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 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 1-12271



                                  CARSON, INC.



             (Exact name of registrant as specified in its charter)


            DELAWARE                                    06-1428605
(State or other jurisdiction of                  (I.R.S. Employer Identification
     incorporation 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  November 9, 1999,  10,083,485  shares of the  registrant's  Class A Common
      Stock, par value $0.01 per share, and 5,126,163 shares of the registrant's
      Class C Common Stock, par value $0.01 per share were outstanding.


<PAGE>




                                  CARSON, INC.

                                      INDEX

Part I.  Financial Information                                              Page

         Item 1.

         Condensed Consolidated Balance Sheets
         September 30, 1999 and December 31, 1998.........................  3

         Condensed Consolidated Statements of Operations
         Three Months and Nine Months Ended September 30, 1999 and 1998...  4

         Condensed Consolidated Statements of Cash Flows
         Nine Months Ended September 30, 1999 and 1998..................... 5

         Notes to Condensed Consolidated Financial Statements.............. 6-13

         Item 2.

         Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................ 14-21

Part II.  Other Information............................................... 21

         Item 6.

         (a) Exhibits .................................................... 22

         (b) Reports on Form 8-K.......................................... 22

         Signature........................................................ 23


                                        2

<PAGE>


                                  CARSON, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1999 AND DECEMBER 31, 1998
                 (In thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                                                                   September 30,     December 31,
                         ASSETS                                                                        1999              1998
                                                                                                  --------------    --------------
                                                                                                    (Unaudited)
<S>                                                                                                <C>               <C>
CURRENT ASSETS:
      Cash and cash equivalents                                                                    $     20,606      $     28,706
      Accounts receivable less allowances of $5,811 and $6,457 at September 30, 1999
          and December 31, 1998, respectively                                                            41,614            38,953
      Inventories                                                                                        27,212            22,825
      Restricted cash                                                                                        --             4,500
      Other current assets                                                                                1,179               669
                                                                                                  --------------    --------------
          Total current assets                                                                           90,611            95,653

PROPERTY, PLANT AND EQUIPMENT, net                                                                       38,025            35,765

INTANGIBLES, net                                                                                        126,410           129,183

OTHER ASSETS                                                                                              6,689             6,862

                                                                                                  --------------    --------------
          TOTAL ASSETS                                                                             $    261,735      $    267,463
                                                                                                  ==============    ==============


                         LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
      Accounts payable                                                                             $     14,711      $     12,584
      Due for A&J Cosmetics                                                                                  --             6,355
      Accrued expenses                                                                                   15,315            19,306
      Income taxes payable                                                                                1,220             2,508
      Current maturities of long-term debt                                                                   --               126
                                                                                                  --------------    --------------
          Total current liabilities                                                                      31,246            40,879

LONG-TERM DEBT                                                                                          136,723           133,423

OTHER LIABILITIES                                                                                         3,299             3,345

MINORITY INTEREST IN SUBSIDIARY                                                                          22,617            20,656

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,  9,977,550 and
             7,926,485 shares issued as of September 30, 1999 and December 31, 1998, respectively           100                79
          Class B, nonvoting, $.01 par value, 2,000,000 shares authorized, 0 and 1,859,677 shares
             issued and outstanding as of September 30, 1999 and December 31, 1998, respectively             --                19
          Class C, voting, $.01 par value, 13,000,000 shares authorized, 5,274,312 and
             5,334,700 shares issued as of September 30, 1999 and December 31, 1998, respectively            53                53

      Paid-in capital                                                                                    81,526            80,970
      Accumulated deficit                                                                                (5,316)           (3,920)
      Accumulated other comprehensive losses                                                             (6,938)           (6,495)
      Notes receivable from shareholders, net of discount                                                (1,238)           (1,209)
      Treasury stock, 13,245 shares of Class A common stock and 28,969 shares of Class C
          common stock                                                                                     (337)             (337)
                                                                                                   -------------    --------------
          Total stockholders' equity                                                                     67,850            69,160

                                                                                                  --------------    --------------
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                               $    261,735      $    267,463
                                                                                                  ==============    ==============
</TABLE>

            See notes to condensed consolidated financial statements.


                                        3

<PAGE>


                                  CARSON, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                      (In thousands, except per share data)
<TABLE>
<CAPTION>
                                                        Three Months Ended September 30,          Nine Months Ended September 30,
                                                            1999               1998                   1999                1998
                                                       ===============    ==============          ================   ===============
<S>                                                     <C>                <C>                     <C>                <C>
Net sales                                               $      48,010      $     44,563            $     130,730      $     105,534
Cost of goods sold                                             22,912            21,983                   62,285             58,436
                                                       ---------------    --------------          ---------------    ---------------
Gross profit                                                   25,098            22,580                   68,445             47,098

Expenses:
    Marketing and selling                                      12,520            12,708                   34,176             30,225
    General and administrative                                  6,760             6,428                   20,715             22,404
    Restructuring charges                                          --               914                      500              5,751
                                                       ---------------    --------------          ---------------    ---------------
                                                               19,280            20,050                   55,391             58,380
                                                       ---------------    --------------          ---------------    ---------------

Operating income (loss)                                         5,818             2,530                   13,054            (11,282)

Interest expense                                               (4,379)           (3,786)                 (13,143)            (9,633)
Gain on sale of subsidiary stock                                   --                --                       --             49,140
Loss on write-off of investment                                    --            (3,768)                                     (3,768)
Other income, net                                                 649             1,057                    2,361              2,761
                                                       ---------------    --------------          ---------------    ---------------
Income (loss) before income taxes, minority
    interest and extraordinary item                             2,088            (3,967)                   2,272             27,218

(Provision for) benefit from income taxes                        (535)            2,011                   (1,731)           (11,015)
                                                       ---------------    --------------          ---------------    ---------------
Income (loss) before minority interest and
    extraordinary item                                          1,553            (1,956)                     541             16,203

Minority interest in earnings of subsidiary                      (493)             (708)                  (1,937)            (1,652)
                                                       ---------------    --------------          ---------------    ---------------
Income (loss) before extraordinary item                         1,060            (2,664)                  (1,396)            14,551

Extraordinary item, net of income taxes                            --              (933)                      --               (933)
                                                       ---------------    --------------          ---------------    ---------------
Net income (loss)                                       $       1,060      $    (3,597)            $      (1,396)     $      13,618
                                                       ===============    ==============          ===============    ===============

Basic and diluted net income (loss) per common share:
    Before extraordinary item                           $        0.07      $      (0.18)           $       (0.09)     $        0.97
    Extraordinary item, net of income taxes                        --             (0.06)                      --              (0.06)
                                                       ---------------    --------------          ---------------    ---------------
    Net income (loss)                                   $        0.07      $      (0.24)           $       (0.09)     $        0.91
                                                       ===============    ==============          ===============    ===============

Weighted average common
    shares outstanding                                         15,210            14,988                   15,130             14,990
                                                      ===============    ==============          ===============    ===============
</TABLE>

            See notes to condensed consolidated financial statements.



                                        4

<PAGE>


                                             CARSON, INC.
                     CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                         FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
                                            (In thousands)
<TABLE>
<CAPTION>
                                                                       Nine Months Ended September 30,
                                                                          1999                 1998
                                                                     --------------       --------------
<S>                                                                   <C>                  <C>
OPERATING ACTIVITIES:
     Net (loss) income                                                $     (1,396)        $     13,618
     Adjustments to reconcile net (loss) income to
        net cash used in operating activities:
            Depreciation and amortization                                    5,503                4,776
            Provision for doubtful accounts                                    963                  634
            Minority interest in earnings of subsidiary                      1,937                1,652
            Gain on sale of subsidiary stock                                     -              (49,140)
            Non-cash special charges                                             -               14,695
            Loss on write-off of investment                                      -                3,768
            Extraordinary item, net of income taxes                              -                  933
            Other, net                                                         (42)                 599
            Changes in operating assets and liabilities:
                  Accounts receivable                                       (3,663)              (3,956)
                  Inventories                                               (4,416)              (5,396)
                  Restricted cash                                            4,500                    -
                  Other current assets                                        (511)              (3,171)
                  Accounts payable                                           2,137               (3,058)
                  Income taxes payable                                      (1,281)              10,385
                  Accrued expenses                                          (3,988)               2,350
                                                                     --------------       --------------
                        Total adjustments                                    1,139              (24,929)
                                                                     --------------       --------------
            Net cash used in operating activities                             (257)             (11,311)
                                                                     --------------       --------------

INVESTING ACTIVITIES:
     Additions to property, plant and equipment                             (4,374)              (8,242)
     Issuance of long-term note receivable                                  (1,000)                   -
     Collection of long-term note receivable                                   517              (35,000)
     Acquisition of business assets, net of cash acquired                        -                   --
                                                                     --------------       --------------
            Net cash used in investing activities                           (4,857)             (43,242)
                                                                     --------------       --------------

FINANCING ACTIVITIES:
     Proceeds from long-term borrowings                                      3,373                9,500
     Principal payments on long-term debt                                      (73)             (12,633)
     Payment on A&J Cosmetics payable                                       (6,171)              (5,416)
     Proceeds from sale of subsidiary stock                                      -               74,450
     Other, net                                                                226                 (197)
                                                                     --------------       --------------
            Net cash (used in) provided by financing activities             (2,645)              65,704
                                                                     --------------       --------------

EFFECT OF EXCHANGE RATE CHANGES                                               (341)              (3,685)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                        (8,100)               7,466
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                            28,706               14,043
                                                                     --------------       --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                            $     20,606         $     21,509
                                                                     ==============       ==============
</TABLE>

                       See notes to condensed consolidated financial statements.



                                        5

<PAGE>




                                   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  1998 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.    Organization

During the quarter ended  September 30, 1999  Dermablend,  Inc., was merged into
Carson  Products  Company and ceased to exist as a separate  legal  entity.  The
merger is intended to enhance internal efficiencies.

3.    Inventories

Inventories are summarized as follows (in thousands):


                                   September 30, 1999          December 31, 1998
                              --------------------------------------------------
Raw materials                              $   14,301                  $   9,979
Work-in-process                                 2,651                      1,938
Finished goods                                 10,260                     10,908
                              --------------------------------------------------
                                           $   27,212                   $ 22,825
                              ==================================================



4.  Comprehensive Income (Loss)

The  components of  comprehensive  income  (loss) are  summarized as follows (in
thousands):


<TABLE>
<CAPTION>
                                     Three Months   Three Months    Nine Months   Nine Months
                                            Ended          Ended          Ended         Ended
                                    September 30,  September 30,  September 30, September 30,
                                             1999           1998           1999          1998
                                    -------------  -------------  -------------  -------------
<S>                                   <C>            <C>            <C>            <C>
Net income (loss)                     $     1,060    $   (3,597)    $    (1,396)   $    13,618
Other comprehensive income
(loss):
Change in equity due to foreign
currency translation adjustments               25            144           (443)        (4,131)
                                    -------------  -------------  -------------  -------------
                                      $     1,085    $    (3,453)   $    (1,839)   $     9,487
                                    =============  =============  =============  =============
</TABLE>


                                        6

<PAGE>





5.  New Accounting Pronouncements

Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging  Activities" ("FAS 133"), as amended by FAS 137, will be
required to be adopted by the Company effective with the quarter ended March 31,
2001.  The Company  has not yet  completed its  evaluation of the effect of this
standard on its financial statements.

6.   Consolidating Financial Information of Carson, Inc.

The following  condensed  consolidating  financial  information is presented for
regulatory purposes in connection with the registration of the Company's 10 3/8%
Senior Subordinated Notes due 2007 (the "Notes").  The Notes are guaranteed on a
senior  subordinated  basis by Carson Products  Company ("Carson  Products"),  a
direct  wholly-owned  subsidiary  of the Company.  Johnson  Products  Co.,  Inc.
("Johnson Products"),  and Dermablend,  Inc.  ("Dermablend"),  formerly indirect
wholly-owned  subsidiaries of the Company,  were also guarantor  subsidiaries of
the Notes until they were merged into Carson  Products during the quarters ended
June 30, 1999 and September 30, 1999, respectively. The following tables present
condensed  consolidating  financial  information for the Company,  the guarantor
subsidiary,   the   non-guarantor   subsidiaries  of  the  Company  (other  than
inconsequential  non-guarantor  subsidiaries) and the eliminations  necessary to
arrive  at  the  consolidated  financial  statements  of  the  Company  and  its
subsidiaries.  Separate financial  statements for the guarantor  subsidiarys are
not included and the guarantor  subsidiary is not filing separate  reports under
the  Securities  Exchange  Act  of  1934,  as  amended,  because  the  guarantor
subsidiary  has fully and  unconditionally  guaranteed  the Notes,  and separate
financial  statements and other disclosures  concerning the guarantor subsidiary
are not deemed material to investors.

Non-guarantor  subsidiaries  include  Carson  Holdings  Limited  ("Carson  South
Africa"),  Carson UK Limited ("Carson UK") and Carson Management Company. Carson
UK is an indirect wholly-owned  subsidiary of the Company.  Carson South Africa,
an indirect  52.5%-owned  non-guarantor  subsidiary  of the  Company,  has three
wholly-owned  subsidiaries  which  are  also  non-guarantors:   Carson  Products
(Proprietary)  Limited,  Carson Products West Africa Limited and Carson Products
East  Africa  (EPZ)  Limited.   The  financial   information   for  these  three
non-guarantor  subsidiaries is included in the consolidated financial statements
of Carson South Africa.  Carson  Management  Company is a direct  majority-owned
subsidiary of the Company.  The Company also has one inactive subsidiary (Carson
Botswana (PTY Limited)),  which is inconsequential to the Company,  and separate
financial information for it has not been included in these tables.


                                        7

<PAGE>


Consolidating Statement of Operations for the Quarter Ended September 30, 1999
<TABLE>


                                                  Carson, Inc.     Guarantor   Non-guarantor                    Consolidated
                                                     (parent)   subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  -------------  --------------  --------------  --------------
<CAPTION>
<S>                                                 <C>            <C>             <C>             <C>             <C>
Net sales                                           $    ----      $  33,036       $  14,974       $    ----       $  48,010
Cost of goods sold                                       ----         14,690           8,294             (72)         22,912
                                               --------------  -------------  --------------  --------------  --------------
    Gross profit                                         ----         18,346           6,680              72          25,098
Marketing and selling expenses                           ----          8,892           3,628            ----          12,520
General and administrative expense                       ----          5,555           1,205            ----           6,760
Restructuring expenses                                   ----           ----            ----            ----            ----
                                               --------------  -------------  --------------  --------------  --------------
    Operating  income                                    ----          3,899           1,847              72           5,818
Other income (expense), net                              ----         (3,834)            176             (72)         (3,730)
Equity in subsidiary earnings (net of taxes)            1,060           ----            ----          (1,060)           ----
                                               --------------  -------------  --------------  --------------  --------------
    Income (loss) before income taxes and
    minority interest                                   1,060             65           2,023          (1,060)          2,088
Income taxes                                             ----           (133)           (402)           ----            (535)
                                               --------------  -------------  --------------  --------------  --------------
    Income (loss) before minority interest              1,060            (68)           1,621         (1,060)         (1,553)
Minority interest                                        ----           ----            (493)           ----            (493)
                                               --------------  -------------  --------------  --------------  --------------
    Net income (loss)                               $   1,060      $     (68)      $   1,128       $  (1,060)      $   1,060
                                               ==============  =============  ==============  ==============  ==============
</TABLE>



Consolidating Statement of Operations for the Quarter Ended September 30, 1998
<TABLE>


                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                     (parent)    subsidiaries    subsidiaries    Eliminations    Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<CAPTION>
<S>                                                 <C>             <C>             <C>             <C>             <C>
Net sales                                           $    ----       $  34,464       $  10,099       $    ----       $  44,563
Cost of goods sold                                       ----          16,934           5,049            ----          21,983
                                               --------------  --------------  --------------  --------------  --------------
    Gross profit                                         ----          17,530           5,050            ----          22,580
Marketing and selling expenses                           ----          10,871           1,837            ----          12,708
General and administrative expense                       ----           5,249           1,179            ----           6,428
Restructuring expenses                                   ----             914            ----            ----             914
                                               --------------  --------------  --------------  --------------  --------------
    Operating  income                                    ----             496           2,034            ----           2,530
Other income (expense), net                              ----          (7,163)            666            ----          (6,497)
Equity in subsidiary earnings (net of taxes)           (3,597)           ----            ----           3,597            ----
                                               --------------  --------------  --------------  --------------  --------------
    Income (loss) before income taxes,
minority interest and extraordinary item               (3,597)         (6,667)          2,700           3,597          (3,967)
Income taxes                                             ----           2,531            (520)           ----           2,011
                                               --------------  --------------  --------------  --------------  --------------
    Income (loss) before minority interest and
extraordinary item                                     (3,597)         (4,136)          2,180           3,597          (1,956)
Minority interest                                        ----            ----            (708)           ----            (708)
                                               --------------  --------------  --------------  --------------  --------------
Income (loss) before extraordinary item                (3,597)         (4,136)          1,472           3,597          (2,664)
Extraordinary item, net of tax                           ----            (933)           ----            ----            (933)
                                               --------------  --------------  --------------  --------------  --------------
    Net income (loss)                               $  (3,597)      $  (5,069)      $   1,472       $   3,597       $  (3,597)
                                               ==============  ==============  ==============  ==============  ==============
</TABLE>






                                        8

<PAGE>



Consolidating Statement of Operations for the Nine Months Ended September 30,
1999
<TABLE>
<CAPTION>
                                                  Carson, Inc.     Guarantor  Non-guarantor                   Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations     Carson, Inc.
                                               --------------  -------------  -------------  -------------  --------------
<S>                                                 <C>            <C>            <C>            <C>             <C>
Net sales                                           $    ----      $  92,156      $  38,574      $    ----       $ 130,730
Cost of goods sold                                       ----         42,402         20,077           (194)         62,285
                                               --------------  -------------  -------------  -------------  --------------
    Gross profit                                         ----         49,754         18,497            194          68,445
Marketing and selling expenses                           ----         25,421          8,755           ----          34,176
General and administrative expenses                      ----         16,828          3,887           ----          20,715
Restructuring expense                                    ----            500           ----           ----             500
                                               --------------  -------------  -------------  -------------  --------------
    Operating  income                                    ----          7,005          5,855            194          13,054
Other income, net                                        ----        (11,679)         1,091           (194)        (10,782)
Equity in subsidiary earnings (net of taxes)           (1,396)          ----           ----          1,396            ----
                                               --------------  -------------  -------------  -------------  --------------
    Income (loss) before income taxes and
    minority interest                                  (1,396)        (4,674)         6,946          1,396           2,272
Income taxes                                             ----           (133)        (1,598)          ----          (1,731)
                                               --------------  -------------  -------------  -------------  --------------
    Income (loss) before minority interest             (1,396)        (4,807)         5,348          1,396             541
Minority interest                                        ----           ----         (1,937)          ----          (1,937)
                                               --------------  -------------  -------------  -------------  --------------
    Net income (loss)                               $  (1,396)     $  (4,807)     $   3,411      $   1,396      $   (1,396)
                                               ==============  =============  =============  =============  ==============
</TABLE>



Consolidating Statement of Operations for the Nine Months Ended September 30,
1998
<TABLE>
<CAPTION>

                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                      (parent)   subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Net sales                                           $    ----       $  75,172       $  30,362       $    ----       $ 105,534
Cost of goods sold                                       ----          43,214          15,694            (472)         58,436
                                               --------------  --------------  --------------  --------------  --------------
    Gross profit                                         ----          31,958          14,668             472          47,098
Marketing and selling expenses                           ----          24,727           5,498            ----          30,225
General and administrative expenses                      ----          18,767           3,637            ----          22,404
Restructuring expense                                    ----           5,751            ----            ----           5,751
    Operating  income (loss)                             ----         (17,287)          5,533             472         (11,282)
                                               --------------  --------------  --------------  --------------  --------------
Other income, net                                        ----          37,347           1,625            (472)         38,500
Equity in subsidiary earnings (net of taxes)           13,618            ----            ----         (13,618)           ----
                                               --------------  --------------  --------------  --------------  --------------
    Income (loss) before income taxes,
minority interest and extraordinary item               13,618          20,060           7,158         (13,618)         27,218
Income taxes                                             ----          (9,398)         (1,617)           ----         (11,015)
                                               --------------  --------------  --------------  --------------  --------------
    Income (loss) before minority interest and
extraordinary item                                     13,618          10,662           5,541         (13,618)         16,203
Minority interest                                        ----            ----          (1,652)           ----          (1,652)
                                               --------------  --------------  --------------  --------------  --------------
Income before extraordinary item                       13,618          10,662           3,889         (13,618)         14,551
Extraordinary item, net of tax                           ----            (933)           ----            ----            (933)
                                               --------------  --------------  --------------  --------------  --------------
    Net income (loss)                               $  13,618       $   9,729       $   3,889       $ (13,618)      $  13,618
                                               ==============  ==============  ==============  ==============  ==============
</TABLE>




                                        9

<PAGE>

Consolidating Balance Sheet as of September 30, 1999
<TABLE>
<CAPTION>
                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                      (parent)   subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Assets
Current assets:
    Cash                                            $    ----       $   8,670       $  11,936       $    ----       $  20,606
    Accounts receivable, net                              827          29,713          16,453          (5,379)         41,614
    Inventories, net                                     ----          15,890          11,322            ----          27,212
    Other current assets                                 ----             753             426            ----           1,179
Property, plant and equipment, net                       ----          27,607          10,454             (36)         38,025
Intangible assets, net and other assets                  ----         121,341          11,758            ----         133,099
Investment in subsidiary                               67,023          46,033            ----        (113,056)          ----
                                               --------------  --------------  --------------  --------------  --------------
Total assets                                        $  67,850       $ 250,007       $  62,349       $(118,471)      $ 261,735
                                               ==============  ==============  ==============  ==============  ==============

Liabilities and stockholders' equity
Current liabilities:
    Accounts payable                                $    ----       $   7,401       $  12,725       $  (5,415)      $  14,711
    Other current liabilities                            ----          13,384           3,151            ----          16,535
Long-term debt                                           ----         136,607             116            ----         136,723
Other liabilities                                        ----          25,592             324            ----          25,916
Common stock and paid in capital                       81,679          28,182          39,655         (67,837)         81,679
Other equity accounts                                  (8,513)        (11,391)         (9,161)         20,552          (8,513)
Retained earnings (Accumulated deficit)                (5,316)         50,232          15,539         (65,771)         (5,316)
                                               --------------  --------------  --------------  --------------  --------------
Total liabilities and stockholders' equity          $  67,850       $ 250,007       $  62,349       $(118,471)      $ 261,735
                                               ==============  ==============  ==============  ==============  ==============
</TABLE>






                                       10

<PAGE>


Consolidating Balance Sheet as of December 31, 1998
<TABLE>
<CAPTION>

                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                      (parent)   subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Assets
Current assets:
    Cash                                            $    ----       $  12,320       $  16,386       $    ----       $  28,706
    Accounts receivable, net                              844          30,701          14,974          (7,566)         38,953
    Inventories, net                                     ----          13,993           8,832            ----          22,825
    Restricted cash                                      ----           4,500            ----            ----           4,500
    Other current assets                                 ----             307             362            ----             669
Property, plant and equipment, net                       ----          26,130           9,671             (36)         35,765
Intangible assets, net and other assets                  ----         124,997          11,048            ----         136,045
Investment in subsidiary                               68,316          43,421           ----         (111,737)           ----
                                               --------------  --------------  --------------  --------------  --------------
Total assets                                        $  69,160       $ 256,369       $  61,273       $(119,339)      $ 267,463
                                               ==============  ==============  ==============  ==============  ==============

Liabilities and stockholders' equity
Current liabilities:
    Accounts payable                                $    ----       $  12,484       $   7,702       $  (7,602)      $  12,584
    Other current liabilities                            ----          18,569           9,726            ----          28,295
Long-term debt                                           ----         133,324              99            ----         133,423
Other liabilities                                        ----          23,676             325            ----          24,001
Common stock and paid in capital                       81,121          28,470          39,320         (67,790)         81,121
Other equity accounts                                  (8,041)        (15,193)         (8,910)         24,103          (8,041)
Retained earnings (Accumulated deficit)                (3,920)         55,039          13,011         (68,050)         (3,920)
                                               --------------  --------------  --------------  --------------  --------------
Total liabilities and stockholders' equity          $  69,160       $ 256,369       $  61,273       $(119,339)      $ 267,463
                                               ==============  ==============  ==============  ==============  ==============
</TABLE>





                                       11

<PAGE>


Consolidating Statement of Cash Flows for the Nine Months Ended September 30,
1999
<TABLE>
<CAPTION>

                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                     (parent)    subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Operating Activities:
   Net income (loss)                                $  (1,396)      $  (4,807)      $   3,411       $   1,396       $  (1,396)
   Adjustments to reconcile net income (loss)
   to net cash provided by (used in) operating
   activities:
      Depreciation and amortization                      ----           4,437           1,066            ----           5,503
      Minority interest in earnings of
      subsidiary                                         ----            ----           1,937            ----           1,937
      Other, net                                        1,396             958             (37)         (1,396)            921
      Changes in operating assets and
      liabilities                                        ----          (6,015)         (1,207)           ----          (7,222)
                                               --------------  --------------  --------------  --------------  --------------
         Total adjustments                              1,396            (620)          1,759          (1,396)          1,139
                                               --------------  --------------  --------------  --------------  --------------
      Net cash (used in ) provided by
      operating activities                               ----          (5,427)          5,170            ----            (257)
                                               --------------  --------------  --------------  --------------  --------------
Investing Activities:
    Additions to property, plant and                     ----          (2,801)         (1,573)           ----          (4,374)
    equipment
    Issuance of long-term note receivable                ----            ----          (1,000)           ----          (1,000)
    Collection of long-term note receivable              ----             517            ----            ----             517
                                               --------------  --------------  --------------  --------------  --------------
      Net cash used in investing activities              ----          (2,284)         (2,573)           ----          (4,857)
                                               --------------  --------------  --------------  --------------  --------------
Financing Activities:
   Proceeds from long-term borrowings                    ----           3,281              92            ----           3,373
   Principal payments on debt                            ----            ----          (6,246)           ----          (6,244)
   Other                                                 ----             780            (552)           ----             226
                                               --------------  --------------  --------------  --------------  --------------
      Net cash provided by (used in)                     ----           4,061          (6,706)           ----          (2,645)
financing activities
                                               --------------  --------------  --------------  --------------  --------------
Effect of Exchange Rate Changes                          ----            ----            (341)           ----            (341)
                                               --------------  --------------  --------------  --------------  --------------
Net decrease in Cash and Cash Equivalents                ----          (3,650)         (4,450)           ----          (8,100)
Cash and Cash Equivalents at Beginning of
Period                                                   ----          12,320          16,386            ----          28,706
                                               --------------  --------------  --------------  --------------  --------------
Cash and Cash Equivalents at End of Period          $    ----       $   8,670       $  11,936       $    ----       $  20,606
                                               ==============  ==============  ==============  ==============  ==============

</TABLE>


                                       12

<PAGE>


Consolidating Statement of Cash Flows for the Nine Months Ended September 30,
1998
<TABLE>
<CAPTION>

                                                  Carson, Inc.      Guarantor   Non-guarantor                    Consolidated
                                                      (parent)   subsidiaries    subsidiaries    Eliminations     Carson, Inc.
                                               --------------  --------------  --------------  --------------  --------------
<S>                                                 <C>             <C>             <C>             <C>             <C>
Operating Activities:
   Net income                                       $  13,618       $   9,729       $   3,889       $ (13,618)      $  13,618
   Adjustments to reconcile net income to net
cash used in operating activities:
      Gain on sale of subsidiary stock                   ----         (49,140)           ----            ----         (49,140)
      Non-cash special charges                           ----          14,695            ----            ----          14,695
      Depreciation and amortization                      ----           3,962             814            ----           4,776
      Extraordinary item, net of tax benefit             ----             933            ----                             933
      Write-off of AM stock                              ----           3,768            ----                           3,768
      Minority interest in earnings of
      subsidiary                                         ----            ----           1,652            ----           1,652
      Other, net                                      (13,618)          3,247          (2,014)         13,618           1,233
      Changes in operating assets and
      liabilities                                        ----           4,130          (6,976)           ----          (2,846)
                                               --------------  --------------  --------------  --------------  --------------
         Total adjustments                            (13,618)        (18,405)         (6,524)         13,618         (24,929)
                                               --------------  --------------  --------------  --------------  --------------
      Net cash used in operating activities              ----          (8,676)         (2,635)           ----         (11,311)
                                               --------------  --------------  --------------  --------------  --------------
Investing Activities:
   Additions to property, plant and
   equipment                                             ----          (4,092)         (4,150)           ----          (8,242)
   Acquisitions of business assets, net of
      cash acquired                                      ----         (35,000)           ----            ----         (35,000)
                                               --------------  --------------  --------------  --------------  --------------
      Net cash used in investing  activities             ----         (39,092)         (4,150)           ----         (43,242)
                                               --------------  --------------  --------------  --------------  --------------
Financing Activities:
   Proceeds from long-term borrowings                    ----           9,500            ----            ----           9,500
   Principal payments on long-term debt                  ----         (12,500)         (5,549)           ----         (18,049)
   Proceeds from sale of subsidiary stock                ----          55,250          19,200            ----          74,450
   Other                                                 ----            (125)            (72)           ----            (197)
                                               --------------  --------------  --------------  --------------  --------------
      Net cash provided by  financing
      activities                                         ----          52,125          13,579            ----          65,704
                                               --------------  --------------  --------------  --------------  --------------
Effect of Exchange Rate Changes                          ----            ----          (3,685)           ----          (3,685)
                                               --------------  --------------  --------------  --------------  --------------
Net increase in Cash and Cash Equivalents                ----           4,357           3,109            ----           7,466
Cash and Cash Equivalents at Beginning of
Period                                                   ----           2,614          11,420               9          14,043
                                               --------------  --------------  --------------  --------------  --------------
Cash and Cash Equivalents at End of Period          $    ----       $   6,971       $  14,529       $       9       $  21,509
                                               ==============  ==============  ==============  ==============  ==============
</TABLE>




                                       13

<PAGE>



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




OVERVIEW

Forward-looking Statements

This report on Form 10-Q for the nine months ended September 30, 1999 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  and  (vii)  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", or
"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 and the Company's  debt offering  prospectus  dated October 31,
1997),  actual  results  could  differ  materially  from those  expressed in any
forward-looking statements made by the Company. 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,  (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, and
(f)  unanticipated  costs,  difficulties or delays in implementing the Company's
Year 2000 compliance  modifications.  The Company assumes no  responsibility  to
update forward-looking information contained herein.

General

The Company believes that it is the number one manufacturer and marketer of hair
care and shaving products for people of color. The majority of the Company's net
sales are  derived  from five  categories  of the ethnic  health and beauty aids
market:  hair relaxers and texturizers,  hair color, men's depilatory  products,
hair care maintenance products and combout/oil sheens.

In the  nine  months  ended  September  30,  1999 and  1998,  33.7%  and  33.5%,
respectively,  of the net sales of the  Company  were to  customers  outside the
United  States.  The  following  table  presents  the  Company's  net  sales  by
geographic region for these periods:


                                       14

<PAGE>




                              Nine Months                   Nine Months
                                    Ended    % of                 Ended    % of
                        September 30,1999   Total     September 30,1998   Total
--------------------------------------------------------------------------------
Net sales to:
United States                    $ 86,632    66.3%             $ 70,230    66.5%
South Africa                       31,355    24.0                25,900    24.5
Europe                              7,219     5.5                 4,911     4.7
Other International                 5,524     4.2                 4,493     4.3
--------------------------------------------------------------------------------
Total                            $130,730   100.0%             $105,534   100.0%



With the  exception of sales by Carson South Africa to South  Africa,  Botswana,
Lesotho, Namibia and Swaziland, which are denominated in South African Rand, all
of the Company's sales are recorded in United States  Dollars.  The Company does
not view the exposure to rand exchange rate fluctuations as significant  because
Carson  South  Africa  incurs  most  of  its  costs  in  rand.  However,  due to
fluctuations  in the exchange rate,  there is a potential for gains or losses on
the  consolidated  level.  Assets and  liabilities  of Carson  South  Africa are
translated for consolidation purposes from South African Rand into United States
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.

Results of Operations

Quarter Ended September 30, 1999 Compared to Quarter Ended September 30, 1998

Net Sales.  Consolidated net sales for the quarter ended September 30, 1999 were
$48.0  million,  an increase of $3.4  million,  or 7.7%,  over net sales for the
quarter ended  September 30, 1998 of $44.6 million.  This increase is summarized
as follows (dollars are in thousands):


                            Quarter Ended     Quarter Ended
                            September 30,     September 30, 1998    % Change
                                     1999
                       ---------------------------------------------------------
Domestic Hair Care               $ 26,195                $ 26,497          (1.1)
Export                              5,221                   3,304          58.0
Dermablend Group                    4,492                   1,256         257.6
   US Ethnic                       35,908                  31,057          15.6
                       ------------------------------------------
South Africa                       12,102                   8,752          38.3
                       ------------------------------------------
   Carson Ethnic                   48,010                  39,809          20.6
                       ------------------------------------------
Cutex                                  --                   4,754        (100.0)
                       ------------------------------------------
   Consolidated                  $ 48,010                $ 44,563           7.7
                       ==========================================

Domestic hair care net sales above include  domestic sales of Carson and Johnson
hair care  products.  Export  includes net sales of Carson and Johnson hair care
products in Europe and other international  markets.  Dermablend Group net sales
includes sales of Dermablend corrective cosmetics, Posner cosmetics and Dark and
Lovely  Cosmetics.  Dermablend net sales are included only for 1999 as the brand
was held for sale from its  purchase in July 1998 until the end of 1998.  Of the
$1.9 million

                                       15

<PAGE>

increase in export sales,  $1.5 million  resulted from increased sales of Carson
hair care products in Europe and other international markets.

There  have  been no net  sales  in 1999 of  Cutex,  as this  brand  was sold in
December 1998.

Gross Profit.  Consolidated  gross profit was $25.1 million in the quarter ended
September 30, 1999 compared to $22.6 million in the quarter ended  September 30,
1998, an increase of $2.5 million, or 11.2%. Gross margin was 52.3% in the third
quarter of 1999 compared to 50.7% in the third quarter of 1998. Gross margins in
1999 benefited from high margins  (typically in excess of 75%) of the Dermablend
business. Compared to the third quarter of 1998, gross margins were lower in the
third quarter of 1999 on South Africa and export  sales,  while they were higher
on Carson hair care sales and  relatively  unchanged on Johnson hair care sales.
The overall gross margin for the third quarter of 1998 was  negatively  impacted
by higher than anticipated returns of Cutex product.

Marketing and Selling  Expenses.  Marketing and selling expenses  decreased $0.2
million,  or 1.5%, to $12.5 million in the quarter ended September 30, 1999 from
$12.7 million in the quarter ended  September 30, 1998.  This decrease  consists
the  elimination  of spending on the Cutex and Dark and Lovely  Cosmetics  lines
offset by higher  spending  resulting from the addition of Dermablend and higher
spending at Carson South  Africa.  As a percentage  of net sales,  marketing and
selling expenses  decreased to 26.1% during the quarter ended September 30, 1999
from 28.5% during the quarter ended September 30, 1998.

General and Administrative  Expenses.  General and administrative  expenses were
$6.8  million for the third  quarter of 1999  compared  to $6.4  million for the
third  quarter of 1998,  an  increase of $0.3  million,  or 5.2%.  The  increase
resulted  primarily  from the addition of  Dermablend.  As a  percentage  of net
sales, general and administrative expenses decreased to 14.1% during the quarter
ended September 30, 1999 from 14.4% during the quarter ended September 30, 1998.

Restructuring Charges.  In the  third  quarter  of  1998, the  Company  recorded
pretax charges of $0.9 million related to a management restructuring.

Operating Income.  As a result of the above changes,  operating income increased
to $5.8 million in the quarter ended September 30, 1999 from $2.5 million in the
quarter ended September 30, 1998.

Interest  Expense.  Interest  expense  increased  to $4.4 million in the quarter
ended  September 30, 1999 from $3.8 million in the quarter  ended  September 30,
1998. The increased  interest expense was the result of additional debt incurred
in 1998 to finance the Johnson Products acquisition.

Loss on Write-off of  Investment.  During the quarter ended  September 30, 1998,
the Company  recorded a pretax  charge of $3.8  million for the  write-off of an
investment in the preferred stock of AM Cosmetics, Inc., a related company which
provided contract manufacturing services to the Company.

Other  Income.  Other income  decreased  to $0.6  million for the quarter  ended
September 30, 1999 from $1.1 million for the quarter  ended  September 30, 1998.
The decrease was primarily due to lower interest income in South Africa.

Provision  for Income Taxes.  The  provision for income taxes  increased to $0.5
million in the quarter

                                       16

<PAGE>


ended  September  30, 1999  compared to a benefit of $2.0 million in the quarter
ended  September 30, 1998.  The 1999 provision was calculated on the earnings of
the Company's  foreign  subsidiaries  and also includes a provision for domestic
state income  taxes.  The Company did not record a federal tax  benefit,  or the
related deferred tax asset, on losses incurred by its domestic subsidiaries,  in
accordance  with  the  requirements  of  Financial  Accounting  Standards  Board
Interpretation No. 18 of Accounting Principles Board Opinion No. 28.

Minority  Interest in Earnings of Subsidiary.  Minority  interest in earnings of
subsidiary  decreased to $0.5 million in the quarter  ended  September  30, 1999
from $0.7 million in the quarter ended September 30, 1998. This decrease was due
to the lower  earnings of Carson  South  Africa in the current year quarter over
the prior year quarter.

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

Net Sales.  Consolidated  net sales for the nine months ended September 30, 1999
were $130.7 million,  an increase of $25.2 million, or 23.9%, over net sales for
the nine months ended  September  30, 1998 of $105.5  million.  This increase is
summarized as follows (dollars are in thousands):


                            Nine Months Ended     Nine Months Ended
                            September 30,1999    September 30, 1998    % Change
                        --------------------------------------------------------
Domestic Hair Care                   $ 73,681              $ 51,574        42.9
Export                                 12,743                 9,404        35.5
Dermablend Group                       12,951                 2,142       504.6
   US Ethnic                           99,375                63,120        57.4
                        -------------------------------------------
South Africa                           31,355                25,900        21.1
                        -------------------------------------------
   Carson Ethnic                      130,730                89,020        46.9
                        -------------------------------------------
Cutex                                      --                16,514      (100.0)
                        -------------------------------------------
   Consolidated                      $130,730              $105,534        23.9
                        ===========================================


Domestic hair care net sales above include  domestic sales of Carson and Johnson
hair care  products.  Export  includes net sales of Carson and Johnson hair care
products in Europe and other international  markets.  Dermablend Group net sales
includes sales of Dermablend corrective cosmetics, Posner cosmetics and Dark and
Lovely  Cosmetics.  Dermablend net sales are included only for 1999 as the brand
was held for sale  from its  purchase  in July 1998  until the end of 1998.  The
increases in net sales of Domestic hair care products and the  Dermablend  Group
resulted  primarily  from  the  acquisition  of  Johnson  Products  Company  and
Dermablend,  Inc. in July 1998.  Export net sales were also increased due to the
acquisition of Johnson  Products  Company as well as higher sales of Carson hair
care products in Europe.

There were no net sales in 1999 of Cutex, which was sold in December 1998.

Gross  Profit.  Consolidated  gross profit was $68.4  million in the nine months
ended  September  30, 1999  compared to $47.1  million in the nine months  ended
September 30, 1998,  an increase of $21.3  million,  or 45.3%.  Gross margin was
52.4% for such period in 1999  compared to 44.6% for such period in 1998. In the
nine months ended  September  30, 1998,  cost of sales  included $6.6 million of
special  charges  for  the  write-down  of  non-strategic,  obsolete  or  excess
inventory.  Excluding these special charges, gross profit was $53.7 million, and
gross margin was 50.9% in the nine months

                                       17

<PAGE>

ended September 30, 1998. The increase in gross margin in 1999 was  attributable
in part to increased plant utilization in the Savannah  manufacturing  facility,
whereas in the first half of 1998  gross  margins  were  adversely  impacted  by
reduced  production  volumes  undertaken in order to lower inventory balances at
that time. Gross margins in 1999 also benefited from high margins  (typically in
excess of 75%) of the  Dermablend  business,  offset  somewhat by lower  Johnson
Products hair care margins  resulting from discounted sales pricing.  Management
has revised  pricing terms for Johnson hair care products;  however,  due to the
phasing in of the new pricing  terms,  the benefits of the price  increases were
not fully  realized in the third  quarter of 1999.  The overall gross margin for
1998 was reduced by higher than anticipated returns of Cutex product.

Marketing and Selling  Expenses.  Marketing and selling expenses  increased $4.0
million,  or 13.1%, to $34.2 million in the nine months ended September 30, 1999
from $30.2 million in the nine months ended  September  30, 1998.  This increase
consists of higher spending  resulting from the addition of Johnson Products and
higher  spending at Carson South Africa offset by the elimination of spending on
the  Cutex,  Dark and  Lovely  Cosmetics  and  Salon  Professional  lines.  As a
percentage  of net sales,  marketing  and selling  expenses  decreased  to 26.1%
during 1999 from 28.6% during 1998.

General and Administrative  Expense.  General and  administrative  expenses were
$20.7  million for the first nine months of 1999  compared to $22.4  million for
the first nine months of 1998, a decrease of $1.7 million, or 7.5%. In the first
nine months of 1998, general and administrative expense included $3.7 million of
special charges primarily related to the executive management  restructuring and
additional  accounts  receivable  reserves.  Excluding  these  special  charges,
general and administrative  expenses were $18.7 million in the nine months ended
September 30, 1998. Compared to this amount, general and administrative expenses
increased $2.0 million,  or 10.9%,  in the nine months ended September 30, 1999.
The increase  resulted  primarily  from the addition of Johnson  Products.  As a
percentage of net sales, general and administrative  expenses decreased to 15.8%
during 1999 from 17.7% during 1998,  excluding special charges.  This percentage
decrease is primarily due to the  incremental net sales provided by the addition
of  Johnson  Products  without  a pro  rata  increase  in  overall  general  and
administrative expenses.

Restructuring  Charges. In the nine months ended September 30, 1999, the Company
recorded $0.5 million of restructuring charges for severance payments related to
personnel reductions. These reductions were undertaken as a cost-cutting measure
to improve the Company's  operating  income.  In the nine months ended September
30, 1998, the Company  recorded  restructuring  charges of $5.7 million  related
primarily to changes in the Company's top management group and to the write-down
of fixed assets which were disposed of as a result of changes in product lines.

Operating Income.  As a result of the above changes,  operating income increased
to $13.1  million in the nine months ended  September 30, 1999 from an operating
loss of $11.3 million in the nine months ended September 30, 1998.

Interest Expense. Interest expense increased to $13.1 million in the nine months
ended  September  30, 1999 from $9.6 million in the nine months ended  September
30, 1998.  The  increased  interest  expense was the result of  additional  debt
incurred in 1998 to finance the Johnson Products acquisition.

Gain on Sale of Subsidiary  Stock.  In May 1998 the Company sold 29.1 million of
its shares of

                                       18

<PAGE>

Carson  South  Africa,  resulting  in a  pre-tax  gain to the  Company  of $49.1
million.

Loss on Write-off of  Investment.  During the nine months  ended  September  30,
1998, the Company  recorded a pretax charge of $3.8 million for the write-off of
an investment in the preferred  stock of AM Cosmetics,  Inc., a related  company
which provided contract manufacturing services to the Company.

Other  Income.  Other income  decreased to $2.4 million in the nine months ended
September 30, 1999  compared to $2.8 million in the nine months ended  September
30, 1998.  The  decrease was  primarily  due to lower  interest  income in South
Africa.

Provision  for Income Taxes.  The  provision for income taxes  decreased to $1.7
million in the nine months ended September 30, 1999 compared to $11.0 million in
the nine months ended  September 30, 1998.  The 1999 provision was calculated on
the earnings of the Company's foreign subsidiaries and also includes a provision
for  domestic  state  income  taxes.  The  Company  did not record a federal tax
benefit,  or the related  deferred tax asset, on losses incurred by its domestic
subsidiaries,  in  accordance  with the  requirements  of  Financial  Accounting
Standards Board Interpretation No. 18 of Accounting Principles Board Opinion No.
28. The 1998 provision  included  expense related to the Company's $49.1 million
gain on the sale of subsidiary stock.

Minority  Interest in Earnings of Subsidiary.  Minority  interest in earnings of
subsidiary increased to $1.9 million in the nine months ended September 30, 1999
from $1.7 million in the nine months ended September 30, 1998. This increase was
due to the higher  earnings of Carson  South Africa in the current year over the
prior year and to the higher  minority  ownership  percentage in 1999  resulting
from sales of Carson South Africa stock in the second quarter of 1998.


Liquidity and Capital Resources

The  Company has a Secured  Term Loan  outstanding  which  bears  interest at an
annual rate of 13% and matures on December 8, 2003. Interest is payable monthly.
The Company may, at its option,  defer the monthly interest payment a maximum of
twelve  times  until  December  8,  2000.   This  option  provides  the  Company
flexibility  in  meeting  its  cash  needs  in the near  term.  In the  event of
deferral,  interest is accrued at an annual  rate of 16% for the month  deferred
and added to the outstanding  principal  amount of the loan. The Company elected
to defer the monthly interest  payments in March, May, June and July of 1999 and
thereby  increased  long-term  debt by $3.3  million  in the nine  months  ended
September  30, 1999.  The capital  stock and assets of Carson  Products  Company
(including stock in Carson South Africa representing a 52.5% majority stake) are
pledged as collateral  for the Secured Term Loan.  The loan  contains  covenants
with respect to, among other  things,  (i)  restrictions  on the  incurrence  of
additional  liens or  indebtedness  and (ii)  restrictions on the payment of any
cash dividend by the Company or any subsidiary.

In the nine  months  ended  September  30,  1999,  the  Company's  cash  balance
decreased by $8.1 million,  to $20.6  million.  Net cash flow used in operations
was $0.3 million.  Cash was used primarily to increase  accounts  receivable and
inventories  and to reduce income taxes payable and accrued  expenses.  Cash was
provided by an increase in accounts  payable and by the conversion of restricted
cash  into  available  cash,  which  was used to pay for  items  related  to the
disposition of Cutex.

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Net cash used in investing  activities  in the nine months ended  September  30,
1999 consisted primarily of capital expenditures of $4.4 million.  Approximately
$1.4  million  of  these  additions  related  to the  Carson  Products  software
conversion to SAP, and approximately $1.6 million were additions by Carson South
Africa.  Cash was also used in the  issuance of a $1.0  million loan from Carson
Products West Africa Limited  ("Carson  Ghana"),  a  wholly-owned  subsidiary of
Carson South Africa, to Layff Kosmetic,  Ltda. ("Layff"), the distributor of the
Company's  products in Brazil.  The loan was made to provide  Layff with working
capital  and thereby assist in developing  the Company's  sales in  Brazil.  The
term of the loan is two years.  All principal is due in September 2001; interest
accrues  at 10% per annum and is payable semi-annually.  The loan is denominated
in US  dollars  and is  secured  by a mortgage on certain real property owned by
Layff. The loan is  included in "Other  assets" in the accompanying consolidated
balance sheet.

Net cash used in financing  activities  in the nine months ended  September  30,
1999  consisted  primarily of $6.2 million of additional  consideration  paid by
Carson South Africa related to the 1997 purchase of A&J Cosmetics. Proceeds from
long-term  borrowings  were  principally  $3.3  million  for  capitalization  of
interest on the Company's Secured Term Loan in lieu of cash payment.

 The Company believes that cash flow from operating activities and existing cash
balances  will be  sufficient  to fund  working  capital  requirements,  capital
expenditures and debt service requirements in the immediate future.  However, no
assurance can be given that  changing  business  circumstances  will not require
additional  capital for reasons that are not currently  anticipated  or that the
necessary  capital will then be available to the Company on favorable  terms, or
at all.

Year 2000 Compliance Efforts

To  replace  former  computer  systems  that were not Year 2000  compliant,  the
Company selected SAP, a single vendor, integrated business software package. SAP
is compatible with the Company's IBM AS/400 computer and suitable for use in all
major  functional  areas,  including  invoicing,  distribution,  production  and
financial reporting.

The Company  completed the  implementation  of SAP at its Savannah,  Georgia and
Chicago  facilities  during the quarters  ended June 30, 1999 and  September 30,
1999, respectively.  The software is operating  satisfactorily,  and the Company
experienced no adverse  material impact on operations  from the  implementation.
The Company has received assurance from the vendor that the SAP software is Year
2000  compliant.  In the fourth  quarter of 1999,  the Company plans to run test
transactions gain further assurance and also expects to receive a certificate of
Year 2000  compliance  for its AS/400  computer  from IBM.  Once the Company has
received the IBM certificate,  the Company will have substantially completed its
Year 2000 compliance efforts for its information technology systems.

In the unlikely event that the SAP software  and/or the AS/400 computer fails to
be Year 2000  compliant,  the Company would  immediately  begin working with the
software and/or  hardware  vendors 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.

The Company has issued requests to all major vendors and customers as well as to
its main bank

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seeking  assurance  that they will be Year 2000  compliant  and will continue to
monitor the progress of these third parties in becoming Year 2000 compliant.

Despite these efforts,  there can be no assurance that the computer software and
systems of the  Company and its  vendors  and  customers  will be made Year 2000
compliant  in a timely  manner.  Any  failures by the  Company,  its vendors and
customers to become Year 2000 compliant in a timely manner could have a material
adverse  effect  on the  business,  financial  condition  or  operations  of the
Company.

Other items which include  non-information  technology  systems are being tested
and upgraded as needed.  Included in non-information  technology systems are the
Company's personal computers and applications,  telephone systems, manufacturing
equipment,  security  systems  and  other  non-crucial  items.  The  Company  is
replacing  all  non-compliant  personal  computers  and  installing  the  latest
versions of year 2000 compliant applications.  Specialized applications not used
company-wide are being upgraded as necessary.  Other non-informative  technology
systems  such as  telephone  systems,  security  systems  and  copiers are being
assessed for year 2000  compliance.  The Company is contacting  vendors of these
items to determine their compliance status.

The cost of  conversion  to SAP is estimated to be  approximately  $1.9 million,
including hardware, software and the Company's commitment of internal resources.
As of September 30, 1999, the Company had incurred approximately $1.8 million of
the total cost.






                                  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

     None.


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Item 5.  Other Information

     None.


Item 6.  Exhibits and Reports on Form 8-K

(a)    Exhibits --     27                  Financial data schedule.


(b)    Reports on Form 8-K --

     None.


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                                    SIGNATURE

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/Robert W. Pierce                                      Date: November 15, 1999
Robert W. Pierce
Executive Vice President, Finance
Chief Financial Officer and Corporate Secretary
(Principal Accounting and Financial Officer)





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