit                                47,999       13,461        8,750            -         70,210

Selling, general and
    administrative expenses                 30,286        8,882        7,949             -        47,117
Amortization of intangible assets            1,115          739           42             -         1,896
Special charge                                 731          184           88             -         1,003
                                          --------      -------      -------      ---------     --------
Operating income                            15,867        3,656          671            -         20,194

Operating income (expense):
    Equity in earnings of affiliates         1,512            -          272        (1,784)            -
    Interest expense                        (7,259)      (3,138)       1,124             -        (9,273)
                                          --------      -------      -------      ---------     --------
Income before income taxes                  10,120          518        2,067        (1,784)       10,921
Income taxes                                 3,535          200          601             -         4,336
                                          --------      -------      -------      ---------     --------
Net income                                  $6,585      $   318       $1,466       $(1,784)     $  6,585
                                          ========      =======      =======      =========     ========
</TABLE>



                                      -16-

<PAGE>



     Condensed Consolidating Statements of Comprehensive Income (Unaudited)
            For the Period from April 24, 1999 to September 30, 1999
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                               Company
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
                                                                             (In thousands)
<S>                                                 <C>              <C>         <C>        <C>           <C>
Net income (loss)                                   $(3,077)         $115        $ 918      $(1,033)      $(3,077)
Other comprehensive income:
   Foreign currency translation adjustments               -             -          281            3           284
                                                    -------       -------      -------      -------       -------
Comprehensive income (loss)                         $(3,077)         $115       $1,199      $(1,030)      $(2,793)
                                                    =======       =======      =======      =======       =======
</TABLE>



     Condensed Consolidating Statements of Comprehensive Income (Unaudited)
              For the Period from January 1, 1999 to April 23, 1999
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                              Predecessor
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
                                                                             (In thousands)

<S>                                                 <C>            <C>           <C>            <C>       <C>
Net income (loss)                                   $(7,816)       $(691)        $162           $529      $(7,816)
Other comprehensive loss:
   Foreign currency translation adjustments               -            -         (116)             -         (116)
                                                    -------       -------      -------      -------       -------
Comprehensive income (loss)                         $(7,816)       $(691)        $ 46           $529      $(7,932)
                                                    =======       =======      =======      =======       =======
</TABLE>



     Condensed Consolidating Statements of Comprehensive Income (Unaudited)
                      Nine Months Ended September 30, 1998
                                 (In thousands)

<TABLE>
<CAPTION>

                                                                              Predecessor
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
<S>                                                <C>            <C>        <C>         <C>             <C>
Net income                                         $6,585         $318       $1,466      $(1,784)        $6,585
Other comprehensive income:
   Foreign currency translation adjustments             -            -          390            1            391
                                                  -------      -------      -------      -------        -------
Comprehensive income                               $6,585         $318       $1,856      $(1,783)        $6,976
                                                  =======      =======      =======      =======        =======
</TABLE>



                                      -17-

<PAGE>



          Condensed Consolidating Statements of Cash Flows (Unaudited)

            For the Period from April 24, 1999 to September 30, 1999

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                               Company
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
<S>                                                 <C>           <C>          <C>          <C>            <C>
Operating activities
Net cash provided by
     operating activities                           $ 7,068       $1,111       $2,731       $(1,325)       $9,585

Investing activities
Capital expenditures                                 (2,076)        (990)        (543)            -        (3,609)
Other                                                   (35)          (1)         (38)            -           (74)
Advances from (to) subsidiaries                        (131)           -       (2,076)        2,207             -
                                                    -------       ------       ------       -------        ------

     Net cash used in investing activities           (2,242)        (991)      (2,657)        2,207        (3,683)

Financing activities
Repayment of long-term obligations                  (37,870)      (1,117)        (230)            -       (39,217)
Proceeds from borrowings                             57,797            -            -             -        57,797
Deferred loan fees                                     (395)           -            -             -          (395)
Advances to parent, net                             (18,783)           -            -             -       (18,783)
Advances from (to) subsidiaries                           -          882            -          (882)            -
                                                    -------       ------       ------       -------        ------

     Net cash provided from (used in)
          financing activities                          749         (235)        (230)         (882)         (598)

Net increase (decrease) in cash and cash
   equivalents                                        5,575         (115)        (156)            -         5,304
Cash and cash equivalents, beginning of
  period                                               (173)         297        2,138             -         2,262
                                                    -------       ------       ------       -------        ------
     Cash and cash equivalents, end of
        period                                       $5,402         $182       $1,982      $      -        $7,566
                                                    =======       ======       ======       =======        ======

</TABLE>


                                      -18-

<PAGE>



          Condensed Consolidating Statements of Cash Flows (Unaudited)

              For the Period from January 1, 1999 to April 23, 1999

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                              Predecessor
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
<S>                                                 <C>           <C>          <C>           <C>          <C>
Operating activities
Net cash (used in) provided by
     operating activities                           $(7,976)      $1,545       $  124        $  973       $(5,334)

Investing activities
Capital expenditures                                 (2,538)        (824)        (276)            -        (3,638)
Other                                                    49            -            -             -            49
Advances from (to) subsidiaries                       2,132            -         (691)       (1,441)            -
                                                    -------       ------       ------       -------        ------

     Net cash used in investing activities             (357)        (824)        (967)       (1,441)       (3,589)

Financing activities
Repayment of long-term obligations                  (25,401)         (62)        (383)            -       (25,846)
Proceeds from borrowings                             65,337            -            -             -        65,337
Deferred loan fees                                   (7,606)           -            -             -        (7,606)
Proceeds from exercise of stock options                   2            -            -             -             2
Advances to parent, net                             (24,155)           -            -             -       (24,155)
Advances from (to) subsidiaries                           -         (468)           -           468             -
                                                    -------       ------       ------       -------        ------
     Net cash provided from (used in)
          financing activities                        8,177         (530)        (383)          468         7,732

Net (decrease) increase in cash and cash
   equivalents                                         (156)         191       (1,226)            -        (1,191)
Cash and cash equivalents, beginning of
  period                                                (17)         106        3,364             -         3,453
                                                    -------       ------       ------       -------        ------
     Cash and cash equivalents, end of
        period                                      $  (173)      $  297       $2,138       $     -        $2,262
                                                    =======       ======       ======       =======        ======
</TABLE>

                                      -19-

<PAGE>



          Condensed Consolidating Statements of Cash Flows (Unaudited)

                      Nine months Ended September 30, 1998

                                 (In thousands)


<TABLE>
<CAPTION>
                                                                              Predecessor
                                                     -------------------------------------------------------------
                                                                              Non-
                                                               Guarantor    guarantor
                                                      ASR    Subsidiaries Subsidiaries  Eliminations  Consolidated
                                                      ---    ------------ ------------  ------------  ------------
<S>                                                  <C>         <C>           <C>          <C>            <C>
Operating activities
Net cash provided by operating activities            $8,946      $   744       $  767       $(1,885)       $8,572

Investing activities
Capital expenditures                                 (5,498)      (3,040)         (97)            -        (8,635)
Purchase of Wolco                                         -            -         (571)            -          (571)
Other                                                    (9)           1          (26)            -           (34)
Investment in subsidiaries                           (1,578)           -        1,578             -             -
Advances from (to) subsidiaries                      (4,397)           -          299         4,098             -
                                                    -------       ------       ------       -------        ------
     Net cash (used in) provided from
          investing activities                      (11,482)      (3,039)       1,183         4,098        (9,240)

Financing activities
Repayment of long-term obligations                   (9,244)        (136)        (486)            -        (9,866)
Proceeds from borrowings                             11,323            -          495             -        11,818
Proceeds for exercise of stock options                  104            -            -             -           104
Advances from (to) subsidiaries                           2        2,219            -        (2,221)            -
                                                    -------       ------       ------       -------        ------
     Net cash provided from (used in)
          financing activities                        2,185        2,083            9        (2,221)        2,056
                                                    -------       ------       ------       -------        ------
Net (decrease) increase in cash and cash
   equivalents                                         (351)        (212)       1,959            (8)        1,388
Cash and cash equivalents, beginning of
  period                                                356          433          637             8         1,434
                                                    -------       ------       ------       -------        ------
     Cash and cash equivalents, end of
        period                                      $     5       $  221       $2,596       $     -        $2,822
                                                    =======       ======       ======       =======        ======
</TABLE>

                                      -20-

<PAGE>


                MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                       CONDITION AND RESULTS OF OPERATIONS

General

The following  discussion  and analysis 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 in this report
and the Registrant's  Annual Report on Form 10-K for the year ended December 31,
1998. Additionally,  management has prepared pro forma results of operations for
the nine  months  ended  September  30, 1999 to enable a  meaningful  comparison
between 1999 and 1998 results of  operations.  Accordingly,  see "Pro Forma Nine
Months Ended  September  30, 1999  Compared to Nine Months Ended  September  30,
1998" discussions below, which compare the nine months ended September, 30, 1999
on a pro forma basis  assuming the  acquisition  and  financing  had occurred on
January 1, 1999,  with 1998 actual results for a more  meaningful  comparison of
operations.


Forward-Looking Statements

This report contains  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.


Three Months Ended  September 30, 1999 Compared to Three Months Ended
September 30, 1998

Net Sales.  Net sales for the three  months ended  September  30, 1999 and 1998,
were $86.1 million and $80.2 million, respectively, an increase of $5.9 million,
or 7%.

Razors and  Blades.  Net sales of our razors  and blades  segment  for the three
months ended  September 30, 1999 and 1998, were $54.7 million and $51.3 million,
respectively, an increase of $3.4 million or 7%.

Net sales of shaving razors and blades for the three months ended  September 30,
1999 and 1998, were $37.4 million and $33.9 million,  respectively,  an increase
of $3.5 million,  or 10%. Net sales of domestic value branded  shaving  products
increased  24%,  rebounding  from  weak  sales  in the  third  quarter  of 1998,
reflecting  sales gains  relating to an increase in  promotional  programs  with
several customers,  the launch of the new Tri-Flexxx shaving product and overall
increased  distribution of the Company's shaving products. Net sales of domestic
private label shaving  products  increased 1%. Net sales of shaving  products in
international  markets  increased 8% (net of a 1% negative impact of unfavorable
exchange  rates)  reflecting  stronger  sales,  primarily in the United Kingdom,
Europe, Puerto Rico and Latin America which were somewhat offset by weaker sales
in Canada, Africa, the Middle East and Asia Pacific.

Net sales of blades and bladed hand tools for the three months  ended  September
30,  1999 and 1998,  were  $13.1  million  and $13.4  million,  respectively,  a
decrease of $0.3 million,  or 2%. This  decrease  primarily  reflects  decreased
sales of the  Company's  Ardell(TM)  brands  of  products  due to the  timing of
promotional programs.

Net sales of specialty  industrial and medical blades for the three months ended
September 30, 1999 and 1998,  were $4.2 million and $4.0 million,  respectively,
an increase of $0.2  million,  or 7%.  Sales of  specialty  industrial  products
increased 6% due  primarily  to the timing of  purchases  by certain  customers.
Sales of medical products  increased 7% due primarily to increased  distribution
of certain products.

Cotton and Foot Care.  Net sales of cotton and foot care  products for the three
months ended  September 30, 1999 and 1998, were $23.5 million and $22.4 million,
respectively, an increase of $1.1 million or 5%. This increase

                                      -21-

<PAGE>



primarily  reflects  increased sales in the puffs,  pads and swabs product lines
due to increased distribution of products.

Custom Bar Soap.  Net sales of the  Company's  custom bar soap  products for the
three  months  ended  September  30, 1999 and 1998,  were $7.9  million and $6.5
million, respectively, an increase of $1.4 million or 22%. This increase results
primarily   from   increased   sales   volume  to  certain   of  the   Company's
pharmaceutical/skin care customers.

Gross Profit.  Gross profit  increased  $4.3 million to $31.2 million during the
three months ended  September 30, 1999,  from $26.9 million for the three months
ended  September 30, 1998. As a percentage of net sales,  gross profit was 36.2%
for the three months ended  September  30, 1999,  and 33.6% for the three months
ended September 30, 1998. Blade margins  improved due to favorable  product mix,
lower  material  costs and lower  manufacturing  costs  reflecting the Company's
continuing efforts to reduce  manufacturing  costs. Soap margins improved due to
favorable  product mix. This  improvement in blade and soap margins was somewhat
offset by increased  depreciation  expense  resulting from the  acquisition  and
lower  margins in the  Company's  cotton  business  due to higher  manufacturing
overheads resulting primarily from issues related to the continuing  integration
and reorganization of the cotton operations.

Operating and Other Expenses.  Selling, general and administrative expenses were
24.7% of net sales for the three months ended  September  30, 1999,  compared to
21.2% for the three months ended  September 30, 1998.  This  increase  primarily
reflects an increase in  promotional  support for the  Company's  shaving  blade
products  and an increase in legal fees  resulting  from the  Gillette  lawsuit.
Amortization of goodwill and other  intangible  assets increased $0.6 million to
$1.3  million for the three  months ended  September  30,  1999,  over the three
months ended September 30, 1998, reflecting increased amortization of intangible
assets related to the acquisition.  Interest expense  increased $3.4 million for
the three months ended September 30, 1999, to $6.5 million over the three months
ended  September 30, 1998, due primarily to the write-off of deferred  financing
costs of approximately $2.2 million in connection with the reduction in the Term
Loan Facility and increased  interest expense,  commitment fees and amortization
of deferred  loans fees  associated  with debt incurred in  connection  with the
acquisition.  This  increase  was  somewhat  offset  by lower  interest  expense
relating to the Company's  $30.7 million  purchase of its 9 7/8% Series Senior B
Notes in June 1999.

As of September  30,  1999,  approximately  $0.7 million  remained as an accrued
expense on our balance sheet related to the Company's  special  charges which is
expected to be substantially  paid or utilized for asset  write-offs  during the
remainder of 1999.

The  Company's  effective  income tax rate was 40.2% for the three  months ended
September 30, 1999,  versus 39.7% for the three months ended September 30, 1998,
and varies from the United States  statutory rate due primarily to nondeductible
goodwill  amortization,  certain  nondeductible  transaction  expenses and state
income taxes, net of the federal tax benefit.


Pro Forma Condensed Consolidated Statement of Operations for the Nine Months
Ended September 30, 1999

The following unaudited pro forma condensed consolidated statement of operations
has been prepared by management from the historical  financial statements of the
Predecessor  for the  period  from  January 1, 1999 to April 23,  1999,  and the
historical  financial  statements  of the  Company for the period from April 24,
1999  to  September  30,  1999.  The  acquisition,  and  the  related  financing
transactions,  are assumed to have  occurred  on January 1, 1999.  The pro forma
condensed  consolidated  statement  of  operations  for the  nine  months  ended
September 30, 1999, is not  necessarily  indicative of the results of operations
that would have occurred for the nine months ended  September 30, 1999,  had the
acquisition and relating financing  transactions occurred on January 1, 1999. In
preparation  of the pro forma  condensed  consolidated  statement of operations,
management has made certain  estimates and  assumptions  that affect the amounts
reported  in  the  unaudited  pro  forma  condensed  consolidated  statement  of
operations.   The  unaudited  pro  forma  condensed  consolidated  statement  of
operations  for the nine months  ended  September  30,  1999,  should be read in
conjunction with the historical  financial  statements and related notes thereto
of the Company which are included in this Form 10-Q and in the Company's  Annual
Report on Form 10-K for the year ended December 31, 1998.

                                      -22-

<PAGE>




   Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
                      Nine Months Ended September 30, 1999
                                 (In Thousands)


<TABLE>
<CAPTION>
                                 Predecessor                   Predecessor       Company                    Company
                                  Historical                    Pro Forma      Historical                  Pro Forma
                                 Period from                   Period From     Period From                Nine Months
                                January 1, 1999              January 1, 1999  April 24, 1999                 Ended
                                  to April 23,    Pro Forma    to April 23,    to September   Pro Forma    September
                                     1999        Adjustments      1999          30, 1999     Adjustments   30, 1999
                                ---------------  ----------- ---------------  -------------- -----------  -----------
<S>                                  <C>          <C>            <C>              <C>                        <C>
Net sales                           $87,591                     $87,591         $146,022      $     -       $233,613
Cost of sales:
   Other costs                       58,520       $  431 (a)     58,951           93,098            -        152,049
   Purchase accounting adjustment
      to inventory                        -        9,008 (b)      9,008            9,008       (9,008)(b)      9,008
                                     ------       ------         ------           ------        -----         ------
   Gross profit                      29,071       (9,439)        19,632           43,916        9,008         72,556

Selling, general and administrative
   expenses                          21,429           68 (c)     21,497           34,413            -         55,910
Amortization of intangibles             835          774 (d)      1,609            2,185            -          3,794
Transaction expenses                 11,440            -         11,440                -            -         11,440
                                     ------       ------         ------           ------        -----         ------
   Operating income (loss)           (4,633)     (10,281)       (14,914)           7,318        9,008          1,412

Interest expense                      3,907        2,006 (e)      5,913           10,486         (138)(g)     16,261
                                     ------       ------         ------           ------        -----         ------
   Income (loss) before income taxes
      and extraordinary item         (8,540)     (12,287)       (20,827)          (3,168)       9,146        (14,849)

Income taxes (benefit)                 (842)      (4,757)(f)     (5,599)            (702)       3,631 (f)     (2,670)
                                     ------       ------         ------           ------        -----         ------
   Income (loss) before
      extraordinary item            $(7,698)     $(7,530)      $(15,228)         $(2,466)      $5,515       $(12,179)
                                     ======       ======         ======           ======        =====         ======
</TABLE>

(a) Adjustment  to provide pro forma  depreciation  expense  resulting  from the
    application  of  purchase  accounting  adjustments  computed  based  on  the
    remaining useful lives of plant and equipment ranging from 3 to 26 years.

(b) Adjustment to reflect the impact on cost of sales of the purchase accounting
    adjustment  to  inventory  assuming the  acquisition  occurred on January 1,
    1999.

(c) Adjustment to reflect the elimination of amortization of unrecognized  prior
    service cost and  unrecognized  gains related to the  Company's  pension and
    postretirement benefit plans.

(d) Adjustment to reflect the  elimination  of $705 of  amortization  related to
    historical  goodwill and record pro forma  amortization of $1,479 related to
    intangible  assets  including  goodwill,  trademarks and patents recorded in
    connection with the acquisition. Goodwill and trademarks are being amortized
    over a 40-year  useful life and patents are being  amortized  over a 15-year
    useful life. These periods are believed by management to be reasonable based
    on the expected lives of the underlying processes,  products,  and equipment
    assumed to be acquired.

(e) Adjustment to reflect (i) the elimination of historical  interest expense of
    $494 related to the Predecessor's  credit facilities,  loan commitment fees,
    and  the  amortization  of  deferred   financing   costs,   (ii)  pro  forma
    amortization of $329 for the $7,606 in deferred  financing costs incurred in
    connection  with the financing,  amortized over the respective  lives of the
    Company's credit facilities,  and (iii) pro forma interest expense of $2,171
    on the Company's  credit  facilities  related to the balances  assumed to be
    outstanding on January 1, 1999.  Interest expense has been computed assuming
    that the  LIBOR-based  interest rate (plus the applicable  margin) option is
    selected by the Company.  Balances  assumed to be  outstanding on January 1,
    1999,  includes $5,000 under the revolving credit facility and $88,000 under
    the Term Loan Facility. In addition, the purchase of $30,700 in Senior Notes
    on June 10, 1999, was assumed to occur on January 1, 1999.

                                      -23-

<PAGE>




(f) Adjustment  to  reflect  the  income  tax  consequences  of  the  pro  forma
    adjustments  computed  at the  statutory  rate of  39.7%  excluding  the net
    adjustment for goodwill of $305 which is not tax deductible.

(g) Adjustment  to  reflect  (i)  pro  forma  interest  expense  of  $261 on the
    Company's  credit   facilities   related  to  the  balances  assumed  to  be
    outstanding on April 24, 1999.  Interest expense has been computed  assuming
    that the  LIBOR-based  interest rate (plus the applicable  margin) option is
    selected by the Company.  Balances  assumed to be  outstanding  on April 24,
    1999,  are the same as  described  in (e)  above,  and  (ii)  the pro  forma
    interest  expense  reduction  of $399 related to the  $30,700,000  in Senior
    Notes which were assumed to be purchased on April 24, 1999.


Pro Forma Nine Months Ended September 30, 1999 Compared to Nine Months Ended
September 30, 1998

Net Sales. Net sales for the pro forma nine months ended September 30, 1999, and
for the nine months ended  September  30, 1998,  were $233.6  million and $220.4
million, respectively, an increase of $13.2 million, or 6%.

Razors and Blades.  Net sales of our razors and blades segment for the pro forma
nine months ended  September 30, 1999,  and for the nine months ended  September
30, 1998, were $150.2 million and $135.8 million,  respectively,  an increase of
$14.4 million, or 11%.

Net sales of shaving  razors and  blades  for the pro forma  nine  months  ended
September 30, 1999, and for the nine months ended September 30, 1998, were $99.3
million and $87.7 million,  respectively,  an increase of $11.6 million, or 13%.
Net sales of domestic value branded  shaving  products  increased 41% rebounding
from weak sales  during the first nine  months of 1998,  reflecting  sales gains
relating to an increase in  promotional  programs  with several  customers,  the
launch of the new Tri-Flexxx shaving product and overall increased  distribution
of the Company's shaving  products.  Net sales of domestic private label shaving
products  decreased 1% due primarily to reduced  promotional  support by certain
customers.  Net sales of shaving products in international  markets increased 8%
(net of a 2% negative impact of unfavorable  exchange rates) reflecting stronger
sales,  primarily in the United  Kingdom,  Europe,  Puerto Rico,  the Caribbean,
Latin America and Mexico which were  somewhat  offset by weaker sales in Canada,
Africa, and the Middle East and Asia Pacific.

Net sales of blades and bladed  hand tools for the pro forma nine  months  ended
September 30, 1999, and for the nine months ended September 30, 1998, were $38.9
million and $36.1  million,  respectively,  an increase of $2.8 million,  or 8%.
This growth primarily reflects increased sales of the Company's  Personna(R) and
American Line(TM) brands of products as a result of new distribution gains.

Net sales of  specialty  industrial  and  medical  blades for the pro forma nine
months ended  September  30, 1999,  and for the nine months ended  September 30,
1998, were $12.0 million.  Sales of specialty  industrial  products decreased 6%
due primarily to inventory  adjustments  by certain  customers and mix shifts to
lower priced blade products. Additionally, certain of the Company's distributors
experienced  increased  competition in their  serviced  niche markets.  Sales of
medical products increased 6% due primarily to increased distribution of certain
products.

Cotton and Foot Care.  Net sales of cotton  and foot care  products  for the pro
forma nine months  ended  September  30,  1999,  and for the nine  months  ended
September  30,  1998,  were $62.6  million and $65.8  million,  respectively,  a
decrease of $3.2  million or 5%. This  decrease  results  primarily  from issues
related to the continuing integration and reorganization of the Company's cotton
operations  which have led to delays in shipping  products to  customers  and in
turn reduced promotional activity and volume with certain customers.

Custom Bar Soap. Net sales of the Company's custom bar soap products for the pro
forma nine months  ended  September  30,  1999,  and for the nine  months  ended
September  30, 1998,  were $20.8  million and $18.8  million,  respectively,  an
increase of $2.0 million or 11%. This increase results  primarily from increased
sales volume to certain of the Company's pharmaceutical/skin care customers.

Gross Profit.  Gross profit  increased $2.4 million to $72.6 million for the pro
forma nine months  ended  September  30, 1999,  from $70.2  million for the nine
months ended September 30, 1998. As a percentage of net sales,  gross profit was
31.1% for the pro forma nine months ended  September 30, 1999, and 31.9% for the
nine  months  ended  September  30,  1998.  Excluding  the  purchase  accounting
adjustment to inventory of $9.0 million, gross profit

                                      -24-

<PAGE>



increased $11.4 million to $81.6 million for the nine months ended September 30,
1999,  from $70.2 million for the nine months ended September 30, 1998, and as a
percentage  of net sales,  gross  profit was 34.9% for the pro forma nine months
ended  September  30, 1999,  and 31.9% for the nine months ended  September  30,
1998. Blade margins improved due to favorable  product mix, lower material costs
and lower  manufacturing  costs reflecting the Company's  continuing  efforts to
reduce  manufacturing  costs. Soap margins improved due to favorable product mix
and lower material costs for certain raw  materials.  This  improvement in blade
and soap margins was somewhat offset by increased depreciation expense resulting
from the acquisition and by lower margins in the Company's cotton operations due
to increased  distribution costs and higher  manufacturing  overheads  resulting
primarily from issues related to the continuing  integration and  reorganization
of the cotton operations.

Operating and Other Expenses.  Selling, general and administrative expenses were
23.9% of net sales for the pro forma  nine  months  ended  September  30,  1999,
compared to 21.4% for the nine months ended  September  30, 1998.  This increase
primarily reflects an increase in promotional  support for the Company's shaving
blade  products  and an  increase  in legal  fees  resulting  from the  Gillette
lawsuit.  Amortization of goodwill and other  intangible  assets  increased $1.9
million to $3.8 million for the pro forma nine months ended  September 30, 1999,
from $1.9  million for the nine months  ended  September  30,  1998,  reflecting
increased amortization of intangible assets related to the acquisition. Interest
expense  increased  $7.0 million to $16.3  million for the pro forma nine months
ended  September 30, 1999, from $9.3 million for the nine months ended September
30,  1998,  due  primarily  to the  write-off  of  deferred  financing  costs of
approximately  $2.2 million in  connection  with the  reduction in the Term Loan
Facility and increased  interest  expense,  commitment fees and  amortization of
deferred  loan  fees  associated  with  debt  incurred  in  connection  with the
acquisition.  This  increase  was  somewhat  offset  by lower  interest  expense
relating to the Company's  $30.7 million  purchase of its 9 7/8% Series B Senior
Notes in June 1999.

As of September  30,  1999,  approximately  $0.7 million  remained as an accrued
expense on our balance sheet related to the Company's  special  charges which is
expected to be substantially  paid or utilized for asset  write-offs  during the
remainder of 1999.

In  connection  with  the  acquisition   transaction  the  Predecessor  incurred
approximately  $11.4 million in transaction  expenses  related  primarily to (i)
amounts paid to redeem all of the  outstanding  options to purchase common stock
of the  Predecessor,  (ii) costs incurred by or on behalf of the  Predecessor in
connection  with the  acquisition,  including legal and other advisory fees, and
(iii) costs incurred by or on behalf of the Predecessor related to payments made
to  certain  employees  of the  Predecessor  in  connection  with the  change of
control.

Costs of $0.7 million (net of tax benefit)  associated  with the purchase of the
Senior Notes and repayment of the  Terminated  Credit  Facility (see Note D) are
reflected  in  the  Company's   consolidated   statement  of  operations  as  an
extraordinary item.

The  Company's  effective  income  tax rate was  (18.0)%  for the pro forma nine
months ended  September 30, 1999, and 39.7% for the nine months ended  September
30, 1998,  and varies from the United  States  statutory  rate due  primarily to
nondeductible goodwill amortization, certain non-deductible transaction expenses
and state income taxes, net of the federal tax benefit.


Liquidity and Capital Resources

The  Company's  principal  sources  of  liquidity  are cash flow from  operating
activities and borrowings under its revolving credit facility. Net cash provided
by operating  activities  amounted to $9.6 million for the period from April 24,
1999, to September 30, 1999, and net cash used in operating  activities amounted
to $5.3  million  for the  period  from  January  1,  1999,  to April 23,  1999,
primarily  reflecting the payment of transaction  expenses of $11.4 million. Net
cash used in investing  activities related primarily to capital  expenditures of
$3.6 million for the period from April 24, 1999 to September  30, 1999,  and net
cash used in  investing  activities  related  to  capital  expenditures  of $3.6
million for the period from January 1, 1999 to April 23, 1999.  Net cash used in
financing  activities  resulted  from  $18.8  million  in  net  advances  to the
Company's parent and deferred loan fees of $0.4 million which were substantially
offset by net borrowings of $18.6 million for the period from April 24, 1999



                                      -25-

<PAGE>



to September 30, 1999,  and net cash provided by financing  activities  resulted
from net  borrowings of $39.5 million which was reduced by deferred loan fees of
$7.6 million and $24.2 million in net advances to the  Company's  parent for the
period from January 1, 1999 to April 23, 1999.

At September 30, 1999, the Company had  approximately  $25 million available for
future  borrowings under its revolving credit facility.  Effective July 5, 1999,
the Company permanently reduced the amount available for future borrowings under
its Term Loan Facility by $52.5 million to $112.5  million which  represents the
amount of borrowings  outstanding  under the Term Loan Facility on September 30,
1999.

The Credit Agreement limits the ability of the Company, among other limitations,
to incur certain  additional  indebtedness,  places certain  restrictions on the
payment of dividends and limits the amount of annual capital  expenditures.  The
Credit  Agreement also contains  certain  financial  covenants which require the
Company, among other requirements,  to meet certain financial ratios relating to
leverage, fixed charges and interest coverage.

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  needs,  capital
expenditures,  debt service  requirements and tax obligations as well as support
the Company's  growth-oriented  strategy for its existing  business for at least
the next 12 months.


Market Risk

The  Company is  exposed to various  market  risk  factors  such as  fluctuating
interest  rates and changes in foreign  currency  rates.  These risk factors can
impact our results of operations,  cash flows and financial position.  We manage
these risks through regular operating and financing  activities and periodically
use derivative financial instruments such as foreign exchange option and forward
contracts.   These  derivative  instruments  are  placed  with  major  financial
institutions and are not for speculative or trading purposes.

The following analysis presents the effect on the Company's earnings, cash flows
and  financial  position as if the  hypothetical  changes in market risk factors
occurred on  September  30, 1999 and  September  30,  1998.  Only the  potential
impacts of our  hypothetical  assumptions  are  analyzed.  The analysis does not
consider other possible effects that could impact our business.


Interest Rate Risk

At September 30, 1999, the Company carried $185.8 million of outstanding debt on
its balance sheet,  with $113.3 million of that total held at variable  interest
rates.  In October 1999, the Company entered into an interest rate cap agreement
and an interest rate swap  agreement  with the bank covering  $56,250,000 of its
variable  rate debt  outstanding  to manage its interest rate risk (See Note D).
Holding all other variables constant, if interest rates hypothetically increased
or decreased by 10%, for the nine months ended  September 30, 1999 and 1998, the
impact on earnings,  cash flow and financial position would not be material.  In
addition,  if interest  rates  hypothetically  increased  or decreased by 10% on
September 30, 1999,  with all other  variables  held  constant,  the fair market
value of our $69.3  million  9 7/8%  Series B Senior  Notes  would  increase  or
decrease by approximately $3.5 million.


Foreign Currency Risk

The Company sells to customers in foreign markets through our foreign operations
and through  export  sales from our plants in the U.S.  These  transactions  are
often denominated in currencies other than the U.S. dollar. Our primary currency
exposures are the Euro,  British  Pound  Sterling,  Canadian  Dollar and Mexican
Peso.

The Company  limits its foreign  currency risk by operational  means,  mostly by
locating  its   manufacturing   operations  in  those  locations  where  it  has
significant exposures in major currencies. The Company has entered into currency
option contracts to partially offset the risk of foreign currency  fluctuations.
The value of these  contracts  at  September  30,  1999 was not  material to the
Company's earnings, cash flow and financial position.


                                      -26-

<PAGE>

Merger

Effective  April 23,  1999,  RSA  Acquisition  Corporation  ("Acquisition"),  an
affiliate of "J.W. Childs", completed its $14.20 per share cash tender offer for
all outstanding shares of the Predecessor in accordance with a February 12, 1999
merger  agreement  upon the terms and subject to the conditions set forth in the
offer to purchase ("the Stock Tender Offer"). Following completion of the offer,
there remained  approximately  266,601 American Safety Razor shares outstanding.
On July 1, 1999, RSA  Acquisition  Corp. and American  Safety Razor  completed a
merger  transaction  pursuant  to which RSA  Acquisition  Corp.  acquired  these
remaining  shares of American  Safety Razor for $14.20 per share.  The aggregate
purchase price, including transaction costs of $1.0 million, paid for the common
stock  purchased in the Stock Tender  Offer  excluding  the cost to redeem stock
options,  including all of the common stock tendered,  was approximately  $173.0
million.

Following  the merger,  the Company  became the surviving  corporation  and is a
direct, wholly- owned subsidiary of RSA Holdings,  which is wholly-owned by J.W.
Childs, its affiliates and Company management.

Subsequent to the  acquisition  and pursuant to the terms of its Indenture,  the
Company made an offer to purchase all of its $100 million 9 7/8% Series B Senior
Notes due August 1, 2005 (the  "Existing  Notes").  In response  thereto,  $30.7
million of the Existing Notes were properly tendered and retired by the Company.

The Company has accounted for the  acquisition as a purchase.  The allocation of
the purchase price resulted in purchase  adjustments being applied to the assets
acquired and  liabilities  assumed.  The total purchase  price of  approximately
$172,964,000 was allocated to the acquired assets and assumed  liabilities based
on preliminary  estimates of their  respective  fair values at April 23, 1999 as
follows:

          Working capital                             $  77,054,000
          Property, plant and equipment                  93,973,000
          Intangible assets, including goodwill         177,967,000
          Prepaid pension and other assets               46,861,000
          Long-term debt                               (163,685,000)
          Other liabilities                             (59,206,000)
                                                       ------------
                                                       $172,964,000
                                                       ============

These  preliminary  estimates  are  subject  to  change  as they  are  based  on
preliminary  appraisals  and as certain of the Company's  business  plans become
finalized.

As a result  of the  acquisition  and new  basis of  accounting,  the  Company's
financial  statements  for the  period  subsequent  to the  acquisition  are not
comparable to the Predecessor's financial statements for the period prior to the
acquisition. As a result of the application of purchase accounting the Company's
depreciation  expense and  amortization of intangible  assets  increased and the
Company  adjusted the carrying  value of acquired  inventories  to reflect their
fair market  value,  which  adjustment  was written off in the April 24, 1999 to
September  30, 1999  reporting  period.  In addition,  certain fees and expenses
incurred relating to the above transactions were expensed in the period in which
the  transactions   were  completed  and  are  included  in  the   Predecessor's
consolidated statement of operations in the caption "Transaction expenses".

The primary components of this caption are (i) amounts paid to redeem all of the
outstanding  options to purchase  common  stock of the  Predecessor,  (ii) costs
incurred by or on behalf of the Predecessor in connection with the  acquisition,
including  legal and other  advisory  fees,  and (iii)  costs  incurred by or on
behalf of the Predecessor  related to payments made to certain  employees of the
Predecessor in connection with the change of control.


Contingencies

Refer to Note H - Contingencies to the Notes to Condensed Consolidated Financial
Statements for a discussion of legal contingencies.


                                      -27-

<PAGE>

New Accounting Standards

In June 1998,  the  Financial  Accounting  Standards  Board issued  Statement of
Financial Accounting  Standards No. 133, "Accounting for Derivative  Instruments
and  Hedging  Activities"  ("FAS  133").  FAS  133  establishes   standards  for
accounting  and  disclosure of  derivative  instruments.  This new standard,  as
amended by FAS 137, is effective for fiscal  quarters of fiscal years  beginning
after June 15, 2000. The  implementation of this new standard is not expected to
have a material  effect on our  consolidated  results of operations or financial
position.

Year 2000 Computer Issues

The Year 2000 issue is the result of computer  programs  being written using two
digits  rather  than four to define the  applicable  year,  as well as  hardware
designed with similar  constraints.  Some of our computer  programs and hardware
that have date  sensitive  functions may recognize a date using "00" as the year
1900  rather  than the year  2000.  This  could  result in a system  failure  or
miscalculations causing disruptions in operations including, among other things,
a temporary inability to process transactions,  receive invoices,  make payments
or engage in normal business transactions.

We are  taking  action to  resolve  those  Year 2000  issues  that are under our
control.  The overall effort encompasses our razors and blades,  cotton and foot
care and custom bar soap business  segments and covers  international as well as
domestic sites. We are centrally monitoring and controlling the effort; however,
there are designated  representatives at each affiliate and subsidiary  location
with responsibility for resolving site-specific Year 2000 issues. Following is a
description of the six-phase approach we are using:

      (1) Assessment - Identify and inventory  all  information  technology  and
          non-information technology system components that are possible sources
          of Year 2000  issues  and  assess  the  criticality  of  non-compliant
          systems in order to establish priorities for replacement or repair.

      (2) Strategy -  Determine  the  nature and extent of Year 2000  issues and
          select a remediation  strategy (i.e.,  renovate by modifying  existing
          system,  upgrade to a later version of the system,  replace with a new
          system, or retire the affected component). After the strategy has been
          selected,  develop  project  plans to address  non-compliant  systems,
          beginning with the most critical systems.

      (3) Remediation   -  Execute   project   plans  to  resolve   issues  with
          non-compliant systems.

      (4) Testing - Perform testing to evaluate  effectiveness of the corrective
          actions  taken or to  confirm  compliance  of  systems  that have been
          certified by third parties.

      (5) Implementation  - Implement  the  renovated,  upgraded,  and  replaced
          system components into the production environment.

      (6) Contingency  Planning - Continue  monitoring  readiness  and  complete
          necessary contingency plans.

We  have  completed  the   Assessment,   Strategy,   Remediation,   Testing  and
Implementation  phases for substantially  all of our information  technology and
non-information technology system components.

Our most  mission-critical  system is the  "Corporate  ERP"  system,  which is a
widely available software package that we have moderately customized.  Twelve of
our  fifteen  manufacturing,   packaging  and  distribution  sites  utilize  the
Corporate    ERP   system   to    process    orders,    control    manufacturing
planning/work-order processing, distribute products, manage financial activities
and report  financial  results.  The twelve sites using the Corporate ERP system
include corporate headquarters, U.S., Mexican, Canadian razors and blades sites,
all cotton and foot care  facilities,  and all custom bar soap  facilities.  The
third party  vendor has  responded  that all of its  software  modules in use at
American Safety Razor and our subsidiaries are Year 2000 ready. In addition, the
most  frequently  utilized  system  functions  have been  tested  by our  users,
including the internally developed system customizations.

We are currently  linked with 159 customers for exchange of documents  using the
Corporate EDI (electronic data  interchange)  system.  Our EDI software has been
upgraded to a Year 2000 compliant version that is now capable of supporting ANSI
standard  version  4010,  which  provides  for a 4 digit year and is the version
which many of

                                      -28-

<PAGE>

our EDI customers are adopting prior to the Year 2000. EDI transactions with a 2
digit year have also been  tested and will  continue to be  supported  for those
customers who elect not to convert to a 4 digit year.  Approximately  90% of the
159 EDI customers have now been implemented on 4010.  Testing with EDI customers
will continue through the remainder of 1999.

All personal  computers have been Year 2000  compliance  tested and are now Year
2000 ready.  In addition,  our U.S. and  international  payroll systems are Year
2000 compliant.

We have assessed the Year 2000 readiness of  non-information  technology systems
and equipment which may include embedded  technology such as  micro-controllers.
Our manufacturing,  assembly,  and packaging machines,  operating in each of our
razors and blades, cotton and foot care and custom bar soap segments were tested
and are now Year 2000 ready.

Our  "worst-case"  scenario at the present  time is the  disruption  of business
operations  as the result of supplier  Year 2000 related  failures,  which would
impair their  ability to adequately  provide us with  products or services.  Our
business   processes   depend  on  our   material   suppliers  as  well  as  our
infrastructure   suppliers   in  areas   such  as   electricity,   water,   gas,
communications and transportation. Year 2000 related failures by suppliers could
adversely affect business operations including payroll, manufacturing processes,
product  distribution,  material ordering,  customer-order  processing and other
support functions  dependent on the affected  supplier.  While we have a limited
ability to test and control our  suppliers'  and other third  parties' Year 2000
readiness, we are contacting major suppliers and other critical third parties to
obtain information as to their Year 2000 readiness. Razors and blades and cotton
and foot care  suppliers  were surveyed  regarding  Year 2000 issues and all key
suppliers have  indicated they plan to be compliant  during 1999. The custom bar
soap business held a meeting with its top suppliers during the second quarter of
1999 for a Year 2000 readiness review.

Considering  the number of internal  and external  systems  which we directly or
indirectly  use, it is likely that there will be instances of failure that could
cause  disruptions  in  business  processes.   The  likelihood  of  failures  in
infrastructure systems and in the supply chain cannot be estimated and therefore
the impact of these failures on business  operations is uncertain.  If we or any
critical third party supplier does not complete  necessary  upgrades as planned,
the Year 2000 issue may have a material impact on us.

Contingency  plans will be developed by December 1999, as needed, to address the
risk of  business  disruption  due to  supplier  Year  2000  issues.  As part of
contingency  planning,  we will  consider a number of options to mitigate  risk,
including building additional inventory prior to year 2000,  establishing manual
backup processes and arranging for alternate suppliers.

Since most of our Year 2000 issues are being  addressed  through  normal planned
upgrades,  incremental  external  Year 2000 costs are  expected  to be  minimal,
approximating  $115,000.  To date,  the  Company  has spent  $115,000,  of which
approximately $20,000 was spent during the third quarter of 1999.

Readers  are  cautioned  that  forward-looking   statements  contained  in  this
discussion  of  Year  2000  issues  should  be  read  in  conjunction  with  our
disclosures under the heading "Forward-Looking Statements" above.


Inflation

Inflation has not been material to our operations within the periods presented.



                                      -29-

<PAGE>



Item 3. Quantitative and Qualitative Disclosure of Market Risk

The information  called for by this item is provided under the captions  "Market
Risk",  "Interest Rate Risk" and "Foreign  Currency Risk" under Part I, Item 2 -
Management's  Discussion  and  Analysis  of  Financial  Position  and Results of
Operations.



                           PART II, OTHER INFORMATION


Item 1.  Legal Proceedings

          The  information  called  for by  this  item is  provided  in Note H -
          Contingencies to Notes to Condensed  Consolidated Financial Statements
          under Part I, Item 1. - Financial Statements


Item 6.  Exhibits and Reports on Form 8-K

          a.   Exhibits - Exhibit 27 - Financial Data Schedule

          b.   Reports  on Form 8-K:  No  reports  on Form 8-K have  been  filed
               during the quarter ended September 30, 1999.


                                      -30-

<PAGE>




                                   SIGNATURES


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                      AMERICAN SAFETY RAZOR COMPANY




November 5, 1999                      By /s/James D. Murphy
----------------                        ---------------------
Date                                      James D. Murphy
                                          President




November 5, 1999                      By /s/Alan R. Koss
----------------                        ---------------------
Date                                      Alan R. Koss
                                          Senior Vice President
                                          Chief Financial Officer


                                -31-