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 quarterly period ended June 30, 1998

                                       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 1-12271



                                  CARSON, INC.



             (Exact name of registrant as specified in its charter)


                               DELAWARE 06-1428605
 (State or other jurisdiction of incorporation (I.R.S. Employer Identification
                            or organization) Number)


                     64 Ross Road, Savannah Industrial Park
                             Savannah, Georgia 31405
          (Address, including zip code, of principal executive offices)



        Registrant's telephone number, including area code:(912) 651-3400




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


At August 1, 1998,  5,000,170 shares of the  registrant's  Class A Common Stock,
par value $0.01 per share,  1,859,677 shares of the registrant's  Class B Common
Stock, par value $0.01 per share, and 8,127,937 shares of the registrant's Class
C Common Stock, par value $0.01 per share were outstanding.



                                  CARSON, INC.

                                      INDEX

Part I.  Financial Information                                             Page

         Item 1.

         Condensed Consolidated Balance Sheets
         June 30, 1998 and December 31, 1997................................. 3

         Condensed Consolidated Statements of Operations
         Three Months and Six Months Ended June 30, 1998 and 1997............ 4

         Condensed Consolidated Statements of Cash Flow
         Six  Months Ended June 30, 1998 and 1997............................ 5

         Notes to Condensed Consolidated Financial Statements................6-8

         Item 2.

         Management's Discussion and Analysis of Financial Condition
         and Results of Operations..........................................9-16


Part II. Other Information................................................... 17

         Item 4.

         Submission of Matters to a Vote of Security Holders................. 17

         Item 6.

         (a) Exhibits ....................................................... 18

         (b) Reports on Form 8-K............................................. 18

         Signatures.......................................................... 19


                                        2

                                  CARSON, INC.
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                      JUNE 30, 1998 AND DECEMBER 31, 1997
                                 (In thousands)
<TABLE>
<S>                                                                             <C>                       <C>  

                                                                                 June 30,                 December 31,
                           ASSETS                                                  1998                       1997
                                                                                 (Unaudited)
CURRENT ASSETS:                                                                 ------------              ------------     
         Cash and cash equivalents                                              $  64,424                 $   14,043
         Accounts receivable (less allowance for doubtful accounts              
           and returns of $4,279 and $3,881 at June 30, 1998 and 
           December 31, 1997, respectively                                         24,400                     28,148
         Inventories, net                                                          25,192                     24,861
         Other current assets                                                         723                        832
                                                                                ------------              ------------
                  Total current assets                                            114,739                     67,884

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation                     21,457                     22,202

INVESTMENT IN AM COSMETICS                                                          3,769                      3,587

INTANGIBLES, net                                                                   97,290                    100,385

OTHER ASSETS                                                                        7,280                      7,366
                                                                                ------------              ------------
                  TOTAL ASSETS                                                  $ 244,535              $     201,424
                                                                                ============              ============

                           LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
         Accounts payable                                                       $  10,120              $       8,567
         Due for A&J Cosmetics                                                      3,267                      5,416
         Accrued expenses                                                           9,469                      7,413
         Income taxes payable                                                      14,852                      1,544
                                                                                ------------               -----------
                  Total current liabilities                                        37,708                     22,940

LONG-TERM DEBT                                                                    100,452                    103,623

DUE FOR A&J COSMETICS                                                                  --                      4,088

DEFERRED INCOME TAXES AND OTHER LIABILITIES                                         1,671                      1,742

MINORITY INTEREST IN SUBSIDIARY                                                    18,673                      7,500

STOCKHOLDERS' EQUITY:
         Preferred stock, $.01 par value, 10,000,000 shares authorized, 
           none outstanding                                                            --                         --
         Common stock:
                  Class A, voting, $.01 par value, 150,000,000 shares authorized,
                     5,042,384 and 5,033,248 shares issued as of June 30, 1998 
                     and December 31, 1997, respectively                               50                         50
                  Class B, nonvoting, $.01 par value, 2,000,000 shares authorized
                     and 1,859,677 shares issued and outstanding                       19                         19
                  Class C, voting, $.01 par value, 13,000,000 shares authorized 
                     and 8,127,937 shares issued and outstanding                       81                         81

         Paid-in capital                                                           80,628                     69,022
         Retained earnings (accumulated deficit)                                   13,204                     -4,011
         Accumulated other comprehensive losses                                    -6,445                     -2,170
         Note receivable from employee shareholders, net of discount               -1,169                     -1,353
         Treasury stock, Class A common stock, 42,214 shares at June 30, 1998 
                  and 13,245 shares at December 31, 1997, respectively               -337                       -107
                                                                                -----------               ------------
                  Total stockholders' equity                                       86,031                     61,531
                                                                                -----------               ------------
                  TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                    $ 244,535              $     201,424
                                                                                ===========               ============
</TABLE>


           See notes to condensed consolidated financial statements.




                                        3
                                  CARSON, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                     (In thousands, except per share data)
<TABLE>
<S>                                  <C>                <C>                <C>                <C>


                                    Three Months Ended June 30,           Six Months Ended June 30,
                                      1998              1997               1998               1997
                                    ---------         ---------          ---------          ---------
Net sales                      $      29,174     $      30,234      $      60,971      $      48,166  
Cost of goods sold                    21,075            13,996             36,453             21,876  
                                    ---------         ---------          ---------          ---------
Gross profit                           8,099            16,238             24,518             26,290  

Expenses:
         Marketing and selling         8,826             6,553             17,517             12,277  
         General and administrative   10,028             4,418             15,976              7,147  
         Restructuring charges         4,837                 0              4,837                  0  
                                    ---------         ---------          ---------          ---------
                                      23,691            10,971             38,330             19,424  
                                    ---------         ---------          ---------          ---------
Operating (loss) income              (15,592)            5,267            (13,812)             6,866  

Interest expense                      (3,010)           (1,511)            (5,847)            (2,115)  
Gain on sale of subsidiary stock      49,140                 0             49,140                  0  
Other income, net                      1,165               381              1,704                716  
                                    ---------         ---------          ---------          ---------
Income before income taxes and 
  minority interest                   31,703             4,137             31,185              5,467  

Provision for income taxes            13,361             1,661             13,026              2,197  
                                    ---------         ---------          ---------          ---------
Income before minority interest       18,342             2,476             18,159              3,270

Minority interest in earnings of 
  subsidiary                            (626)             (210)              (944)              (322)  
                                    ---------         ---------          ---------          ---------
Net income                     $      17,716     $       2,266      $      17,215      $       2,948  
                                    =========         =========          =========          =========
Basic and diluted net income   
  per common share             $        1.18     $        0.15      $        1.15      $        0.20
                                    =========         =========          =========          =========
Weighted average common
  shares outstanding                  14,988            14,984             14,990             14,984
                                    =========         =========          =========          =========
</TABLE>


           See notes to condensed consolidated financial statements.



                                                         4

                                  CARSON, INC.
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                 (In thousands)
<TABLE>

<S>                                                           <C>               <C>

                                                          Six Months Ended June 30,
                                                               1998              1997
                                                            ---------         ---------
OPERATING ACTIVITIES:
  Net income                                           $      17,215     $       2,948
  Adjustments to reconcile net income to
     net cash used in operating activities:
      Gain on sale of subsidiary stock                       (49,140)               --
      Non-cash special charges                                14,222                --
      Depreciation and amortization                            3,189             1,570
      Provision for doubtful accounts                            196               172
      Other, net                                                 431                 4
      Changes in operating assets and liabilities, 
       net of acquisitions in 1997:
          Accounts receivable                                   (437)           (6,806)
          Inventories                                         (7,706)           (3,556)
          Other current assets                                    90              (454)
          Accounts payable                                     2,443            (1,928)
          Income taxes payable                                13,679             2,281
          Accrued expenses                                      (585)           (1,021)
                                                            ---------         ---------
              Total adjustments                              (23,618)           (9,738)
                                                            ---------         ---------
      Net cash used in operating activities                   (6,403)           (6,790)
                                                            ---------         ---------
INVESTING ACTIVITIES:
  Additions to property, plant and equipment                  (4,926)           (3,585)
  Acquisitions of business assets, net of cash acquired           --           (49,406)
                                                            ---------         ---------
      Net cash used in investing activities                   (4,926)          (52,991)
                                                            ---------         ---------
FINANCING ACTIVITIES:
  Proceeds from long-term borrowings                           9,500            62,100
  Principal payments on long-term debt                       (12,556)           (1,412)
  Payment on A&J Cosmetics payable                            (5,416)               --
  Proceeds from sale of subsidiary stock                      74,392                --
  Proceeds from equity rights offering                            --             1,525
  Other, net                                                    (277)              (68)
                                                            ---------         ---------
      Net cash provided by financing activities               65,643            62,145
                                                            ---------         ---------
EFFECT OF EXCHANGE RATE CHANGES                               (3,933)               --
                                                            ---------         ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS                     50,381             2,364
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD              14,043             4,191
                                                            ---------         ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD             $      64,424     $       6,555
                                                            =========         =========




           See notes to condensed consolidated financial statements.


</TABLE>

                                        5

                                   CARSON, INC
        NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


1.  Basis of Presentation

    The accompanying  condensed  consolidated  interim  financial  statements of
Carson, Inc. (the "Company") presented herein have been prepared by the Company,
without  audit,  pursuant to the rules and  regulations  of the  Securities  and
Exchange  Commission.  Certain  information  and footnote  disclosures  normally
included in annual  financial  statements  prepared in accordance with generally
accepted  accounting  principles  have  been  omitted  from  these  consolidated
financial  statements  pursuant  to  applicable  rules  and  regulations  of the
Securities and Exchange Commission. These financial statements should be read in
conjunction  with the audited  Consolidated  Financial  Statements and the notes
thereto of the  Company's  1997  Annual  Report on Form 10-K.  In the opinion of
management,  the accompanying  unaudited financial statements contain all normal
recurring  adjustments  necessary  to  present  fairly the  Company's  financial
position,  results of operations and cash flows at the dates and for the periods
presented.  Interim results of operations are not necessarily  indicative of the
results to be expected for a full year.  Certain prior period  amounts have been
reclassified to conform with the current period presentation.


2.  Acquisition

    During June,  1998 the Company  entered into a Purchase  Agreement with Ivax
Corporation,  d/b/a IVX  Bioscience,  Inc.,  to  acquire  the  shares of Johnson
Products  Co.,  Inc.,  a  Florida  corporation.  Johnson  Products  is  a  major
manufacturer  of personal care products for the ethnic market.  The  acquisition
was  completed in July 1998 and was  accounted  for as a purchase.  The purchase
price  approximated  $85.0 million with $35.0 million paid in cash.  The Company
entered into a Credit  Agreement with Ivax  Corporation  for the remaining $50.0
million  purchase price.  The term loan provided by Ivax matures on November 30,
1998 and  bears  interest  at 9.0%  per  annum,  payable  monthly.  Any  overdue
principal  and  interest  bear  interest at 12.0% per annum and are payable upon
demand.

    In conjunction with the Credit Agreement,  the Company terminated its senior
secured credit facility with Credit Agricole Indosuez.  During the third quarter
of 1998, the Company will recognize an  extraordinary  loss of $0.9 million (net
of tax, or $0.06 per basic and diluted  share) for the write-off of $1.6 million
of debt financing costs related to this credit facility.



                                        6

<PAGE>



3.  Special and Non-recurring Charges

     During the  quarter  ended June 30,  1998,  the Company  recorded  one-time
pretax charges of $15.1 million ($8.7 million net of tax). The one-time  charges
related  primarily to the  restructuring  of product lines and management at the
Company's Savannah operation.

Special and non-recurring charges by category of expenditure were as follows:

<TABLE>
<S>                                   <C>                    <C>                <C>                <C>

                                                 Included In
                         ----------------- ------------------------  -----------------
                                   Cost of              General and      Restructuring
                                Goods Sold           Administrative            Charges             Total
                         ----------------- ------------------------  -----------------  ----------------
Inventories                           $6.6                                                          $6.6
Management restructuring                                     $1.5 *             $1.7 *               3.2
Fixed assets                                                  0.2 *              2.9                 3.1
Other                                                         2.0                0.2 *               2.2
                         ----------------- ------------------------  -----------------  ----------------
                                      $6.6                   $3.7               $4.8               $15.1
                         ================= ========================  =================  ================

</TABLE>

         The inventory charge related primarily to write-down of inventory which
was determined to be  non-strategic  and to reserves for obsolete  inventory and
inventory  in  excess  of usage  plans.  The  management  restructuring  charges
included  employee  severance  costs and  expenses  related to the hiring of the
Company's  new  chief  executive  officer.  The  fixed  assets  charges  related
primarily  to fixed  assets  which will be  disposed of in  connection  with the
restructuring  of product  lines.  The other  charges  included  $2.0 million of
additional reserves against accounts receivable for customer deductions.

         Of the $15.1 million of special charges, a total of $3.6 million (those
denoted by "*" above) were  recorded as accrued  liabilities.  Cash payments for
these  expenses  totaled  approximately  $0.9  million  resulting in a liability
balance at June 30, 1998 of $2.7 million.

4.   Sale of Subsidiary Stock

     During the quarter  ended June 30,  1998,  the Company  recorded a one-time
pretax gain of $49.1 million  ($28.1  million net of tax) related to its sale of
29.1 million shares of its South African  subsidiary,  Carson  Holdings  Limited
("Carson  South  Africa"),  the shares of which are  traded on the  Johannesburg
Stock Exchange.  This sale generated cash proceeds of $55.2 million and resulted
in an  increase  in  minority  interest of $6.0  million  which  represents  the
Company's cost basis in the shares sold.

         Concurrent with the sale of the Company's  shares,  Carson South Africa
issued an additional 10.25 million shares for which it received cash proceeds of
$19.2  million.  This  transaction  resulted  in a gain to the  Company of $11.7
million which was recorded as paid in capital.  The  transaction  also increased
minority interest by $7.6 million.

         As a  result  of these  combined  sales,  the  Company  currently  owns
approximately 53.2% of the stock of Carson South Africa.












                                        7

<PAGE>





5.    Inventories

Inventories are summarized as follows (in thousands):


                                 June 30, 1998             December 31, 1997
                ------------------------------  ----------------------------
Raw materials                           $9,877                       $10,873
Work-in-process                          1,198                         1,651
Finished goods                          14,116                        12,337
                ------------------------------  ----------------------------
                                       $25,192                       $24,861
                ==============================  ============================


6.  New Accounting Pronouncements

     Statement   of  Financial   Accounting   Standards   No.  130,   "Reporting
Comprehensive Income" ("SFAS No. 130") is effective and has been adopted for the
Company's  fiscal  year  ending  December  31,  1998.  SFAS No. 130  establishes
standards for reporting and displaying  comprehensive  income and its components
(revenues,  expenses,  gains  and  losses)  in a  full  set  of  general-purpose
financial statements.

The components of comprehensive income were as follows (in thousands):

<TABLE>
<S>                                      <C>             <C>             <C>                <C>

                                    Three Months   Three Months Six Months Ended  Six Months Ended
                                   June 30, 1998  June 30, 1997    June 30, 1998     June 30, 1997
                                  -------------- -------------- ----------------  ----------------
Net income                              $17,716         $2,266          $17,215            $2,948
Other comprehensive (loss)
income:
  Change in equity due to foreign
  currency translation adjustments       (4,137)          (270)          (4,275)              625
                                  -------------- -------------- ----------------  ----------------
Comprehensive income                    $13,577         $1,996          $12,940            $3,573
                                  ============== ============== ================  ================
</TABLE>

The loss in equity due to foreign currency  translation  adjustments  during the
three  months and six  months  ended  June 30,  1998 was due to the  significant
devaluation  of the South  African Rand during the second  quarter of 1998.  The
Rand devalued approximately 20.0%, from 4.9970 Rand per dollar at March 31, 1998
to 5.9950  Rand per  dollar at June 30,  1998.  During the prior  year,  no such
significant fluctuation of the Rand occurred.


         Statement of Financial Accounting Standards No. 131, "Disclosures about
Segments of an  Enterprise  and Related  Information"  ("SFAS No.  131") is also
effective for the Company's  fiscal year ending  December 31, 1998. SFAS No. 131
establishes  standards  for the way  that  public  business  enterprises  report
information about operating segments in annual financial statements and requires
that those enterprises  report selected  information about operating segments in
interim  financial  reports  issued to  shareholders.  This  statement  does not
significantly alter the segment disclosures the Company provides.


                                        8

<PAGE>




                     Management's Discussion and Analysis of
                  Results of Operations and Financial Condition

OVERVIEW

Forward-looking Statements

         This  report  on Form  10-Q as well as other  public  documents  of the
Company   contain   forward-looking   statements   which   involve   risks   and
uncertainties,  including (i) the Company's  plans to introduce new products and
product enhancements,  (ii) the Company's plans to make selective  acquisitions,
(iii) the Company's marketing,  distribution and manufacturing  expansion plans,
(iv) future financial performance,  (v) cash flows from operations, (vi) capital
expenditures,  (vii) the availability of funds from credit facilities and (viii)
the cost  and  timely  implementation  of the  Company's  Year  2000  compliance
modifications.  The Company's  actual results may differ  materially  from those
discussed  in such  forward-looking  statements.  When  used  herein  and in the
Company's future filings, the terms "expects", "plans", "intends",  "estimates",
"projects",  "anticipates"  or similar  expressions  are  intended  to  identify
forward-looking  statements (within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")).  Such statements reflect
the current  views of the Company with respect to future  events and are subject
to certain risks,  uncertainties  and  assumptions.  In addition to risk factors
that may be described in the Company's  filings with the Securities and Exchange
Commission  (the  "Commission")   (including  this  filing,  the  Company's  IPO
prospectus dated October 14, 1996, the Company's exchange offer prospectus dated
December 19, 1997 and the  Company's  1997 Annual  Report on Form 10-K),  actual
results  could differ  materially  from those  expressed in any  forward-looking
statements made by the Company.  Such risks,  uncertainties and factors include,
but  are  not  limited  to,  foreign  business  risks,   industry   cyclicality,
fluctuations  in customer  demand and order pattern,  the seasonal nature of the
business,  changes  in  pricing,  the  identification  of  suitable  acquisition
candidates,  changes in the  implementation of the Company's  acquisition plans,
the availability of financing, and general economic conditions, as well as other
risks  detailed  in the  Company's  filings  with the  Securities  and  Exchange
Commission.  Additional  risk  factors  include,  but are not  limited  to,  the
following:  (a) the  Company's  success in  implementing  its  growth  strategy,
including its success in obtaining financing where required, (b) difficulties or
delays in developing and introducing new products or the failure of consumers to
accept new product  offerings,  (c) changes in consumer  preferences,  including
reduced consumer demand for the Company's current  products,  (d) the nature and
extent of future competition in the Company's principal marketing areas, and (e)
political,  economic and demographic  developments in the United States, Africa,
Brazil, the Caribbean,  Europe and other countries where the Company now does or
in the future may do business.


General

         The Company is a leading manufacturer and marketer in the United States
of  selected  personal  care  products  for both the ethnic  market and the mass
market. The Company believes that it is one of the leading global  manufacturers
and marketers of ethnic hair care products for persons of African  descent.  The
Company's  flagship brand,  Dark & Lovely,  is the most widely recognized ethnic
brand name in the United  States  retail  ethnic hair care  market.  The Company
currently sells over 70 different products  specially  formulated to address the
unique  physiological  characteristics  of persons of African  descent under six
principal brand names, including Dark & Lovely,  Excelle,  Beautiful Beginnings,
Dark & Natural,  Magic and Let's Jam.  The majority of the  Company's  net sales
have  historically  been derived from hair relaxers and  texturizers,  which are
used to chemically treat and straighten hair ( constituting approximately 50% of
the Company's sales in 1997),  hair color,  men's  depilatory  products and hair
care maintenance products, primarily for persons of African descent. The Company
is expanding its product offerings to other segments of the ethnic personal care
market,  including cosmetics and skin care products. In addition, the Company is
a leading  marketer of nail care products to the United States mass market under
the Cutex  brand  name.  The  Company is  currently  seeking to divest the Cutex
business in order to focus on the worldwide ethnic personal care business.










                                        9

<PAGE>



         In the six months ended June 30, 1998,  approximately  38.1% of the net
sales of the Company were to customers  outside the United States as compared to
27.5 % in the first six months of the prior fiscal  year.  The  following  table
presents the Company's net sales by geographic region for these periods (dollars
are in thousands):



Net sales to:                1998           %         1997            %
                     ------------ -----------  -----------  -----------
United States             $37,721       61.9%      $34,899        72.5%
Africa                     17,148       28.1         7,391        15.3
Other                       6,102       10.0         5,876        12.2
                     ------------ -----------  -----------  -----------
  Total                   $60,971      100.0%       48,166       100.0%
                     ============ ===========  ===========  ===========


          With  the  exception  of sales in  South  Africa,  Botswana,  Lesotho,
Namibia and Swaziland,  which are  denominated in South African Rand, all of the
Company's  sales are  recorded in U.S.  Dollars.  The Company  does not view the
exposure to Rand exchange rate fluctuations as significant  because Carson South
Africa incurs  substantially all of its costs in Rand. Assets and liabilities of
Carson South Africa are translated for consolidation purposes from South African
Rand into U.S. Dollars at the rate of currency exchange at the end of the fiscal
period.  Revenues and  expenses are  translated  at average  monthly  prevailing
exchange rates. Resulting translation  differences are recognized as a component
of stockholders' equity.

Acquisition

         During June,  1998 the Company  entered into a Purchase  Agreement with
Ivax Corporation,  d/b/a IVX Bioscience, Inc., in order to acquire the shares of
Johnson Products Co., Inc., a Florida  corporation.  Johnson Products is a major
manufacturer of personal care products for the ethnic market.  Johnson hair care
products  include  brand names such as Gentle  Treatment,  UltraSheen,  Precise,
Bantu and AfroSheen. Its cosmetics are sold under the Posner name. Also included
in the  acquisition  was the Dermablend  corrective  cosmetics  line,  which the
Company intends to divest immediately. The acquisition was completed on July 14,
1998 and was  accounted  for as a purchase.  The purchase  price,  including the
Dermablend  line,  was  approximately  $85.0  million with $35.0 million paid in
cash. The Company entered into a Credit  Agreement with Ivax Corporation for the
remaining  $50.0 million  purchase  price.  The short-term loan provided by Ivax
matures on  November  30,  1998 and bears  interest  at 9.0% per annum,  payable
monthly. Any overdue principal and interest bear interest at 12.0% per annum and
are payable upon demand. The Company intends to repay the note with a portion of
the proceeds from the divestitures of the Dermablend and Cutex brands.

         In conjunction with the Credit  Agreement,  the Company  terminated its
senior secured credit facility with Credit Agricole  Indosuez.  During the third
quarter of 1998,  the  Company  will  recognize  an  extraordinary  loss of $0.9
million  (net of tax, or $0.06 per share) for the  write-off  of $1.6 million of
debt financing costs related to this credit facility.


Special Items

     During the  quarter  ended June 30,  1998,  the Company  recorded  one-time
pretax  charges of $15.1 million ($8.7 million net of tax) as well as a one-time
pretax gain of $49.1 million ($28.1 million net of tax).

         The  one-time  charges  related   primarily  to  the  restructuring  of
management and product lines at the Company's  Savannah  operation.  The Company
revised its key  management  team,  including the  termination of several senior
managers and the addition of Gregory J. Andrews as Chief Executive Officer,  and
announced a new strategic focus on its core business,  the worldwide ethnic hair
care market. In connection with this new focus and the Johnson acquisition,  all
of the combined  products,  brands and facilities were reviewed for optimum use.
Items identified as non-strategic or redundant were written down.

         Of the pretax charges,  $6.6 million was recorded as cost of goods sold
for obsolete or excess inventory and

                                       10

<PAGE>



the  elimination  of over 100 stock  keeping  units  (SKUs),  $3.7  million  was
recorded as general and administrative expenses and $4.8 million was recorded as
restructuring  charges.  The general and  administrative  expenses included $1.5
million related to the management restructuring, $0.2 million for the write-down
of fixed  assets and $2.0  million  for  additional  reserves  against  accounts
receivable for customer deductions.  Restructuring charges included $1.7 million
related to the  management  restructuring,  $2.9 million for the  write-down  of
fixed assets and $0.2 million of other charges.

     The  one-time  pretax  gain of $49.1  million  ($28.1  million  net of tax)
related to the sale of 29.1 million shares of Carson South Africa, the shares of
which are traded on the  Johannesburg  Stock  Exchange.  This sale generated net
cash proceeds of $55.2 million and resulted in an increase in minority  interest
of $6.0 million.  Concurrent with the sale of the Company's shares, Carson South
Africa issued an additional  10.25 million shares for which it received net cash
proceeds of $19.2 million. This transaction resulted in a gain to the Company of
$11.7  million  which was  recorded in paid in  capital.  The  transaction  also
increased  minority  interest  by $7.6  million.  As a result of these  combined
sales,  the Company  currently owns  approximately  53.2% of the stock of Carson
South Africa.


Results of Operations

Quarter  Ended June 30, 1998 Compared to Quarter Ended June 30, 1997

Net Sales.  Consolidated  net sales for the quarter ended June 30, 1998 of $29.2
million decreased $1.1 million,  or 3.53%, from the quarter ended June 30, 1997.
This decrease is summarized as follows (dollars are in thousands):



                                       Quarter Ended   Quarter Ended
                                       June 30, 1998  June 30,  1997  % Change
                                     --------------- --------------- ---------
Domestic core                                $10,413         $18,245      (42.9)
Cutex                                          6,279           4,762       31.9
Salon Professional and Cosmetics                 376              32     1075.0
                                     --------------- --------------- ---------
   Total Domestic                             17,068          23,039      (25.9)
                                     --------------- --------------- ---------
South Africa                                   9,347           4,824       93.6
Other International, including U.S.
export                                         2,759           2,371       16.4
                                     --------------- --------------- ---------
   Total International                        12,106           7,195       68.2
                                     --------------- --------------- ---------
   Consolidated                              $29,174         $30,234       (3.5)
                                     =============== =============== =========







     Sales of the Company's  domestic core business,  ethnic hair care products,
amounted to $10.4 million in the quarter ended June 30, 1998, a decrease of $7.8
million, or 42.9%, compared to the quarter ended June 30, 1997. This decrease is
the  result of several  factors,  including  unusually  high sales in the second
quarter of 1997,  continuation  of the  approximately  year long softness in the
Company's  domestic core sales and overall  softness in the domestic ethnic hair
care industry. Sales for the quarter ended June 30, 1997 were unusually high due
to special  quarter-end  promotions  which boosted sales for that quarter and to
customer  buy-ins in advance  of an announced price  increase.   The  Company no
longer offers such quarter-end promotions.  To address the downward trend in the
Company's domestic core sales, the management  restructuring  changes previously
discussed were undertaken. In

                                       11

<PAGE>



addition,  the Company is revising  certain  sales,  distribution  and marketing
practices to better meet customer and distributor  needs and stimulate  interest
at the  consumer  level,  thereby  increasing  demand for and sales of hair care
products.

     Net  sales of Cutex  increased  significantly  from the prior  year  second
quarter.  Cutex  was  purchased  in April of 1997  and was not  included  in the
Company's  results of  operations  for the entire  quarter  ended June 30, 1997.
Cutex product shipments for the quarter ended June 30, 1998 were actually higher
than the  reported net sales  indicate due to unusually  high levels of returned
product in the second  quarter  of 1998.  Introduction  of the new Ultra line of
nail  polishes in April 1998  resulted in high  returns of old product  which it
replaced.

     International  sales continued to grow  significantly  from the prior year.
International  net sales were $12.1  million in the quarter ended June 30, 1998,
an increase of $4.9  million,  or 68.2 %, compared to the quarter ended June 30,
1997.  Most of the growth was in Africa,  but gains were also made in Europe and
South America, while sales to the Caribbean were down.

Gross Profit.  Gross profit was $8.1 million for the quarter ended June 30, 1998
compared to $16.2  million for the quarter  ended June 30, 1997.  Excluding  the
$6.6  million  of  special  charges  included  in cost of  sales,  gross  profit
decreased to $14.7 million in the quarter ended June 30, 1998 from $16.2 million
in the quarter ended June 30, 1997, and gross margin  decreased to 50.3% for the
quarter  ended  June 30,  1998 from  53.7% for the same  quarter  in 1997.  This
decrease in gross margin was due primarily to decreased  production  volumes and
partly to geographic and product shifts in the sales mix.  Production volume was
curtailed to reduce  inventories  which had risen to levels in excess of current
needs.  Inventories  were  built up at the end of the prior  fiscal  year due to
manufacturing inefficiencies which necessitated carrying higher inventory levels
to meet customer needs.  Inventories  were further built up in the first part of
fiscal  1998 to meet  sales  forecasts  which  proved to be too  high.  To lower
inventory  levels,  the plant was shut down for two weeks and operated only four
days for several more weeks during the quarter ended June 30, 1998.  This action
resulted in unabsorbed  overhead in production  which  adversely  impacted gross
margin.

     Gross  margin was  lowered  as Carson  South  Africa's  net sales grew as a
percentage of consolidated net sales.  Sales in Africa typically provide a lower
gross margin than domestic sales.  However,  marketing and selling  expenses are
also lower on these international sales, and the operating margin on these sales
is typically higher than on domestic sales.

     Gross margin was also  negatively  impacted  during the quarter by the high
returns of Cutex product discussed above.

Marketing and Selling Expenses. Marketing and selling expenses increased to $8.8
million in the  quarter  ended June 30,  1998 from $6.6  million in the  quarter
ended June 30, 1997,  an increase of 34.7%.  This  increase was primarily due to
the  additions  of  Cutex,  Let's  Jam and  Dark & Lovely  Cosmetics  as well as
expanded  marketing to support Carson South Africa sales. As a percentage of net
sales,  these  expenses  increased to 30.3% during this period from 21.7% during
the comparable period in 1997.

General and Administrative  Expense.  General and  administrative  expenses were
$10.0  million for the quarter  ended June 30, 1998 compared to $4.4 million for
the quarter ended June 30, 1997.  Excluding the $3.7 million of special  charges
included  in general and  administrative  expenses,  general and  administrative
expenses  increased to $6.3 million in the quarter ended June 30, 1998 from $4.4
million  in the  quarter  ended  June 30,  1997,  an  increase  of  42.8%.  As a
percentage of net sales, general and administrative  expenses increased to 21.6%
during  this  period  from 14.6%  during  the  comparable  period in 1997.  This
increase was primarily due to higher  spending at Carson South Africa to support
the  subsidiary's  growth combined with increased  professional  fees and higher
warehouse costs associated with high domestic inventory levels.

Restructuring.  As discussed above,  restructuring charges included $1.7 million
related to the  management  restructuring,  $2.9 million for the  write-down  of
fixed assets and $0.2 million of other miscellaneous charges.

Operating Income.  As a result of the above changes,  operating income decreased
to a loss of $15.6  million in the  quarter  ended June 30,  1998 from income of
$5.3 million in the quarter ended June 30, 1997.  Excluding the special charges,
operating  income  decreased to a loss of $0.5 million in the quarter ended June
30, 1998 from income of $5.3 million in the quarter ended June 30, 1997.

Interest Expense.  Interest expense  increased  significantly to $3.0 million in
the quarter  ended June 30, 1998 from $1.5 million in the quarter ended June 30,
1997. The increased  interest expense was the result of additional debt incurred
in 1997 to finance  acquisitions,  which was  subsequently  refinanced  with the
proceeds from the sale of $100 million aggregate

                                       12

<PAGE>



principal amount of 10-year 10 3/8 % Senior Subordinated Notes.

Gain on Sale of Subsidiary Stock.    As discussed above, this gain resulted from
the sale of 29.1 million shares of Carson South Africa.

Minority  Interest in Earnings of Subsidiary.  Minority  interest in earnings of
subsidiary  increased to expense of $0.6  million in the quarter  ended June 30,
1998 from  expense of $0.2  million in the  quarter  ended June 30,  1997.  This
increase is due to higher  earnings of Carson  South  Africa in the current year
quarter  over the prior year quarter and also to the higher  minority  ownership
percentage resulting from the sales of subsidiary stock.

Other Income.  Other income increased to $1.2 million for the quarter ended June
30,  1998  from $0.4  million  for the same  quarter  of 1997  primarily  due to
interest  income on cash  balances in the United  States and South  Africa which
were generated by the sale of subsidiary stock.

Provision for Taxes.  The provision for taxes increased to $13.4 million,  based
on an  effective  rate of 43.0%,  in the  quarter  ended June 30, 1998 from $1.7
million,  based on an  effective  rate of 42.3%,  in the quarter  ended June 30,
1997.  Excluding the special charges and gain, the provision for taxes decreased
to a benefit  of $1.2  million,  based on an  effective  rate of  40.0%,  in the
quarter ended June 30, 1998. This effective tax rate has decreased from 1997 due
to the larger impact of the earnings of Carson South Africa,  which are taxed at
lower rates than the earnings in the United States.

Six Months Ended June 30, 1998 Compared to Six Months Ended June 30, 1997

Net  Sales.  Consolidated  net sales for the six months  ended June 30,  1998 of
$61.0 million increased $12.8 million,  or 26.6%, over the six months ended June
30, 1997. This increase is summarized as follows (dollars are in thousands):



                                   Six Months Ended  Six Months Ended
                                      June 30, 1998    June 30,  1997 % Change
                                   ----------------  ---------------- ----------
Domestic core                               $24,893           $30,105     (17.3)
Cutex                                        11,760             4,762     147.0
Salon Professional and Cosmetics              1,068                32    3237.5
                                   ----------------  ---------------- ----------
   Total Domestic                            37,721            34,899       8.1
                                   ----------------  ---------------- ----------
South Africa                                 17,148             7,391     131.9
Other International                           6,102             5,876       3.9
                                   ----------------  ---------------- ----------
   Total International                       23,250            13,267      75.2
                                   ----------------  ---------------- ----------
   Consolidated                             $60,971           $48,166      26.6
                                   ================  ================ ==========






     Sales of the Company's  domestic core business,  ethnic hair care products,
amounted to $24.9  million in the six months  ended June 30, 1998, a decrease of
$5.2  million,  or 17.3%,  compared to the six months ended June 30, 1997.  This
decrease is the result of several factors, including unusually high sales in the
second quarter of 1997,  continuation of the approximately year long softness in
the Company's  domestic core sales and overall  softness in the domestic  ethnic
hair care industry.  Sales for the six months ended June 30, 1997 were unusually
high due to special quarter-end promotions and customer buy-ins in advance of an
announced  price increase at the end of the second quarter of 1997 which boosted
sales for that  quarter and the six months  ended June 30,  1998.  As  discussed
previously,  a management  restructuring  was undertaken to address the downward
trend in the Company's domestic core sales. In addition, the Company is revising
certain sales,  distribution and marketing practices to better meet customer and
distributor  needs  and  stimulate  interest  at  the  consumer  level,  thereby
increasing demand for and sales of hair care products.  Sales were also impacted
by industry

                                       13

<PAGE>



factors, including the effects of drug chain consolidation. Drugstores represent
the largest source of retail sales for the domestic core business.

     Net sales of Cutex increased  significantly from the prior year six months.
The brand was  purchased in April of 1997 and  therefore was not included in the
Company's results of operations for the entire six months ended June 30, 1997.

     International  sales continued to grow  significantly  from the prior year.
International  net sales  were $23.2  million  in the six months  ended June 30,
1998, an increase of $10.0 million,  or 75.2 %, compared to the six months ended
June 30,  1997.  Most of the growth  was in Africa,  but gains were also made in
Europe and South America, while sales to the Caribbean were down.

Gross  Profit.  Gross profit was $24.5 million for the six months ended June 30,
1998 compared to $26.3 million for the six months ended June 30, 1997. Excluding
the $6.6  million of special  charges  included in cost of sales,  gross  profit
increased  to $31.1  million  in the six months  ended June 30,  1998 from $26.3
million in the six months  ended June 30, 1997,  and gross  margin  decreased to
51.0% for the six months  ended June 30, 1998 from 54.6% for the same six months
in 1997. This decrease in gross margin was due primarily to decreased production
volumes and partly to geographic and product shifts in the sales mix. Production
volume was curtailed in the second quarter of 1998 to reduce  inventories  which
had risen to levels in excess of current needs. Inventories were built up at the
end  of  the  prior  fiscal  year  due  to  manufacturing  inefficiencies  which
necessitated   carrying  higher   inventory   levels  to  meet  customer  needs.
Inventories were further built up in the first part of fiscal 1998 to meet sales
forecasts which proved to be too high. To lower inventory levels,  the plant was
shut down for two weeks and run only four days for several more weeks during the
second  quarter  of  1998.  This  action  resulted  in  unabsorbed  overhead  in
production which adversely impacted gross margin.

     Gross  margin was  lowered  as Carson  South  Africa's  net sales grew as a
percentage of consolidated net sales.  Sales in Africa typically provide a lower
gross margin than domestic sales.  However,  marketing and selling  expenses are
also lower on these international sales, and the operating margin on these sales
is typically higher than on domestic sales.

     Gross margin was also negatively  impacted during the six months ended June
30, 1998 by high returns of old Cutex product in response to introduction of the
new Ultra line of nail  polish  and by  increased  sales of Let's Jam  products,
which  generated a relatively low gross margin,  primarily due to high packaging
costs and the fact that the products are  outsourced.  Management  is working on
packaging  changes,   evaluating   pricing  changes  and  considering   in-house
manufacturing  to bring these  products more in line with the  Company's  normal
gross margin. There can be no assurance,  however, that the Company will achieve
a higher gross margin.

Marketing  and Selling  Expenses.  Marketing and selling  expenses  increased to
$17.5  million in the six months  ended June 30, 1998 from $12.3  million in the
six months  ended  June 30,  1997,  an  increase  of 42.7%.  This  increase  was
primarily due to the additions of Cutex,  Let's Jam and Dark & Lovely  Cosmetics
as well as  expanded  marketing  to support  Carson  South  Africa  sales.  As a
percentage of net sales,  these  expenses  increased to 28.7% during this period
from 25.5% during the comparable period in 1997.

General and Administrative  Expense.  General and  administrative  expenses were
$16.0  million for the six months  ended June 30, 1998  compared to $7.1 million
for the six months  ended June 30, 1997.  Excluding  the $3.7 million of special
charges  included  in  general  and  administrative   expenses,  these  expenses
increased  to $12.3  million  in the six months  ended  June 30,  1998 from $7.1
million in the six months  ended  June 30,  1997,  an  increase  of 71.5%.  As a
percentage of net sales, general and administrative  expenses increased to 20.1%
during  this  period  from 14.8%  during  the  comparable  period in 1997.  This
increase was due in part to increased personnel,  professional and miscellaneous
expenses  associated with  enhancement of  infrastructure  needed to support the
Company's  anticipated growth,  combined with higher amortization of intangibles
related to  acquisitions  and higher  warehouse  costs related to high inventory
levels.

Restructuring.  As discussed above,  restructuring charges included $1.7 million
related to the  management  restructuring,  $2.9 million for the  write-down  of
fixed assets and $0.2 million of other miscellaneous charges.

Operating Income.  As a result of the above changes,  operating income decreased
to a loss of $13.8  million in the six months ended June 30, 1998 from income of
$6.9  million  in the six months  ended June 30,  1997.  Excluding  the  special
charges of $15.1 million,  operating  income decreased to income of $1.3 million
in the six months  ended June 30,  1998 from  income of $6.9  million in the six
months ended June 30, 1997.

Interest Expense.     Interest expense increased significantly  to  $5.8 million
in the six months ended June 30, 1998 from

                                       14

<PAGE>



$2.1  million in the six months  ended June 30,  1997.  The  increased  interest
expense  was  the  result  of  additional  debt  incurred  in  1997  to  finance
acquisitions,  which was subsequently refinanced with the proceeds from the sale
of  $100  million  aggregate  principal  amount  of  10-year  10  3/8  %  Senior
Subordinated Notes.

Gain on Sale of Subsidiary Stock.    As discussed above, this gain resulted from
the sale of 29.1 million shares of Carson South Africa.

Minority  Interest in Earnings of Subsidiary.  Minority  interest in earnings of
subsidiary increased to expense of $0.9 million in the six months ended June 30,
1998 from expense of $0.3  million in the six months  ended June 30, 1997.  This
increase  was due to higher  earnings of Carson South Africa in the current year
six  months  over the prior  year six  months  and also to the  higher  minority
ownership percentage resulting from the sales of subsidiary stock.

Other  Income.  Other income  increased to $1.7 million for the six months ended
June 30, 1998 from $0.7 million for the same six months of 1997 primarily due to
interest  income on cash  balances in the United  States and South  Africa which
were generated by the sale of subsidiary stock.

Provision for Taxes.  The provision for taxes increased to $13.0 million,  based
on an effective  rate of 43.0%,  in the six months ended June 30, 1998 from $2.2
million,  based on an effective rate of 42.7%,  in the six months ended June 30,
1997.  Excluding the special charges and gain, the provision for taxes decreased
to a benefit of $1.5 million,  based on an effective  rate of 40.0%,  in the six
months ended June 30, 1998.  This effective tax rate has decreased from 1997 due
to the larger impact of the earnings of Carson South Africa,  which are taxed at
lower rates than the earnings in the United States.



Liquidity and Capital Resources

     In the six months ended June 30, 1998, net cash used in operations was $6.4
million.  Excluding the gain on sale of subsidiary  stock,  the non-cash special
charges and the taxes  related to these,  net cash used in  operations  was $6.1
million. This cash was used primarily for increased inventory levels,  including
a $3.6 million  increase at Carson  South Africa and a $3.5 million  increase in
Cutex inventories.

     Net cash used in investing activities for the six months ended June 30,1998
consisted of capital expenditures of $4.9 million.

     Net cash provided by financing activities for the six months ended June 30,
1998  totaled  $65.6  million.  Cash inflows  included  $55.2  million  received
domestically  from the sale of Carson  Holdings  stock by the  Company and $19.2
million  received  in South  Africa  for the  issuance  of new  shares of Carson
Holdings  stock.  Significant  financing  cash  outflows  included the scheduled
payment of $5.4 million for the purchase of A&J Cosmetics and a net $3.0 million
reduction in the Company's outstanding revolver balance.

     The cash balance was also adversely impacted by the significant devaluation
of the South African Rand during the second  quarter of 1998.  The Rand devalued
approximately  20.0%,  from  4.9970  Rand per dollar at March 31, 1998 to 5.9950
Rand per dollar at June 30, 1998.  Due to this  devaluation,  the cash  balances
held in South Africa fell $3.9 million when  converted to U.S.  dollars.  During
the prior year, no such significant devaluation of the Rand occurred.

     The Company  believes that cash flow from  operating  activities,  existing
cash  balances and  anticipated  proceeds from the planned  divestitures  of the
Cutex  and  Dermablend  brands  will  be  sufficient  to  fund  working  capital
requirements,   capital  expenditures  and  debt  service  requirements  in  the
immediate  future.  A portion  of the  anticipated  proceeds  from the  business
divestitures  is expected to be used to repay the short-term note issued by Ivax
to finance the  purchase of Johnson  Products in July 1998.  If the Ivax note is
not repaid by November  30,  1998,  principal  and  interest  will be payable on
demand and will bear  interest at 12% per annum.  As discussed  previously,  the
Company's revolving credit facility with Credit Indosuez Agricole was terminated
during July 1998. A new revolving  credit facility is currently being negotiated
with a major bank.






                                       15

<PAGE>



Year 2000 Computer Issue

The Company currently utilizes two computer  information systems. The JD Edwards
financial  package is used to support  several  financial  applications.  In its
distribution and manufacturing  operations,  the Company uses a software package
known as PRISM developed by MARCAM.  The JD Edwards and PRISM packages run on an
IBM AS/400 computer and are currently not year 2000 compliant.

To replace the current systems and provide year 2000 compliance,  management has
selected a single vendor,  integrated  business  software  package.  The cost of
conversion to the new system is estimated to be approximately $1.0 million.  The
new system is  expected  to be  functional  by the end of the second  quarter of
1999.

In the  unlikely  event that  implementation  of the selected  software  package
fails, the Company would  immediately begin working with another software vendor
to achieve year 2000 compliance as quickly as possible. The risk associated with
not having systems that are compliant by the year 2000 is that the Company would
have  to  implement  manual  procedures  which  would  lead  to a  reduction  in
efficiency.  The Company  could  continue to operate,  but at a reduced level of
productivity.



                                       16

<PAGE>




                                  CARSON, INC.

                           PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

     The Company is party to lawsuits  incidental  to its  business.  Management
believes that the ultimate  resolution of these matters will not have a material
adverse  impact on the business or financial  condition  and  operations  of the
Company.

Item 2.  Changes in Securities

     None

Item 3.  Defaults upon Senior Securities

     None

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

At the annual meeting of shareholders of Carson,  Inc., held on May 8, 1998, the
following directors were elected to three- year terms expiring in 2001: Joyce M.
Roche,  Abbey J. Butler and Melvin J.  Estrin.  Other  directors  whose terms of
office  continued  after the  meeting  included:  Dr.  Roy  Keith,  Lawrence  E.
Bathgate,  II, Suzanne de Passe,  James L. Hudson,  Jack F. Kemp, John L. Sabre,
Dennis E.  Smith  and  Vincent  A.  Wasik.  In  connection  with the  management
restructuring,  Dennis E. Smith,  formerly  Executive  Vice  President of Sales,
resigned from the board of directors in June 1998. The appointment of Deloitte &
Touche LLP as  independent  auditors  for 1998 was also  ratified  at the annual
meeting.

Results of the annual meeting votes were as follows:


<TABLE>
<S>                                                               <C>                 <C>                 <C>    
                                                                                      Against
                                                                                         or
                                                                     For              Withheld          Abstentions
                                                              ------------------ ------------------  ------------------
(1) To elect directors to three-year terms expiring in 2001:
      Joyce M. Roche                                              71,802,372           1,100                -0-
      Abbey J. Butler                                             71,802,872             600                -0-
      Melvin J. Estrin                                            71,803,472             600                -0-
(2) To ratify the appointment of Deloitte & Touche LLP
     as the Company's independent auditors for 1998               71,783,367          14,555              5,550
</TABLE>


Item 5.  Other Information

     None
 











                                       17

<PAGE>



Item 6.  Exhibits and Reports on Form 8-K

(a)    Exhibits --

     10.52  Employment Agreement dated as of July 1,1998 between Carson Products
            Company and Gregory J. Andrews
     10.53  Employment Agreement dated as of June 8,1998 between Carson Products
            Company and Aurelia Waldon
     27     Financial data schedule.


(b)    Reports on Form 8-K --


On June 17, 1998, the Company filed a Form 8-K announcing a restructuring of its
senior  management  team.  The Company also  announced  the sale of stock of its
South  African  subsidiary  and plans to divest its Cutex  nail  polish and nail
polish remover business.

On July 29, 1998, the Company filed a Form 8-K announcing  that it had completed
the acquisition of Johnson Products Co., Inc.

                                       18

<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.

CARSON, INC.



/s/  Gregory J. Andrews                                Date: August 14, 1998
-----------------------
Gregory J. Andrews
Chief Executive Officer



/s/   Robert W. Pierce                                 Date: August 14, 1998
----------------------
Robert W. Pierce
Executive Vice President, Chief Financial
Officer and Secretary (Principal Financial Officer)

                                       19

<PAGE>