Apple Final Cut Pro 7 - Manual (Page 584)

This can be useful for quickly rearranging pieces of your sequence, for deleting a section
of a clip, for applying an effect to a specific part of a clip, or for moving a piece of a clip
to the same location on another track.
Before
The Razor Blade tool lets
you cut a clip item into
two pieces.
After
584 Chapter 39 Cutting Clips and Adjusting Durations