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, 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 July 31, 1999, 9,964,305 shares of the registrant's Class A Common Stock,
      par value $0.01 per share, and 5,245,343 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
         June 30, 1999 and December 31, 1998............................... 3

         Condensed Consolidated Statements of Operations
         Three Months and Six Months Ended June 30, 1999 and 1998.......... 4

         Condensed Consolidated Statements of Cash Flows
         Six Months Ended June 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 4.

         Submission of Matters to a Vote of Security Holders ............. 21

         Item 6.

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

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

         Signatures....................................................... 23


                                        2

<PAGE>

                                 CARSON, INC.
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1999 AND DECEMBER 31, 1998
                 (In thousands, except share and per share data)
<TABLE>
<S>                                                                                                   <C>             <C>

                                                                                                        June 30,      December 31,
                                            ASSETS                                                        1999            1998
                                                                                                      ============    ============
                                                                                                       (Unaudited)
CURRENT ASSETS:
       Cash and cash equivalents                                                                      $    19,957      $   28,706
       Accounts receivable less allowances of $4,941 and $6,457 at June 30, 1999
            and December 31, 1998, respectively                                                            39,957          38,953
       Inventories                                                                                         23,409          22,825
       Restricted cash                                                                                      2,373           4,500
       Other current assets                                                                                 1,378             669
                                                                                                      ------------     -----------
              Total current assets                                                                         87,074          95,653

PROPERTY, PLANT AND EQUIPMENT, net                                                                         37,688          35,765

INTANGIBLES, net                                                                                          127,359         129,183

OTHER ASSETS                                                                                                5,937           6,862

                                                                                                      ------------     -----------
            TOTAL ASSETS                                                                              $   258,058      $  267,463
                                                                                                      ============     ===========


                                   LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable                                                                               $    12,070      $   12,584
       Due for A&J Cosmetics                                                                                   --           6,355
       Accrued expenses                                                                                    17,115          19,306
       Income taxes payable                                                                                 1,147           2,508
       Current maturities of long-term debt                                                                    --             126
                                                                                                      ------------     -----------
            Total current liabilities                                                                      30,332          40,879

LONG-TERM DEBT                                                                                            135,901         133,423

OTHER LIABILITIES                                                                                           3,309           3,345

MINORITY INTEREST IN SUBSIDIARY                                                                            21,776          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 June 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 June 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 June 30, 1999 and December 31, 1998, respectively                    53              53

       Paid-in capital                                                                                     81,501          80,970
       Accumulated deficit                                                                                 (6,376)         (3,920)
       Accumulated other comprehensive losses                                                              (6,963)         (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                                                                     66,740          69,160

                                                                                                      ------------     -----------
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                                $   258,058      $  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>
<S>                                                          <C>              <C>                  <C>              <C>
                                                               Three Months Ended June 30,            Six Months Ended June 30,
                                                                 1999             1998                 1999             1998
                                                             =============    =============        =============    =============



Net sales                                                    $     41,067     $     29,174         $     82,720     $     60,971
Cost of goods sold                                                 19,488           21,075               39,373           36,453
                                                             -------------    -------------        -------------    -------------
Gross profit                                                       21,579            8,099               43,347           24,518

Expenses:
     Marketing and selling                                         11,332            8,826               21,656           17,517
     General and administrative                                     6,728           10,028               13,955           15,976
     Restructuring charges                                            500            4,837                  500            4,837
                                                             -------------    -------------        -------------    -------------
                                                                   18,560           23,691               36,111           38,330
                                                             -------------    -------------        -------------    -------------

Operating income (loss)                                             3,019          (15,592)               7,236          (13,812)

Interest expense                                                   (4,487)          (3,010)              (8,764)          (5,847)
Gain on sale of subsidiary stock                                       --           49,140                   --           49,140
Other income, net                                                     822            1,165                1,712            1,704
                                                             -------------    -------------        -------------    -------------
(Loss) income before income taxes and minority interest              (646)          31,703                  184           31,185

Provision for  income taxes                                        (1,086)         (13,361)              (1,196)         (13,026)
                                                             -------------    -------------        -------------    -------------
(Loss) income before minority interest                             (1,732)          18,342               (1,012)          18,159

Minority interest in earnings of subsidiary                          (904)            (626)              (1,444)            (944)

                                                             -------------    -------------        -------------    -------------
Net (loss) income                                            $     (2,636)    $     17,716         $     (2,456)    $     17,215
                                                             =============    =============        =============    =============

Basic and diluted net (loss) income  per common share        $      (0.17)    $       1.18         $      (0.16)    $       1.15
                                                             =============    =============        =============    =============

Weighted average common shares outstanding                         15,100           14,988               15,090           14,990
                                                             =============    =============        =============    =============

</TABLE>

     See notes to condensed consolidated financial statements.




                                        4

<PAGE>

                                CARSON, INC.
           CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
                 FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                 (In thousands)

<TABLE>
<S>                                                                 <C>                <C>
                                                                       Six Months Ended June 30,
                                                                        1999               1998
                                                                    =============      =============

OPERATING ACTIVITIES:
     Net (loss) income                                              $    (2,456)       $    17,215
     Adjustments to reconcile net (loss) income to
     net cash used in operating activities:
            Depreciation and amortization                                 3,657              3,189
            Provision for doubtful accounts                                 634                196
            Minority interest in earnings of subsidiary                   1,444                944
            Gain on sale of subsidiary stock                                 --            (49,140)
            Non-cash special charges                                         --             14,222
            Other, net                                                        2               (513)
            Changes in operating assets and liabilities:
                   Accounts receivable                                   (1,833)              (437)
                   Inventories                                             (728)            (7,706)
                   Restricted cash                                        2,127                 --
                   Other current assets                                    (715)                90
                   Accounts payable                                        (466)             2,443
                   Income taxes payable                                  (1,326)            13,679
                   Accrued expenses                                      (2,178)              (585)
                                                                   -------------      -------------
                         Total adjustments                                  618            (23,618)
                                                                   -------------      -------------
            Net cash used in operating activities                        (1,838)            (6,403)
                                                                   -------------      -------------

INVESTING ACTIVITIES:
     Additions to property, plant and equipment                          (3,454)            (4,926)
     Collection of long-term note receivable                                517                 --
                                                                   -------------      -------------
            Net cash used in investing activities                        (2,937)            (4,926)
                                                                   -------------      -------------

FINANCING ACTIVITIES:
     Proceeds from long-term borrowings                                   2,538              9,500
     Principal payments on long-term debt                                   (58)           (12,556)
     Payment on A&J Cosmetics payable                                    (6,171)            (5,416)
     Proceeds from sale of subsidiary stock                                  --             74,392
     Other, net                                                             177               (277)
                                                                   -------------      -------------
            Net cash (used in) provided by financing activities          (3,514)            65,643
                                                                   -------------      -------------

EFFECT OF EXCHANGE RATE CHANGES                                            (460)            (3,933)

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                     (8,749)            50,381
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                         28,706             14,043
                                                                   -------------      -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                         $     19,957       $     64,424
                                                                   =============      =============


</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 June 30, 1999 Johnson  Products Co.,  Inc.,  was merged
into Carson Products Company and ceased to exist as a separate legal entity. The
merger is intended to enhance internal efficiencies,  specifically in connection
with the Company's implementation of new software.

3.    Inventories

Inventories are summarized as follows (in thousands):


                                          June 30, 1999       December 31, 1998
                                    --------------------------------------------
Raw materials                                 $  11,042               $   9,979
Work-in-process                                   2,222                   1,938
Finished goods                                   10,145                  10,908
                                    --------------------------------------------
                                              $  23,409               $  22,825
                                    ============================================



4.  Comprehensive Income (Loss)

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

<TABLE>
<S>                                            <C>              <C>              <C>              <C>
                                                 Three Months     Three Months       Six Months       Six Months
                                                        Ended            Ended            Ended           Ended
                                                June 30, 1999    June 30, 1998    June 30, 1999   June 30, 1998
                                               --------------   --------------   --------------   --------------
Net (loss) income                                  $  (2,636)       $  17,716        $  (2,456)      $   17,215
Other comprehensive income
(loss):
Change in equity due to foreign
currency translation adjustments                         762           (4,137)            (468)          (4,275)
                                               --------------   --------------   --------------   --------------
Comprehensive (loss) income                        $  (1,874)       $  13,577        $  (2,924)       $  12,940
                                               ==============   ==============   ==============   ==============
</TABLE>


                                       6


<PAGE>


5.  New Accounting Pronouncements

Statement of Financial  Accounting Standards No. 133, "Accounting for Derivative
Instruments  and  Hedging  Activities"  ("FAS  133"),  was  issued in June 1998.
Statement of Financial  Accounting Standards No. 137, "Accounting for Derivative
Instruments  and Hedging  Activities  - Deferral of the  Effective  Date of FASB
Statement No. 133", was issued in June 1999, deferring the effective date of FAS
133 from June 15, 1999 to June 15, 2000 for all fiscal  quarters of fiscal years
beginning  after June 15, 2000. The Company has not yet completed its evaluation
of the effect of this standard on its  financial  statements.  However,  at this
time the  Company  does not  expect  FAS 133 to have a  material  effect  on its
financial  position,  results of operations,  cash flows or financial  statement
disclosures.


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") and
Dermablend,  Inc.  ("Dermablend").  Carson  Products  is a  direct  wholly-owned
subsidiary of the Company, and Dermablend is an indirect wholly-owned subsidiary
of the Company which was purchased by Carson Products in 1998.  Johnson Products
Co., Inc. ("Johnson Products"),  formerly an indirect wholly-owned subsidiary of
the Company,  was also a guarantor  subsidiary  of the Notes until it was merged
into Carson  Products  during the quarter  ended June 30,  1999.  The  following
tables present condensed  consolidating  financial  information for the Company,
the guarantor subsidiaries, 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  subsidiaries are
not included and the  guarantor  subsidiaries  are not filing  separate  reports
under the  Securities  Exchange Act of 1934,  as amended,  because the guarantor
subsidiaries have fully and  unconditionally  guaranteed the Notes, and separate
financial statements and other disclosures concerning the guarantor subsidiaries
are not deemed material to investors.

Non-guarantor  subsidiaries  include  Carson  Holdings  Limited  ("Carson  South
Africa")  and  Carson  UK  Limited  ("Carson  UK").  Carson  UK is  an  indirect
wholly-owned  subsidiary  of the  Company.  Carson  South  Africa,  an  indirect
52.6%-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. 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.  Carson  Management
Company is a direct majority-owned subsidiary of the Company.


                                        7


<PAGE>


Consolidating Statement of Operations for the Quarter Ended June 30, 1999
<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>


                                                  Carson, Inc.     Guarantor  Non-guarantor                   Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Net sales                                         $     ----     $   28,434      $  12,633     $     ----     $   41,067
Cost of goods sold                                      ----         13,268          6,220           ----         19,488
                                               -------------- -------------- -------------- -------------- --------------
    Gross profit                                        ----         15,166          6,413           ----         21,579
Marketing and selling expenses                          ----          8,375          2,957           ----         11,332
General and administrative expense                      ----          5,644          1,084           ----          6,728
Restructuring expenses                                  ----            500           ----           ----            500
                                               -------------- -------------- -------------- -------------- --------------
    Operating  income                                   ----            647          2,372           ----          3,019
Other income, net                                       ----         (4,109)           444           ----         (3,665)
Equity in subsidiary earnings (net of taxes)          (2,636)          ----           ----          2,636           ----
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before income taxes and
    minority interest                                 (2,636)        (3,462)         2,816          2,636           (646)
Income taxes                                            ----           (278)          (808)          ----         (1,086)
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before minority interest            (2,636)        (3,740)         2,008          2,636         (1,732)
Minority interest                                       ----           ----           (904)          ----           (904)
                                               -------------- -------------- -------------- -------------- --------------
    Net income (loss)                             $   (2,636)    $   (3,740)    $    1,104     $    2,636     $   (2,636)
                                               ============== ============== ============== ============== ==============
</TABLE>




Consolidating Statement of Operations for the Quarter Ended June 30, 1998
<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>


                                                  Carson, Inc.     Guarantor  Non-guarantor                  Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Net sales                                         $     ----     $   18,483     $   10,691     $     ----     $   29,174
Cost of goods sold                                      ----         16,013          5,062           ----         21,075
                                               -------------- -------------- -------------- -------------- --------------
    Gross profit                                        ----          2,470          5,629           ----          8,099
Marketing and selling expenses                          ----          6,593          2,233           ----          8,826
General and administrative expense                      ----          8,674          1,354           ----         10,028
Restructuring expenses                                  ----          4,837           ----           ----          4,837
                                               -------------- -------------- -------------- -------------- --------------
    Operating income (loss)                             ----        (17,634)         2,042           ----        (15,592)
Other income, net                                       ----         46,660            635           ----         47,295
Equity in subsidiary earnings (net of taxes)          17,716           ----           ----        (17,716)          ----
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before income taxes and
    minority interest                                 17,716         29,026          2,677        (17,716)        31,703
Income taxes                                            ----        (12,451)          (910)          ----        (13,361)
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before minority interest            17,716         16,575          1,767        (17,716)        18,342
Minority interest                                       ----           ----           (626)          ----           (626)
                                               -------------- -------------- -------------- -------------- --------------
    Net income (loss)                             $   17,716     $   16,575     $    1,141     $  (17,716)    $   17,716
                                               ============== ============== ============== ============== ==============
</TABLE>

                                       8

<PAGE>


Consolidating Statement of Operations for the Six Months Ended June 30, 1999
<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>
                                                  Carson, Inc.     Guarantor  Non-guarantor                  Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Net sales                                         $     ----     $   59,121     $   23,599     $     ----     $   82,720
Cost of goods sold                                      ----         27,713         11,660           ----         39,373
                                               -------------- -------------- -------------- -------------- --------------
    Gross profit                                        ----         31,408         11,939           ----         43,347
Marketing and selling expenses                          ----         16,528          5,128           ----         21,656
General and administrative expenses                     ----         11,271          2,684           ----         13,955
Restructuring expense                                   ----            500           ----           ----            500
                                               -------------- -------------- -------------- -------------- --------------
    Operating  income                                   ----          3,109          4,127           ----          7,236
Other income, net                                       ----         (7,967)           915           ----         (7,052)
Equity in subsidiary earnings (net of taxes)          (2,456)          ----           ----          2,456           ----
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before income taxes and
    minority interest                                 (2,456)        (4,858)         5,042          2,456            184
Income taxes                                            ----           ----         (1,196)          ----         (1,196)
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before minority interest            (2,456)        (4,858)         3,846          2,456         (1,012)
Minority interest                                       ----           ----         (1,444)          ----         (1,444)
                                               -------------- -------------- -------------- -------------- --------------
    Net income (loss)                             $   (2,456)    $   (4,858)    $    2,402     $    2,456     $   (2,456)
                                               ============== ============== ============== ============== ==============
</TABLE>




Consolidating Statement of Operations for the Six Months Ended June 30, 1998
<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>
                                                  Carson, Inc.     Guarantor  Non-guarantor                  Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Net sales                                         $     ----     $   40,705     $   20,266     $     ----     $   60,971
Cost of goods sold                                      ----         26,282         10,171           ----         36,453
                                               -------------- -------------- -------------- -------------- --------------
    Gross profit                                        ----         14,423         10,095           ----         24,518
Marketing and selling expenses                          ----         13,854          3,663           ----         17,517
General and administrative expenses                     ----         13,516          2,460           ----         15,976
Restructuring expense                                   ----          4,837           ----           ----          4,837
                                               -------------- -------------- -------------- -------------- --------------
    Operating income (loss)                             ----        (17,784)         3,972           ----        (13,812)
Other income, net                                       ----         44,041            956           ----         44,997
Equity in subsidiary earnings (net of taxes)          17,215           ----           ----        (17,215)          ----
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before income taxes and
    minority interest                                 17,215         26,257          4,928        (17,215)        31,185
Income taxes                                            ----        (11,381)        (1,645)          ----        (13,026)
                                               -------------- -------------- -------------- -------------- --------------
    Income (loss) before minority interest            17,215         14,876          3,283        (17,215)        18,159
Minority interest                                       ----           ----           (944)          ----           (944)
                                               -------------- -------------- -------------- -------------- --------------
    Net income (loss)                             $   17,215     $   14,876     $    2,339     $  (17,215)    $   17,215
                                               ============== ============== ============== ============== ==============
</TABLE>


                                       9


<PAGE>


Consolidating Balance Sheet as of June 30, 1999
<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>
                                                Carson, Inc.   Guarantor      Non-guarantor                 Consolidated
                                                  (parent)     subsidiaries   subsidiaries   Eliminations   Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Assets
Current assets:
    Cash                                           $    ----     $    9,691      $  10,266     $     ----      $  19,957
    Accounts receivable, net                             827         28,735         15,166         (4,771)        39,957
    Inventories, net                                    ----         13,822          9,587           ----         23,409
    Restricted cash                                     ----          2,373           ----           ----          2,373
    Other current assets                                ----          1,019            359           ----          1,378
Property, plant and equipment, net                      ----         27,650         10,074            (36)        37,688
Intangible assets, net and other assets                 ----        122,630         10,666           ----        133,296
Investment in subsidiary                              65,913         44,667           ----       (110,580)          ----
                                               -------------- -------------- -------------- -------------- --------------
Total assets                                       $  66,740      $ 250,587      $  56,118      $(115,387)     $ 258,058
                                               ============== ============== ============== ============== ==============

Liabilities and stockholders' equity
Current liabilities:
    Accounts payable                               $    ----      $   8,346      $   8,495      $  (4,771)     $  12,070
    Other current liabilities                           ----         15,756          2,506           ----         18,262
Long-term debt                                          ----        135,770            131           ----        135,901
Other liabilities                                       ----         24,766            319           ----         25,085
Common stock and paid in capital                      81,654         28,182         39,608        (67,790)        81,654
Other equity accounts                                 (8,538)       (15,269)        (9,758)        25,027         (8,538)
Retained earnings (Accumulated deficit)               (6,376)        53,036         14,817        (67,853)        (6,376)
                                               -------------- -------------- -------------- -------------- --------------
Total liabilities and stockholders' equity         $  66,740      $ 250,587      $  56,118      $(115,387)     $ 258,058
                                               ============== ============== ============== ============== ==============
</TABLE>



                                       10


<PAGE>


Consolidating Balance Sheet as of December 31, 1998
<TABLE>
<S>                                           <C>              <C>              <C>              <C>              <C>
                                                Carson, Inc.    Guarantor     Non-guarantor                 Consolidated
                                                  (parent)     subsidiaries   subsidiaries   Eliminations   Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
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 Six Months Ended June 30, 1999

<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>
                                                  Carson, Inc.     Guarantor  Non-guarantor                  Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Operating Activities:
   Net income (loss)                              $   (2,456)    $   (5,279)     $   2,823     $    2,456     $   (2,456)
   Adjustments to reconcile net income (loss)
   to net cash provided by (used in) operating
   activities:
      Depreciation and amortization                     ----          2,922            735           ----          3,657
      Minority interest in earnings of
      subsidiary                                        ----            540            904           ----          1,444
      Other, net                                       2,456            676            (40)        (2,456)           636
      Changes in operating assets and
      liabilities                                       ----         (2,569)        (2,550)          ----         (5,119)
                                               -------------- -------------- -------------- -------------- --------------
         Total adjustments                             2,456          1,569           (951)        (2,456)           618
                                               -------------- -------------- -------------- -------------- --------------
      Net cash (used in ) provided by
      operating activities                              ----         (3,710)         1,872           ----         (1,838)
                                               -------------- -------------- -------------- -------------- --------------
Investing Activities:
    Additions to property, plant and                    ----         (2,372)        (1,082)          ----         (3,454)
    equipment
    Collection of long-term note receivable             ----            517           ----           ----            517
                                               -------------- -------------- -------------- -------------- --------------
      Net cash used in investing activities             ----         (1,855)        (1,082)          ----         (2,937)
                                               -------------- -------------- -------------- -------------- --------------
Financing Activities:
   Proceeds from long-term borrowings                   ----          2,446             92           ----          2,538
   Principal payments on debt                           ----           ----         (6,229)          ----         (6,229)
   Other                                                ----            490           (313)          ----            177
                                               -------------- -------------- -------------- -------------- --------------
      Net cash provided by (used in)                    ----          2,936         (6,450)          ----         (3,514)
financing activities
                                               -------------- -------------- -------------- -------------- --------------
Effect of Exchange Rate Changes                         ----           ----           (460)          ----           (460)
                                               -------------- -------------- -------------- -------------- --------------
Net decrease in Cash and Cash Equivalents               ----         (2,629)        (6,120)          ----         (8,749)
Cash and Cash Equivalents at Beginning of
Period                                                  ----         12,320         16,386           ----         28,706
                                               -------------- -------------- -------------- -------------- --------------
Cash and Cash Equivalents at End of Period        $     ----     $    9,691     $   10,266     $     ----     $   19,957
                                               ============== ============== ============== ============== ==============
</TABLE>




                                       12


<PAGE>


Consolidating Statement of Cash Flows for the Six Months Ended June 30, 1998

<TABLE>
<S>                                            <C>            <C>            <C>            <C>            <C>
                                                  Carson, Inc.     Guarantor  Non-guarantor                  Consolidated
                                                     (parent)   subsidiaries   subsidiaries   Eliminations    Carson, Inc.
                                               -------------- -------------- -------------- -------------- --------------
Operating Activities:
   Net income (loss)                              $   17,215     $   14,876     $    2,339     $  (17,215)    $   17,215
   Adjustments to reconcile net income (loss)
   to net cash provided by (used in) operating
   activities:
      Gain on sale of subsidiary stock                  ----        (49,140)          ----           ----        (49,140)
      Non-cash special charges                          ----         14,222           ----           ----         14,222
      Depreciation and amortization                     ----          2,643            546           ----          3,189
      Minority interest in earnings of
      subsidiary                                        ----           ----            944           ----            944
      Other, net                                     (17,215)           (47)          (270)        17,215           (317)
      Changes in operating assets and
      liabilities                                       ----          8,005           (521)          ----          7,484
                                               -------------- -------------- -------------- -------------- --------------
         Total adjustments                           (17,215)       (24,317)           699         17,215        (23,618)
                                               -------------- -------------- -------------- -------------- --------------
      Net cash (used in) provided by
      operating activities                              ----         (9,441)         3,038           ----         (6,403)
                                               -------------- -------------- -------------- -------------- --------------
Investing Activities:
   Additions to property, plant and
   equipment                                            ----         (2,378)        (2,548)          ----         (4,926)
                                               -------------- -------------- -------------- -------------- --------------
      Net cash used in investing  activities            ----         (2,378)        (2,548)          ----         (4,926)
                                               -------------- -------------- -------------- -------------- --------------
Financing Activities:
   Proceeds from long-term borrowings                   ----          9,500           ----           ----          9,500
   Principal payments on long-term debt                 ----        (12,500)        (5,472)          ----        (17,972)
   Proceeds from sale of subsidiary stock               ----         55,265         19,127           ----         74,392
   Other                                                ----           (277)          ----           ----           (277)
                                               -------------- -------------- -------------- -------------- --------------
      Net cash provided by  financing
      activities                                        ----         51,988         13,655           ----         65,643
                                               -------------- -------------- -------------- -------------- --------------
Effect of Exchange Rate Changes                         ----           ----         (3,933)          ----         (3,933)
                                               -------------- -------------- -------------- -------------- --------------
Net increase in Cash and Cash Equivalents               ----         40,169         10,212           ----         50,381
Cash and Cash Equivalents at Beginning of
Period                                                  ----          2,623         11,420           ----         14,043
                                               -------------- -------------- -------------- -------------- --------------
Cash and Cash Equivalents at End of Period        $     ----     $   42,792     $   21,632     $     ----     $   64,424
                                               ============== ============== ============== ============== ==============
</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 six months ended June 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 six months ended June 30, 1999 and 1998,  32.4% and 38.1%,  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>


                            Six Months                    Six Months
                                 Ended       % of              Ended       % of
                          June 30,1999      Total       June 30,1998      Total
--------------------------------------------------------------------------------
Net sales to:
United States                $  55,946       67.6%        $  37,721        61.9%
South Africa                    19,252       23.3            17,148        28.1
Europe                           4,347        5.3             3,117         5.1
Other International              3,175        3.8             2,985         4.9
--------------------------------------------------------------------------------
Total                        $  82,720      100.0%        $  60,971       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 June 30, 1999 Compared to Quarter Ended June 30, 1998

Net Sales. Consolidated net sales for the quarter ended June 30, 1999 were $41.1
million,  an increase of $11.9 million, or 40.8%, over net sales for the quarter
ended June 30, 1998 of $29.2  million.  The  increase in net sales is  primarily
attributable to the Company's  acquisition of Johnson Products and Dermablend in
July 1998. This increase is summarized as follows (dollars are in thousands):


                             Quarter Ended      Quarter Ended
                             June 30, 1999      June 30, 1998           % Change
                           ---------------    ---------------    ---------------
Carson Hair Care                $  11,522          $  10,444               10.3
Johnson Hair Care                  11,038                 --                N/A
Export                              3,449              2,758               25.1
Dermablend Group                    4,415                346            1,176.0
                           ---------------    ---------------
   US Ethnic                       30,424             13,548              124.6
                           ---------------    ---------------
South Africa                       10,643              9,347               13.9
                           ---------------    ---------------
   Carson Ethnic                   41,067             22,895               79.4
                           ---------------    ---------------
Cutex                                  --              6,279             (100.0)
                           ---------------    ---------------
   Consolidated                 $  41,067          $  29,174               40.8
                           ===============    ===============


Carson and Johnson hair care net sales above include domestic sales of 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


                                       15

<PAGE>



sales of Dermablend corrective cosmetics, Posner cosmetics  and Dark and  Lovely
Cosmetics.  Most of the increase in Carson  hair  care products was  in sales of
relaxers and hair color products.

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

Gross Profit.  Consolidated  gross profit was $21.6 million in the quarter ended
June 30, 1999  compared to $8.1 million in the quarter  ended June 30, 1998,  an
increase of $13.5 million, or 166.7%. Gross margin was 52.5% in 1999 compared to
27.8% in 1998.  In the  second  quarter  of 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 $14.7
million,  and gross margin was 50.3% in the second quarter of 1998. The increase
in gross margin in 1999 was attributable in part to increased plant  utilization
in the  Savannah  manufacturing  facility,  whereas in 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 hair care margins  resulting  from  discounted  sales  pricing.
Management has revised  pricing terms for Johnson hair care products and expects
gross  margins  to  improve  in the second  half of 1999.  Carson  South  Africa
produced a gross profit of $5.3 million and a gross margin  percentage  of 49.9%
in the second  quarter of 1999  compared to a gross profit of $4.6 million and a
gross margin percentage of 49.0% in the second quarter of 1998.

Marketing and Selling  Expenses.  Marketing and selling expenses  increased $2.5
million, or 28.4%, to $11.3 million in the quarter ended June 30, 1999 from $8.8
million in the quarter  ended June 30, 1998.  This  increase  consists of higher
spending  resulting from the addition of Johnson Products and higher spending at
Carson South  Africa  offset by reduced  spending on the Cutex,  Dark and Lovely
Cosmetics and Salon Professional  lines, all of which were being promoted in the
second  quarter of 1998.  As a percentage  of net sales,  marketing  and selling
expenses  decreased to 27.6%  during the quarter  ended June 30, 1999 from 30.3%
during the quarter ended June 30, 1998.

General and Administrative  Expenses.  General and administrative  expenses were
$6.7 million for the second  quarter of 1999  compared to $10.0  million for the
second  quarter of 1998,  a decrease of $3.3  million,  or 32.9%.  In the second
quarter of 1998,  general and  administrative  expenses included $3.7 million of
special charges primarily related to an executive  management  restructuring and
additional  accounts  receivable  reserves.  Excluding  these  special  charges,
general and  administrative  expenses were $6.3 million in the second quarter of
1998.  Compared to this amount,  general and  administrative  expenses increased
$0.4 million,  or 6.3%,  in the second  quarter of 1999.  The increase  resulted
primarily  from the addition of Johnson  Products and  consisted of increases in
amortization,  bad debt  expense,  research and  development  and  insurance and
taxes.  As a  percentage  of net  sales,  general  and  administrative  expenses
decreased to 16.4% during the quarter  ended June 30, 1999 from 21.7% during the
quarter ended June 30, 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 second quarter of 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 second  quarter of 1998,  the
Company  recorded  restructuring  charges of $4.8 million  related  primarily to
changes in the Company's  top  management  group and to the  write-down of fixed


                                       16

<PAGE>



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 $3.0  million in the quarter  ended June 30, 1999 from an  operating  loss of
$15.6 million in the quarter ended June 30, 1998.

Interest  Expense.  Interest  expense  increased  to $4.5 million in the quarter
ended June 30, 1999 from $3.0 million in the quarter  ended June 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 Carson South Africa, resulting in a pre-tax gain to the Company of
$49.1 million.

Other Income.  Other income decreased to $0.8 million for the quarter ended June
30, 1999 from $1.2 million for the quarter ended June 30, 1998. The decrease was
primarily due to lower interest income on reduced domestic cash balances.

Provision  for Income Taxes.  The  provision for income taxes  decreased to $1.1
million in the  quarter  ended June 30, 1999  compared  to $13.4  million in the
quarter ended June 30, 1998.  The 1999  provision was calculated on the earnings
of the Company's foreign subsidiaries. The Company did not record a 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 $0.9  million in the quarter  ended June 30, 1999 from
$0.6 million in the quarter  ended June 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  resulting from sales of Carson
South Africa stock in the second quarter of 1998.

Six months Ended June 30, 1999 Compared to Six months Ended June 30, 1998

Net Sales.  Consolidated  net sales for the six months  ended June 30, 1999 were
$82.7 million,  an increase of $21.7 million,  or 35.7%,  over net sales for the
six months ended June 30, 1998 of $61.0 million.  This increase is summarized as
follows (dollars are in thousands):

                        Six months Ended    Six months Ended
                           June 30, 1999       June 30, 1998           % Change
                        ----------------    ----------------     ---------------
Carson Hair Care              $  26,772           $  25,074                 6.8
Johnson Hair Care             $  20,715                  --                 N/A
Export                            7,522               6,103                23.3
Dermablend Group                  8,459                 886               854.7
                        ----------------    ----------------
   US Ethnic                     63,468              32,063                97.9
                        ----------------    ----------------
South Africa                     19,252              17,148                12.3
                        ----------------    ----------------
   Carson Ethnic                 82,720              49,211                68.1
                        ----------------    ----------------
Cutex                                --              11,760              (100.0)
                        ----------------    ----------------
   Consolidated               $  82,720           $  60,971                35.7
                        ================    ================



                                       17


<PAGE>


Carson and Johnson hair care net sales above include domestic sales of 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.  Most of the  increase in Carson hair care  products  was in sales of
hair color products.

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

Gross  Profit.  Consolidated  gross  profit was $43.3  million in the six months
ended June 30, 1999  compared to $24.5  million in the six months ended June 30,
1998, an increase of $18.8  million,  or 76.8%.  Gross margin was 52.4% for such
period in 1999  compared  to 40.2% for such  period in 1998.  In the six  months
ended June 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 $31.1 million,  and gross margin was 51.0% in
the six months  ended June 30,  1998.  The  increase in gross margin in 1999 was
attributable   in  part  to  increased   plant   utilization   in  the  Savannah
manufacturing facility, whereas in 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  and expects  gross
margins to improve in the second half of 1999.  Carson South  Africa  produced a
gross profit of $9.6 million and a gross margin  percentage  of 49.9% in the six
months  ended June 30,  1999  compared to a gross  profit of $8.1  million and a
gross margin percentage of 47.4% in the six months ended June 30, 1998.

Marketing and Selling  Expenses.  Marketing and selling expenses  increased $4.1
million,  or 23.6%,  to $21.7 million in the six months ended June 30, 1999 from
$17.5 million in the six months ended June 30, 1998.  This increase  consists of
higher  spending  resulting  from the  addition of Johnson  Products  and higher
spending at Carson South Africa  offset by reduced  spending on the Cutex,  Dark
and  Lovely  Cosmetics  and Salon  Professional  lines,  all of which were being
promoted in the first half of 1998. As a percentage of net sales,  marketing and
selling expenses decreased to 26.2% during 1999 from 28.7% during 1998.

General and Administrative  Expense.  General and  administrative  expenses were
$14.0 million for the first six months of 1999 compared to $16.0 million for the
first six months of 1998, a decrease of $2.0 million, or 12.7%. In the first six
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 $12.3 million in the six months ended
June 30, 1998.  Compared to this  amount,  general and  administrative  expenses
increased  $1.7 million, or  13.8%, in  the six months ended June 30, 1999.  The
increase resulted primarily from the  addition of Johnson Products and consisted
of increases in  amortization,  bad debt  expense, research and  development and
insurance and taxes.  As a  percentage of net sales, general and  administrative
expenses  decreased  to 16.4%  during  1999  from 20.1%  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.


                                       18


<PAGE>


Restructuring  Charges.  In the six months  ended  June 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 six months  ended June 30,
1998,  the  Company  recorded  restructuring  charges  of $4.8  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 $7.2 million in the six months ended June 30, 1999 from an operating  loss of
$13.8 million in the six months ended June 30, 1998.

Interest  Expense.  Interest expense increased to $8.8 million in the six months
ended June 30, 1999 from $5.8 million in the six months ended June 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 Carson South Africa, resulting in a pre-tax gain to the Company of
$49.1 million.

Other Income.   Other income  was flat  for the  six months  ended June 30, 1999
compared to the six months ended June 30, 1998.

Provision  for Income Taxes.  The  provision for income taxes  decreased to $1.2
million in the six months ended June 30, 1999  compared to $13.0  million in the
six  months  ended June 30,  1998.  The 1999  provision  was  calculated  on the
earnings of the Company's foreign subsidiaries. The Company did not record a 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 $1.4 million in the six months ended June 30, 1999 from
$0.9 million in the six months ended June 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 and June of 1999 and
thereby  increased  long-term debt $2.4 million in the six months ended June 30,
1999.  The  capital  stock  and  assets  of  Carson  Products Company (including
stock in Carson South Africa  representing a 52.6% majority  stake), the capital




                                       19


<PAGE>


stock and intellectual property of Dermablend Inc. 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 six months ended June 30, 1999, the Company's  cash balance  decreased by
$8.7  million,  to $20.0  million.  Net cash  flow used in  operations  was $1.8
million.  Cash was used primarily to increase accounts  receivable and to reduce
income taxes payable and accrued  expenses.  Approximately  $2.1 million of cash
was provided by the conversion of restricted cash into available cash, which was
used to pay for items related to the disposition of Cutex.

Net cash used in  investing  activities  in the six months  ended June 30,  1999
consisted primarily of capital expenditures of $3.5 million.  Approximately $1.1
million of these additions related to the Carson Products software conversion to
SAP, and approximately $1.1 million were additions by Carson South Africa.

Net cash used in  financing  activities  in the six months  ended June 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  $2.5  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 foreseeable future.

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 Year 2000  compliant,  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
facilities during the quarter ended June 30, 1999. The  implementation of SAP at
the  Company's  Chicago  facility is currently in progress and is expected to be
completed  during the third quarter of 1999.  Moreover,  the Company  expects to
receive a certificate of Year 2000  compliance for its AS/400 computer from IBM.
Once SAP has been  implemented  at the  Chicago  facility  and 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 another
software and/or hardware 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.

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


                                       20

<PAGE>


its main bank 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 June 30, 1999, the Company had incurred  approximately $1.5 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

   At the annual meeting of shareholders of Carson, Inc., held on June 15, 1999,
the following directors were elected to three-year terms expiring in 2002: Leroy
Keith,  Lawrence E.  Bathgate  II,  John L. Sabre and  Vincent A.  Wasik.  Other
directors whose terms of office continued after the meeting  included:  Abbey J.
Butler,  Suzanne de Passe,  Melvyn J. Estrin,  James L. Hudson, Jack F. Kemp and

                                       21

<PAGE>


Malcolm R. Yesner. Also, the appointment of Deloitte & Touche LLP as independent
auditors for 1999 was ratified,  and the Carson,  Inc. 1996 Long-Term  Incentive
Plan was adopted 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 2002:
      Leroy Keith                                                 43,728,442           451,415              -0-
      Lawrence E. Bathgate, II                                    43,728,442           451,415              -0-
      John L. Sabre                                               42,136,642         2,043,215              -0-
      Vincent A. Wasik                                            43,728,442           451,415              -0-
(2) To ratify the appointment of Deloitte & Touche LLP
      as the Company's independent auditors for 1999              44,178,357             1,100              400
(3) To adopt The Carson, Inc. 1996 Long-Term Incentive
Plan                                                              38,077,642         6,046,807           55,408

</TABLE>

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.

                                       22

<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.





                                                           Date: August 16, 1999
/S/Robert W. Pierce
Executive Vice President, Finance
Chief Financial Officer and Corporate Secretary
(Principal Accounting and Financial Officer)





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