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, 1997

                                               or

[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities 
    Exchange Act of 1934

                For the transition period from _______ to _______

                         Commission file number 1-12271



                                  CARSON, INC.



          (Exact name of registrant as specified in its charter)


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


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



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




     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.
                                                     Yes x No


     At October 29, 1997,  5,033,248 shares of the  registrant's  Class A Common
Stock, par value $0.01 per share,  1,859,677 shares of the registrant's  Class B
Common  Stock,   par  value  $0.01  per  share,  and  8,127,937  shares  of  the
registrant's Class C Common Stock, par value $0.01 per share were outstanding.


<PAGE>




                   CARSON, INC.

                       INDEX

Part I.  Financial Information                                          Page

         Item 1.

         Condensed Consolidated Balance Sheets
         September 30, 1997 and December 31, 1996.........................  3

         Condensed Consolidated Statements of Operations
         Three and Nine Months Ended September 30, 1997 and 1996..........  4

         Condensed Consolidated Statements of Cash Flow
         Nine Months Ended September 30, 1997 and 1996.................... 5

         Notes to Condensed Consolidated Financial Statements............. 6-9

         Item 2.

         Management's Discussion and Analysis of Financial Condition
         and Results of Operations........................................10-14


Part II.  Other Information...............................................15



         Signatures....................................................... 16



<PAGE>
                                                         2
Carson, Inc.
Condensed Consolidated Balance Sheets
September 30, 1997 and December 31, 1996
(In thousands)

<TABLE>
<S>                                                                                    <C>                       <C>               
                                                                                           September 30,              December 31,
                                    ASSETS                                                      1997                      1996
                                                                                            (Unaudited)
CURRENT ASSETS:
       Cash and cash equivalents                                                       $            4,987        $            4,191
       Accounts receivable (less allowance for doubtful accounts and returns of       
        $3,054 and $614 at September 30, 1997 and December 31, 1996, respectively)                 26,259                    15,117
       Inventories, net                                                                            18,413                    10,572
       Other current assets                                                                           723                     1,421
                       Total current assets                                                        50,382                    31,301

PROPERTY, PLANT AND EQUIPMENT, net of accumulated depreciation                                     19,314                    15,089

INVESTMENT IN AM COSMETICS                                                                          3,483                     3,187

GOODWILL, net                                                                                      91,473                    45,801

OTHER ASSETS                                                                                        6,197                     2,151

                       TOTAL ASSETS                                                    $          170,849        $           97,529


                                    LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable                                                                $            8,382        $            7,065
       Accrued expenses                                                                             7,447                     5,784
       Income taxes payable                                                                         2,577                         --
       Current maturities of long-term debt                                                         3,000                     2,600
                       Total current liabilities                                                   21,406                    15,449

LONG-TERM DEBT                                                                                     84,918                    24,501

MINORITY INTEREST IN SUBSIDIARY                                                                     3,919                     1,664

DEFERRED INCOME TAXES AND OTHER LIABILITIES                                                         1,701                     1,700

STOCKHOLDERS' EQUITY:
       Preferred stock                                                                                  --                        --
       Common stock                                                                                   150                       150
       Paid-in capital                                                                             62,899                    62,418
       Accumulated deficit                                                                         (1,234)                   (5,679)
       Note receivable from employee shareholders, net of discount                                 (1,437)                   (1,365)
       Foreign currency translation adjustment                                                     (1,473)                   (1,309)
                       Total stockholders' equity                                                  58,905                    54,215

                       TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                      $          170,849        $           97,529



See notes to condensed consolidated financial statements.


                                        3
</TABLE>


<PAGE>

Carson, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
For the Three and Nine Months Ended September 30, 1997 and 1996
(In thousands, except per share data)

<TABLE>

<S>                                        <C>                 <C>                <C>                    <C>
                                               Three Months Ended September 30,          Nine Months Ended September 30,
                                                 1997               1996                 1997                   1996
                                                                                                             (Restated)
                                                                                                            (See Note 6)

            
NET SALES                                  $      29,625       $    19,897        $        77,791        $        56,488
COST OF GOODS SOLD                                13,555             8,735                 35,431                 24,853
GROSS PROFIT                                      16,070            11,162                 42,360                 31,635

EXPENSES:
     Marketing and selling                         7,325             5,118                 19,602                 13,283
     General and administrative                    4,544             2,758                 11,691                  8,488
     Incentive compensation                            --            6,323                      --                 7,123
                                                  11,869            14,199                 31,293                 28,894

OPERATING INCOME                                   4,201            (3,037)                11,067                  2,741

INTEREST EXPENSE                                  (1,809)           (1,850)                (3,924)                (5,523)
OTHER INCOME, net                                    214               313                    608                    497

INCOME (LOSS) BEFORE INCOME TAXES                  2,606            (4,574)                 7,751                 (2,285)

PROVISION FOR INCOME TAXES                         1,113               593                  3,310                  1,808

NET INCOME (LOSS)                          $       1,493       $    (5,167)       $         4,441        $        (4,093)

EARNINGS (LOSS)  PER SHARE                 $        0.10       $     (0.44)       $          0.30        $         (0.34)

WEIGHTED AVERAGE COMMON
     SHARES OUTSTANDING                           15,021            11,871                 15,005                 11,871


See notes to condensed consolidated financial statements.


</TABLE>
                                                         4
<PAGE>


Carson, Inc.
Condensed Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1997 and September 30, 1996
(In thousands)
<TABLE>

<S>                                                       <C>               <C>                 
                                                               Nine months ended September 30,
                                                               1997             1996
OPERATING ACTIVITIES:

  Net income                                              $         4,441   $       (4,093)
  Adjustments to reconcile net income to
     net cash provided by operating activities:
      Depreciation and amortization                                 2,686            1,830
      Other, net                                                   (1,295)            (456)
      Minority interest in earnings of subsidiary                     507               88
      Foreign currency translation adjustment                        (164)            (578)
      Changes in operating assets and liabilities,
        net of acquisitions
          Accounts receivable                                     (10,030)          (2,070)
          Inventories                                              (5,897)          (1,850)
          Other current assets                                     (1,547)          (1,074)
          Accounts payable                                            261              591
          Income taxes payable                                      2,577              (52)
          Accrued expenses                                          1,501              783
              Total adjustments                                   (11,401)          (2,788)
      Net cash used in operating activities                        (6,960)          (6,881)

INVESTING ACTIVITIES:
  Additions to property, plant and equipment                       (5,108)          (3,895)
  Acquisitions of business assets, net of cash acquired           (49,406)               0
      Net cash used in investing activities                       (54,514)          (3,895)

FINANCING ACTIVITIES:
  Proceeds from long-term borrowings                               62,979            5,991
  Principal payments on long-term debt                             (2,162)          (2,000)
  Incentive compensation                                               - -           7,123
  Other, net                                                          (72)             456
  Proceeds from equity rights offering                              1,525                0
  Proceeds from sale of common stock                                    0            2,814
      Net cash provided by financing activities                    62,270           14,384

NET CHANGE IN CASH AND CASH EQUIVALENTS                               796            3,608
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    4,191              378
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $         4,987   $        3,986


See notes to condensed consolidated financial statements.

</TABLE>


                                                         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 1996 Transition  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.  Inventories

    Inventories are summarized as follows (in thousands):


                                  September 30, 1997          December 31, 1996
                            ------------------------  -------------------------
Raw materials                                 $7,899                     $7,017
Work-in-process                                1,391                      1,236
Finished goods                                 9,123                      2,319
                            ------------------------  -------------------------
                                             $18,413                    $10,572
                            ========================  =========================



The  September  30, 1997 and  December  30, 1996  inventory  balances are net of
valuation allowances of $1.7 million and $181 thousand, respectively.


                                                         6

<PAGE>




3.   Acquisitions

         During March 1997, the Company entered into an Asset Purchase Agreement
with  Conopco,  Inc.  d/b/a  Chesebrough-Pond's  USA Co. in order to acquire the
rights to manufacture  and market Cutex nail polish remover,  nail enamel,  nail
care treatment products and nail care implements in the United States and Puerto
Rico  (the  "Cutex  acquisition").  Cutex is the  leading  brand of nail  polish
remover and is also a line of nail  enamels.  The  purchase  price  approximated
$41.4 million  including  amounts paid to  Chesebrough-Pond's  of $37.5 million,
inventory  acquired  from  Chesebrough-Pond's  USA  of  $600,000  and  inventory
acquired from Jean Phillipe of $3.3 million.  In addition,  the Company incurred
debt-related  acquisition  costs of approximately  $2.6 million and other direct
acquisition fees and expenses of $1.4 million. This acquisition is accounted for
under the purchase  method of accounting and the results of the operations  have
been included in the condensed  consolidated financial statements since the date
of  acquisition.  Funds  were  provided  by  additional  long-term  debt and the
transaction was completed on April 30, 1997.

         During  March  1997,  the  Company  entered  into an  Asset  Repurchase
Agreement with Jean Philippe  Fragrances,  Inc., the entity that previously held
the license to package,  distribute and sell nail enamel and nail care treatment
products,  nail care  implements and lipstick  under the Cutex  trademark in the
United States and Puerto Rico. In connection  with the  termination on April 30,
1997  of  the  license  agreement  between  Conopco,   Inc.  and  Jean  Philippe
Fragrances,  Inc. by Carson as  successor in interest to Conopco,  Inc.,  Carson
acquired  certain  assets of Jean Philippe  Fragrances,  Inc. used in connection
with the Cutex license agreement.

         The  following  unaudited pro forma  information  presents a summary of
consolidated  results of  operations of the Company and the results of the Cutex
acquisition  as if the  acquisition  had  occurred as of the  beginning  of each
period presented:

(Dollars in thousands except per share amounts)

                           Three Months Ended           Nine Months Ended
                               September 30,              September 30,

                                1997        1996        1997        1996
                       ------------- -----------   ---------  ------------
Net sales                    $29,625     $25,396     $82,997       $69,843
Net income                     1,493     (4,454)       4,669       (2,977)
Earnings per share             $0.10     $(0.38)       $0.31       $(0.25)

         These  unaudited pro forma  results have been prepared for  comparative
purposes only and include certain adjustments,  such as an adjustment to cost of
goods   sold  per  a   manufacturing   agreement   between   the   Company   and
Chesebrough-Pond's USA Co., additional goodwill amortization, additional selling
expenses  related to an  agreement  between  the Company  and AM  Cosmetics  and
additional  interest expense on acquisition debt, among others.  These unaudited
pro forma results are not necessarily indicative of what the actual consolidated
results  of  operations  might  have been if the Cutex  acquisition  had been in
effect as of the  beginning of each period  presented,  or of future  results of
operations of the consolidated  Company.  The pro forma nine-month  period ended
September 30, 1996 reflects the change from  last-in,  first-out  (LIFO) cost or
market to the lower of first-in, first-out (FIFO) cost or market.

         During April 1997, the Company  acquired the complete Let's Jam product
line from New Images  Laboratories,  Inc. in a cash  transaction  valued at $5.6
million.  This acquisition adds one of the leading hair care maintenance  brands
in the ethnic  retail market to the  Company's  portfolio of brands.  Funds were
provided by additional long-term debt and the transaction was completed on April
8,  1997.  This  acquisition  is  accounted  for  under the  purchase  method of
accounting.

         In the first half of 1997, Carson Holdings Ltd. ("Carson South Africa")
consummated,  through Carson Products,  S.A., three  acquisitions in the African
personal care industry  including the African Nu-Me Cosmetics,  Restore Plus and
Seasilk  brand names and  certain  related  assets.  The total  purchase  price,
including  fees, for these three  acquisitions  was approximately  $1.5 million,
comprised  of $0.7  million in cash and 500,000  shares of Carson  South  Africa
stock.  These  acquisitions  are  accounted  for  under the  purchase  method of
accounting.


                                                         7

<PAGE>



     Carson  South Africa  announced on November 13, 1997 that it had  completed
the acquisition of A&J Cosmetics,  a toiletries  company with sales of less than
$10.0 million in 1996.  A&J Cosmetics  manufactures  and owns the Sadie brand of
toiletry products, which has been selling in the ethnic market for over 20 years
and competes primarily in the roll-on deodorant market. Carson South Africa will
fund the  acquisition  with the  issuance  of shares of its  common  stock.  The
purchase  consideration  payable  for the  acquisition  is  approximately  $12.0
million, adjusted according to the after tax profit of the business for the year
ended  December 31, 1998.  Approximately  $5.9 million of the purchase  price is
payable on January 31, 1998,  approximately $4.4 million is payable on or before
January 3, 1999 and the remainder (subject to adjustment) is payable by no later
than March 31, 1999.

4.  New Accounting Pronouncement

         The Financial  Accounting Standards Board issued Statement of Financial
Accounting  Standards  ("SFAS") No. 128,  "Earnings Per Share" in February 1997.
SFAS No. 128  replaces  the  presentation  of primary  earnings per share with a
presentation of basic earnings per share and requires dual presentation of basic
and  diluted  earnings  per share on the face of the  income  statement  for all
entities  with complex  capital  structures.  SFAS No. 128 is effective for both
interim and annual periods ending after December 15, 1997. The Company  recently
issued stock  options to certain  officers,  employees  and  directors at prices
equal  to the  market  value  on the  dates  granted.  Management  is  currently
determining  the  effect,  if any,  SFAS No.  128 will have on the  consolidated
financial statements of the Company.

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial  Accounting  Standards No. 130,  "Reporting  Comprehensive  Income"
("SFAS No.  130") and  Statement  of  Financial  Accounting  Standards  No. 131,
"Disclosures about Segments of an Enterprise and Related Information" ("SFAS No.
131").  The  Company  will  adopt  SFAS No.  130 and 131 in 1998.  SFAS No.  130
establishes standards for reporting and displaying  comprehensive income and its
components   (revenues,   expenses,   gains  and   losses)  in  a  full  set  of
general-purpose financial statements. Management expects to report comprehensive
income for the effects of foreign  currency  translation  adjustments  which are
currently reported as a change in shareholders' equity. SFAS No. 131 establishes
standards for the way that public business  enterprises report information about
operating  segments  in annual  financial  statements  and  requires  that those
enterprises  report selected  information  about  operating  segments in interim
financial  reports issued to shareholders.  Management is currently  determining
the  effect,  if  any,  SFAS  No.  131  will  have  on the  annual  and  interim
consolidated financial statements of the Company.

5.  Long-Term Debt

         On April 30,  1997,  the Company  entered  into an Amended and Restated
Credit Agreement (the" Existing Credit Facility") with Banque Indosuez as agent,
and the lenders  named  therein.  The  Existing  Credit  Facility  replaced  the
Company's $40 million  senior credit  facility with a $100 million senior credit
facility  consisting of $25 million in Term A loans  maturing in April 2002, $50
million in Term B loans maturing in April 2004 and $25 million in revolving loan
commitments maturing in April 2002. The proceeds of the new term loans were used
in part to finance the Cutex  acquisition.  In connection with this refinancing,
the  Company  incurred  debt  issuance  costs  of  approximately  $2.6  million,
including $520,000 paid to Morningside Capital Group, L.L.C.

     On November 6, 1997,  the Company  completed a private  offering under Rule
144A and Regulation S of the Securities Act of 1933, as amended, of $100 million
aggregate  principal amount of ten year, fixed rate 10 3/8% senior  subordinated
notes.  The Company  used the net  proceeds  from the  offering,  after  initial
purchasers'  discounts and other offering expenses, to repay in full outstanding
indebtedness  and  accrued  interest  under the  Existing  Credit  Facility  and
transaction fees and expenses  related to a new credit facility.  The balance of
the  proceeds  of the  offering  will be used for  working  capital  and general
corporate   purposes.   The  Company   entered   into  a  new  credit   facility
simultaneously  with  the  closing  of the  proposed  offering.  The new  credit
facility  provides  for loans of up to $75  million,  $25  million of which is a
revolver for working  capital  purposes and $50 million of which can be drawn as
term loans to fund acquistions.

       
6.  Change in Accounting Method

     During  the second  quarter  of 1997,  the  Company  changed  its method of
valuing  inventories  in the United States from the lower of last-in,  first-out
(LIFO) cost or market to the lower of first-in,  first-out (FIFO) cost or market
in order to provide  conformity among  subsidiaries due to recent  acquisitions.
The effect of this change has been  reflected in all periods  presented in these
financial  statements.  As a result of this change in accounting method, cost of
goods sold  increased and net income  decreased for the three months ended March
31, 1996 by $177,000 and $102,000,  respectively. In addition, inventories as of
December 31, 1996 decreased by $177,000, retained earnings decreased by $102,000
and other assets decreased by $75,000. The effect on all other periods presented
was not material.

                                                         8

<PAGE>



7.  Year 2000 Computer Problem

         Many computer  applications were created with a two-digit field for the
year in the date field,  and as a result,  such  applications may fail or create
erroneous  results by the year 2000 unless  corrective  measures are taken.  The
Company has  evaluated the extent of any problems and  corrective  measures have
been  taken to  ensure  that the  upcoming  change  of  century  will not have a
significant impact on future results of operations.

                                                         9

<PAGE>



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

OVERVIEW

Forward Looking Statements

     This report on Form 10-Q as well as other  public  documents of the Company
contain  forward-looking  statements  which  involve  risks  and  uncertainties,
including  (i) the  Company's  plans  to  introduce  new  products  and  product
enhancements, (ii) the Company's plans to expand its international operations in
Africa, Brazil, and the Caribbean,  (iii) the Company's entrance into the ethnic
cosmetics  product  category,  (iv)  the  Company's  plans  to  enter  the  U.S.
professional salon market for ethnic hair care products, (v) the Company's plans
to make selective acquisitions,  and (vi) the Company's marketing,  distribution
and  manufacturing  expansion  plans.  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")). 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 and
the Company's prospectus dated October 14, 1996), such risks,  uncertainties and
factors  include,  but are not  limited to,  foreign  business  risks,  industry
cyclicality,  fluctuations  in customer  demand and order pattern,  the seasonal
nature of the  business,  changes in  pricing,  the  identification  of suitable
acquisition   candidates,   changes  in  the  implementation  of  the  Company's
acquisition  plans,  and the  availability  of financing   and general  economic
conditions.  Additional  risk  factors  include,  but are not  limited  to,  the
following:  (a) the  Company's  success in  implementing  its  growth  strategy,
including its success in obtaining financing where required, (b) difficulties or
delays in developing and introducing new products or the failure of consumers to
accept new product  offerings,  (c) changes in consumer  preferences,  including
reduced consumer demand for the Company's current  products,  (d) the nature and
extent of future competition in the Company's principal marketing areas, and (e)
political,  economic and demographic  developments in the United States, Africa,
Brazil, the Caribbean,  Europe and other countries where the Company now does or
in the future may do business.

General
         The Company is a leading manufacturer and marketer in the United States
of  selected  personal  care  products  for both the ethnic  market and the mass
market.  The  Company  currently  sells  over 70  different  products  specially
formulated  to address the unique  physiological  characteristics  of persons of
African  descent in the United States and more than 60 other countries under six
principal brand names. The majority of the Company's net sales have historically
been derived from four  categories  of the ethnic health and beauty aids market:
hair  relaxers  and  texturizers  (which  constituted  approximately  50% of the
Company's net sales in 1996 and 1997), hair color, men's depilatory products and
hair care maintenance  products.  The Company is also a leading marketer of nail
care products to the United States mass market under the Cutex brand name.

         In the nine months ended September 30, 1997, approximately 28.2% 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 such
period:


Net sales to:                    1997       %         1996         %
                          ----------- ------- ------------  --------
United States                 $55,895   71.8%      $42,128     74.6%
Africa                         13,360    17.2        6,858      12.1
Other                           8,536    11.0        7,502      13.3
                          ----------- ------- ------------  --------
Total                         $77,791  100.0%      $56,488    100.0%
                          =========== ======= ============  ========



     In July 1996,  the Company's  South African  subsidiary,  Carson  Holdings,
Limited.  ("Carson  South Africa") sold 25.0% of its shares in an initial public
offering on the Johannesburg Stock Exchange. As a result of the issuance

                                                        10

<PAGE>



of these  shares,  the Company has  reflected in its  consolidated  statement of
operations for periods  subsequent to the share issuance a minority  interest in
subsidiary earnings. The amount of the charge reflected in this line item equals
Carson South  Africa's net income for the  applicable  period  multiplied by the
percentage of the Carson South Africa shares which are not owned by the Company.
In conjunction  with the South African  initial public  offering,  the Company's
U.S.  subsidiary,  Carson  Products  Company  entered  into an  amendment to its
license  agreement with Carson South Africa,  which provides that  commencing on
April 1, 1998,  Carson South Africa will pay to Carson Products a royalty in the
amount  of 3.0% of the net sales of all  licensed  products.  The  amount of the
royalty  increases  to 3.5% on April 1, 1999 and 4.0% on April 1, 2000 until the
termination of the agreement. The initial term of the agreement expires on April
1,  1999;  however,  the  agreement  continues  indefinitely   thereafter  until
terminated by either party upon 12 months written notice.

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

          In June  1996,  the  Company  made an  investment  of $3.0  million in
Morningside AM Acquisition Corp. ("AM Acquisition"), the parent of AM Cosmetics,
Inc.  ("AM  Cosmetics")  a  leading  low cost  manufacturer  of  cosmetics.  The
investment  was made  through the  purchase of $3.0  million of 12%  cumulative,
payment-in-kind  preferred  stock.  The  Company's  consolidated  statements  of
operations for periods  subsequent to June 1996 include the dividend income from
this  investment,  although  dividends  are  anticipated  to be paid through the
issuance of additional  preferred  stock.  Therefore,  it is anticipated that no
cash will be generated  from this  investment in the near future.  In connection
with the  investment,  the Company  entered into a management  agreement and has
entered into certain related sales agreements and a manufacturing agreement with
AM Cosmetics.  Pursuant to the management  agreement,  AM Acquisition  agreed on
behalf of itself and AM Cosmetics,  that for a period of five years beginning on
July 1, 1996,  (I) AM Cosmetics  will not "contract  manufacture"  for any other
ethnic  cosmetics line, (ii) AM Cosmetics will agree to produce a cosmetics line
for  Carson  Products,  as  designed  and  directed  by Carson  Products,  at AM
Cosmetics' cost plus a maximum 25% markup,  and (iii) AM Cosmetics will agree to
provide the necessary  research and development for  formulations for the ethnic
cosmetic product line(s) as determined by Carson Products, at no additional cost
to Carson Products.

Results of Operations

Quarter  Ended September 30, 1997 Compared to Quarter Ended September 30, 1996

Net Sales.  Consolidated  net sales for the quarter ended  September 30, 1997 of
$29.6 million  increased  48.9% over the same quarter in 1996.  This increase is
primarily a result of  incremental  net sales related to the Cutex and Let's Jam
acquisitions of $7.3 million and $663,000, respectively. Dark & Lovely Cosmetics
generated  net sales of $821,000 in the third  quarter.  Sales of the  Company's
domestic core business, ethnic hair care products,  amounted to $12.2 million, a
decrease of 10.4% in the quarter  ended  September 30, 1997 compared to the same
quarter  in  1996,  reflecting  industry  softness  due in part  to  drug  chain
consolidation. International sales including South Africa increased by 36.9% for
the  quarter  ended  September  30,  1997.  Carson  South  Africa  continued  to
demonstrate  strong  results  with an  increase  in net  sales of 109.5% to $5.6
million in the quarter ended September 30, 1997 from $2.7 million in the quarter
ended September 30, 1996.

Gross Profit.       Gross profit increased to $16.1 million in the quarter ended
September 30, 1997 from $11.2  million in the quarter ended  September 30, 1996.
Gross margin  decreased to 54.2% from 56.1% for the quarter ended  September 30,
1997 compared to the same quarter in 1996. Gross margin continues to be affected
by inefficiencies in the logistics and manufacturing  processes,  due in part to
complexities  associated with the rapid growth in number of stock keeping units,
multiple inventory locations and difficulties in coordination with new outsource
manufacturers.  During  the  third  quarter  the  Company  hired a  Senior  Vice
President,  with extensive  experience in consumer  products  manufacturing  and
logistics,  who has assumed  responsibility  for all  operations at the Savannah
plant. Additionally, the Company has hired in October an experienced director of
materials  management  who will have full  responsibility  for  procurement  and
warehousing of  inventories.  Management  believes it is taking the  appropriate
steps to address the operational  inefficiencies and to improve related customer
service performance.


                                                        11

<PAGE>



Marketing and Selling Expenses. Marketing and selling expenses increased to $7.3
million in the quarter ended September 30, 1997 from $5.1 million in the quarter
ended  September 30, 1996,  an increase of 43.1%.  As a percentage of net sales,
these expenses  decreased to 24.7% from 25.7% during this period.  This decrease
as a  percentage  of net  sales is  primarily  a result of Cutex  marketing  and
selling expenses incurred at a relatively low 11.3% of net sales.

General and  Administrative  Expenses.       Excluding a nonrecurring  incentive
compensation  charge of $6.3  million  recorded  in the third  quarter  of 1996,
general and  administrative  expenses  increased  to $4.5 million in the quarter
ended  September 30, 1997 from $2.8 million in the quarter  ended  September 30,
1996,  an  increase  of  64.8%.  As a  percentage  of  net  sales,  general  and
administrative  expenses increased to 15.3% from 13.9% during this period.  This
increase is due in part to increased amortization related to recent acquisitions
combined with increased  professional  fees and personnel costs  associated with
the enhancement of infrastructure needed to support the Company's growth.

Operating Income.  As a result of the above changes,  operating income increased
to $4.2 million in the quarter ended  September 30, 1997 from an operating  loss
of $3.0 million in the quarter ended September 30, 1996.

Interest  Expense.  Interest  expense was relatively flat at $1.8 million in the
quarter  ended  September 30, 1997 compared to $1.9 million in the quarter ended
September 30, 1996.

Other Income.       Other income  decreased in the quarter  ended  September 30,
1997 compared to the same period in 1996  primarily  because of higher  minority
interest recorded as a result of higher net earnings for Carson South Africa.

Provision  for Income Taxes.  The  provision for income taxes  increased to $1.1
million from $593,000  during this period.  The effective tax rate was 42.7% for
the quarter ended  September 30, 1997.  This rate is not  comparable to the 1996
rate due to nonrecurring  incentive  compensation  charges recorded in the third
quarter of 1996 which were not fully deductible for tax purposes.

Nine Months Ended September 30, 1997 Compared to Nine Months Ended 
          September 30, 1996

Net Sales.  Consolidated  net sales increased 37.7% to $77.8 million in the nine
months ended  September 30, 1997 from $56.5 million in the comparable  period in
1996.  This increase is primarily a result of  incremental  net sales related to
the  Cutex  and  Let's  Jam  acquisitions  of $12.1  million  and $1.2  million,
respectively.  Dark &  Lovely  Cosmetics  generated  year to date  net  sales of
$854,000.  Sales of the  Company's  domestic  core  business,  ethnic  hair care
products,  amounted to $41.7 million,  a decrease of approximately  0.9% for the
nine  months  ended  September  30,  1997  compared  to the same period in 1996,
reflecting   industry  softness  due  in  part  to  drug  chain   consolidation.
International  sales  including  South  Africa  increased  by 52.5% for the nine
months ended  September 30, 1997.  Carson South Africa  continued to demonstrate
strong  results with an increase in net sales of 104.2% to $12.9  million in the
nine months ended September 30, 1997 from $6.3 million in the comparable  period
of 1996.

Gross  Profit.       Gross profit  increased to $42.4 million in the nine months
September  30, 1997 from $31.6  million in the nine months ended  September  30,
1996.  Gross  profit  margin  decreased  to 54.4% from 56.0% for the nine months
ended  September  30, 1997  compared to the same  period in 1996.  Gross  margin
continues to be affected by  inefficiencies  in the logistics and  manufacturing
processes,  due in part to  complexities  associated  with the  rapid  growth in
number of stock keeping units,  multiple inventory locations and difficulties in
coordination  with new  outsource  manufacturers.  During the third  quarter the
Company hired a Senior Vice  President,  with  extensive  experience in consumer
products  manufacturing and logistics,  who has assumed  responsibility  for all
operations at the Savannah plant. Additionally, in October, the Company hired an
experienced  director of materials  management who will have full responsibility
for procurement and warehousing of inventories. Management believes it is taking
the appropriate steps to address the operational  inefficiencies  and to improve
related customer service performance.

Marketing  and Selling  Expenses.  Marketing and selling  expenses  increased to
$19.6 million in the nine months ended  September 30, 1997 from $13.3 million in
the nine months ended  September 30, 1996, an increase of 47.6%. As a percentage
of net sales,  these expenses  increased to 25.2% from 23.5% during this period.
This increased  spending is a result of increased  advertising  and  promotional
spending as well as higher selling expenses  associated with Cutex.  Advertising
spending  in 1997 is higher in part  because  the  Company  changed  advertising
agencies early in 1996, and had ceased most advertising  during first and second
quarters while awaiting new creative material.

General and Administrative Expenses.  Excluding a nonrecurring incentive 
compensation charge of $7.1 million recorded in the nine months ended 
September 30, 1997, general and administrative expenses increased to $11.7 
million

                                                        12

<PAGE>



in 1997 from $8.5 million in 1996, an increase of 37.7%. This increase is due in
part to increased  amortization  related to recent  acquisitions  combined  with
increased  professional fees and personnel costs associated with the enhancement
of infrastructure needed to support the Company's growth. As a percentage of net
sales,  general  and  administrative  expenses  were level at 15.0%  during this
period.

Operating Income.  As a result of the above changes,  operating income increased
to $11.1  million in the nine months ended  September 30, 1997 from $2.7 million
in the nine months ended September 30, 1996.

Interest Expense.  Interest expense decreased to $3.9 million in the nine months
ended  September  30, 1997 from $5.5 million in the nine months ended  September
30, 1996. The decreased  interest expense is a result of the use of the proceeds
from the Company's  initial public  offering to retire  certain debt,  offset in
part by  interest  on the  additional  borrowings  used  to  finance  the  Cutex
acquisition.

Other Income.      Other income increased in the nine months ended September 30,
1997 compared to the same period in 1996 primarily as a result of the management
contract  entered  into in June 1996 with AM  Cosmetics.  Under the terms of the
investment  and the  management  agreement,  the  Company is  entitled  to a 12%
paid-in-kind  dividend on its $3.0  million  preferred  stock  investment  in AM
Cosmetics.  In addition,  as a result of the  management  contract,  the Company
receives a minimum annual management fee of $500,000.  Other income includes the
effects of these transactions since June 1996.

Provision  for Income Taxes.  The  provision for income taxes  increased to $3.3
million from $1.8 million  during this period.  The effective tax rate was 42.7%
for the nine months ended September 30, 1997. This rate is not comparable to the
1996 rate due to nonrecurring  incentive  compensation  charges  recorded in the
second  and third  quarters  of 1996  which  were not fully  deductible  for tax
purposes.

Liquidity and Capital Resources

     The Company  completed the offering  (the "Initial  Offering") of 4,818,500
shares of Class A common  stock on the New York Stock  Exchange  on October  18,
1996 at a price of $14 per share.  Of these  shares  3,113,000  were sold by the
Company with the balance sold by selling  stockholders,  none of which  included
any members of management or the principal  investors.  The Company used the net
proceeds of the Initial Offering to repay certain indebtedness.

     In  conjunction  with the  Initial  Offering,  the Company  refinanced  the
remaining portion of its Senior Bank Credit Facility with borrowings under a New
Senior  Bank  Facility  pursuant to a credit  agreement  dated as of October 18,
1996,  which included (i) a $15.0 million term loan A, (ii) a $10.0 million term
loan B and (iii) a $15.0 million revolving credit facility,  which provides more
availability than the current  facility.  On April 30, 1997, the Company entered
into an Amended and Restated Credit Agreement with Banque Indosuez as agent, and
the lenders named therein.  The Existing Credit Facility  replaced the Company's
$40 million senior credit  facility with a $100 million  senior credit  facility
consisting  of $25 million in Term A loans,  $50 million in Term B loans and $25
million in revolving loan  commitments.  The proceeds of the new term loans were
used to finance  the Cutex  acquisition.  The term loan A and  revolving  credit
facility  bore interest at the lower of the  applicable  prime rate plus 0.5% or
LIBOR rate plus 2.0% and had a final  maturity date of April 2002. The term loan
B bore  interest  at the lower of the  applicable  prime rate plus 1.0% or LIBOR
rate plus 2.5% and had a final  maturity date of April 2004. In connection  with
this refinancing, the Company incurred debt issuance costs of approximately $2.6
million, including $520,000 paid to Morningside Capital Group, L.L.C.

     On November 6, 1997,  the Company  completed a private  offering under Rule
144A and Regulation S of the Securities Act of 1933, as amended, of $100 million
aggregate  principal amount of ten year, fixed rate 10 3/8% senior  subordinated
notes (the "Note  Offering")  The Company  used the net  proceeds  from the Note
Offering,  after initial purchasers'  discounts and other offering expenses,  to
repay in full  outstanding  indebtedness and accrued interest under the Existing
Credit  Facility  and  transaction  fees and  expenses  related  to a new credit
facility.  The  balance of the  proceeds of the Note  Offering  will be used for
working capital and general corporate  purposes.  The Company entered into a new
credit facility  simultaneously  with the closing of the proposed offering.  The
new credit  facility  provides  for loans of up to $75  million,  $25 million of
which is a revolver for working capital purposes and $50 million of which can be
drawn as term loans to fund acquistions.


                                                        13

<PAGE>


  
     In the  nine  months  ended  September  30,  1997,  net cash  flow  used in
operations  was $7.0 million  largely as a result of a $5.9 million  increase in
inventory and a $10.0 million increase in accounts  receivable offset in part by
a $6.0  million  increase  in current  liabilities.  The  increase  in  accounts
receivable is primarily a result of collections  through  September 1997 of $5.7
million on total Cutex sales of $12.1  million.  The Company  believes  that the
slow  collections  on  Cutex  sales is a  temporary  phenomenon  related  to the
transition  of order entry,  invoicing  and cash  collection by third parties on
behalf of the Company.  The majority of the increase in inventory is in finished
goods  and is in part  attributable  to  increases  in  domestic  core  products
finished goods inventory necessary to improve customer service performance.

     Net cash used in investing  activities for the nine months ended  September
30, 1997  totaled  $54.5  million  which  consisted  primarily  of cash paid for
acquisitions  of business  assets of $49.4 million and capital  expenditures  of
$5.1 million.

     Net cash  provided  from  financing  activities  for the nine months  ended
September  30, 1997 totaled  $62.3  million  primarily as a result of additional
borrowings  related to acquisitions.  Additionally,  the Company's South African
subsidiary  completed an equity rights  offering which generated $1.5 million of
cash, net of $4.2 million which was invested indirectly by the Company.

     In the first half of 1997, Carson South Africa consummated,  through Carson
Products,  S.A.,  three  acquisitions  in the  African  personal  care  industry
including the African Nu-Me Cosmetics,  Restore Plus and Seasilk brand names and
certain  related  assets.  The total purchase  price,  including fees, for these
acquisitions was approximately  $1.5 million,  comprised of $0.7 million in cash
and 500,000 shares of Carson South Africa common stock.  These  acquisitions are
accounted for under the purchase method of accounting.

     During March 1997,  the Company  entered into an Asset  Purchase  Agreement
with Conopco,  Inc.  d/b/a  Chesebrough-  Pond's USA Co. in order to acquire the
rights to sell,  distribute,  package,  manufacture and market Cutex nail polish
remover,  nail enamel,  nail care treatment products and nail care implements in
the United States and Puerto Rico.  The purchase price was  approximately  $41.4
million,  with funds provided by additional  long-term debt, and the transaction
was completed on April 30, 1997.

     During March 1997, the Company entered into an Asset  Repurchase  Agreement
with Jean Phillipe  Fragrances,  Inc. In connection  with the termination of the
license agreement between Conopco, Inc. and Jean Phillipe by Carson as successor
in interest to  Conopco,  Inc.,  the  Company  acquired  certain  assets of Jean
Phillipe  used to  package,  distribute  and sell  nail  enamel  and  nail  care
treatment products,  nail care implements and lipstick under the Cutex trademark
in the  United  States  and  Puerto  Rico on April 30,  1997.  Immediately  upon
consummation  of the Jean Phillipe  Repurchase  Agreement on April 30, 1997, the
license agreement with Jean Phillipe was terminated.

     The Company  believes that cash flow from  operating  activities,  existing
cash balances and  available  borrowings  under its new credit  facility will be
sufficient to fund working capital  requirements,  capital expenditures and debt
service requirements in the foreseeable future.






                                                        14

<PAGE>




                           CARSON, INC.

                    PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

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

Item 2.  Changes in Securities

     None

Item 3.  Defaults upon Senior Securities

     None

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

     None.

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 --

     On October 9, 1997,  the  Company  filed and  amended  Form  8-K/A-3  which
incorporated various revisions to the 8-K/A-2 filed on July 16, 1997.



                                                        15

<PAGE>



                                                    SIGNATURES

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

CARSON, INC.



/s/ Roy Keith                                            
---------------------------------------                  Date: November 14, 1997
Roy Keith
Chairman and Chief Executive Officer



/s/ Robert W. Pierce                            
--------------------------------------                   Date: November 14, 1997
Robert W. Pierce
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

                                        16