<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION

                              WASHINGTON, DC 20549

                                    FORM 10-Q

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

                  For the quarterly period ended June 30, 1998

                                       OR

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

        For the transition period from _____________ to ________________

                         Commission file number 0-22726

                              SAFESKIN CORPORATION
             (Exact name of registrant as specified in its charter)

                    Florida                               59-2617525
       ---------------------------------            -----------------------
         (State or other jurisdiction                (IRS Employer ID No.)
       of incorporation or organization)

               12671 High Bluff Drive, San Diego, California 92130
              -----------------------------------------------------
                    (Address of principal executive offices)

                                 (619) 794-8111
             ------------------------------------------------------
              (Registrant's telephone number, including area code)

        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  [ ]

        Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.

                Class                              Outstanding at July 31, 1998
                -----                              ----------------------------

Common Stock, par value $0.01 per share                       54,424,739


<PAGE>   2

                              SAFESKIN CORPORATION

                                      INDEX


<TABLE>
<CAPTION>
                                                                             Page Number
                                                                             -----------
<S>            <C>                                                               <C>
PART I:        Financial Information................................              1

ITEM 1.        Financial Statements.................................              1

               Condensed Consolidated Balance Sheets at June 30, 1998
               and December 31, 1997................................              2

               Condensed Consolidated Statements of Operations for
               the three months ended June 30, 1998 and 1997........              3

               Condensed Consolidated Statements of Operations for
               the six months ended June 30, 1998 and  1997.........              4
              
               Condensed Consolidated Statements of Cash Flows for
               the six months ended June 30, 1998 and 1997..........              5

               Consolidated Statements of Comprehensive Income for                6
               the three months ended June 30, 1998 and 1997 .......

               Consolidated Statements of Comprehensive Income for                7
               the six months ended June 30, 1998 and 1997 .........

               Notes to Condensed Consolidated Financial Statements.              8

ITEM 2.        Management's Discussion and Analysis of Financial
               Condition and Results of Operations..................              10


PART II:       Other Information....................................              21

ITEM 6.        Exhibits and Reports on Form 8-K.....................              21

               SIGNATURES...........................................              22
</TABLE>



<PAGE>   3







                                PART I: FINANCIAL INFORMATION




ITEM 1.        Financial Statements


<TABLE>
<CAPTION>
               INDEX                                                                      PAGE
               -----                                                                      ----
               Condensed Consolidated Balance Sheets at June 30, 1998
               <S>                                                                          <C>
               and December 31, 1997.........................................................2

               Condensed Consolidated Statements of Operations for
               the three months ended June 30, 1998 and 1997.................................3

               Condensed Consolidated Statements of Operations for
               the six months ended June 30, 1998 and 1997...................................4

               Condensed Consolidated Statements of Cash Flows for the
               six months ended June 30, 1998 and 1997.......................................5

               Consolidated Statements of Comprehensive Income for the
               three months ended June 30, 1998 and 1997 ....................................6

               Consolidated Statements of Comprehensive Income for the
               six months ended June 30, 1998 and 1997 ......................................7

               Notes to Condensed Consolidated Financial Statements..........................8
</TABLE>








<PAGE>   4

                              SAFESKIN CORPORATION
                      CONDENSED CONSOLIDATED BALANCE SHEETS
                       JUNE 30, 1998 AND DECEMBER 31, 1997


<TABLE>
<CAPTION>

                                                               JUNE 30,
                                                                 1998           DECEMBER 31,
                                                             (UNAUDITED)            1997
                                                            -------------       -------------
<S>                                                         <C>                 <C>          
ASSETS

Current assets:
     Cash and cash equivalents .........................    $  11,962,457       $  23,916,959
     Accounts receivable, net ..........................       24,882,778          22,195,828
     Inventory .........................................       31,216,976          21,242,732
     Other current assets ..............................       11,444,252           5,692,369
                                                            -------------       -------------
          Total current assets .........................       79,506,463          73,047,888
Property, plant and equipment, net .....................       79,736,623          52,904,271
Intangibles and other assets ...........................       31,525,044          12,568,245
                                                            -------------       -------------
          Total assets .................................    $ 190,768,130       $ 138,520,404
                                                            =============       =============

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable ..................................    $   9,288,869       $   6,922,540
     Accrued liabilities ...............................       20,986,471          22,924,623
                                                            -------------       -------------
          Total current liabilities ....................       30,275,340          29,847,163
Long-term debt .........................................       16,000,000                  --
Deferred income taxes and other liabilities ............        3,594,313           2,094,928
                                                            -------------       -------------
          Total liabilities ............................       49,869,653          31,942,091

Commitments and contingencies

Shareholders' equity:
     Preferred stock; $.01 par value; 10,000,000
           shares authorized and no shares outstanding                 --                  --
     Common stock; $.01 par value; 80,000,000 shares
           authorized; 53,981,392 shares
           and 52,964,224 shares outstanding ...........          539,814             529,642
     Additional paid-in-capital ........................       47,268,889          47,517,453
     Accumulated other comprehensive loss ..............      (39,439,668)        (45,687,717)
     Retained earnings .................................      132,529,442         104,218,935
                                                            -------------       -------------
           Total shareholders' equity ..................      140,898,477         106,578,313
                                                            -------------       -------------
           Total liabilities and shareholders' equity ..    $ 190,768,130       $ 138,520,404
                                                            =============       =============
</TABLE>


              The accompanying notes are an integral part of these
                        condensed financial statements.





                                       -2-

<PAGE>   5


                              SAFESKIN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                               1998              1997
                                                           ------------      ------------
<S>                                                        <C>               <C>         
Net sales ...........................................      $ 58,642,596      $ 44,947,572
Cost of goods sold ..................................        27,890,151        25,108,097
                                                           ------------      ------------
        Gross profit ................................        30,752,445        19,839,475
                                                           ------------      ------------

Operating expenses:
    Selling .........................................         6,141,030         4,751,996
    Research and development ........................         1,679,546           961,038
    General and administrative ......................         6,130,258         3,743,624
                                                           ------------      ------------
        Total operating expenses ....................        13,950,834         9,456,658
                                                           ------------      ------------
        Income from operations ......................        16,801,611        10,382,817

Interest expense (income), net ......................           123,070          (140,119)

Other expense, net ..................................            16,160           206,765
                                                           ------------      ------------
Income before income tax provision ..................        16,662,381        10,316,171

Income tax provision ................................         1,666,237         1,113,040
                                                           ------------      ------------

Net income ..........................................      $ 14,996,144      $  9,203,131
                                                           ============      ============

Per share amounts:
Earnings per share of common stock and
    common stock equivalents outstanding:
      Basic .........................................      $       0.28      $       0.18
      Diluted .......................................              0.25              0.16

Weighted average number of shares of common stock and
    common stock equivalents outstanding:
      Basic .........................................        53,849,094        52,053,816
      Diluted .......................................        61,120,471        57,656,780
</TABLE>


              The accompanying notes are an integral part of these
                        condensed financial statements.





                                       -3-


<PAGE>   6

                              SAFESKIN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                1998                1997
                                                           -------------       -------------
<S>                                                        <C>                 <C>         
Net sales ...........................................      $ 111,938,431       $  86,115,950

Cost of goods sold ..................................         53,344,413          47,845,737
                                                           -------------       -------------
        Gross profit ................................         58,594,018          38,270,213
                                                           -------------       -------------

Operating expenses:
    Selling .........................................         11,772,122           9,192,490
    Research and development ........................          3,514,219           1,585,425
    General and administrative ......................         12,051,208           7,272,403
                                                           -------------       -------------
        Total operating expenses ....................         27,337,549          18,050,318
                                                           -------------       -------------
        Income from operations ......................         31,256,469          20,219,895

Interest income, net ................................           (159,666)           (333,175)

Other expense (income), net .........................            (39,982)            625,531
                                                           -------------       -------------

Income before income tax provision ..................         31,456,117          19,927,539

Income tax provision ................................          3,145,611           2,233,931
                                                           -------------       -------------

Net income ..........................................      $  28,310,506       $  17,693,608
                                                           =============       =============

Per share amounts:
Earnings per share of common stock and
    common stock equivalents outstanding:
      Basic .........................................      $        0.53       $        0.34
      Diluted .......................................               0.47                0.31

Weighted average number of shares of common stock and
    common stock equivalents outstanding:
      Basic .........................................         53,319,341          51,952,422
      Diluted .......................................         60,878,216          57,537,181
</TABLE>


              The accompanying notes are an integral part of these
                         condensed financial statements.





                                       -4-


<PAGE>   7

                              SAFESKIN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                               1998               1997
                                                           ------------       ------------
<S>                                                        <C>                <C>         
Cash flows from operating activities:
    Net income ........................................    $ 28,310,506       $ 17,693,608
    Adjustments to reconcile net income to cash
       provided by operating activities:
         Depreciation and amortization ................       5,360,857          3,367,232
         Exchange loss-unrealized .....................       6,332,129                 --
         Loss on disposal of equipment ................          14,049             37,926
    Changes in operating assets and liabilities:
             Accounts receivable ......................        (365,083)        (1,158,596)
             Inventory ................................      (8,745,872)         1,335,670
             Other assets .............................      (6,909,165)           769,295
             Accounts payable and accrued liabilities..       2,178,521          5,259,940
                                                           ------------       ------------
         Net cash provided by operating activities ....      26,175,942         27,305,075
                                                           ------------       ------------
Cash flows from investing activities:
    Payments for acquisitions .........................     (14,346,460)       (14,463,092)
    Purchase of property, plant and equipment .........     (26,664,206)       (17,120,521)
    Proceeds from sale of equipment ...................              --             24,662
                                                           ------------       ------------
         Net cash used by investing activities ........     (41,010,666)       (31,558,951)
                                                           ------------       ------------
Cash flows from financing activities:
    Increase in long-term debt ........................      16,000,000                 --
    Proceeds from issuance of common stock ............       5,420,911          2,169,328
    Repurchase of common stock ........................      (7,223,304)                --
                                                           ------------       ------------
         Net cash provided by financing activities ....      14,197,607          2,169,328
                                                           ------------       ------------
Effect of exchange rate changes on cash ...............     (11,317,385)           443,618
                                                           ------------       ------------
Net decrease in cash and cash equivalents .............     (11,954,502)        (1,640,930)
Cash and cash equivalents at beginning of period ......      23,916,959         16,265,468
                                                           ------------       ------------
Cash and cash equivalents at end of period ............    $ 11,962,457       $ 14,624,538
                                                           ============       ============
</TABLE>

              The accompanying notes are an integral part of these
                        condensed financial statements.





                                       -5-


<PAGE>   8

                              SAFESKIN CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                FOR THE THREE MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                        1998               1997
                                                    ------------       ------------
<S>                                                 <C>                <C>         
Net income .....................................    $ 14,996,144       $  9,203,131

Other comprehensive income (loss), net of tax:

     Foreign currency translation adjustments ..      (7,114,749)         1,665,438
                                                    ------------       ------------

Comprehensive income ...........................    $  7,881,395       $ 10,868,569
                                                    ============       ============
</TABLE>
























              The accompanying notes are an integral part of these
                        condensed financial statements.





                                       -6-


<PAGE>   9

                              SAFESKIN CORPORATION
                 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                 FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                       1998            1997
                                                   -----------      -----------
<S>                                                <C>              <C>         
Net income ....................................    $28,310,506      $17,693,608

Other comprehensive income, net of tax:

     Foreign currency translation adjustments..      6,248,049        1,660,518
                                                   -----------      -----------

Comprehensive income ..........................    $34,558,555      $19,354,126
                                                   ===========      ===========
</TABLE>
























              The accompanying notes are an integral part of these
                        condensed financial statements.






                                       -7-

<PAGE>   10

                              SAFESKIN CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1.  In the opinion of the Company, the accompanying unaudited condensed
    consolidated financial statements contain all adjustments, which consist
    only of normal and recurring adjustments, necessary for a fair presentation
    of results for the periods indicated. The results of any interim period are
    not necessarily indicative of results for the full year. Certain information
    and footnote disclosures normally included in financial statements prepared
    in accordance with generally accepted accounting principles have been
    condensed or omitted. These condensed consolidated financial statements
    should be read in conjunction with the consolidated financial statements and
    related notes thereto for the year ended December 31, 1997. The December 31,
    1997 condensed consolidated balance sheet was derived from audited financial
    statements, but does not include all disclosures required by generally
    accepted accounting principles.

2.  Inventories at June 30, 1998 consisted of $3,691,000, $1,604,000 and
    $25,922,000 for raw materials, work in process and finished goods,
    respectively. At December 31, 1997, inventories consisted of $2,701,000,
    $690,000 and $17,852,000 for raw materials, work in process and finished
    goods, respectively.

3.  On February 17, 1998, the Company authorized a two-for-one stock split of
    its common stock to be effective in the form of a stock dividend distributed
    on April 1, 1998 to shareholders of record at the close of business on
    February 27, 1998. The holders of the Company's common stock received a
    stock dividend at the rate of one share of common stock for each share of
    common stock owned. The stated par value of each share was not changed from
    $.01. A total of $268,588 and $264,821 was reclassified from the Company's
    additional paid-in capital account to the Company's common stock account for
    the periods ending June 30, 1998 and December 31, 1997, respectively. All
    share and per share amounts have been retroactively restated to reflect the
    stock split.

4.  The Company is exposed to exchange rate risk when it and certain of its
    subsidiaries enter into transactions denominated in currencies other than
    their functional currency. Certain firmly committed transactions are hedged
    with forward foreign exchange contracts. As exchange rates change, gains and
    losses on the exposed transactions may be partially offset by gains and
    losses related to the hedging contracts. Both the exposed transactions and
    the hedging contracts are translated at current spot rates, with gains and
    losses included in earnings. The Company's derivative activities, all of
    which consist of forward foreign exchange contracts as of June 30, 1998, are
    initiated primarily to hedge intercompany receivables and payables.

    The forward foreign exchange contracts generally require the Company to
    exchange U.S. dollars for foreign currencies based on pre-established
    exchange rates at the contracts' maturity dates. If the counterparties to
    the exchange contracts (primarily AA rated international institutions) do
    not fulfill their obligations to deliver the contacted currencies, the
    Company could be at risk for currency related fluctuations (generally
    limited to unrealized gains). Management believes that the high credit
    worthiness of the counterparties to the hedging





                                      -8-
<PAGE>   11

    contracts minimizes the risk of non-performance. Net gains and losses from
    foreign currency transactions for the three and six month periods ended June
    30, 1998 and 1997 were not significant.

5.  The Company has adopted Statement of Financial Accounting Standards No. 130
    "Reporting Comprehensive Income" in the first quarter of 1998. This standard
    expands or modifies disclosures, and accordingly, has no impact on the
    Company's financial position, results of operations or cash flows.





























                                      -9-

<PAGE>   12

ITEM 2.   Management's Discussion and Analysis of Financial Condition
          and Results of Operations.

The following discussion and analysis should be read in conjunction with the
condensed consolidated financial statements and related notes thereto.

GENERAL

The Company's net sales have grown substantially over the past several years.
The Company attributes the growth in net sales during this period principally to
increased market penetration due to the implementation of sales and marketing
programs, the introduction of new products and growth in markets for its
products. The Company introduced lightly powdered medical gloves, powder-free
medical gloves, HypoClean(R) powder-free gloves, powder-free latex surgical
gloves and high technology and scientific nitrile gloves, and Safeskin 2000(TM)
powder-free latex surgical gloves, in 1989, 1990, 1992, 1994, 1995, and 1996,
respectively. In 1997, the Company began selling a medical examination glove
made of a non-latex material called nitrile. In addition, as a result of its
acquisition of the synthetic glove business of Tactyl Technologies, Inc.
("Tactyl"), the Company began selling Tactylon(R) synthetic examination and
surgical gloves. In February 1998, as a result of its acquisition of Absolute
Quality Leadership, Inc. ("AQL"), the Company expanded its current product line
associated with the high-technology and scientific markets to include a broad
line of proprietary latex and synthetic glove products, specifically designed
for the microelectronics, health technologies and general laboratory and safety
market segments. Although the Company has continued to develop new products and
expects to do so in the future, no assurance can be given that the new products
will be accepted in the marketplace or will have similar growth rates.

The Company's net sales are derived from the sale of finished products, net of
contractual allowable rebates and fees provided to distributors and group
purchasing organizations for the resale of the Company's products in specific
volumes to specified end user customers. The Company estimates allowable rebates
on a monthly basis through the analysis of actual sales information from
customers, contractual arrangements and historical trends related to actual
rebates issued. Cost of goods sold includes all costs to manufacture the
finished product plus related costs associated with ocean freight, customs duty,
warehousing and product delivery expenses. Selling expenses include salaries for
sales and marketing staffs and other related expenses such as sales commissions,
and costs associated with travel, trade show participation and advertising.
Research and development expenses include salaries for research and development
staffs and related expenses for consulting, product testing and travel. General
and administrative expenses include salaries for administrative and information
technology staffs and related expenses for travel, insurance, facilities,
consulting and professional fees. The income tax provision is substantially less
than statutory rates as a result of the tax-free status of the Company's foreign
manufacturing operations. The Company's Malaysian manufacturing operations were
granted five years of tax-free status which expires on September 30, 1998. The
expiration of this tax-free status is not expected to have a material adverse
effect upon the





                                      -10-
<PAGE>   13

Company's operations in the foreseeable future. The Company's existing Thailand
manufacturing facilities have been granted tax-free status through 2003 and have
been granted a reduced tax rate through 2007. As the Company begins to build new
production facilities in Thailand, it has applied for and received similar
tax-free status for these operations.

The Company's medical glove distributor customers do not bill third-party
reimbursement sources separately for purchases of the Company's gloves.
Consequently, the timing and effect of third-party payments to hospitals and
clinics do not have a material effect on the Company's operations or liquidity.

THREE MONTHS ENDED JUNE 30, 1998 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 1997

Net sales for the three months ended June 30, 1998 were $58,642,000 which
represents a 30.5% increase over net sales of $44,948,000 for the same period in
1997. The predominant causes for the sales growth were an increase in unit
volumes sold and the shift in product mix to higher priced powder-free gloves in
the 1998 period as compared to the 1997 period.

Cost of goods sold increased 11.1% from $25,109,000 for the three month period
ended June 30, 1997 to $27,890,000 for the three months ended June 30, 1998. As
a percentage of net sales, cost of goods sold decreased from 55.9% for the three
months ended June 30, 1997 to 47.6% for the same period in 1998. This decrease
in cost of goods sold as a percentage of net sales was attributable to the
continued shift of production to Thailand's lower-cost manufacturing facility.
In addition, the Company's gross profit margin was favorably impacted in 1998
due to the positive effects of the devaluation of the currencies in Malaysia and
Thailand. As a result of the above factors, gross profits increased 55.0% from
$19,839,000 for the three months ended June 30, 1997 to $30,752,000 for the
three months ended June 30, 1998.

Selling expenses increased 29.2% from $4,752,000 for the three months ended June
30, 1997 to $6,141,000 for the three months ended June 30, 1998. As a percentage
of net sales, selling expenses decreased slightly from 10.6% for the three
months ended June 30, 1997 to 10.5% for the same period in 1998.

Research and development expenses increased 74.8% from $961,000 for the three
months ended June 30, 1997 to $1,679,000 for the three months ended June 30,
1998. As a percentage of net sales, these expenses increased from 2.1% for the
three months ended June 30, 1997 to 2.9% for the three months ended June 30,
1998. The increase in research and development expenses as a percentage of net
sales pertains primarily to increased compensation costs for research and
development personnel.

General and administrative expenses increased 63.8% from $3,744,000 for the
three months ended June 30, 1997 to $6,130,000 for the three months ended June
30, 1998. As a percentage of net sales, general and administrative expenses
increased from 8.3% for the 1997 period to 10.5% for the 1998 period. The
increase in general and administrative expenses as a percentage of net sales





                                      -11-
<PAGE>   14

was caused primarily by increased costs associated with the Company's efforts to
improve and streamline its information technology systems and services. An
additional factor can be attributed to costs and expenses associated with the
Company's acquisition of AQL.

Income from operations increased 61.8% from $10,382,000 for the three months
ended June 30, 1997 to $16,802,000 for the three months ended June 30, 1998.
Operating margins increased from 23.7% in the 1997 period to 28.7% in the 1998
period.

Interest expense (income), net, changed from $140,000 of interest income for the
three months ended June 30, 1997 to $123,000 of interest expense for the three
months ended June 30, 1998, primarily due to the fact that in 1998 the Company
had incurred interest expense on debt outstanding during the period. In 1997,
the Company had no debt outstanding and generated investment returns on its cash
balances.

Other expense, net, decreased from $206,000 for the three months ended June 30,
1997 to $16,000 for the three months ended June 30, 1998. The decrease in other
expense was due substantially to losses experienced from foreign currency
transactions in the Company's European subsidiaries in the three months ended
June 30, 1997. The Company did not experience significant net gains or losses
from foreign currency transactions for the three months ended June 30, 1998.

Income taxes increased from $1,113,000 for the three months ended June 30, 1997
to $1,666,000 for the three months ended June 30, 1998. The income tax
provisions recorded in both 1997 and 1998 remain less than statutory rates due
primarily to the foreign tax free status.

Net income increased 63.0% from $9,203,000 for the three months ended June 30,
1997 to $14,997,000 for the three months ended June 30, 1998 due to the
foregoing factors.





























                                      -12-

<PAGE>   15

SIX MONTHS ENDED JUNE 30, 1998 COMPARED TO SIX MONTHS ENDED JUNE 30, 1997

Net sales for the six months ended June 30, 1998 were $111,938,000 which
represents a 30.0% increase over net sales of $86,116,000 for the same period in
1997. The predominant causes for the sales growth were an increase in unit
volumes sold and the shift in product mix to higher priced powder-free gloves in
the 1998 period as compared to the 1997 period.

Cost of goods sold increased 11.5% from $47,846,000 for the six month period
ended June 30, 1997 to $53,344,000 for the six months ended June 30, 1998. As a
percentage of net sales, cost of goods sold decreased from 55.6% for the six
months ended June 30, 1997 to 47.7% for the same period in 1998. This decrease
in cost of goods sold as a percentage of net sales was attributable to the
continued shift of production to Thailand's lower-cost manufacturing facility.
In addition, the Company's gross profit margin was favorably impacted in 1998
due to the positive effects of the devaluation of the currencies in Malaysia and
Thailand. As a result of the above, gross profits increased 53.1% from
$38,270,000 for the six months ended June 30, 1997 to $58,594,000 for the six
months ended June 30, 1998.

Selling expenses increased 28.1% from $9,193,000 for the six months ended June
30, 1997 to $11,772,000 for the six months ended June 30, 1998. As a percentage
of net sales, selling expenses decreased slightly from 10.7% for the six months
ended June 30, 1997 to 10.5% for the same period in 1998.

Research and development expenses increased 121.7% from $1,586,000 for the six
months ended June 30, 1997 to $3,514,000 for the six months ended June 30, 1998.
As a percentage of net sales, these expenses increased from 1.8% for the six
months ended June 30, 1997 to 3.1% for the six months ended June 30, 1998. The
increase in research and development expenses as a percentage of net sales is
primarily due to an increase in the number of research and development
personnel, an increase in other compensation expenses and costs totaling
approximately $700,000 associated with research related to the Company's
outstanding product liability claims.

General and administrative expenses increased 65.7% from $7,272,000 for the six
months ended June 30, 1997 to $12,051,000 for the six months ended June 30,
1998. As a percentage of net sales, general and administrative expenses
increased from 8.4% for the 1997 period to 10.8% for the 1998 period. The
increase in general and administrative expenses as a percentage of net sales
pertains primarily to increased costs associated with the Company's efforts to
improve and streamline its information technology systems and services as well
as increased compensation costs.

Income from operations increased 54.6% from $20,219,000 for the six months ended
June 30, 1997 to $31,257,000 for the six months ended June 30, 1998. Operating
margins increased from 23.5% in the 1997 period to 27.9% in the 1998 period.

Interest expense (income), net, decreased from $333,000 of interest income for
the six months ended June 30, 1997 to $160,000 of interest income for the six
months ended June 30, 1998, and is





                                      -13-
<PAGE>   16

primarily due to the fact that in 1998 the Company had incurred interest expense
on debt outstanding during the period. In 1997, the Company had no debt
outstanding and generated investment returns on its cash balances.

Other expense, net, changed from $625,000 of other expense for the six months
ended June 30, 1997 to $40,000 of other income for the six months ended June 30,
1998. The change in other expense was due substantially to losses experienced
from foreign currency transactions in the Company's European subsidiaries in the
six months ended June 30, 1997. The Company did not experience significant net
gains and losses from foreign currency transactions for the six months ended
June 30, 1998.

Income taxes increased from $2,234,000 for the six months ended June 30, 1997 to
$3,146,000 for the six months ended June 30, 1998. The income tax provisions
recorded in both 1997 and 1998 remain less than statutory rates due primarily to
the foreign tax free status.

Net income increased 60.0% from $17,693,000 for the six months ended June 30,
1997 to $28,311,000 for the six months ended June 30, 1998 due to the foregoing
factors.

























                                      -14-

<PAGE>   17

LIQUIDITY AND CAPITAL RESOURCES

The Company's operations generated approximately $26,176,000 and $27,305,000 of
cash during the six months ended June 30, 1998 and 1997, respectively. Further,
during the six months ended June 30, 1998 and 1997, the Company acquired or
constructed capital assets of approximately $26,664,000 and $17,121,000,
respectively, primarily all of which were for the expansion of the Company's
foreign manufacturing operations.

During 1997, the Company completed construction and began operating the first of
its three new production lines located in its Thailand facility, referred to by
the Company as the "Grand Master(TM)." The two additional production lines began
operating in the first quarter of 1998. The Company's management believes that a
single "Grand Master(TM)" production line will have the highest capacity of any
glove production line in the world, equivalent in capacity to approximately
eight of the existing production lines in this facility. The construction of
these production lines has been funded with internally generated cash.

In addition, the Company is currently building a latex concentrate plant in
Thailand. The output of the plant will supply latex concentrate to the Company's
factories in Thailand and Malaysia for the manufacture of its disposable latex
gloves. The Company began initial production of latex concentrate in the third
quarter of 1997 and expects the final phase of construction of its latex
concentrate plant to be completed within two years. The Company anticipates that
this construction will be funded with internally generated cash. This plant will
allow the Company to integrate its manufacturing processes to gain better
control over the quality, cost and reliability of latex supplies.

In April 1997, the Company announced plans for the expansion of its Southeast
Asian manufacturing operations in order to meet the continued strong demand and
anticipated future demand for its latex and synthetic medical examination,
surgical and high-technology and scientific gloves. The Company's expansion
plans over the next year include the construction of an additional building and
related machinery at the Company's existing Thai facility. Additionally, the
Company also plans to construct a second manufacturing facility to be located in
southern Thailand that is expected to produce latex and synthetic surgical,
high-technology and scientific and examination gloves. Construction of this site
began in the second half of 1997 after approval by the Thailand Board of
Investment. Four production buildings are expected to be constructed on this
site. One of these buildings will house the expansion of the Company's
Tactylon(R) synthetic examination and surgical glove and the Company's nitrile
glove production and is scheduled to be completed during the second half of
1998. The first machine in this building is expected to increase by over 200
percent the production capacity of the Tactylon(R) product line in comparison to
the existing facility which is located in Vista, California. The second building
will be constructed to provide additional capacity for the production of the
Company's surgical and clean-room glove products. Production is scheduled to
begin in the fourth quarter of 1998. In the interim, these products will
continue to be manufactured at the Company's Malaysia and Vista, California
facilities. An additional two buildings will be





                                      -15-
<PAGE>   18

constructed to house the Company's increased capacity for latex examination,
scientific, synthetic and surgical gloves. Production is scheduled to begin in
1999. The new buildings, machines and supporting infrastructure are expected to
cost approximately $80 million in the aggregate. The significant investment by
the Company in its manufacturing operations is expected to increase the
Company's annualized production capacity from approximately 3.5 billion gloves
to approximately 5.5 billion gloves. Financing for the total capital
expenditures for the two-year period is projected to come from internally
generated funds, with any shortfalls to be financed through borrowings from the
credit facilities.

In February 1998, the Company completed the acquisition of AQL, a
California-based marketer of glove products for the high-technology and
scientific markets. The Company paid for this acquisition with internally
generated cash. The Company changed the name of AQL to Safeskin Scientific
Corporation.

The Company has an unsecured two-year credit facility for financing general
working capital needs, up to a maximum of $40,000,000 in borrowings. As of June
30, 1998, there was $16,000,000 outstanding under this credit facility.

The Company's foreign manufacturing subsidiaries have revolving lines of credit
for financing general working capital needs up to approximately $8,400,000. As
of June 30, 1998, there were no borrowings outstanding under these credit
facilities. These borrowings are collateralized by all assets of the
subsidiaries and are further supported by a guarantee of the Company.

In July 1997, the Thai baht and Malaysian ringgit were permitted to float
against the U.S. dollar and other currencies, and as a result, the baht and
ringgit have devalued from approximately 24.7 bahts/dollar and 2.52
ringgits/dollar, as of June 30, 1997 to approximately 48.15 bahts/dollar and
3.89 ringgits/dollar as of December 31, 1997, respectively. The significant
devaluation in both the Thailand and Malaysian currencies has resulted in an
increased amount of foreign currency transaction net gains, which are included
in other income, and an increased amount of foreign currency translation
adjustments, which are recorded as other comprehensive income. As of June 30,
1998, the Thailand baht and Malaysian ringgit were approximately 42.2
bahts/dollar and 4.13 ringgits/dollar. The Company has not experienced
significant foreign currency transaction net gains and losses in 1998.
Nevertheless, the Company has experienced an increased amount of foreign
currency translation adjustments in 1998. The devaluation of the baht and
ringgit may cause the Company's competitive environment to improve. It is not
possible at this time to determine what effect the devaluation will have upon
pricing or costs, but management believes the devaluation will not have a
material adverse effect and may have a continued positive impact upon the
Company's operating results for 1998 and beyond.






                                      -16-
<PAGE>   19

SUBSEQUENT EVENTS

The Company on July 30, 1998, through its subsidiary Safeskin (B.V.I.) Limited
("Safeskin BVI"), entered into and closed a credit agreement for a $100.0
million loan facility (the "BVI Facility") with Union Bank of California, N.A.,
as Agent. The BVI Facility is secured by a first priority lien on the Common
Stock of the Company purchased by Safeskin BVI, a first priority lien on all the
assets of Safeskin BVI and a first priority pledge of the capital stock and
beneficial interest in Safeskin Corporation (Thailand) Limited. Safeskin BVI may
elect for interest on the BVI Facility to accrue at a rate per annum equal to
either (i) the base rate plus 0.25% or (ii) LIBOR plus 1.75%. The BVI Facility
matures six months after closing, with all principal and interest due on such
date.

In addition, On July 30, 1998, the Company signed a credit agreement with Union
Bank of California, N.A., as Agent, for a $100.0 million, term loan facility and
a $40.0 million revolving line of credit facility, the closing of which is
subject to numerous conditions. 

LEGAL PROCEEDINGS

Since May 1995, 159 actively pending product liability lawsuits seeking monetary
damages have been filed in federal and state courts against the Company, and
other manufacturers of latex gloves. On February 26, 1997, the Judicial Panel on
Multi-District Litigation entered an order transferring all latex allergy
lawsuits brought by healthcare workers against the Company and other latex glove
manufacturers in the Federal courts to the Federal district court in
Philadelphia, consolidating those cases, and other pending and future Federal
court latex allergy lawsuits, for discovery management and other pre-trial
proceedings.

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

This report and the documents incorporated by reference herein contain
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934,
as amended. These forward-looking statements include, among others, statements
concerning the Company's outlook for 1998 and





                                      -17-
<PAGE>   20

beyond, the effect of currency fluctuations in Thailand and Malaysia on the
operating results of the Company, the Company's liquidity and working capital,
the Company's ability to complete construction of new facilities as scheduled,
the production capacity and the Company's ability to achieve additional
efficiencies in its manufacturing facilities and other statements of
expectations, beliefs, future plans and strategies, anticipated events or trends
and similar expressions concerning matters that are not historical facts. The
forward-looking statements in this report are subject to risks and uncertainties
that could cause the assumptions underlying such forward-looking statements and
the actual results to differ materially from those expressed in or implied by
the statements.

The most important factors that could prevent the Company from achieving its
goals--and cause the assumptions underlying forward-looking statements and the
actual results of the Company to differ materially from those expressed in or
implied by those forward-looking statements--include, but are not limited to,
the following:

        o   the competitive nature of the industry and the ability of the
            Company to continue to distinguish its products on the basis of
            quality, reliability and value; possible obsolescence of the
            Company's primary product due to the development by competitors of
            new products, manufacturing processes or technologies including
            latex alternatives; the ability of the Company to maintain strong
            distributor relationships; and the ability of the Company to
            maintain selling prices and anticipated volumes;

        o   adverse outcomes regarding product liability lawsuits or the ability
            to obtain sufficient product liability insurance coverage at
            reasonable rates;

        o   the ability of the Company to meet existing or future FDA
            regulations regarding the manufacture and sale of the Company's
            gloves;

        o   delays in the completion of the Company's construction of its new
            production facilities in Thailand and the failure of these
            production facilities to generate anticipated productivity and
            efficiencies;

        o   risks associated with investments and operations in foreign
            countries, particularly Thailand and Malaysia, including exchange
            rate fluctuations, local economic conditions, governmental policies
            regarding foreign ownership of manufacturing facilities, local
            regulatory requirements, tax holidays and political factors;

        o   the consistent availability, at budgeted prices, of raw rubber from
            independent growers and concentrate plant operators in Malaysia and
            Thailand;

        o   delays in the completion of the final phase of the Company's
            construction of its latex concentrate plant in Thailand or the
            failure of this plant to generate anticipated productivity and
            efficiencies;

        o   failure of the Company's new production lines, referred to by the
            Company as "Grand Masters(TM)," to generate anticipated productivity
            and efficiencies;

        o   economic conditions in the healthcare industry, including the
            potential impact of industry consolidation and cost constraints on
            the end-user;

        o   changes in significant government regulations affecting the
            healthcare industry;





                                      -18-
<PAGE>   21

        o   the ability of the Company to protect its proprietary products,
            know-how and manufacturing processes;

        o   changes in the Company's rates or basis of income taxation; and

        o   rapid levels of inflation which could have a significant effect on
            the Company's net sales and profitability.

These and other risks and uncertainties affecting the Company are discussed in
greater detail in this report and in other filings by the Company with the
Securities and Exchange Commission.



























                                      -19-

<PAGE>   22

RISKS ASSOCIATED WITH YEAR 2000

The Company recognizes the need to ensure its operations will not be adversely
impacted by the inability of the Company's systems to process data having dates
on or after January 1, 2000 (the "Year 2000" issues). Processing errors due to
software failures arising from calculations using the Year 2000 date are a
recognized risk. In February 1998, the Company engaged Perot Systems Corporation
for the management of its information technology systems. Both the Company and
Perot Systems Corporation are currently addressing the risk, with respect to the
availability and integrity of its financial systems and the reliability of its
operating systems, and are in the process of communicating with suppliers,
customers, financial institutions and others with whom it conducts business
transactions to assess whether they are Year 2000 compliant. The Company does
not believe that it will incur a material financial impact from the risk, or
from assessing the risk, arising from the Year 2000 issues. However, there can
be no guarantee that the Company's initial assessment of the financial impact of
this risk will be accurate; actual results could differ materially from those
anticipated. Specific factors that might cause such material differences
include, but are not limited to, the availability and cost of personnel trained
in this area, the ability to locate and correct all relevant computer codes, and
similar uncertainties.

























                                      -20-

<PAGE>   23
                           PART II: OTHER INFORMATION


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

     On May 6, 1998, at the Company's annual meeting, the shareholders
reelected each of the following six directors, with the following votes:

<TABLE>
<CAPTION>
          NAME                 VOTES FOR        VOTES WITHHELD
          ----                 ---------        --------------
<S>                           <C>               <C>
     Irving Jaffe             49,862,724            202,312
     Cam L. Garner            49,863,800            201,236
     Neil K. Braverman        49,863,600            201,436
     Richard Jaffe            49,863,800            201,236
     Howard L. Shecter        49,863,800            201,236
     Joseph Stemler           49,863,800            201,236
</TABLE>

In addition, the shareholders approved a proposal to grant 1,200,000 performance
stock options to the Company's Chief Executive Officer. The second proposal
received the following votes: for 26,367,678; against 14,031,130; abstain
329,444 and broker non-votes 9,336,784.

ITEM 6.        Exhibits and Reports on Form 8-K

(a)     Exhibits


<TABLE>
<CAPTION>
        EXHIBIT       DESCRIPTION
        -------       -----------
        <S>           <C>
        10.43         Amended and Restated Loan Agreement between Safeskin
                      Corporation and Union  Bank of California, N.A., dated
                      May 4, 1998

        11            Statement re: Computation of per share earnings
</TABLE>


(b)     Reports on Form 8-K

        None.

























                                      -21-

<PAGE>   24

                                   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.




                                      SAFESKIN CORPORATION



Date: August 14, 1998                 By:  /s/ David L. Morash
                                          ------------------------------------
                                           David L. Morash, Executive Vice-
                                           President, Chief Financial Officer



























                                      -22-