SECURITIES AND EXCHANGE COMMISSION

                       WASHINGTON, D.C.  20549
                              FORM 10-K

          ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF
               THE SECURITIES EXCHANGE ACT OF 1934

    For the fiscal year ended March 31, 1999 Commission File No. 0-6436

                        BLOCK DRUG COMPANY, INC.
          (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           New Jersey                                      22-1375645
(STATE OR OTHER JURISDICTION
OF INCORPORATION OR ORGANIZATION)                (Employer Identification No.)

257 Cornelison Avenue, Jersey City, New Jersey            07302-9988
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                  (ZIP CODE)


REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE      (201) 434-3000

Securities  registered  pursuant to Section 12(b) of the Act:

TITLE OF EACH CLASS                   NAME OF EACH EXCHANGE ON WHICH REGISTERED
      None                                             None

Securities  registered  pursuant to Section 12(g) of the Act:

Class A Common Stock - $.10 par value
         (TITLE OF CLASS)

Indicate by check mark whether  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, and (2) has been subject to such filing requirements
for the past 90 days.                                  Yes X    No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.                                             Yes X    No

As of June 8,  1999,  nonaffiliates  held no voting  shares  of the  Registrant;
therefore,  the aggregate market value of voting shares held by nonaffiliates is
zero. As of June 8, 1999, the aggregate  market value on non-voting  shares held
by nonaffiliates was $283,033,819. For purposes of this Form 10-K, nonaffiliates
are all holders of non-voting  stock other than directors,  officers and members
of the Block family.

As of June 8, 1999  there  were  14,467,258  shares of Class A Common  Stock and
8,418,808 shares of Class B Common Stock of Registrant outstanding.

Documents Incorporated by Reference: None

<PAGE>1
                                                      PART I
Item 1.  Business

GENERAL

Block Drug Company, Inc. (the "Company") is a worldwide manufacturer and
marketer of denture care products, oral health care products, consumer over-the-
counter medicines and professional dental products.

Approximately  60% of the Company's  business is derived from non-U.S.  markets.
The Company's key  international  markets are the U.K.,  Germany and Continental
Europe; Asia/ Pacific,  including Japan,  Australia,  South Korea, Thailand, New
Zealand  and  the  Philippines;  Latin  America (including  Argentina,  Brazil,
Colombia and Mexico) and Canada.

With the  exception of  Atridox(R)  (doxycycline  hyclate) 10% and  Atrisorb(R),
which are only sold in the U.S. and Canada,  the Company  markets  virtually the
same categories of products in  international  markets as it does  domestically.
International  operations are subject to certain risks.  These include  possible
nationalization,  expropriation,  importation  limitations and other restrictive
governmental actions. Fluctuations in foreign currency exchange rates can impact
consolidated  financial  results.  For additional  information on  international
operations,  refer to  "Management's  Discussion  and Analysis of Operations and
Financial  Condition" (Item 7), "Financial  Instruments" (Note 5), and "Segments
of an Enterprise" (Note 17), all found in this Form 10-K.

PRODUCT SEGMENT AND OTHER FINANCIAL INFORMATION

The "Product  Segment Data" for the fiscal years ending March 31, 1999, 1998 and
1997 are as follows:
                                                        (In Thousands)
                                                        --------------
                                               1999          1998        1997
                                               ----          ----        ----

Denture Care and Oral Health Care Products*  $595,116      $606,812     $621,103
Consumer Over The Counter Medicines           225,985       256,245      241,368
                                            ---------     ---------    ---------
Consolidated Net Sales                       $821,101      $863,057     $862,471
                                             ========      ========     ========

*Includes professional dental products

DENTURE CARE AND ORAL HEALTH CARE PRODUCTS

In the U.S., the Company's  denture care products  include the Polident(R)  line
denture cleansers;  the Poli-Grip(R) line of denture adhesives;  and Dentu-Creme
and Dentu-Gel denture cleansers.  Polident(R)  Whitening Mouthwash,  a specialty
mouthwash for denture wearers, was added to the line in the fourth quarter.

Polident  brand  is  available  in  five  varieties:  Polident(R)  Five  Minute;
Polident(R)  Overnight;  Smoker's  Polident(R);  Polident(R)  for Partials;  and
Polident(R)  Powder.  The Company  introduced  Polident(R)  with  PoliShield(TM)
during  fiscal 1999, a new formula  which  provides  dentures  with a protective
shield against stains and odors.

<PAGE>2

The  Poli-Grip(R)  line of denture  adhesives  includes  Poli-Grip(R)  Original;
Poli-Grip(R)  Ultra Fresh and  Poli-Grip(R)  Free, a formula free of  artificial
ingredients.

Corega(R) brand denture cleansers and adhesives are marketed by the Company, its
subsidiaries and branches in many international markets around the world.

One of the Company's leading brands is Sensodyne(R)  anti-cavity  toothpaste for
sensitive teeth. Sensodyne is a worldwide brand name except in Japan where the
product is sold under the  Shumitect(R)  brand name.  In most  markets in which
it is sold, Sensodyne is the  leading  desensitizing  toothpaste  brand. In the
U.S.,  the Company  markets  Sensodyne(R)  Extra  Whitening;  Sensodyne(R)
Tartar Control; Sensodyne(R) with Baking Soda;  Sensodyne(R) Fresh Mint;
Sensodyne(R) Cool Gel; and Sensodyne(R) Original Flavor.

Parodontax(R)  brand  toothpaste  for gum care is another  specialty  dentifrice
marketed by the Company. It is sold in approximately 30 countries outside of the
United States.

The Company markets two brands of mouthwash,  Targon(R)  Smokers'  Mouthwash and
Polident(R)  Whitening Mouthwash.  Targon brand is marketed to smokers to remove
tobacco tar from teeth.  Polident(R)  Whitening Mouthwash is marketed to denture
wearers to whiten dentures and freshen breath.

Targon is sold in two varieties; Original and Clean Taste. Polident(R) Whitening
Mouthwash is sold in Peppermint and Bright Mint(TM) flavors.

Serious dental medicines are marketed by the Company to dental  professionals in
the U.S.  These include  Atridox(R)  (doxycycline  hyclate) 10%, a treatment for
chronic adult  periodontitis;  PerioGlas(R)  brand  bioactive  glass used in the
treatment  of  periodontal  disease;  Atrisorb(R),  a barrier for guided  tissue
regeneration in oral surgery;  and  Aphthasol(R)  (amlexanox oral paste, 5%) the
first and only prescription  treatment for aphthous ulcers, also known as canker
sores. The products are detailed to dental  professionals  through the Company's
force of Dental Consultants.

CONSUMER OVER-THE-COUNTER MEDICINES

The Company markets consumer over-the-counter medicines in a variety of
categories in the U.S. and in most international markets.

The Company markets a broad selection of gas treatment and digestive products in
the U.S.  These  include the (1)  Phazyme(R)  line of gas relief  products,  (2)
Beano(R)  food enzyme  dietary  supplement,  and (3)  Nature's  Remedy(R)  brand
laxative.

In the baby care products  market,  the Company  markets  Balmex(R) brand diaper
rash  ointments.  Balmex(R) with Aloe and Vitamin E was added to the line during
the fourth  quarter.  Numz-It(R)  Teething Gel is another of the Company's  baby
care brands.

<PAGE>3

Three brands of powdered  analgesics are marketed by the Company in the Southern
U.S. These include the BC(R),  Goody's(R) and  Stanback(R)  lines.  The Stanback
line was  acquired  during the fiscal  year.  Goody's(R)  Body Pain  Formula was
introduced in the fourth quarter as a line extension of the parent brand.  Other
line extensions in this category include Goody's(R) PM and BC(R) Allergy/Sinus.

Sleep-aid  products  sold by the Company  include  Nytol(R)  brand and  Nytol(R)
Natural.  The latter brand is a homeopathic  sleep-aid  with a  well-established
brand name.

The Chap-et(R) line of lip care  products  was acquired  this fiscal  year.  It
includes a dozen varieties of lip balm products.

Tegrin(R)  Shampoo is a value priced  brand the Company  markets in the dandruff
shampoo category.

ACQUISITIONS AND DIVESTITURES

The Company made a significant  number of  acquisitions  during and  immediately
after the close of the current fiscal year.

During The Fiscal Year:

The Company divested three household product brands (2000 Flushes(R) toilet bowl
cleaners, X- 14(R) toilet bowl and hard surface cleaners and Carpet Fresh(R) rug
and room deodorizers) in fiscal 1999.

In the U.S., the Company  acquired the Stanback(R)  line of powdered  analgesics
and the Chap-et line of lip care products.

In Europe,  the Company  purchased  Strep(R)  depilatory  in Italy and  Pilca(R)
depilatory in Germany.  The Agevit(R)  line of herbal  nutritional  supplements,
known as nutraceuticals, was acquired in France.

Subsequent To The Close Of The Fiscal Year:

The Company divested the Lava(R) brand hand soap in April, 1999.

In Germany,  the Company acquired  Chlorahexamed(R),  a medicated mouthwash sold
over-the-counter in that country and in other European markets.

In the UK, the Company acquired the Louis Marcel(R) line of depilatories.

In Latin America, acquisitions occurred in Brazil and Argentina. The Silidron(R)
and Espasmo  Silidron(R)  lines of anti-gas  products  were added to our product
portfolio in Brazil.  In Argentina,  the Company acquired the Pelo Libre(R) line
of pediculicides.

In Korea,  the Company  acquired the balance of certain  marketing rights to the
Parodontax(R) brand toothpaste, which it sells in various countries.

<PAGE>4

MATERIAL REGULATIONS

The  Company is subject  to  worldwide  governmental  regulations  and  controls
relating to product safety,  efficacy,  packaging,  labelling and  distribution.
While not all of the  products  which the Company  plans to  introduce  into the
market  are  "new  drugs"  or  "new  devices,"   those  fitting  the  regulatory
definitions  are  subject  to a  stringent  premarket  approval  process in most
countries.  Submission  of a  substantial  amount of  preclinical  and  clinical
information prior to market introduction  significantly  increases the amount of
time and related costs incurred for preparing such products for market.

The Company  submits  data to the Food and Drug  Administration  as necessary in
response  to the  ongoing  monograph  review of the safety and  efficacy  of all
over-the-counter   drug   products   marketed  in  the  U.S.  As  a  responsible
manufacturer,  the Company is alert to the possibility that the final monographs
to be issued in the  foreseeable  future may require  formula  modifications  of
certain  of its  products  to  maintain  compliance  with these  regulations,  a
possibility facing competitive products as well.

Manufacturing companies, especially those engaged in health care related fields,
are  subject to a wide range of federal,  state and local laws and  regulations.
Concern  for  maintaining  compliance  with  federal,  state,  local and foreign
regulations   on   environmental   protection,   hazardous   waste   management,
occupational safety and industrial hygiene has also increased substantially. The
Company's policies and practices in the areas of environmental quality,  product
safety, loss prevention, occupational health and safety are tempered by the many
laws and regulations affecting these areas.

The Company cannot predict what additional  legislation or governmental  action,
if any,  will be enacted or taken with respect to the above matters and what its
effect,  if  any,  will be on the  Company's  consolidated  financial  position,
results of operations or cash flows.

MARKETING

The Company  commits a substantial  portion of its gross income to  advertising,
promotion,   market  research  and  test  marketing.   Its  denture  care,  oral
healthcare,  and  over-the-counter  consumer products are advertised directly to
consumers on network, cable and spot television,  network and spot radio, and in
magazines and  newspapers.  The largest  expenditures by the Company are for the
purchase of television time.

Oral  hygiene  and  professional  dental  products  are  promoted by the Company
through  dental  journals.  A team of Dental Sales  Consultants  sells  products
directly  to dentists  and a TeleSales  group at  headquarters  services  dental
accounts by telephone.

The  Company  sells  its  consumer  denture,   dental  care,  oral  hygiene  and
over-the-counter  medicines  through its national  sales  force.  Sales are made
directly  to  food  and  drug  chains,   wholesalers,   mass  merchandisers  and
independent food and drug stores. In addition, the Company employs marketing and
sales representatives in international markets.

<PAGE>5

TRADEMARKS AND PATENTS

The Company's  principal  trademarks are of material importance to its business.
These trademarks are owned by the Company or its wholly-owned subsidiaries.

Although the Company  enjoys  certain  benefits  under  patents which it owns or
licenses,  no one patent or license is material to our overall business or to an
individual business segment.

COMPETITION

The Company  markets  products  in highly  competitive  fields.  For many of its
products,   its  competitors  include  significantly  larger  corporations  with
substantially  greater resources.  The high degree of trademark  recognition and
goodwill associated with many of the Company's brand names are important factors
in its ability to compete  effectively.  While  larger  competitors  are able to
commit  significantly  greater  revenue to  national  advertising,  the  Company
believes  its  advertising  and  marketing   expertise   enable  it  to  compete
effectively.

The  primary   competitive   factors  affecting   proprietary   over-the-counter
medicines,   denture   care,   and  consumer  oral  care  products  are  product
formulation, reputation, advertising and consumer promotion.

MANUFACTURING

Most  of the  principal  raw  materials  used  by the  Company  in its  domestic
manufacturing  operations  are  purchased  domestically.  Although  some  of the
Company's raw materials  are obtained  from single  source  providers,  most are
available  from  alternate  suppliers as well.  In cases where a raw material is
available only from one source (as opposed to being only purchased from a single
source)  alternate  raw  materials  can be used as a  replacement.  The  Company
maintains   inventories   of  raw  materials  to  protect   against  a  business
interruption  caused by moving from one supplier to another.  In  addition,  the
Company  has  qualified   alternate   formulae  to  assure   continued   product
availability in the unlikely event any one raw material becomes unavailable.

During  the  course of the  fiscal  year  ended  March 31,  1999,  there were no
substantial  raw  material  shortages.  The  Company  was able to obtain all raw
materials required for its normal operations at competitive prices.

The  Company  manufactures  the  majority of its  products.  Some  products  are
manufactured  by independent  third  parties.  There is not a single third party
that manufactures 10% or more, in the aggregate, of the Company's products.

Item 2.  Properties

      The  worldwide  executive  and  administrative   offices,   manufacturing,
research and development, warehousing and distribution facilities of the Company
and its subsidiaries  use an aggregate of  approximately  2,000,000 square feet.
This  figure  does not  include  undeveloped  land on which its  facilities  are
located or land adjacent to certain properties.  The Company or its subsidiaries
own substantially all of the properties.

<PAGE>6

      Among these  properties  are the  following:  (1) corporate  headquarters;
Jersey  City,  New  Jersey;  (2)  professional  dental  product   manufacturing:
Glendale, Wisconsin (leased); (3) manufacturing plants for the Company's denture
care,  oral  health  care and  over-the-counter  products;  Memphis,  Tennessee;
Dungarvan,  Ireland; Humacao, Puerto Rico (Dentco and Reedco); Plymouth, UK; Rio
de Janeiro,  Brazil;  Buenos Aires,  Argentina;  and  Salisbury,  North Carolina
(leased).

      Subsequent  to the  end of the  fiscal  year,  the  Company  entered  into
negotiations  to sell its factory in South  Brunswick,  New Jersey,  has entered
into a contract for the sale of its  facilities in Buenos  Aires,  Argentina and
has closed on the sale of its plant and offices in Mississauga, Canada.

      The Company owns land  contiguous  to the Memphis,  Plymouth and Dungarvan
facilities  which  would  allow for the  future  expansion  of such  facilities.
Additional  warehouse and  distribution  facilities are in  Mississauga,  Canada
(leased);  Memphis,  Tennessee (leased);  Dayton, New Jersey;  Plymouth,  UK and
Zaragoza, Spain.

      The  Company  also has offices in Welwyn  Garden  City,  UK,  Mississauga,
Canada  (leased) and Ratingen,  Germany where  business  involving  each product
group is conducted.

      The Company's plants and facilities, in the opinion of management,  are in
good condition and, together with expansions and alterations recently completed,
or in the process of being completed as part of the manufacturing  restructuring
plan,  are regarded by management as adequate for current  requirements  and for
those of the  next  several  years.  Management's  Discussion  and  Analysis  of
Operating  Results and  Financial  Condition  further  describes  the  Company's
restructuring plan.

Item 3.  Legal Proceedings

      The Company is involved in various  routine  litigation  incidental to its
business.  While the  significance  of these matters cannot be fully assessed at
this time, management, on advice of counsel, does not believe that any liability
that may arise from these proceedings will have a material adverse impact on the
Company's consolidated financial position, results of operations or liquidity.

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

      No matters were submitted to a vote of the holders of Class B Common Stock
during the quarter ended March 31, 1999.

<PAGE>7

                                PART II

Item 5. Market for the Registrant's Common Stock and Related Security Holder
        Matters

                     STOCK PRICE AND DIVIDEND INFORMATION


                               Market Price          Cash Dividends Declared
                               Range of Class A              Per Share
                               Common Stock*
============================== ============================================
Fiscal Year Ended March 31,    High**      Low**
1999
First Quarter                  $46         $36 1/4  $0.315    Class A Shares
                                                    $0.11     Class B Shares
Second Quarter                  40 1/4      32 1/2  $0.315    Class A Shares
                                                    $0.11     Class B Shares
Third Quarter                   43 5/8      33 1/4  $0.3175   Class A Shares
                                                    $0.110625 Class B Shares
Fourth Quarter                  47          36 1/2  $0.3175   Class A Shares***
                                                    $0.110625 Class B Shares***
-----------------------------------------------------------------------------
Fiscal Year Ended March 31,    High        Low
1998
First Quarter                  $47 1/2     $40 3/4  $0.31     Class A Shares
                                                    $0.1075   Class B Shares
Second Quarter                  51 1/2      43 5/8  $0.31     Class A Shares
                                                    $0.1075   Class B Shares
Third Quarter                   50 7/8      41 1/2  $0.315    Class A Shares
                                                    $0.11     Class B Shares
Fourth Quarter                  44 3/4      39 1/4  $0.315    Class A Shares****
                                                    $0.11     Class B Shares****
================================================= =============== ==============

   *   The Company's  Class A (non-voting)  Common Stock is
       traded on the Nasdaq National  Market System.  There
       is no  established  trading market for the Company's
       Class B (voting) Common Stock.

  **   These  are  high  and low  bid  quotes  and  reflect
       inter-dealer    prices   without   retail   mark-up,
       mark-down  or  commission  and may  not  necessarily
       represent actual transactions.

 ***   In addition, a 3% stock dividend was paid on January
       4, 1999 to Class A and B shareholders in Class A and
       B Common Stock, respectively.

****   In addition, a 3% stock dividend was paid on January
       2, 1998 to Class A and B shareholders in Class A and
       B Common Stock, respectively.

The following  table  indicates the  approximate  number of shareholders of each
class of the Company's equity securities based upon the number of record holders
as of June 8, 1999:


           Title of Class                            Number of Shareholders
============================================  ==================================
Common Stock, Class A (non-voting)                          433
Common Stock, Class B (voting)                                5
============================================  ==================================

<PAGE>8
<TABLE>
<CAPTION>

Item 6.  Selected Financial Data


                                                                     Fiscal Year Ended March 31,
                                           1999(3)              1998             1997(2)            1996             1995
====================================  ==================  ================= ================= ================ ================
<S>                                     <C>                   <C>              <C>              <C>              <C>

Net Sales from Continuing Operations     $   821,101,000       $863,057,000     $ 862,471,000    $ 715,242,000    $ 621,139,000
Interest, Dividends & Other Income       $    27,984,000       $ 25,882,000     $  28,335,000    $  30,157,000    $  23,026,000
Income from Continuing Operations        $    67,497,000       $ 69,611,000     $  10,817,000    $  65,501,000    $  57,870,000
  before Income Taxes
Income Taxes                             $    15,875,000       $ 17,819,000     $   2,210,000    $  11,798,000    $  11,944,000
Income from Continuing Operations        $    51,622,000       $ 51,792,000     $   8,607,000    $  53,703,000    $  45,926,000
Average Number of Common Shares               22,853,000         22,808,000        22,766,000       22,724,000       22,677,000
   Outstanding(1)
Income from Continuing Operations,
  Per Share of Common Stock (Basic                 $2.26              $2.27             $0.38            $2.36            $2.03
  and Diluted)(1)
Earnings Per Share of
  Common Stock (Basic and Diluted)(1)              $2.26              $2.27             $0.38            $3.90            $2.22
Cash Dividends Per Share of
 Class A Common                                    $1.27              $1.25             $1.20            $1.12            $1.06
Cash Dividends Per Share of
 Class B Common                                   $0.441             $0.435            $0.415            $0.30                -
Stock Dividends Per Share of
 Class A Common                                       3%                 3%                3%               3%               3%
Stock Dividends Per Share of
 Class B Common                                       3%                 3%                3%               3%               3%
Depreciation                             $    20,852,000   $     19,651,000    $   20,210,000   $   19,012,000     $ 16,031,000
Working Capital                          $    61,578,000   $     19,840,000    $   90,172,000    $ 106,050,000     $ 26,095,000
Current Ratio                                        1.2                1.1               1.3              1.5              1.1
Total Assets                              $1,166,763,000     $1,087,072,000    $1,014,923,000     $929,117,000     $871,320,000
Long-Term Debt and Notes Payable         $   107,012,000   $     58,318,000   $    55,943,000    $  56,143,000     $ 15,273,000
Shareholders' Equity                     $   683,885,000    $   647,255,000    $  631,320,000     $641,042,000     $562,531,000
Number of Employees                                3,251              3,380             3,703            3,600            3,521
====================================  ==================  ================= ================= ================ ================
</TABLE>

Management's   Discussion  and  Analysis  of  Operating  Results  and  Financial
Condition is presented on pages 10 to 20 of this report.

(1)    Restated to reflect stock dividends on Class A and Class B Common Stock
       by the Company in 1999 and previously.

(2)    Fiscal  1997  income  statement  numbers  reflect  a  pre-tax  charge  of
       $72,450,000   for   manufacturing   restructuring   and   re-engineering.
       Additionally,  these amounts reflect the  consolidation of the Block Drug
       Company (Japan) Inc. subsidiary,  which had been previously accounted for
       as a 50%-owned  equity joint venture.  The Company acquired the remaining
       50% share in fiscal year 1997.

(3)    Fiscal 1999 income  statement  numbers reflect a credit of $12,673,000 in
       connection with the manufacturing  restructuring and re-engineering.  See
       Note 13 to the Consolidated Financial Statements.

<PAGE>9

Item 7. Management's Discussion and Analysis of Operating Results and Financial
        Condition

Operating Results

       Consolidated  worldwide  sales for the fiscal  year ended  March 31, 1999
were $821.1 million compared to $863.1 million and $862.5 million in fiscal 1998
and 1997, respectively. During the year, the Company sold three of its household
product brands (2000 Flushes (R) toilet bowl cleaners, X-14 (R) toilet bowl and
hard surface cleaners and Carpet Fresh (R) rug and room deodorizers).  Excluding
the effects of the divestitures,  consolidated sales were $813.2 million,
$795.4 million,  $785.2 million for the fiscal years ended March 31, 1999,  1998
and 1997,  respectively.  For fiscal 1999,  excluding  the divestitures  and
negative  foreign  exchange rates,  sales would have increased
2.2% and 1.1%, respectively. Domestic sales were down by 9.2 % and international
sales were down by 1.8 %.  Excluding  the effects of the  divestiture,  domestic
sales  increased  6.4%, of which 2% was due to price  increases and 4.4 % due to
volume increases. Excluding the effects of the divestitures, international sales
were slightly lower.

SALES BY GEOGRAPHIC AREA (Dollars in Thousands)

                                         Percent             Percent
                                FY 1999  Change    FY 1998   Change    FY 1997
                                -------  ------    -------   ------    -------

Domestic                       $330,246    -9%     $363,507     5%     $347,523
Europe, Africa, Middle East     312,866     5%      296,765     -       295,774
Latin America, Canada,
   Asia/Pacific                 177,989   -12%      202,785    -7%      219,174
                              ---------           ---------           ---------

Total Net Sales                $821,101    -5%     $863,057     -      $862,471
                               ========            ========            ========

       Domestic  sales  growth  was  driven  by  relatively  strong  sales  from
Polident(R) and Poli-Grip(R)  and BC(R) and Goody's(R)  analgesic powder brands.
In addition,  Stanback(R)  brand  analgesic  headache  powder and Chap-et(R) lip
conditioner, which were acquired in the fourth quarter, contributed to the sales
increase.  Sensodyne(R)  brand sales were up by 8%,  mainly due to the growth of
Sensodyne(R)  Extra  Whitening.  Atridox(R)  (doxycycline  hyclate) 10%, a newly
introduced product, met sales targets.

       In international  markets,  the European Division had sales growth of 5%.
Medical  products  showed strong growth.  Setlers(R),  Otomize(R) and Piriton(R)
brand sales increased by 12 %, 16 % and 21 %,  respectively.  Sales of Sensodyne
increased 5 %. Italy's  exceptional  sales  performance was primarily due to the
acquisition of the STREP(R) depilatory brand. In Holland,  sales were up by 13 %
mainly due to the successful  introduction of Parodontax(R)  toothpaste Gel line
extension.  In other  international  areas,  sales  were  down  due to  economic
recession, weak currencies and the household products divestitures.

       The Company's international operations represent approximately 60% of the
Company's  business.  During fiscal 1999,  the  performance  was impacted by the
divestiture of a household product in Latin America.  The European market showed
a strong  improvement  during the year. The  performance in the Asian market was
impacted  by weak  currency  conditions  and  economic  crisis.  The net foreign
exchange   gains  and  losses  are   included   within   selling,   general  and
administrative  expenses  due to the fact  that  they  were  insignificant.  For
additional  information see Note 1 to  consolidated  financial  statements.  The
largest markets in Austral-Asia are Japan

<PAGE>10

and  Australia.  In fiscal 1998,  Australia  experienced a 15% increase in local
currency sales. However, Japan sales in local currency,  decreased by 13%. After
translating  into  U.S.  Dollars,  sales in Japan  were down by 21% and sales in
Austral-Asia were up by 8% respectively. In fiscal 1999, sales in Australia were
up by 4% in local currency and sales in Japan were down by 9% in local currency.
After translating into U.S. Dollars,  sales in Australia were down 12% and sales
in Japan were down 14%  respectively.  In fiscal 1998,  U.S.  Dollar  translated
sales in Europe,  Africa and Middle  East were flat  compared to the prior year.
However, if exchange rates remained constant,  sales would have increased by 4%.
In fiscal 1999, U.S. Dollars translated sales in Europe,  Africa and Middle East
were up by 5%.  The  exchange  rate  impact  on  sales  in  fiscal  1999 was not
material.

       Interest,  dividends  and other  income of  $27,984,000  increased  by 8%
compared  to prior  year  income  of  $25,882,000,  primarily  due to  increased
interest income from marketable securities.  The increase was slightly offset by
the  reduction in  co-promotion  income due to  expiration  of the  contracts of
Habitrol(R) and Lodine(R) brands and discontinuation of the brand Duract(R).

       The cost of goods  sold  percentage  to sales was  33.1% in  fiscal  1999
compared to 32.6% in fiscal 1998 and 32.4% in fiscal 1997.  The domestic cost of
sales was 33.3%,  34.3% and 32.8% for fiscal 1999, 1998 and 1997,  respectively.
These  percentages  reflect the mix of products  sold,  in addition to selective
price  increases  and the  effect of  divestiture  of three  household  products
brands.  The  international  cost of sales was 33%,  31.4% and 32.1% for  fiscal
1999, 1998 and 1997, respectively. The increase was primarily due to an increase
in the cost of sales,  outpacing  the increase in the selling price because of a
very competitive European market.

       Selling, general and administrative expenses represented 61.9%, 60.7% and
60.1% of sales in fiscal 1999, 1998 and 1997, respectively. The major portion is
related to advertising and promotional activities.  These expenses reflect major
spending programs to meet significant competition and to build brand equities.

       Interest  expense in fiscal 1999  experienced  a favorable  variance from
fiscal 1998,  primarily due to lower average debt resulting from the divestiture
of  three  household  brands  as  well  as  declining  interest  rates  on  Euro
denominated  borrowing.  This was partially  offset by additional  financing for
product  acquisitions  and  increased  interest  cost  on  some  US  denominated
short-term  bank debt that was  refinanced for ten years through the issuance of
the Company's privately placed 6.46% Senior Notes due 7/1/08.

       The Company's  interest rate exposures result from financing  activity in
the form of short and long-term  variable rate debt and investments in long-term
fixed income securities. The Company uses interest rate cap agreements to manage
the exposure resulting from variable rate debt (See Note 5). The notional amount
of such agreements at March 31, 1999 was $100 million.  Investments in long-term
fixed income securities are typically held to maturity and fluctuations in their
market value, which are included in Other Comprehensive Income, are not hedged.

<PAGE>11

       The  Company's  foreign  exchange  exposures  derive  primarily  from the
activities of its foreign  subsidiaries  and  affiliates  which sell products to
customers generating accounts receivable both in their own local currency and in
other currencies.  Certain subsidiaries,  principally manufacturing locations in
the United Kingdom, Ireland and Brazil, also incur significant costs denominated
in currencies other than their functional currency. Additionally, the Company is
exposed to the risk that the results of operations of its foreign affiliates may
translate  to lower than  expected  net income for  inclusion  in the  Company's
consolidated results.

       Interest rate cap  agreements and foreign  currency  options are the only
types of  derivatives  used by the  Company for risk  management.  The costs and
benefits derived from the interest rate caps are taken into income over the term
of the agreements as an adjustment to interest expense. No benefits were derived
from these agreements during fiscal 1999 or 1998. (See Note 5).

       The Company manages its most significant  foreign  currency  exposures,
principally inventory purchases, by purchasing  average rate currency  options
that protect  against the fiscal year average value of each currency declining
more than an acceptable amount from the average for the prior year.  Currencies
that are highly  correlated to the U.S. Dollar and those that are illiquid or
have high  interest  rates (and  therefore hedging cost) are not hedged.
However,  certain affiliates in high interest rate environments  maintain  cash
balances  in  U.S.  Dollars.  If  the  affiliate's functional  currency
declines  against the dollar,  such balances would produce incremental  income,
thereby  offsetting  the  declining  dollar  value  of the affiliate's results
included in the Company's net income.

          The cost of foreign currency options are expensed over the period to
which they relate and any benefits, to the extent of options deemed effective
hedges, are treated as an adjustment to the related costs of inventory when
purchased.  For additional information, see 'Financial Instruments' (Note 5) in
Notes to Consolidated Financial Statements.

       Worldwide Earnings by Geographic Region (Dollars in Thousands)

                                             1999          1998           1997
                                             ----          ----           ----

United States                             $ 59,200      $ 52,186     $   56,331
Europe, Africa, Middle East                 33,745        45,353         43,029
Latin America, Canada, Asia/Pacific         10,825        22,019         20,363
                                          --------      --------     ----------
Total Operating Income                     103,770       119,558        119,723
General Corporate expenses, net            (36,273)      (49,947)      (108,906)
                                          --------     ---------       --------
Consolidated Income Before Income Taxes   $ 67,497     $  69,611     $   10,817
                                          ========     =========       ========

       Income  before income tax for the United States  increased  13%.  Europe,
Africa, Middle East decreased 26%. Latin America, Canada, Asia/Pacific decreased
51%. The increase in the United States was primarily due to mix of products sold
and the  effect  of the  divestiture  of three  household  product  brands.  The
decrease in Europe,  Africa,  Middle East was due to a very competitive European
market.  The Latin  America,  Canada,  Asia/Pacific  decline was due to economic
recession, weak currencies and the household product divestitures.

<PAGE>12
       Due to the above factors, income before taxes was 6.7% of sales in fiscal
1999 (excluding  restructuring  and
re-engineering credit) as compared to 8.1% and 9.7 % in fiscal 1998  and 1997
(excluding  restructuring  and re-engineering charges), respectively.



       The effective income tax rates of 23.5%,  25.6% and 20.4% in fiscal 1999,
1998 and  1997,  respectively,  reflect  tax  exempt  interest  from  government
securities  and income from the lower tax areas of Puerto Rico and Ireland.  The
effective  rate increase  from 1997 to 1998 occurred  primarily as a result of a
change in taxability of certain Puerto Rico  securities.  The rate decrease from
1998 to 1999 occurred mainly because  operating  profit in lower taxed countries
was proportionally  higher than in 1998. For additional  information see "Income
Taxes" Note 8 to the Consolidated Financial Statements.

       The  operations in other Asian markets  (excluding  Japan and  Australia)
were   relatively   insignificant   to  the  Company's   consolidated   results.
Accordingly,  the  recession  in Asia  did not  have a  significant  impact  on
profits.

       It is difficult to predict future  exchange  movement.  If exchange rates
would continue at fiscal 1999 levels,  management  does not anticipate any major
material effects on the Company's future financial condition or liquidity.

       Although  inflation has been moderate  throughout  fiscal 1999,  1998 and
1997, the Company  continues to utilize  selective price increases and budgetary
monitoring of advertising, personnel and other expenses to control its operating
margins.

       In  February  1997,  the  Company  announced  the  consolidation  of  its
manufacturing  operations  by  planning  to close six of its  twelve  production
facilities in various parts of the world over a two year period.  This action is
expected to generate approximately $25 million in additional annual cost savings
beginning  in fiscal  2000 which will be  reinvested  to support  the  Company's
brands,  acquisitions,  new products and strengthen the Company to penetrate new
geographic  areas  worldwide.  The  worldwide  manufacturing  restructuring  and
re-engineering  program  resulted in a pre-tax  charge of $72.5  million  ($55.7
million net tax),  or $2.60 per share after taxes in fiscal 1997,  of which $9.2
million  remains as a current liability as of March 31, 1999. As of March 31,
1999,  the Company sold its factories in Wales,  Belgium and  Australia.  In
addition,  the Company discontinued  manufacturing activities in Canada and
leased that portion of the facility to a third party. Subsequent to the fiscal
year end, the Company sold its facilities in Canada.

<TABLE>

<CAPTION>

   The  following  table  displays  a  rollforward  of the  liabilities  for the
manufacturing restructuring from inception to March 31, 1999:


                         Original     Amounts        Remaining Amount                Remaining  Amount       Amount       Ending
                         Provision    Utilized in    Balance   Utilized in            Balance   Utilized in  Reversed in  Balance
Type of Cost             Fiscal 1997  Fiscal 1997    3-31-97   Fiscal 1998   Other    3-31-98   Fiscal 1999  Fiscal 1999  3-31-99*
------------              -----------  -----------  ---------  -----------   -----   ---------- -----------  -----------  --------
<S>                      <C>           <C>          <C>         <C>        <C>        <C>        <C>          <C>         <C>
Employee severance and    $15,454(a)        -        $15,454     ($7,516)   ($3,300)   $4,638     ($2,637)     ($2,001)     -
  related costs
Plant closing and          32,978(b)   $(24,468)       8,510        -        (8,510)     -           -            -         -
  related asset
  write-offs
Re-engineering              7,184(c)     (7,184)        -           -          -         -           -            -         -
Contractual obligations    16,834(d)     (5,042)      11,792      (7,500)    11,110    15,402        (562)      (5,640)   $9,200
  and other               -------      ---------    --------   ----------   -------  --------   ----------   ----------   ------

                          $72,450      $(36,694)     $35,756    ($15,016)     ($700)  $20,040     ($3,199)     ($7,641)   $9,200
                          =======     =========     ========  ==========   ========  ========   =========   ==========    ======
</TABLE>
 * The balance at the end of the year is classified as a current liability.

<PAGE>13
(a)  Represents severance costs for approximately 450 production employees at
     six facilities.  Estimates were based on calculations derived by attorneys
     who considered the local labor laws at each location.
(b)  Represents estimated impairment losses on land and buildings to be sold
     ($15 million) and machinery and equipment to be disposed ($14 million).
     Also included is the estimate of site cleanup costs ($4 million). Estimates
     were based principally on appraisals from third-party appraisers.
(c)  Principally represents consulting costs, as well as limited training and
     maintenance costs, which were expensed during 1997.
(d)  Represents consulting and legal fees and other costs.

       In 1997, the Company re-engineered certain major systems and processes.
The non-recurring, incremental costs of the re-engineering aggregated to $7.1
million, and included primarily consulting costs and training costs.  These
amounts have been classified and presented within the Manufacturing
restructuring and re-engineering provision caption on the fiscal 1997
income statement.

       During fiscal 1998, the Company sold three facilities at aggregate sales
prices substantially in excess of its original estimates, and continued to
actively market the three remaining facilities located in Canada, Argentina and
the U.S.  The Canadian facility was sold on June 15, 1999 and management expects
the Argentine facility to be sold by September 1999.  In addition, during
fiscal 1998 and 1999, the Company transferred a substantial portion of
production in the sites being sold to other facilities.  As a result of the
realization of sales prices for the facilities sold in excess of amounts
originally anticipated, in 1998 the Company reclassified approximately $8.5
million from its plant closing liability and related asset write-offs to its
contractual obligations and other liability (as discussed below).  In addition,
with the exception of a limited group of employees (approximately 56) at the
Company's U.S. facility, all manufacturing employees included in the initial
restructuring plan have been severed (392 employees).  As of March 31, 1998, the
aggregate cost of the Company's severance program was $3.3 million less than
initially anticipated, principally due to favorable labor negotiations.
Accordingly, during fiscal 1998, the Company reclassified $3.3 million from its
employee severance and related costs liability to its contractual obligations
and other liability (as discussed below).

       As of March 31, 1998, the Company had discontinued substantially all
production at the U.S. location to be closed, with the exception of the
production under a contractual obligation to produce one product for the
purchaser of the Company's ethical pharmaceutical practice division,
which was sold in 1996.  In connection with the original restructuring plan,
the Company anticipated completely exiting its U.S. facility.  As of
March 31, 1997, management believed that the facility would either be sold to
the entity to which the Company was obligated for production or to another
entity, whom it expected would assume responsibility for the production.However,
during 1998, despite the Company's efforts to sell the facility, it was unable
to do so.  As a result of the transfer of all other production from this
facility, remaining production under this contract and other costs will result
in a loss of approximately $10 million, which was not recognized under the
original restructuring provision, but was increased to $10 million during 1998.

<PAGE>14

       As of March 31, 1999, the Company identified additional excess amounts of
$7.6 million due to additional favorable experiences in calculating final
severance payments and settlement of post-closing adjustments in connection with
the sale of one of its plants.  In addition, as a result of favorable fixed
asset disposals, which are not presented in the above table, a gain of
$5.1 million was generated.  Consequently, the Company recorded a restructuring
credit of $12.7 million in its income statement for the year ended
March 31, 1999.

       As of March 31, 1999, the Company's remaining obligation of $9.2 million
consists of its contractual obligation to produce a product for another entity.
Management believes that the remaining manufacturing reserves are adequate to
complete its plan during fiscal 2000.

       During  fiscal 1999,  the Company  acquired  exclusive  U.S. and Canadian
marketing  rights for  Atridox(R)  for use in the  treatment  of  chronic  adult
periodontitis.  The Company paid $19.1 million for the milestones already met as
of March 31,1999. Additional liability of $34 million is contingent upon certain
additional milestone events. If such milestone events are attained,  the Company
believes its financial  condition,  results of operations  and liquidity will be
substantially  enhanced.  In the U.S., the Company acquired the Stanback(R) line
of  powdered  analgesics  and the  Chap-et(R)  line of lip care  products.  In
international  markets,  the Company  acquired  Strep(R)  depilatory  line,  the
Agevit(R)  nutraceutical line, and the Pilca(R) depilatory line in Italy, France
and Germany, respectively. The aggregate amount spent for these acquisitions was
$69.0 million,  mainly comprised of goodwill payments. The Company sold three of
its domestic  household products in April, 1998 at a modest gain. These products
did not fit the  Company's  long  term  strategy,  and  accordingly,  management
anticipates  these  divestitures  to positively  impact its financial  position,
results of operations and liquidity.

Year 2000

       As many computer  systems and other equipment or processors with embedded
chips  (collectively,  "Business  Systems") use only two digits to represent the
year, they may be unable to process  accurately  certain data,  before during or
after the year 2000. As a result,  business and government  entities are at risk
for possible  miscalculations  or systems failures  causing  disruption in their
business operations.  This is commonly know as the year 2000 (Y2K Millennium Bug
or Y2K problem). The Y2K problem can arise at any point in the Company's supply,
manufacturing, processing, distribution and financial chains.

       Block Drug  Company  and each of its  operating  subsidiaries  are in the
process of implementing a Y2K compliance readiness program with the objective of
having all of their significant  Business  Systems,  including those that affect
facilities and manufacturing  activities,  functioning  properly with respect to
the Y2K problem before January 1, 2000.  All operating  subsidiaries  are in the
remediation stage of Y2K readiness.

       The first  component  of the Y2K  compliance  program is to identify  the
internal Business Systems of the Company and its operating subsidiaries that are
susceptible  to  system  failures  or  processing  errors as a result of the Y2K
problem. This effort is substantially  complete with all operating  subsidiaries
having  identified  the  Business  Systems  that  may  require   remediation  or
replacement and established priorities for repair or replacement. Those Business
Systems  considered  most critical to continuing  operations are being given the
highest priority.

<PAGE>15

       The second  component of the Y2K compliance  program  involves the actual
remediation and replacement of Business  Systems.  The Company and its operating
subsidiaries  are using both  internal and external  resources to complete  this
process.  The  Business  Systems  ranked  highest in  priority  have either been
remediated,  replaced or scheduled  for  remediation  or  replacement.  Business
Systems  previously  earmarked for retirement and replacement  without regard to
the Y2K problem have been  evaluated  for early  replacement  with Y2K compliant
systems or programs or, in the alternative,  remediation.  The Company is in the
process of implementing Y2K compliant  software/hardware  wherever needed in the
US as well as fixing or replacing  hardware and software where  warranted,  with
Y2K compliant solutions in our Affiliates. The Company completed all remediation
and replacement of its U.S. based internal  Business  Systems in March 1999. The
final  testing and  certification  for Y2K  readiness  will be completed by July
1999, and the contingency plans will be prepared by September 1999.

       As part of the Y2K compliance  program,  significant  service  providers,
vendors,  suppliers,  customers and government  entities that are believed to be
critical to business operations after January 1, 2000, ("Key Business Partners")
have been identified and contacted through questionnaires, interviews or on-site
visits to ascertain their stage of Y2K readiness.  Where ever we have electronic
or computer to computer  communications  with Key  Partners,  we plan to jointly
test these interfaces.  In conjunction with this effort, key government agencies
and  utilities  upon  which  the  Company  and its  subsidiaries  rely are being
approached on a worldwide basis to identify their level of Y2K preparedness.  In
many cases these  entities,  particularly  those outside North  America,  have a
lower  level  of Y2K  awareness  and are less  willing  to  provide  information
concerning their state of Y2K readiness.

       Because of the vast  number of Business  Systems  used by the Company and
its operating subsidiaries,  the significant number of Key Business Partners and
extent of the Company's foreign operations,  the Company presently believes that
it may experience some disruption in its business  due  to  the  Y2K   problem.
More   specifically,   because  of  the interdependent  nature  of  Business
Systems,  the  Company  and its  operating subsidiaries could be materially
adversely affected if utilities and government entities with which they do
business or that provide essential  services are not Y2K ready. The Company
currently  believes that the greatest risk of disruption in  its  businesses
exists  in  certain  international  markets.  The  possible consequences  of the
Company  or Key  Business  Partners  not  being  fully Y2K compliant  by
January 1, 2000  include,  among  other  things,  temporary  plant closings,
delay in the  delivery  of  products,  delay in receipt of  supplies,
invoice  and  collection   errors,   and  inventory  and  supply   obsolescence.
Concurrently,  the business and results of  operations  of the Company  could be
materially  adversely  affected by a temporary  inability of the Company and its
operating  subsidiaries to conduct their businesses in the ordinary course for a
period of time after January 1, 2000. However, the Company believes that its Y2K
readiness program,  including the contingency  planning discussed below,  should
significantly reduce the adverse effect of such disruptions.

       Concurrently,  with  the Y2K  readiness  measures  described  above,  the
Company and its operating subsidiaries are developing contingency plans intended
to  mitigate  the  disruption  in business  operations  that may result from Y2K
problems,  and are developing cost estimates for such plans.  Contingency  plans
may  include  stockpiling  raw and  packaging  materials,  increasing  inventory
levels,  securing alternate sources of supply,  adjusting facility shut-down and
start-up schedules and other appropriate measures.  Once developed,  contingency
plans and related  cost  estimates  will be  continually  refined as  additional
information becomes available.

<PAGE>16

       The Company's original investment was estimated at $14 million to address
its Y2K effort as well as other business information requirements. This has been
revised,  and it is  expected  that Y2K related  expenses  will reach a total of
about $16.9 million. To date, the Company has spent approximately $15.4 million.
These amounts do not include any costs  associated  with the  implementation  of
contingency plans, which are in the process of being developed.

       The Company's Y2K compliance  program is an ongoing  process.  Therefore,
the estimates of costs and  completion  dates for various  components of the Y2K
compliance program are subject to change. The Company is, however,  making every
effort to ensure  that  costs are  forecasted  as  accurately  as  possible  and
scheduled completion dates are achieved.

       The estimates and conclusions herein contain  forward-looking  statements
and are based on  management's  best  estimates of future  events.  The risks to
completing the plan include the availability of resources at specific facilities
and the ability of suppliers to bring their systems into Year 2000 compliance.

Euro Currency Adoption

       As result of the European  Economic and Monetary Union, a single currency
(the  "Euro")  will  replace the  national  currencies  of many of the  European
countries in which the Company conducts  business.  The conversion rates between
the Euro and the participating  nations'  currencies were fixed as of January 1,
1999, with the participating  national  currencies  scheduled to be removed from
circulation between January 1, and June 30, 2002, and replaced by Euro notes and
coinage.  During the transition period from January 1, 1999 through December 31,
2001,  public and private  entities as well as individuals may pay for goods and
services using either checks,  drafts, or wire transfers denominated in Euros or
the  participating  country's  national  currency.  We do not  expect  the  Euro
conversion to have a material  negative impact on operations in fiscal 2000. All
affiliates can operate within the Euro market.



       We are currently  upgrading  our computer  systems so that we can operate
more efficiently within the Euro market in fiscal 2000.

Liquidity and Capital Resources

       Cash and cash  equivalents  decreased to $48.4  million at March 31, 1999
from $56.3 million at March 31, 1998 and $38.9 million at March 31, 1997.

       Net cash flow from  operating  activities was $86 million in fiscal 1999,
$11 million less than the prior year.  The  decrease in operating  cash flow was
due to an  increase  in accounts  receivable  and an  increase in other  current
assets,  partially  offset by a decrease  in  inventories,  and an  increase  in
accounts  payable.  In fiscal 1998, net cash flow from operating  activities was
$97  million,  $39 million  more than the prior year.  Earnings  net of non-cash
expenses,  an increase in accounts payable and a decrease in accounts receivable
more than offset  increases in inventories.  Accounts  receivable at fiscal year
end 1999, 1998, 1997, represent 2.2, 2.0, 2.3 average month sales, respectively.
Inventory levels comprised 6.0 months supply at year end 1999, 1998 and 1997.

       Net cash used in  investing  activities  in fiscal 1999 was $93  million,
compared  to net cash used of $114  million  in  fiscal  1998.  In fiscal  1999,
additions to property, plant and equipment,  payments for products acquired, and
purchases of marketable  securities  more than offset the

<PAGE>17

proceeds from the sale of securities, property plant and equipment and sale of
three household products brands.  In fiscal  1998,  cash was invested  primarily
in property,  plant and equipment and as payments for products  acquired.  In
fiscal 1997,  the net cash outflow for investing  activity was $59 million.  The
Company is finalizing  its Production Optimization Program which will
consolidate manufacturing facilities.

       Net capital  expenditures were $35 million for fiscal 1999, a decrease of
$3 million from fiscal 1998 and 1997.

       Domestically,  major  projects  over the  three  year  period  include  a
substantial  investment in computer  modernization  and R & D laboratories.  The
production  and warehouse  facilities  in Memphis,  Tennessee and in Puerto Rico
have undergone expansion and modernization that will continue as a result of the
Company's Production Optimization Program.

       The Company's facility in Dungarvan, Ireland was expanded in fiscal 1998.
The Dungarvan  facility  will  continue to undergo  expansion as a result of the
Company's  Production  Optimization  Program.  The  Company  anticipates  future
capital   spending  to  approximate  5%  of  net  sales,  and  expects  to  fund
modernization  and expansion through  internally  generated funds and short-term
borrowings as appropriate.

       Net cash utilized by financing  activities was $2 million in fiscal 1999,
compared to net cash  provided of $38 million in fiscal  1998.  In fiscal  1997,
there was a net cash inflow of $23  million.  The  financial  outflows in fiscal
1999 arose from the payment of dividends paid to shareholders and the retirement
of short  term  debt  which  was  funded  by the  proceeds  of the sale of three
household  products  brands.  This was mostly  offset with the proceeds from the
issuance of a $50 million ten year note.  Financial  inflows in fiscal 1998 were
the result of the  issuance of debt.  Financial  inflows in fiscal 1997 were the
result of debt issuance offset by dividends paid to shareholders.



       An overall weakening of the U.S. Dollar in relation to foreign currencies
resulted in net foreign currency translation gains of $4 million in fiscal 1999.
In fiscal 1998, net foreign currency translation losses were $20 million.  These
amounts were recorded in the  Shareholders'  Equity section in the balance sheet
as a component of Other Comprehensive Income.

       The Company classified all long-term  securities as "available for sale".
These  long-term  securities  are  reported at fair market  value  resulting  in
cumulative unrealized holding gains of $4,222,000, net of taxes of $ 1,083,000
as of March 31,1999. Cumulative holding gains were $3,692,000, net of taxes of
$941,000 as of March 31, 1998 and $551,000, net of taxes of $254,000 as of
March 31,1997.

       The Company  anticipates  that  sufficient  funds will be  provided  from
operations  and  borrowing  capabilities  for  capital  expenditures,   dividend
payments and other cash needs in fiscal 2000. The Company has uncommitted  lines
of credit  totaling  $341  million and $314  million at March 31, 1999 and 1998,
respectively.

Market Risk

The Company's  primary market risk  exposures  consist of interest rate risk and
foreign  currency  exchange  risk.  See Note 5  "Financial  Instruments"  to the
consolidated financial statement for the Company's objectives and strategies for
managing potential exposures related to these risks.

<PAGE>18

Management primarily uses two types of financial instruments, interest rate cap
agreements and foreign currency put options, to hedge exposures to certain
foreign currency fluctuations as described in Note 5.  As hedges, gains and
losses on forward contracts are offset by the effects of currency movements on
respective underlying hedged transactions.  Therefore, with respect to
financial instruments outstanding at March 31, 1999, a change of 10 percent in
currency rates, compared to fiscal 1999 rates, would not have a material effect
on the Company's consolidated financial position, liquidity, cash flows or
results of operations.

The Company holds certain instruments, primarily debt obligations, which are
sensitive to changes in market interest rates.  At March 31, 1999, the majority
of the Company's variable rate debt consisted of bank borrowings which are
subject to changes in market interest rates. However, at March 31, 1999, a
change of 10 percent in interest rates, compared to fiscal 1999 rates,  would
not have a material effect on the Company's consolidated financial position,
liquidity, cash flows,  results of operations or the fair value of the Company's
debt.

Reporting on Comprehensive Income:

       Effective  April 1, 1998,  the Company  adopted  Statement  of  Financial
Accounting  Standards No. 130 (SFAS 130), Reporting  Comprehensive  Income. SFAS
130  establishes  standards  for the  reporting  of  comprehensive  income,  and
requires  that an enterprise  classify  items of other  comprehensive  income by
their nature in a financial  statement,  and display the accumulated  balance of
other  comprehensive  income  in the  statement  of  financial  position.  Other
comprehensive   income  consists  of  movements  in  the  Company's   cumulative
translation  adjustment  and  unrealized  holding gains and losses on marketable
securities.



Segments of an Enterprise:

       During fiscal 1999, the Company adopted SFAS No. 131, "Disclosures  about
Segments of an Enterprise and Related Information".  SFAS 131 establishes
standards for the way public business enterprises   report   information  about
operating   segments  in  reports  to shareholders. The adoption of SFAS 131 did
not affect  results of operations or financial position but did affect the
disclosure of segment  information.  Prior year data has been restated for
comparability  purposes. More details on segment information are contained in
Note 17 of the Notes to the Consolidated  Financial
Statements.

Employers' Disclosures about Pensions and Other Postretirement Benefits:

       During  fiscal  1999,  the  Company  adopted  SFAS No.  132,  "Employers'
Disclosures  about Pensions and Other  Postretirement  Benefits,"  which revises
employers'  disclosures  about pension and other  postretirement  benefit plans.
SFAS No. 132 does not change the  measurement or recognition of those plans (See
Note 9).

New Accounting Standards:

       In June 1998, the FASB issued SFAS No. 133,  "Accounting  and Derivatives
and Hedging  Activities," which establishes  accounting and reporting  standards
for derivative instruments, including certain derivative instruments embedded in
other  contracts,  (collectively  referred  to as  derivatives)  and for hedging
activities,  SFAS No. 133 is effective  for all fiscal  quarters of fiscal years
beginning  after June 15, 2000 . The Company is currently  evaluating the impact
of the new statement on its fiscal 2002 disclosures.

<PAGE>19

Subsequent Events

       Subsequent  to the close of the year,  the Company  divested  the Lava(R)
hand soap brand for $19 million which resulted in a modest gain.  This divesture
was  consistent  with the  Company's  long  term  strategy  and is  expected  to
positively affect the financial  position,  results of operations and liquidity.
In Latin  America,  the Company  acquired  Silidron(R)  and Espasmo  Silidron(R)
anti-gas medicines and in Argentina, the Company acquired the Pelo Libre(R) line
of pediculicides. Louis Marcel(R), a depilatory brand, was acquired for the U.K.
market. In Germany, the Company purchased  Chlorhexamed(R)  medicated mouthwash.
The Company  acquired the balance of certain  marketing  rights to Parodontax(R)
brand toothpaste in Korea. The aggregate amount spent on these  acquisitions was
$55.6 million, mainly comprised of goodwill payments.

Information Concerning Forward-Looking Statements

       The Company has made, and may continue to make,  various  forward-looking
statements with respect to its financial position, business strategy,  projected
costs,  projected  savings,  and  plans  and  objectives  of  management.   Such
forward-looking statements are identified by the use of forward-looking words or
phrases  such  as  "anticipates,"  "intends,"  "expects,"  "plans,"  "believes,"
"estimates,"  or words or  phrases  of  similar  import.  These  forward-looking
statements are subject to numerous  assumptions,  risks, and uncertainties,  and
the  statements  looking  forward beyond fiscal year 1999 are subject to greater
uncertainty because of the increased likelihood of changes in underlying factors
and assumptions.  Actual results could differ  materially from those anticipated
by the forward-looking statements.

       The Company's forward-looking  statements represent its judgement only on
the dates such  statements are made. By making any  forward-looking  statements,
the  Company  assumes  no duty  to  update  them to  reflect  new,  changed,  or
unanticipated events or circumstances.

<PAGE>20

Item 8.  Financial Statements and Supplementary Data

                    Report of Independent Accountants

To the Board of Directors and
Shareholders of Block Drug Company, Inc.

In our opinion, based upon our audits and the reports of other auditors, the
accompanying consolidated financial statements and the financial statements
schedules of Block Drug Company, Inc. and subsidiaries listed in the index on
page 59 of this Form 10-K, present fairly, in all material respects, the
consolidated financial position of Block Drug Company, Inc. and subsidiaries at
March 31, 1999 and 1998 and the consolidated results of their operations and
their cash flows for each of the three years in the period ended March 31,
1999, in conformity with generally accepted accounting principles.  These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits.  We did not audit the financial statements of certain foreign
subsidiaries and branches, which statements reflect total assets and total
revenues constituting approximately 15 percent and 30 percent, respectively,
as of and for the year ended March 31, 1999, 13 percent and 32 percent,
respectively, as of and for the year ended March 31, 1998 and 15 percent and 37
percent, respectively, in the year ended March 31, 1997 of the corresponding
consolidated totals.  Those statements were audited by other auditors whose
reports thereon have been furnished to us and our opinion expressed herein,
insofar as it relates to the amounts included for Block Drug Company, Inc. and
subsidiaries, is based solely on the reports of the other auditors. We conducted
our audits of the consolidated financial statements in accordance with generally
accepted auditing standards which require that we plan and perform our audit to
obtain reasonable assurance about whether these financial statements are free of
material misstatements.  An audit includes examining on a test basis evidence
supporting the amounts and disclosures in the financial statement, assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe that
our audits and the reports of other auditors provide a reasonable basis for the
opinion expressed above.


PricewaterhouseCoopers LLP



New York, New York
June 8, 1999

<PAGE>21

<TABLE>

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                                                                          MARCH 31,
                                                                                                1999                     1998
                                                                                           ---------------          --------------
ASSETS
<S>                                                                                        <C>                       <C>

Current Assets:
  Cash and cash equivalents............................................................     $   48,363,000            $ 56,331,000
  Marketable securities, at market.....................................................         29,994,000               5,070,000
  Accounts receivable, less allowances of $4,750,000 (1999) and
     $4,446,000 (1998).................................................................        153,470,000             143,114,000
  Inventories..........................................................................        135,947,000             139,139,000
  Other current assets.................................................................         41,867,000              37,056,000
                                                                                           ---------------           -------------

     Total current assets..............................................................        409,641,000             380,710,000

  Property, plant and equipment, less
     accumulated depreciation..........................................................        252,270,000             251,737,000
  Long-term securities, at market......................................................        257,082,000             263,518,000
  Goodwill and other intangible assets, less
     accumulated amortization of $21,217,000(1999)
     and $19,065,000 (1998)............................................................        239,818,000             183,654,000
  Other assets.........................................................................          7,952,000               7,453,000
                                                                                            --------------          --------------

     Total assets......................................................................     $1,166,763,000          $1,087,072,000
                                                                                            ==============          ==============

LIABILITIES AND SHAREHOLDERS' EQUITY

  Current Liabilities:
     Notes and bonds payable...........................................................     $  143,740,000           $ 171,210,000
     Accounts payable and accrued expenses.............................................        185,270,000             173,226,000
     Income taxes payable..............................................................         13,532,000              11,128,000
     Dividend payable..................................................................          5,521,000               5,306,000
                                                                                            --------------            ------------

        Total current liabilities......................................................        348,063,000             360,870,000

  Notes and bonds payable..............................................................        107,012,000              58,318,000
  Deferred income taxes................................................................          8,155,000               3,023,000
  Deferred compensation and other liabilities..........................................         19,648,000              17,606,000
                                                                                            --------------           -------------

        Total liabilities..............................................................        482,878,000             439,817,000
                                                                                            --------------           -------------

  Shareholders' equity:
  Class A common stock non-voting par value $.10-15,000,000
     shares authorized, 14,456,000 (1999) and
     13,991,000 (1998) shares issued and outstanding...................................          1,445,000               1,399,000
  Class B common stock, par value $.10-30,000,000 shares
     authorized, 8,419,000 (1999) and 8,174,000 (1998) shares
     issued and outstanding............................................................            842,000                 817,000
  Capital in excess of par value.......................................................        306,433,000             281,993,000
  Retained earnings....................................................................        384,952,000             377,595,000
  Cumulative other comprehensive income (loss).........................................         (9,787,000)            (14,549,000)
                                                                                           ---------------         ---------------
  Total shareholders' equity...........................................................        683,885,000             647,255,000
                                                                                           ---------------          --------------

     Total liabilities and shareholders' equity........................................     $1,166,763,000          $1,087,072,000
                                                                                            ==============         ===============
</TABLE>

                     See notes to consolidated financial statements.

<PAGE>22

<TABLE>

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS

<CAPTION>

For the Years Ended March 31,                                                1999                1998                  1997
                                                                        --------------      --------------        --------------
<S>                                                                    <C>                   <C>                  <C>
Revenues:
  Net sales...................................................          $ 821,101,000         $863,057,000         $862,471,000
  Interest, dividends and other income........................             27,984,000           25,882,000           28,335,000
                                                                        -------------         ------------         ------------
                                                                          849,085,000          888,939,000          890,806,000
                                                                        -------------         ------------         ------------

Cost and Expenses:
  Cost of goods sold..........................................            272,065,000          281,475,000          279,334,000
  Selling, general and administrative.........................            508,668,000          523,959,000          518,059,000
  Interest expense............................................             13,528,000           13,894,000           10,146,000
  Manufacturing restructuring and
  re-engineering (credit) provision..........................            (12,673,000)              -                72,450,000
                                                                       --------------         ------------         ------------
                                                                          781,588,000          819,328,000          879,989,000
                                                                        -------------         ------------         ------------

Income before income taxes....................................             67,497,000           69,611,000           10,817,000
                                                                        -------------         ------------         ------------

Income Taxes:
  Current.....................................................             11,194,000           14,868,000           14,112,000
  Deferred....................................................              4,681,000            2,951,000          (11,902,000)
                                                                        -------------         ------------         -------------
                                                                           15,875,000           17,819,000            2,210,000
                                                                        -------------         ------------         ------------

Net Income....................................................             51,622,000           51,792,000            8,607,000

Retained earnings at beginning of year........................            377,595,000          377,202,000          416,200,000
Less: Cash dividends - $1.27
  (1999), $1.25 (1998) and $1.20 (1997)
  per share of Class A common stock                                       (17,864,000)         (17,087,000)         (15,881,000)
Cash dividends $0.441 (1999)
 $.435 (1998) and $.415 (1997) per share
 of Class B common stock......................................             (3,634,000)          (3,503,000)          (3,197,000)
Stock dividends 3% (1999, 1998 and 1997)
  to Class A shareholders
  payable in Class A common stock.............................            (14,385,000)         (19,441,000)         (17,982,000)
Stock dividends 3% to Class B
  shareholders payable in Class B
  common stock (1999, 1998 and 1997)..........................             (8,382,000)         (11,368,000)         (10,545,000)
                                                                        --------------       -------------        -------------

Retained earnings at end of year..............................          $ 384,952,000         $377,595,000         $377,202,000
                                                                        ==============        ============         ============

Earnings per share of common stock:

Earnings per share - Basic and Diluted........................                  $2.26                $2.27                $0.38
                                                                                =====                =====                =====
</TABLE>


         See notes to consolidated financial statements.

<PAGE>23

<TABLE>

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


<CAPTION>

For the Years Ended March 31,                                                1999                  1998                  1997
                                                                       --------------        --------------        --------------
<S>                                                                    <C>                    <C>                    <C>

Net income....................................................          $51,622,000            $51,792,000            $8,607,000
                                                                        -----------            -----------            ----------
Other comprehensive income (loss):
  Foreign currency translation adjustment*..                              4,232,000            (20,285,000)            4,520,000
  Unrealized holding gain (loss) on marketable
     securities, net of taxes.................................              530,000              3,141,000            (5,479,000)
                                                                        -----------            -----------           -----------
                                                                          4,762,000            (17,144,000)             (959,000)
                                                                        -----------           ------------           -----------
Comprehensive income..........................................          $56,384,000            $34,648,000            $7,648,000
                                                                        ===========           ============           ===========
</TABLE>

See Note 15 for Accumulated Other Comprenhensive Income.


*The  Company  does not  provide  for U.S.  income  taxes  on  foreign  currency
 translation  adjustments  because  it  does  not  provide  for  such  taxes  on
 undistributed earnings of foreign subsidiaries.



                See notes to consolidated financial statements.

<PAGE>24
<TABLE>

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW

<CAPTION>

For the Years Ended March 31,                                                1999                  1998                  1997
                                                                        --------------        --------------        --------------

CASH FLOW FROM OPERATING ACTIVITIES
<S>                                                                       <C>                    <C>                 <C>
Net income.............................................................    $ 51,622,000           $ 51,792,000        $ 8,607,000
Adjustments to reconcile net income to
 net cash provided by operating activities:
     Depreciation and amortization.....................................      26,110,000             24,670,000         24,629,000
     Deferred income tax provision.....................................       4,681,000              2,951,000        (11,902,000)
     Deferred compensation provision...................................       1,338,000              4,310,000          2,110,000
     (Gain)on sales of long-term securities                                    (283,000)              (987,000)        (3,136,000)
     Restructuring and re-engineering
      (payments) provision.............................................     (3,202,000)            (15,016,000)        67,415,000
     Manufacturing restructuring credits...............................    (12,673,000)                   -                  -
     Employee savings plan provision...................................       1,744,000              1,879,000          1,707,000
     Other, net........................................................         557,000                 80,000            963,000
     Loss (gain)on sale of property, plant
        and equipment..................................................         152,000             (3,557,000)              -
Changes in assets and liabilities that
  provided (used) cash, net of effects from
 purchase of products acquired:

     Accounts receivable...............................................      (8,535,000)            12,161,000        (38,291,000)
     Inventories.......................................................       6,559,000             (7,169,000)       (17,705,000)
     Accounts payable and accrued expenses.............................      20,904,000             25,716,000         12,682,000
     Other current assets..............................................      (4,158,000)             4,751,000         (8,441,000)
     Other assets......................................................        (395,000)            (1,230,000)        15,950,000
     Income taxes and dividends payable................................       2,561,000             (1,113,000)         4,946,000
     Payments of deferred compensation and
       other noncurrent liabilities....................................        (822,000)            (2,292,000)        (1,210,000)
                                                                           ------------          -------------       ------------

Net cash flow from operating activities................................      86,160,000             96,946,000         58,324,000
                                                                           ------------           ------------        -----------

CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from sales of household products brands,
  net of cash expenses.................................................      28,475,000                   -                  -
Additions to property, plant and equipment.............................     (39,754,000)           (45,822,000)       (45,418,000)
Proceeds from sale of property, plant
  and equipment........................................................       5,163,000              7,970,000          7,555,000
Decrease (increase) in marketable
  securities, net......................................................       3,030,000               (100,000)        13,486,000
Dispositions of long-term securities...................................      54,515,000             46,457,000         49,039,000
Purchase of long-term securities.......................................     (75,390,000)           (84,234,000)       (55,771,000)
Payments for products acquired,
  primarily intangibles................................................     (69,011,000)           (38,173,000)       (28,171,000)
                                                                          -------------          -------------       ------------

Net cash used in investing activities..................................     (92,972,000)          (113,902,000)       (59,280,000)
                                                                          -------------          -------------       ------------

CASH FLOW FROM FINANCING ACTIVITIES

Dividends paid to shareholders.........................................     (21,498,000)           (20,590,000)       (19,078,000)
Proceeds from issuance of long-term debt...............................      50,000,000             58,890,000         51,190,000
Payment of short-term notes............................................     (30,802,000)                  -            (9,005,000)
                                                                          -------------          -------------       ------------

Net cash (used in) provided by
  financing activities.................................................      (2,300,000)            38,300,000         23,107,000
                                                                           -------------          ------------        -----------

Effects of exchange rates on cash......................................       1,144,000             (3,898,000)           346,000
                                                                           ------------           -------------       -----------

(Decrease) increase in cash and cash
  equivalents..........................................................      (7,968,000)            17,446,000         22,497,000

Cash and cash equivalents, beginning of year...........................      56,331,000             38,885,000         16,388,000
                                                                           ------------           ------------        -----------

Cash and cash equivalents, end of year.................................    $ 48,363,000           $ 56,331,000        $38,885,000
                                                                           ============           ============        ===========

</TABLE>
                  See notes to consolidated financial statements.

<PAGE>25

<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)


<CAPTION>

For the Years Ended March 31,                                                  1999                 1998                  1997
                                                                           ------------         ------------          ------------

SUPPLEMENTAL CASH FLOW DATA
<S>                                                                       <C>                   <C>                  <C>
Cash Paid During the Year:

  Interest.............................................................    $12,127,000           $14,076,000          $10,381,000
  Income Taxes.........................................................    $10,257,000           $12,350,000          $ 9,560,000

</TABLE>

                      See notes to consolidated financial statements.

<PAGE>26

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS


Note 1. Significant Accounting Policies:

Basis of consolidation:

  The accompanying consolidated financial statements include the accounts of the
Company  and  its   domestic  and  foreign   subsidiaries,   all  of  which  are
wholly-owned.  With the  exception of the March 31 year-end  accounts of Germany
and Colombia  branches,  all other  accounts of foreign  subsidiaries  have been
included on the basis of fiscal years ended December 31 in order to be available
for inclusion in the consolidation.  All material intercompany  transactions and
balances have been eliminated in consolidation.

Revenue Recognition:

  The Company  recognizes  revenue from product sales when the goods are shipped
to the customer.

Foreign currency translation:

  All assets and liabilities, other than those of highly inflationary countries,
are translated at year-end exchange rates. In such cases,  translation gains and
losses are recorded as a separate component of shareholders'  equity and are not
included  in  the  determination  of  net  income.  For  subsidiaries  that  are
considered to be operating in highly  inflationary  countries (Brazil for fiscal
years 1998 and 1997 and Mexico for 1999 and 1998),  the  functional  currency is
the US dollar.  Certain  assets and  liabilities  are  translated  at historical
exchange  rates and resulting  translation  gains and losses are included in the
determination of net income. Income statements are translated each month into US
dollars at the weighted average exchange rates during the period.  In all cases,
foreign currency  transaction gains and losses are included in the determination
of net income.

  Net foreign  exchange losses of ($1,369,000),  ($2,523,000) and  ($3,940,000),
were  included  in  selling,   general  and   administrative   expenses  in  the
determination of net income for fiscal years 1999, 1998 and 1997, respectively.


                                         1999           1998           1997
==================================== ===========   ============    ============
Transaction (losses)                 $ (737,000)   $(2,339,000)    $(3,805,000)
Translation (losses) relating
to highly inflationary countries       (632,000)      (184,000)       (135,000)
                                   ------------  -------------    ------------
Total                               $(1,369,000)   $(2,523,000)    $(3,940,000)
                                   ============   ============    ============

CUMULATIVE TRANSLATION ADJUSTMENT
 RECONCILIATION                          1999           1998           1997
==================================  ===========   =============  ==============
Balance -Beginning                 $(18,241,000)  $  2,044,000     $(2,476,000)
Translation Adjustment                4,232,000    (20,285,000)      4,520,000
Balance-Ending                     $(14,009,000)  $(18,241,000)     $2,044,000


Advertising:

  Cost  associated   with   advertising  are  expensed  in  the  year  incurred.
Advertising  expenses,  which are comprised  primarily of  television  and print
media, were $205,099,000, $201,653,000 and $234,974,000 in fiscal 1999, 1998 and
1997, respectively.

Cash and Cash Equivalents:

  Cash equivalents  include  primarily demand deposits,  certificates of deposit
and time deposits with maturity periods of three months or less when purchased.

<PAGE>27

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)


Inventories:

  Inventories  are  stated at the lower of cost or  market.  Cost is  determined
principally by the average cost and first-in, first-out methods.

Property, plant and equipment and depreciation:

  Property,  plant and equipment is recorded at cost.  Depreciation  is provided
over estimated lives using the straight-line method. Average useful lives are 40
years for buildings and building  additions,  12 years for equipment and 5 years
for computers. The cost of maintenance,  repairs and minor renewals of property,
plant and equipment are charged to operations; major renewal and betterments are
capitalized.

Goodwill and other intangible assets:

  Goodwill and other  intangible  assets  represent  the excess of cost over the
fair value of net  tangible  assets of  companies  or products  purchased.  Such
assets  consist  primarily of goodwill and  trademarks.  At March 31, 1999,  the
carrying values of these assets were $187 million and $53 million, respectively.
At March 31, 1998,  these  respective  carrying values were $132 million and $52
million.  Goodwill  acquired  prior to October 31,  1970 is not being  amortized
since, in management's opinion, its value has not diminished.  Goodwill acquired
subsequent to that date is being amortized using the  straight-line  method over
the  years  estimated  to be  benefited,  but  not to  exceed  40  years.  Other
intangible assets are recorded at cost and amortized over their estimated useful
lives on the straight line method.  The Company  periodically  evaluates whether
current  events or  circumstances  warrant  adjustments to the carrying value or
estimated  useful lives of its  intangible  assets in accordance  with SFAS 121;
"Accounting for the Impairment of Long-Lived  Assets",  and APB 17,  "Intangible
Assets".

  Amortization  of  goodwill  and  other   intangible   assets  was  $5,258,000,
$5,019,000  and  $4,419,000  in the years ended March 31,  1999,  1998 and 1997,
respectively.

Marketable  securities,  financial  instruments  and  fair  value  of  financial
instruments:

  Marketable  securities  classified as current assets include debt  instruments
with less than one year remaining until  maturity,  are treated as available for
sale and are recorded at market value.  Long-term securities are also treated as
available  for sale and are recorded at market value.  Unrealized  holding gains
and losses on  securities  classified  as  available  for sale are recorded in a
separate  component of shareholders  equity.  The fair values of such securities
are determined by published market prices,  independent  pricing services and/or
securities dealers.

The Company utilizes certain financial instruments to manage its foreign
currency and interest rate exposures.  The Company does not engage in trading or
other speculative use of these financial instruments.  To qualify as a hedge,
the Company must be exposed to currency or interest rate risk and the financial
instrument must reduce the exposure and be designated as a hedge.  Additionally,
for hedges of anticipated transactions, the significant characteristics and
expected terms of the anticipated transaction must be identified and it must be
probable that the anticipated transaction will occur.  Financial instruments
qualifying for hedge accounting must maintain a high correlation between the
hedging instrument and the item being hedged, both at inception and throughout
the hedged period.  If anticipated transactions were not to occur, any gains or
losses would be recognized in earnings currently.

The Company uses foreign currency options to mitigate its foreign currency
exposure.  The corresponding gains and losses on those contracts are deferred
and included in the basis of the underlying hedged transactions when settled.
Option premiums on options used to hedge anticipated exposures, principally
inventory purchases, are recorded as other current assets on the consolidated
balance sheets and amortized to expense over the lives of the related options.
The values of options, excluding their time values, are recognized as
adjustments to the related hedged items when the related transaction occurs.

The Company uses interest rate cap agreements to mitigate its interest rate
exposure related to variable rate borrowings.  These agreements cover periods
similar to the third party debt which they are intended to hedge.  The premiums
are amortized to interest expense over the lives of the related interest rate
agreements, or immediately if the related debt does not remain outstanding.

<PAGE>28

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

  During 1998,  the Financial  Accounting  Standards  Board issued  Statement of
Financial  Accounting  Standards  ("SFAS") No. 133,  "Accounting  for Derivative
Instruments  and  Hedging  Activities,"  which must be adopted by the Company by
April 1, 2001. SFAS No. 133 requires that all derivative  financial  instruments
be recorded on the consolidated  balance sheets at their fair value.  Changes in
the fair value of derivatives  will be recorded each period in earnings or other
comprehensive earnings,  depending on whether a derivative is designated as part
of a hedge transaction and, if it is, the type of hedge  transaction.  Gains and
losses on derivative  instruments reported in other comprehensive income will be
reclassifed  as earnings in the periods in which  earnings  are  affected by the
hedged item. The Company does not anticipate  that adoption of SFAS No. 133 will
have a material effect on its financial position or results of operations.

Retirement plans and deferred compensation agreements:

  Pension costs recorded as charges to operations include actuarially determined
current service costs and an amount  equivalent to amortization of prior service
costs in accordance  with the provisions  set forth in SFAS No. 87,  "Employer's
Accounting  for  Pensions." It is the Company's  policy to fund pension costs in
accordance with the Internal Revenue Service full funding limitation.

  The  Company  accounts  for  postretirement  benefits  other than  pensions in
accordance with SFAS No. 106, "Employers Accounting for Postretirement  Benefits
Other Than Pensions." The Company accounts for the cost of these benefits, which
are for health  care,  by accruing  them during the  employee's  active  working
career. The Company has elected to amortize the unfunded  obligation existing at
April 1, 1993 (transition obligation) over a period of 20 years.

  The Company has agreements with certain key executives  which provide deferred
compensation  depending on length of service and average salary level.  Benefits
payable in the future to these  executives under these agreements are charged to
operations on an actuarially  determined basis over the attribution period which
equals the estimated period of active employment of such executives.

Concentration of Credit Risk:

  The Company  sells a broad range of products in many  countries  of the world.
Concentrations  of credit risk with respect to trade receivables are limited due
to the large number of customers comprising the Company's customer base. Ongoing
credit  evaluations  of  customer's   financial  condition  are  performed  and,
generally,  no  collateral  is  required.  The Company  maintains  reserves  for
potential credit losses.

Research and development expenditures:

  Research and development  expenditures  are charged to operations as incurred.
The charges for the years ended March 31, 1999, 1998 and 1997 were  $22,635,000,
$25,849,000 and $28,180,000, respectively.

Reporting on Comprehensive Income:

  In fiscal 1999,  the Company  adopted SFAS No. 130,  "Reporting  Comprehensive
Income."  Under  provisions  of this  statement,  the  Company  has  included  a
financial statement presentation of comprehensive income to conform to these new
requirements.  SFAS 130  requires  unrealized  gains or losses on the  Company's
available-for-sale  securities  and foreign  currency  translation  adjustments,
which,  prior  to  adoption  of  the  statement  were  reported  separately  in
shareholders'  equity,  to be  included  in  other  comprehensive  income.  As a
consequence  of  this  change,  certain  balance  sheet  reclassifications  were
necessary for previously  reported amounts to achieve the required  presentation
of comprehensive income. See Note 15.

Risks and Uncertainties:

  The Company markets  products in highly  competitive  fields.  For many of its
products,   its  competitors  include  significantly  larger  corporations  with
substantially  greater resources.  The high degree of trademark  recognition and
goodwill  associated  with many of the  Company's  brand  names is an  important
factor in its ability to compete effectively.  While larger competitors are able
to commit significantly  greater revenues to national  advertising,  the Company
believes  its  advertising  and  marketing   expertise  enables  it  to  compete
effectively.

  The primary competitive factors affecting proprietary  over-the-counter brands
are product formulation, reputation and advertising and consumer promotions.

<PAGE>29

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

  The  preparation  of  consolidated  financial  statements in  conformity  with
generally accepted  accounting  principles requires management to make estimates
and  assumptions  that  affect the  amounts  reported.  Actual  amounts  are not
expected to differ materially from those estimates.

Reclassifications:

  Certain prior year amounts have been reclassified to conform with current year
presentation.

Note 2. Inventories:
  Major classes of inventories are summarized as follows:
                                                             March 31
                                                       1999              1998

Raw and packaging materials...................   $ 30,997,000       $ 42,661,000
Finished goods................................    104,950,000         96,478,000
                                                 ------------       ------------

  Total.......................................   $135,947,000       $139,139,000
                                                 ============       ============

Note 3. Property, Plant and Equipment:
  Major classes of property, plant and equipment
  are summarized as follows:                                 March 31
                                                   1999                 1998

Land    ....................................    $ 15,496,000       $  16,745,000
Building and related improvements...........     146,392,000         143,854,000
Machinery and equipment.....................     151,921,000         162,440,000
Furniture and fixtures  ....................      61,128,000          45,512,000
Construction in progress....................      12,594,000          15,478,000
                                                ------------        ------------
                                                 387,531,000         384,029,000

Less:  Accumulated depreciation                  135,261,000         132,292,000
                                                ------------        ------------

 Total                                          $252,270,000        $251,737,000
                                                ============        ============


   Depreciation  expense for the years ended March 31,  1999,  1998 and 1997 was
$20,852,000,  $19,651,000 and  $20,210,000,  respectively.  Certain of the above
properties are pledged as collateral for long term debt (Note 6).

Note 4. Marketable and Long-Term Securities:

   The Company accounts for securities in accordance with SFAS No. 115
"Accounting for Certain Investments in Debt and Equity Securities".  Currently,
the Company classifies its marketable and long-term securities as
available-for-sale.

   The  Company's  marketable  and  long-term   securities,   both  current  and
noncurrent, as of March 31, 1999 consisted of the following:


<TABLE>
<CAPTION>

                                                                                                          Unrealized Holding
      Security Type                              Amortized Cost              Fair Value               Gains               Losses
<S>                                                <C>                     <C>                     <C>                   <C>
U.S. government & its agencies                     $ 39,843,000            $ 39,958,000            $  267,000            $152,000
Mortgage backed securities                           86,770,000              88,455,000             1,835,000             150,000
State and municipal                                 151,158,000             154,561,000             3,417,000              14,000
Hedge funds                                           4,000,000               4,102,000               102,000                   0
                                                   ------------            ------------            ----------            --------
                     Total                         $281,771,000            $287,076,000            $5,621,000            $316,000

</TABLE>

   The above  unrealized  holding  gains  and  losses,  net of  income  taxes of
$1,083,000,  are  reflected  as a component of "other  comprehensive  income" in
shareholders' equity.

<PAGE>30
<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

   The marketable securities, both current and non-current, as of March 31, 1998
consisted of the following:

<CAPTION>


                                                                                                         Unrealized Holding
      Security Type                              Amortized Cost             Fair Value               Gains               Losses
<S>                                                <C>                     <C>                     <C>                   <C>
U.S. government & its agencies                     $ 22,947,000            $ 22,907,000            $   84,000            $124,000
Mortgage backed securities                          124,750,000             126,070,000             1,766,000             446,000
State and municipal                                 112,258,000             115,543,000             3,340,000              55,000
Hedge funds                                           4,000,000               4,068,000                68,000                   0
                                                   ------------            ------------            ----------           ---------
                     Total                         $263,955,000            $268,588,000            $5,258,000            $625,000

</TABLE>

   The above  unrealized  holding  gains  and  losses,  net of  income  taxes of
$941,000  are  reflected  as a  component  of "other  comprehensive  income"  in
shareholders equity.

   The maturities of the Company's investment in debt securities, at fair value,
as of March 31, 1999 and 1998 were as follows:



                                                 1999                   1998
Within 1 year                               $ 29,994,000            $ 5,070,000
After 1 year through 5 years                  59,290,000             48,854,000
After 5 years through 10 years               107,614,000             75,350,000
After 10 years                                90,178,000            139,314,000
            Total                           $287,076,000           $268,588,000



For the years ended March 31, 1999, 1998, and 1997 the proceeds from the sales
of securities including normal principal payments on government agency
obligations, bond redemptions, and maturities were $54,515,000, $46,457,000, and
$49,039,000, respectively.  Gross realized gains and gross realized losses from
these transactions were $367,000 and $84,000 for 1999,$995,000 and $8,000 for
1998, and $3,154,000 and $18,000 for 1997, respectively.  The costs of
marketable securities sold were determined by specific identification.

Note 5. Financial Instruments:

The Company uses two types of financial instruments, interest rate cap
agreements and foreign currency put options, to reduce exposures to market risks
from fluctuations in interest and foreign exchange rates.  The Company does not
use financial instruments for trading or speculative purposes.

At March 31, 1999 and 1998, the Company has interest rate cap agreements with a
notional amount of $100 million.  These agreements limit the Company's interest
costs on its short and long-term variable rate debt during the period from
June 1, 1997 through March 1, 2002 if the LIBOR rate exceeds 9%.  Due to the
timing of payments, there were no amounts recorded in the balance sheets as of
March 31, 1999 and 1998.

<PAGE>31

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

As of the end of fiscal years 1999 and 1998, the Company held foreign currency
put options to reduce the impact of fluctuations in certain foreign currencies,
principally the yen, the Euro, the pound sterling, the Australian dollar, and
the Canadian dollar, on anticipated transactions, principally inventory
purchases.  The aggregate notional amount of these options, which expire in
fiscal years 2000 and 2001, approximated $137,703,000 and $52,000,000,
respectively, as of the end of fiscal year 1999, with a weighted average
maturity of 465 days. At the end of fiscal year 1998, the aggregate notional
amount of outstanding options approximated $61,929,000, with a weighted average
maturity of 365 days.

During fiscal years 1999 and 1998, the Company received proceeds of $1,980,000
and $1,283,000, respectively, from the exercise of foreign currency put options.
Gains and losses from option activity were not significant for fiscal years
1999, 1998, and 1997.  The remaining carrying value of put options recorded in
other current assets at March 31, 1999 is $3,700,000.

The fair value of the interest rate cap agreements represents the estimated
amount that the Company would receive or pay to terminate the agreements.  As of
March 31, 1999 and 1998, the Company would have paid $1,367,000 and $1,732,000,
respectively, to terminate the interest rate cap agreements.

The estimated fair value of the foreign currency put options at the end of
fiscal years 1999 and 1998, which represents the estimated amount the Company
would receive if it terminated the agreements, was $1,415,000 and $942,000,
respectively.

The Company is exposed to loss in the event of nonperformance by the
counterparties to its financial instruments.  However, the Company does not
anticipate nonperformance by the counterparties, which are major financial
institutions.


Note 6. Notes and Bonds Payable:

   Short-term  notes payable consist  primarily of borrowings from various banks
at interest  rates  ranging from 3.5% to 11.3% with a weighted  average of 5.47%
and 6.28% for the fiscal years ended March 31, 1999 and 1998,  respectively.  At
March 31, 1999 and 1998,  the Company  maintained  short-term  uncommitted  bank
lines of credit  aggregating  $341,046,000 and  $313,630,000,  respectively.  Of
these amounts,  $211,620,000  and  $151,198,000 was unused at March 31, 1999 and
1998, respectively.  The fair value of the short-term notes payable approximates
book value due to the relatively short maturity of these loans.

Long-term notes and bonds payable are comprised of the following:

                                                            March 31
                                                  1999                  1998
                                              -------------        -------------

7.0% Notes due fiscal 2000................... $       -              $ 1,353,000
Variable rate mortgage notes
 (currently 3.85%) due fiscal 2002...........    2,562,000             2,515,000
6.47% Senior notes due fiscal 2006...........   50,000,000            50,000,000
6.46% Senior notes due fiscal 2009...........   50,000,000                  -
Variable rate bonds (currently 3.1%),
 due fiscal 2010.............................    4,450,000             4,450,000
                                               -----------           -----------
                                               107,012,000           $58,318,000
                                              ============           ===========

Long-term  notes and bonds  payable  maturing in the next five fiscal  years and
thereafter is as follows:

                                                           March 31

                                                  1999                  1998
                                              ------------         -------------

F'2000 7.0% Notes...........................  $       -              $ 1,353,000
F'2001......................................          -                     -
F'2002 Variable rate notes (now 3.85%)......     2,562,000             2,515,000
F'2003......................................          -                     -
F'2004......................................          -                     -
F'2005 and later............................  $104,450,000           $54,450,000


   Certain  properties of the Company  (approximate  book value  $8,450,000) are
pledged as collateral for the bonds.  The  requirements  of the bond  indentures
include the maintenance by the Company of specified  financial  ratios and tests
including a maximum ratio of indebtedness to total  capitalization and a minimum
interest coverage ratio.

<PAGE>32

   Interest  expense on all  borrowings was charged to expense and aggregated
$13,528,000 in fiscal 1999, $13,894,000 in fiscal 1998 and $10,146,000 in
fiscal 1997.

   The fair value of the senior  notes at March 31,  1999 was  $98,625,000.  The
fair value of the senior note at March 31, 1998 was $49,362,000.  The fair value
of the remaining long term debt approximates book value.


<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

<CAPTION>
Note 7. Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses are comprised of the following:

                                                                                                           March 31
                                                                                                   1999                   1998
                                                                                              -------------          -------------
<S>                                                                                          <C>                     <C>
Accounts payable - trade................................................................      $ 42,611,000            $ 34,300,000
Accrued salaries, wages, vacation pay and bonuses.......................................        44,389,000              38,696,000
Accrued advertising and selling expenses................................................        50,264,000              43,224,000
Restructuring and re-engineering........................................................         9,200,000              20,040,000
Accrued legal...........................................................................        20,066,000              11,951,000
Other current liabilities...............................................................        18,740,000              25,015,000
                                                                                              ------------            ------------
                                                                                              $185,270,000            $173,226,000
</TABLE>

Note 8. Income Taxes:

<TABLE>

     Income taxes consisted of:
<CAPTION>

                                                                              Current              Deferred                 Total

For the year ended March 31, 1999
<S>                                                                       <C>                   <C>                     <C>
      Federal..........................................................   $ 3,679,000           $(1,586,000)            $ 2,093,000
      Foreign..........................................................     7,179,000             6,403,000              13,582,000
      State............................................................       336,000              (136,000)                200,000
                                                                          -----------           ------------            -----------
                                                                          $11,194,000           $ 4,681,000             $15,875,000
                                                                          ===========           ===========             ===========

For the year ended March 31, 1998
      Federal..........................................................   $ 3,741,000           $    752,000            $ 4,493,000
      Foreign..........................................................    11,353,000              2,135,000             13,488,000
      State............................................................      (226,000)                64,000               (162,000)
                                                                         ------------           ------------           ------------
                                                                          $14,868,000           $  2,951,000            $17,819,000
                                                                         ============           ============            ============

For the year ended March 31, 1997
      Federal..........................................................   $ 2,762,000           $ (3,995,000)           $(1,233,000)
      Foreign..........................................................    11,155,000             (7,564,000)             3,591,000
      State............................................................       195,000               (343,000)              (148,000)
                                                                          ------------         -------------           ------------
                                                                          $14,112,000           $(11,902,000)           $ 2,210,000
                                                                         ============          =============           ============
</TABLE>

  Deferred  income  tax  expenses  result  from  temporary  differences  in  the
recognition of revenue and expense for tax and financial statement purposes. The
source and the tax effect of these differences were as follows:

<TABLE>
<CAPTION>

                                                                                       1999            1998             1997
                                                                                    ----------     -----------       ----------

For the year ended March 31:
<S>                                                                                <C>              <C>             <C>
  Depreciation..................................................................   $1,794,000       $(1,996,000)    $   651,000
  Expenses (not) currently deductible for
  tax purposes..................................................................    2,702,000         6,376,000     (14,111,000)
  Other      ...................................................................      185,000        (1,429,000)      1,558,000
                                                                                   ----------       -----------    ------------
                                                                                   $4,681,000        $2,951,000    ($11,902,000)
                                                                                   ==========       ===========   =============
</TABLE>


   A reconciliation  of the provision for income taxes and the amount that would
be computed using statutory  federal income tax rates on income  before  income
taxes  for the years  ended  March 31 is as follows:

                                                          (In millions)

                                                   1999         1998       1997
                                                --------     --------    -------
For the year ended March 31:

   Tax at U.S. Federal statutory rate of 35%......$23.6        $24.4      $ 3.8
   Tax benefit on Puerto Rico investment income
     related primarily to tax-exempt bonds........ (2.6)        (2.7)      (3.2)
   Irish operating income taxed at lower rate..... (0.3)        (5.7)      (4.8)
   Reduction in taxes resulting from Puerto Rico
     source income subject to lower tax rate...... (5.0)        (2.8)      (2.9)
   Foreign tax rate differential..................  0.9          3.7        3.4
   Non-deductible restructuring charges...........  0.0          0.0        9.2
   Other.......................................... (0.7)         0.9       (3.3)
                                                  -----       ------     ------
   Total..........................................$15.9        $17.8      $ 2.2
                                                  =====       ======     ======

<PAGE>33

   The Company's  subsidiaries in Puerto Rico have agreements which commenced in
fiscal 1988 and expire in 2002,  which provide for a 90%  exemption  from income
taxes on operating  income.  The  Company's  subsidiary in Ireland has a 10% tax
rate on export sales.  The Company has not accrued U.S.  federal income taxes on
cumulative  undistributed earnings of foreign subsidiaries of $225,276,000 as of
March  31,  1999,  since  the  majority  of such  earnings  are  expected  to be
permanently  reinvested abroad. Where it is the intention to remit earnings, the
related U.S.  income taxes on these  earnings,  after giving effect to available
tax credits,  would not be material. The Company believes that the determination
of the liability  for the amount of  unrecognized  deferred  taxes for temporary
differences related to investments in foreign subsidiaries that are permanent in
duration is not practicable.


<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

<CAPTION>

   Deferred tax assets and liabilities consisted of the following:*

   Deferred tax assets:                                                                                    March 31,
                                                                                                 ----------------------------
                                                                                                    1999                 1998
                                                                                                 ----------           ----------
    <S>                                                                                      <C>                  <C>
     Coupon accrual, sales discounts, and workers compensation..........................      $ 3,386,000          $ 3,053,000
     Employee benefits..................................................................        6,754,000            7,784,000
     Accrual on vacation................................................................        1,329,000            1,226,000
     Deferred compensation..............................................................        3,968,000            4,968,000
     Capital gain.......................................................................       10,471,000            7,807,000
     Accrued restructuring..............................................................        3,496,000            7,642,000
     Other..............................................................................        4,250,000            1,497,000
                                                                                              -----------          -----------
                                                                                              $33,654,000          $33,977,000
                                                                                              ===========          ===========

   Deferred tax liabilities:
     Property, plant and equipment......................................................       17,784,000          $15,990,000
     SFAS No. 115 adjustment............................................................        1,083,000              942,000
     Other..............................................................................       10,233,000            7,621,000
                                                                                             ------------          -----------

                                                                                              $29,100,000          $24,553,000
                                                                                             ============          ===========
</TABLE>

 *       As of March 31, 1999 and 1998,  recoverable  income taxes  reflected in
         the balance sheet in "Other current assets"  included  current deferred
         tax assets of $12,709,000 and $12,447,000,  respectively. The remaining
         deferred tax liabilities, net of deferred tax assets, were reflected in
         the balance sheet as "Deferred income taxes".


Note 9. Retirement and Deferred Compensation Plans:

   In fiscal 1999,  the Company  adopted SFAS No. 132,  "Employers'  Disclosures
about Pensions and  Postretirement  Benefits," which standardizes the disclosure
requirements  for  pensions and other  postretirement  benefits.  The  Statement
addresses  disclosure only. It does not address liablity  measurement or expense
recognition. There was no effect on financial position or net income as a result
of adopting SFAS No. 132.

   The  Company  and  its  subsidiaries  have  several  pension  plans  covering
substantially all domestic employees and certain employees in foreign countries.
The  Company  makes  annual  contributions  to the  plan  equal  to the  amounts
allowable under the Internal  Revenue  Service maximum full funding  limitation.
The domestic plan benefits are primarily based upon the employee's  compensation
during the sixty highest consecutive months of the last 120 months of employment
and the number of years of service.

   In addition to  providing  pension  benefits  the  Company  provides  certain
retiree  health  care  benefits, presented as "Other Benefits", for
substantially   all  non-union   employees (excluding  Puerto Rico) who reach
retirement age while working for the Company. Health care  benefits  are
provided by Blue Cross Blue Shield of New Jersey and selected Health Maintenance
Organizations.  The Company  reserves the right to change or discontinue these
benefits in whole or in part at any time.

   The following tables provide a reconciliation  of changes in plan obligations
and fair values of plan assets at March 31,  1999 and 1998,  and a statement  of
the funded status of the plans at March 31, 1999 and 1998, respectively:

<TABLE>
<CAPTION>


                                                                          Pension Benefits                     Other Benefits
                                                                     --------------------------           ------------------------
                                                                        1999            1998                 1999          1998
                                                                     -----------    -----------           ----------    ----------

Change in Benefit Obligation
  <S>                                                                <C>               <C>                 <C>          <C>
   Benefit Obligation at Beginning of Year........................    $74,756,000       $57,229,000         $8,554,000   $8,292,000
   Service Cost...................................................      4,261,000         3,592,000            329,000      287,000
   Interest Cost..................................................      4,352,000         4,515,000            607,000      622,000
   Settlement.....................................................    (17,075,000)             -                  -            -
   Special Termination Benefits...................................        931,000         3,924,000               -            -
   Amendments.....................................................        913,000              -                  -            -
   Curtailments...................................................       (394,000)             -                  -            -
   (Gain)/Loss....................................................      2,761,000         7,839,000           (279,000)    (498,000)
   Benefit Payments...............................................     (6,065,000)       (2,343,000)          (169,000)    (149,000)
                                                                     ------------      ------------        -----------  -----------
   Benefit Obligation at End of Year..............................    $64,440,000       $74,756,000         $9,042,000   $8,554,000
                                                                      ===========       ===========         ==========  ===========

Change in Plan Assets

   Fair Value of Assets at Beginning of Year......................    $77,492,000       $67,522,000               -            -
   Settlement.....................................................    (17,075,000)             -                  -            -
   Actual Return on Assets........................................      4,523,000        12,135,000               -            -
   Employer Contribution..........................................      3,227,000           178,000       $   169,000    $  149,000
   Employee Contribution..........................................          -                 -                15,000         9,000
   Benefits Payments..............................................     (6,065,000)       (2,343,000)         (184,000)     (158,000)
                                                                     ------------    -------------        -----------   -----------
   Fair Value of Assets at End of Year............................    $62,102,000       $77,492,000       $      -       $     -
                                                                      ===========     ============        ===========   ===========
</TABLE>

<PAGE>34

<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<CAPTION>


                                                                          Pension Benefits                      Other Benefits
                                                                     --------------------------           ------------------------
                                                                        1999            1998                 1999          1998
                                                                     -----------    -----------           ----------    ----------

Change in Benefit Obligation
   <S>                                                             <C>              <C>                  <C>          <C>
   Funded Status..................................................  $ (2,338,000)    $  2,736,000         $(9,043,000) $(8,554,000)
   Unrecognized (Gain)............................................   (15,690,000)     (20,927,000)         (1,054,000)    (775,000)
   Unrecognized Prior Service Cost................................     4,304,000        3,795,000                -            -
   Unrecognized Transition Obligation.............................      (564,000)      (1,365,000)          3,930,000    4,210,000
                                                                   -------------   --------------         -----------  -----------
   (Accrued)/Prepaid Benefit Cost.................................  $(14,288,000)    $(15,761,000)        $(6,167,000) $(5,119,000)
                                                                   =============   ==============        ============ ============
</TABLE>


   The projected benefit obligation,  accumulated  benefit obligation,  and fair
value of plan assets for the pension plans with accumulated  benefit obligations
in excess of plan assets were $6,337,000,  $4,288,000 and zero,  respectively as
of March 31, 1999 and $11,422,000, $9,035,000 and $3,813,000, respectively as of
March 31, 1998.

   The following  table provides the amounts  recognized in the balance sheet as
of March 31, 1999 and 1998:
<TABLE>
<CAPTION>

                                                                            Pension Benefits                   Other Benefits
                                                                          1999            1998               1999          1998
  <S>                                                                <C>             <C>             <C>              <C>
   Prepaid Benefit Costs..........................................    $  4,615,000    $  3,181,000    $      -         $      -
   Accrued Benefit Liability......................................     (20,122,000)    (20,550,000)      (6,167,000)    (5,119,000)
   Intangible Asset...............................................       1,219,000       1,148,000             -              -
   Accumulated Other Comprehensive Income.........................            -            460,000             -              -
                                                                      ------------    ------------     ------------    -----------
   Net Amount Recognized..........................................    $(14,288,000)   $(15,761,000)     $(6,167,000)   $(5,119,000)
                                                                     =============   =============    =============   ============
</TABLE>

   The following table provides the components of net periodic benefit costs for
the plans at March 31, 1999, 1998, and 1997.
<TABLE>
<CAPTION>

                                                         Pension Benefits                                 Other Benefits
                                            -------------------------------------------    ----------------------------------------
                                               1999            1998            1997           1999           1998           1997
                                            ----------      -----------     -----------    ----------     ----------     ----------
  <S>                                    <C>             <C>             <C>              <C>            <C>           <C>
   Service Cost.......................    $4,261,000      $ 3,592,000     $3,575,000       $  328,000     $  286,000    $  296,000
   Interest Cost......................     4,353,000        4,515,000      4,086,000          607,000        622,000       587,000
   Expected Return on
     Plan Assets......................    (4,402,000)      (5,268,000)    (4,218,000)            -              -             -
   Amortization of
     (Gain) Loss......................       (52,000)      (4,935,000)      (421,000)            -              -             -
   Amortization of Prior
     Service Cost.....................       403,000          403,000        227,000             -              -             -
   Amortization of
     Transition Obligation............      (567,000)        (684,000)      (684,000)         281,000        281,000       281,000
                                          ----------     ------------   ------------       ----------     ----------    ----------
   Annual Net Periodic
     Benefit Cost.....................     3,996,000       (2,377,000)     2,565,000        1,216,000      1,189,000     1,164,000
   Change in (gain) loss
    recognition ......................          -          (1,447,000)          -                -              -             -
   Voluntary Retirement
     Incentive Program................          -                -              -                -              -             -
   Curtailment Gain...................      (394,000)            -              -                -              -             -
   Settlement Gain....................    (2,807,000)            -              -                -              -             -
   Special Termination
     Benefits.........................       931,000        3,924,000           -                -              -             -
                                          ----------      -----------    -----------       ----------     ----------    ----------
   Total Pension Cost.................    $1,726,000      $   100,000     $2,565,000       $1,216,000     $1,189,000    $1,164,000
                                          ==========      ===========    ===========       ==========     ==========    ==========
</TABLE>


   As a result of a workforce  reduction  program,  the Company  offered special
enhanced  benefits  to  potential  retirees  in fiscal  years 1999 and 1998.  As
required  under  SFAS No. 88,  charges of  approximately  $.9  million  and $3.9
million in fiscal years 1999 and 1998,  respectively,  related to these enhanced
benefits,  were recognized  immediately.  In addition,  in fiscal year 1999, the
Company  recognized a curtailment  gain of $.4 million and a settlement  gain of
$2.8 million related to these reductions.

   During fiscal year 1998, the Company  changed the methodology for recognizing
gains and losses. The recognition methodology went from the minimum amortization
approach  stated  under  SFAS  No.  87 to a  methodology  that  accelerates  the
recognition  of  gains.  The  impact  of  this  change  resulted  in a  gain  of
approximately $1.4 million.

   The assumptions used in measuring the Company's  benefit plan obligations are
as follows:

   Benefits Obligation at Beginning of Year

                                  Pension Benefits           Other Benefits
                                  1999       1998         1999           1998

Discount Rate.............        7.25%      7.25%        7.25%          7.25%
Expected Return on
 Plan Assets.............         9.00       9.00          -              -
Salary Scale.............         5.00       5.00          -              -


<PAGE>35

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

   Health Care Trend Rates

         A 7.5% annual rate of increase in the per capita cost of covered health
care benefits was assumed for 1998.  The rate was assumed to decrease  gradually
to 5.5% for 2001 and remain at that level  thereafter.  Increasing  the  assumed
health care cost trend rates by one percentage point in each year would increase
the  Accumulated  Postretirement  Benefit  Obligation  as of March  31,  1999 by
approximately  $298,000  and the  aggregate  of the  service and  interest  cost
components of net periodic  postretirement  benefit cost for the year then ended
by $23,000. Similarly,  decreasing the assumed health care cost care trend rates
by  one  percentage   point  in  each  year  would   decrease  the   Accumulated
Postretirement Benefit Obligation as of March 31, 1999 by approximately $341,000
and the  aggregate of the service and interest  cost  components of net periodic
postretirement benefit cost for the year then ended by $29,000.

   The  domestic  plans are fully  funded.  Plan  assets  consist  primarily  of
government  bonds,  corporate  bonds and common  stocks.  The Company's  foreign
subsidiaries  have plans  under  which  funds are  deposited  with  trustees  or
annuities are purchased.

   The  Company  has a Special  Stock Unit Plan (the  "Plan")  whereby  selected
participants  receive the right to deferred  compensation based on the growth in
the Company's  average earnings per share, as defined in the Plan, and the value
of the awards is  adjusted to reflect the  dilutive  effect of stock  dividends.
Charges  under the Plan for the years ended March 31,  1999,  1998 and 1997 were
$495,000, $2,894,000 and $3,289,000, respectively. Deferred compensation payable
include  $3,338,000  at  March  31,  1999 and  $3,877,000  at  March  31,  1998,
respectively. Such amounts represent the actuarially determined present value of
the vested benefits.

   The Company has  employment  contracts  with four  executives of the Company.
These contracts specify the payment of benefits to the individual or beneficiary
upon the termination of employment or death.

Note 10. Shareholders' Equity:

   The two classes of the  Company's  Common Stock are identical in all respects
except that (a) all voting rights are held by the owners of Class B Common Stock
and (b) holders of Class A Common Stock are entitled to receive dividends,  when
and if declared by the Board of Directors  whether or not dividends are declared
in respect of the Class B Common Stock, but in the event of the declaration of a
dividend in respect of the Class B Common Stock, a dividend of at least the same
amount must be declared in respect of the Class A Common  Stock.  The  Company's
Certificate  of  Incorporation  provides  that upon an  affirmative  vote of the
holders of two-thirds  of the  outstanding  Class B Common Stock,  all shares of
Class A Common Stock will be converted into Class B Common Stock. The conversion
terms  are one  share of Class A Common  Stock  for one  share of Class B Common
Stock  subject  to  certain   antidilutive   or  other  capital   reorganization
provisions.

   On November 3, 1998,  the Company  declared  an  increased  cash  dividend of
$.3175 on the Class A Common Stock and an extra  Common Stock  dividend of 3% on
both the Class A and Class B Common  Stock,  and an increased  cash  dividend of
$0.11 5/8 per share on the Class B Common  Stock,  payable on January 4, 1999 to
shareholders of record as of December 1, 1998.

   On November 4, 1997, the Company declared an increased cash dividend of $.315
on the Class A Common Stock and an extra Common Stock dividend of 3% on both the
Class A and Class B Common  Stock,  and an increased  cash  dividend of $.11 per
share on the Class B Common Stock, payable on January 2, 1998 to shareholders of
record as of December 1, 1997.

   On November 5, 1996, the Company  declared an increased cash dividend of $.31
on the Class A Common Stock and an extra Common Stock dividend of 3% on both the
Class A and Class B Common Stock, and an increased cash dividend of $.10 3/4 per
share on the Class B Common Stock, payable on January 2, 1997 to shareholders of
record as of December 2, 1996.

   Earnings per share of common  stock has been  restated to reflect the current
and prior years' stock dividends.

<PAGE>36

<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<CAPTION>

   Changes in Class A Common  Stock,  Class B Common Stock and capital in excess
of par value during fiscal 1999, 1998 and 1997 were as follows:

                                                            CLASS A                          CLASS B
                                                         COMMON STOCK                      COMMON STOCK
                                                                                                                       Capital in
                                                           Issued                              Issued                  Excess of
                                                   Shares          Amount            Shares            Amount          Par Value
<S>                                           <C>               <C>                <C>              <C>              <C>
Balance, March 31, 1996....................    13,112,000        $1,311,000         7,704,000         $770,000        $219,207,000
                                               ==========        ==========         =========         ========        ============

3% Stock Dividend..........................       394,000        $   39,000           232,000         $ 24,000        $ 28,465,000
Savings Incentive Plan(1)..................        38,000             4,000                                              1,703,000
                                               ----------        ----------         ---------         --------        ------------

Balance, March 31, 1997....................    13,544,000        $1,354,000         7,936,000          794,000        $249,375,000
                                               ==========        ==========         =========         ========        ============

3% Stock Dividend..........................       407,000        $   41,000           238,000         $ 23,000        $ 30,744,000
Savings Incentive Plan(1)..................        40,000             4,000                                              1,874,000
                                               ----------        ----------         ---------         --------        ------------

Balance, March 31, 1998....................    13,991,000        $1,399,000         8,174,000         $817,000        $281,993,000
                                               ==========        ==========         =========         ========        ============

3% Stock Dividend..........................       421,000        $   42,000           245,000         $ 25,000        $ 22,700,000
Savings Incentive Plan(1)..................        44,000             4,000                                              1,740,000
                                               ----------        ----------         ---------         --------        ------------

Balance, March 31, 1999....................    14,456,000        $1,445,000         8,419,000         $842,000        $306,433,000
                                               ==========        ==========         =========         ========        ============
</TABLE>

(1)    The Company has a voluntary  savings incentive plan for eligible domestic
       employees. Company contributions to this 401(K) plan are made in the form
       of the  Company's  Class A Common  Stock which is valued at fair value at
       the date of the contribution.


Note 11.  Legal Proceedings:

   The Company is  involved  in various  routine  litigation  incidental  to its
continuing and discontinued operations.  While the significance of these matters
cannot be fully assessed at this time,  management,  on advice of counsel,  does
not believe that any liability that may arise from these proceedings will have a
material  adverse  impact  on the  Company's  consolidated  financial  position,
results of operations or liquidity.

Note 12.  Earnings Per Common Share:

   Basic  earnings per common share was calculated by dividing net income by the
weighted average number of common shares outstanding during the period.  Diluted
earnings  per share was  calculated  by  dividing  net  income by the sum of the
weighted average number of common shares  outstanding plus all additional common
shares that would have been  outstanding if potentially  dilutive  common shares
had been issued.

   The following table  reconciles the number of shares utilized in the earnings
per share calculations:

                                                 Year Ended March 31,
                                                   (In Thousands)
                                           1999         1998            1997
                                         ------------------------------------

Net income............................. $51,622      $51,792           $8,607
Earnings per common share-basic.......    $2.26        $2.27            $0.38
Earnings per common share-diluted......   $2.26        $2.27            $0.38
Number of shares (in thousands):
Common shares-basic....................22,853.0     22,808.0         22,766.0
Effect of dilutive securities:
 Stock options.........................    12.0           -                -
                                       --------     --------        ---------

Common shares-diluted..................22,865.0     22,808.0         22,766.0
                                       ========     ========         ========



Note 13.  Restructuring and Re-engineering Provision (Credit):

   In the fourth  quarter of fiscal  1997,  the Company  approved a program (the
"Program") to  consolidate  its  manufacturing  operations by closing six of its
twelve production facilities in various parts of the world. The facilities to be
exited were located in Belgium,  the United  Kingdom,  Australia,  Canada,  U.S.
and Argentina.  Significant  components of the Program  involved the
termination of approximately 450 manufacturing employees (23% of its
manufacturing  workforce), the  cleanup,  closing  and sale of  plants,  and the
physical  disposition  of inventory and equipment.

<PAGE>37

<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<CAPTION>

   The  following  table  displays  a  rollforward  of the  liabilities  for the
manufacturing restructuring from inception to March 31, 1999:


                         Original     Amounts        Remaining Amount                Remaining  Amount       Amount       Ending
                         Provision    Utilized in    Balance   Utilized in            Balance   Utilized in  Reversed in  Balance
Type of Cost             Fiscal 1997  Fiscal 1997    3-31-97   Fiscal 1998   Other    3-31-98   Fiscal 1999  Fiscal 1999  3-31-99*
------------              -----------  -----------  ---------  -----------   -----   ---------- -----------  -----------  --------
<S>                      <C>           <C>          <C>         <C>        <C>        <C>        <C>          <C>         <C>
Employee severance and    $15,454(a)        -        $15,454     ($7,516)   ($3,300)   $4,638     ($2,637)     ($2,001)     -
  related costs
Plant closing and          32,978(b)   $(24,468)       8,510        -        (8,510)     -           -            -         -
  related asset
  write-offs
Re-engineering              7,184(c)     (7,184)        -           -          -         -           -            -         -
Contractual obligations    16,834(d)     (5,042)      11,792      (7,500)    11,110    15,402        (562)      (5,640)   $9,200
  and other               -------      ---------    --------   ----------   -------  --------   ----------   ----------   ------

                          $72,450      $(36,694)     $35,756    ($15,016)     ($700)  $20,040     ($3,199)     ($7,641)   $9,200
                          =======     =========     ========  ==========   ========  ========   =========   ==========    ======
</TABLE>

   *The balance at the end of the year is classified as a current liability.


(a) Represents severance costs for approximately 450 production employees at six
    facilities.  Estimates were based on calculations derived by attorneys who
    considered the local labor laws at each location.
(b) Represents estimated impairment losses on land and buildings to be sold
    ($15 million) and machinery and equipment to be disposed ($14 million).
    Also included is the estimate of site cleanup costs ($4 million). Estimates
    were based principally on appraisals from third-party appraisers.
(c)  Principally represents consulting costs, as well as limited training and
    maintenance costs, which were expensed during 1997.
(d) Represents consulting and legal fees and other costs.

  In 1997, the Company re-engineered certain major systems and processes.
The non-recurring, incremental costs of the re-engineering aggregated to $7.1
million, and included primarily consulting costs and training costs.  These
amounts have been classified and presented within the Manufacturing
restructuring and re-engineering provision caption on the fiscal 1997
income statement.

 During fiscal 1998, the Company sold three facilities at aggregate sales prices
substantially in excess of its original estimates, and continued to actively
market the three remaining facilities located in Canada, Argentina and the U.S.
The Canadian facility was sold on June 15, 1999 and management expects the
Argentine facility to be sold by September 1999.  In addition, during fiscal
1998 and 1999, the Company transferred a substantial portion of production in
the sites being sold to other facilities.  As a result of the realization of
sales prices for the facilities sold in excess of amounts originally
anticipated, in 1998 the Company reclassified approximately $8.5 million from
its plant closing liability and related asset write-offs to its contractual
obligations and other liability (as discussed below).  In addition, with the
exception of a limited group of employees (approximately 56) at the Company's
U.S. facility, all manufacturing employees included in the initial restructuring
plan have been severed (392 employees).  As of March 31, 1998, the aggregate
cost of the Company's severance program was $3.3 million less than initially
anticipated, principally due to favorable labor negotiations.  Accordingly,
during fiscal 1998, the Company reclassified $3.3 million from its employee
severance and related costs liability to its contractual obligations and other
liability (as discussed below).

As of March 31, 1998, the Company had discontinued substantially all production
at the U.S. location to be closed, with the exception of the production under a
contractual obligation to produce one product for the purchaser of the Company's
ethical pharmaceutical practice division, which was sold in 1996.  In connection
with the original restructuring plan, the Company anticipated completely exiting
its U.S. facility.  As of March 31, 1997, management believed that the facility
would either be sold to the entity to which the Company was obligated for
production or to another entity, whom it expected would assume responsibility
for the production.  However, during 1998, despite the Company's efforts to sell
the facility, it was unable to do so.  As a result of the transfer of all other
production from this facility, remaining production under this contract and
other costs will result in a loss of approximately $10 million, which was not
recognized under the original restructuring provision, but was increased to
$10 million during 1998.

As of March 31, 1999, the Company identified additional excess amounts of $7.6
million due to additional favorable experiences in calculating final severance
payments and settlement of post-closing adjustments in connection with the sale
of one of its plants.  In addition, as a result of favorable fixed asset
disposals, which are not presented in the above table, a gain of $5.1 million
was generated.  Consequently, the Company recorded a restructuring credit of
$12.7 million in its income statement for the year ended March 31, 1999.

<PAGE>38

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

  As of March 31, 1999, the Company's remaining obligation of $9.2 million
consists of its contractual obligation to produce a product for another entity.
Management believes that the remaining manufacturing reserves are adequate to
complete its plan during fiscal 2000.

Note 14.  Stock Option Plan

   In June 1998,  the Company  implemented  its Stock  Option Plan (the  "Plan")
whereby  incentive and nonqualified  options to purchase shares of the Company's
Class A Common Stock,  par value $.10 per share,  may be granted to employees of
the Company and its subsidiaries. The aggregate number of shares of common stock
for which options may be granted  under the Plan is  1,000,000.  The fair market
value of the Company's common stock is determined on the date of grant as quoted
on the NASDAQ National Market. Stock options expire ten years from the date they
are granted and vest over service periods of three years, although early vesting
may occur in cases of death, disability or normal retirement.

   The following tables summarize  activity regarding stock options for the year
ended March 31, 1999:

                                                 Options        Weighted Average
                                               Outstanding*      Exercise Price*
(Shares in Thousands)

Balance at March 31, 1998                           -                   -
Options granted                                  104,706             $36.72
Options exercised                                   -                   -
Options cancelled/forfeited                        2,920              37.06
                                                 -------
Balance at March 31, 1999                        101,786             $36.74

   * Adjusted to reflect the 1999 3% stock dividend.

   There were 7,182 stock options exercisable at March 31, 1999.

                                  Options
                               Outstanding at              Remaining Contractual
   Exercise Price*             March 31, 1999*                  Life in Years

   At $33.25                      17,509                             9.3
   At $35.92                       6,490                             9.3
   At $38.13                      17,709                             9.5
   At $37.32                      52,077                             9.7
   At $38.50                       8,001                             9.9

   * Adjusted to reflect the 1999 3% stock dividend.

   The Company applies  Accounting  Principles  Board Opinion No. 25 "Accounting
for Stock  Issued to  Employees,"  ("APB  25") and  related  interpretations  in
accounting  for its Plan.  During the year ended March 31, 1999, the Company did
not  recognize  compensation  expense for options  granted to  employees  as the
option exercise price per share of Class A Common Stock was equal to the closing
sale  price of the stock on the date of grant as quoted on the  NASDAQ  National
Market. The Company estimates that it will recognize  compensation expense in an
aggregate  amount of $0 in future  years as options  vest for grants made during
fiscal 1999.

   Had  compensation  expense for options  granted to employees been  determined
based  upon the  fair  value at the date of  grant  for  awards  under  the Plan
consistent with the methodology  prescribed under SFAS No. 123,  "Accounting for
Stock Based Compensation," ("SFAS 123"), the Company's net income and income per
share for the year ended March 31, 1999 would have  decreased  by  approximately
$159,000 or $.01 per share.

<PAGE>39

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)

   The fair values of options  granted to employees  during the year ended March
31,  1999 have been  determined  on the date of the  respective  grant using the
Black-Scholes  option-pricing  model  based on the  following  weighted  average
assumptions:

                                             1999
   Risk-free rate                            5.19%
   Volatility                                  25%
   Expected life                           5 years
   Dividend yield                            3.50%

   Using the  Black-Scholes  model, the average fair value of options granted in
fiscal 1999 was $7.99.


Note 15.  Accumulated Other Comprehensive Income:

   Components of other comprehensive income/(loss) consists of the following:

                                            Dollars in Thousands)
                                                                   Accumulated
                                   Foreign       Unrealized            Other
                                   Currency      Gain/(Losses)     Comprehensive
                                  Translation    on Securites      Income (Loss)

March 31, 1997                     $   2,044        $  551           $   2,595

Change in fiscal 1998                (20,285)        3,141             (17,144)
                                   ---------        ------           ---------

March 31, 1998                       (18,241)        3,692             (14,549)
                                   ---------        ------           ---------

Change in fiscal 1999                  4,232           530               4,762
                                   ---------        ------           ---------

March 31, 1999                      $(14,009)       $4,222            $ (9,787)
                                   =========        ======           =========


Note 16.  Acquisition of Joint Venture:

   In fiscal year 1997,  the Company  acquired  the  remaining  50% share of the
Kobayashi-Block  Company Ltd.  joint venture  whereupon it became a wholly-owned
subsidiary.  The purchase  price was  approximately  $16,500,000.  Sales for the
wholly-owned subsidiary were $67,243,000 and $78,103,000 and $99,277,000 for the
fiscal  years  ended  March  31,  1999,  March  31,  1998 and  March  31,  1997,
respectively.

Note 17. Segments of an Enterprise:

   The Company has adopted SFAS No. 131, "Disclosure about Segments of
a Business Enterprise and Related Information," which requires reporting certain
financial  information  according to the  "management  approach."  This approach
requires reporting  information  regarding  operating segments on the basis used
internally by management to evaluate segment performance.

   The  accounting  policies of the segments are the same as those  described in
Note 1, "Significant Accounting Policies".Transfers between geographic areas are
accounted for at prices which  approximate  arm's length market price.  Segments
are determined based on geographic  area. The Company  evaluates the performance
of its segments based on operating profit,  excluding  interest  expense,  other
income and expense,  certain unallocated  expenses,  the effects of nonrecurring
items, and income tax expense.

   The Company is managed in three operating  segments:  United States;  Europe,
Africa and the Middle East; and Latin America, Canada, and Asia/Pacific.

<PAGE>40
<TABLE>

NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Continued)
<CAPTION>

   The following table presents information  concerning the Company's continuing
operations by geographic area for the years ended March 31, 1999, 1998 and 1997.

                                                                                   1999              1998                1997
                                                                                ----------       ----------          -----------
                                                                                                 (in thousands)
<S>                                                                           <C>               <C>                 <C>
GEOGRAPHIC AREA
   Net Sales:
     United States........................................................     $ 330,246         $  363,507          $  347,523
     Europe, Africa, Middle East..........................................       312,866            296,765             295,774
     Latin America, Canada, Asia/Pacific..................................       177,989            202,785             219,174
                                                                               ----------        -----------         ----------
     Consolidated net sales...............................................     $ 821,101         $  863,057          $  862,471
                                                                               ==========        ===========         ==========

   Operating Income:
     United States........................................................     $   59,200        $   52,186          $   56,331
     Europe, Africa, Middle East..........................................         33,745            45,353              43,029
     Latin America, Canada, Asia/Pacific..................................         10,825            22,019              20,363
                                                                               ----------        -----------         -----------
     Total operating income...............................................        103,770           119,558             119,723
     General corporate expenses, net (1)..................................        (36,273)          (49,947)         $ (108,906)
                                                                               -----------       -----------         -----------
     Consolidated income before income taxes..............................     $   67,497        $   69,611          $   10,817
                                                                               ===========       ===========         ===========

   Assets:
     United States........................................................     $  471,106        $  446,198          $  388,681
     Europe, Africa, Middle East..........................................        281,316           247,264             278,844
     Latin America, Canada, Asia/Pacific..................................         78,902            68,691              82,614
                                                                               ----------        ----------          ----------
     Total identifiable assets............................................        831,324           762,153             750,139
     General corporate assets (2).........................................        335,439           324,919             264,784
                                                                               ----------        ----------          ----------
     Consolidated assets..................................................     $1,166,763        $1,087,072          $1,014,923
                                                                               ==========        ==========          ==========

   Depreciation and Amortization:
     United States........................................................     $   16,761        $   14,264          $   15,298
     Europe, Africa, Middle East..........................................          7,408             7,812               6,852
     Latin America, Canada, Asia/Pacific..................................          1,941             2,594               2,479
                                                                               ----------        ----------          ----------
     Consolidated depreciation and amortization...........................     $   26,110        $   24,670          $   24,629
                                                                               ==========        ==========          ==========

   Capital Expenditures:
     United States........................................................     $   23,061        $   26,709          $   19,583
     Europe, Africa, Middle East..........................................          8,943            16,845              21,288
     Latin America, Canada, Asia/Pacific..................................          7,750             2,268               4,547
                                                                               ----------        ----------          ----------
     Consolidated capital expenditures....................................     $   39,754        $   45,822          $   45,418
                                                                               ==========        ==========          ==========

</TABLE>

   (1) General corporate expenses include administrative  expenses,  translation
losses  relating  to  highly  inflationary  countries,   interest  expense  less
investment income and manufacturing restructuring provision and credits.

   (2) General  corporate assets include cash and cash  equivalents,  marketable
and long-term securities.

Note 18.  Contingency Payments:

   The Company is conditionally  liable for additional milestone payments of $34
million  related to the  Atridox(R)  acquisition if certain future events occur.
The timing of such future occurrences cannot currently be estimated.

Note 19.  Subsequent Events:

   Subsequent to the close of the fiscal year, the Company sold the Lava(R) hand
soap brand for  approximately  $19  million.  In Germany,  the Company  acquired
Chlorhexamed(R),  a medicated mouthwash. In U.K., the Company acquired the Louis
Marcel(R)  line  of  depilatories.   In  Latin  America,  the  Company  acquired
Silidron(R) and Espasmo  Silidron(R),  two anti-gas medicines sold in Brazil. In
Argentina,  the Pelo Libre(R) line of pediculicides was acquired.  In Korea, the
Company acquired the balance of certain  marketing  rights to the  Parodontax(R)
brand  toothpaste.  The aggregate  amount spent on these  acquisitions was $55.6
million, mainly comprised of goodwill payments.

<PAGE>41

<TABLE>

QUARTERLY FINANCIAL INFORMATION
(Unaudited)
<CAPTION>

   The  following is a tabulation  of quarterly  results of  operations  for the
years ended March 31, 1999 and 1998:

                                                                                    Fiscal 1999 Quarters
                                                                First            Second             Third             Fourth(2)
<S>                                                        <C>               <C>               <C>                 <C>

Net sales.............................................      $189,447,000      $204,063,000      $194,485,000        $233,106,000
Gross profit..........................................       133,057,000       140,965,000       124,689,000         150,325,000
Income Before Income Taxes............................        16,194,000        16,910,000        17,639,000          16,754,000
Net Income ...........................................        11,935,000        12,794,000        12,313,000          14,580,000
Earnings per share of Common Stock (Basic and Diluted)(1)           $.52              $.56              $.54                $.64


                                                                                    Fiscal 1998 Quarters
                                                               First             Second             Third             Fourth

Net sales.............................................      $200,206,000      $221,878,000      $208,284,000        $232,689,000
Gross profit..........................................       140,757,000       144,250,000       140,327,000         156,248,000
Income (Loss)Before Income Taxes......................        20,786,000        21,211,000        13,095,000          14,519,000
Net Income (Loss).....................................        15,381,000        15,277,000        11,432,000           9,702,000
Earnings per share of Common Stock(1).................              $.67              $.67              $.51                $.42

</TABLE>

(1) Restated to reflect the three percent stock dividends (See Note 10).

(2)   Reflects a credit of $12,673,000 in connection with the restructuring and
      re-engineering.  See Note 13 to the Consolidated Financial Statements.


Item 9.  Changes In and Disagreements with Accountants on Accounting and
         Financial Disclosure

   Not applicable.

<PAGE>42

                                     PART III

Item 10.        Directors and Executive Officers of the Registrant:


     (a)    Directors of the Registrant

            The  following is a list of each  director of the Company,  the date
their present terms of office will expire and all other positions presently held
with the Company unless otherwise noted:
<TABLE>
<CAPTION>

<S>                                   <C>            <C>                 <C>               <C>
                                                        Date of            Date Term                   Other Positions Held
                Name                      Age         Appointment           Expires                  (or principal occupation)
==================================== ============ ==================== =================  ==========================================
 Leonard Block                            87              9/48               6/00           Senior Chairman of the Board
 James A. Block                           62              4/63               6/00           Chairman of the Board
 Thomas R. Block                          54              7/70               6/00           President
 Peter M. Block                           32              5/97               6/00           President, International Division
 Donald H. LeSieur                        63              5/74             *12/98           Executive Vice President and President,
                                                                                            International Division
 Michael C. Alfano,                       51             10/88             **7/98           Senior Vice President, Research and
 D.M.D., Ph.D.                                                                              Technology
 Michael P. Danziger                      35              1/98               6/00           President, The Steppingstone
                                                                                            Foundation
 Peggy Danziger                           59              5/89               6/00           Private Investor
 Dominick P. DePaola,                     56             10/97               6/00           President & Director, Forsyth Institute
 D.D.S., Ph.D.                                                                              Boston, MA
 William T. Golden                        89              7/70               6/00           Corporate Director and Trustee
 Melvin Kopp                              69             12/78               6/00           Senior Vice President
 Peter C. Mann                            57              3/96               6/00           President, Americas Division
 John E. Peters                           57             10/88               6/00           Senior Vice President, General Counsel
                                                                                            and Secretary
 Peter J. Repetti                         81              3/76               6/00           Member, Fulbright & Jaworski L.L.P.
                                                                                            (Retired)
 Mary C. Tanner                           49              9/95               6/00           Financial Consultant
==================================== ============ ==================== =================  ==========================================
</TABLE>

 *   Mr. LeSieur served as a Director and Executive Officer until his retirement
     on 12/31/98.

**   Dr. Alfano tendered his resignation as an employee and Director on 7/3/98.

<PAGE>43

                                      PART III

Item 10.  Directors and Executive Officers of the Registrant: (Continued)

       (a)   Directors of the Registrant (Continued)

       The following family relationships exist among the Directors of the
Company:  Leonard Block is the father of Thomas R. Block and Peggy Danziger, the
uncle of James A. Block, great uncle of Peter M. Block and the grandfather of
Michael Danziger.  James A. Block is the father of Peter M. Block.  Thomas R.
Block and Peggy Danziger are brother and sister and are first cousins of
James A. Block.  Michael Danziger is the son of Peggy Danziger, grandson of
Leonard Block, and nephew of Thomas R. Block.

       Each  Director of the  Company  has been  employed by the Company for the
past five years  except for (I) William T. Golden who is a director  and trustee
of Verde  Exploration  Ltd,  (ii) Peter J.  Repetti,  an attorney  and a retired
member of the New York law firm of  Fulbright  & Jaworski  L.L.P.,  (iii)  Peggy
Danziger,  who is a private  investor,  (iv) Michael  Danziger,  President,  The
Steppingstone Foundation,  (v) Mary C. Tanner, a Financial Consultant,  and (vi)
Dominick P. DePaola, DDS, Ph.D, President & Director, Forsyth Institute.

       The Executive Committee consists of Leonard N. Block, James A. Block,
Thomas R. Block and Peter M. Block.

       The Audit Committee consists of Thomas R. Block, William T. Golden and
Mary Tanner.

       The Compensation Committee consists of William T. Golden and
Peter J.Repetti.

       None of the Directors serve on the Boards of Directors of any other
public corporation, except for William T. Golden who serves on the Board of
Directors of Verde Exploration Ltd. and General American Investors.

       On October 31, 1977, Leonard Block and James A. Block executed a document
setting forth their mutual intent  concerning the  representation  of the Melvin
Block family group and the Leonard  Block family group on the Board of Directors
of the  Company.  Melvin  Block  (deceased)  is the father of James A. Block and
brother of Leonard Block. They stated their intention as shareholders and not as
directors to maintain equal  representation of the Melvin Block family group and
the Leonard  Block family group on the Board of  Directors.  On January 8, 1998,
Leonard  Block and James A. Block  executed  a letter  expressing  their  mutual
intent  to add  another  Leonard  Block  family  group  member  to the  Board of
Directors of the Company. The letter authorizes the Melvin Block family group to
add a fourth representative to the Board of Directors. They further stated their
awareness  that the  sentiments  expressed in such letters did not  constitute a
binding  agreement between them and that all actions taken in the future by them
in whatever  capacity to elect directors must and would be those which, in their
judgment,  would be in the best interest of the Company. At present,  the Melvin
Block  family  group has three (3)  representatives  on the Board of  Directors:
James A. Block, Peter M. Block, and Peter J. Repetti (attorney); and the Leonard
Block  family  group has four (4)  representatives  on the  Board of  Directors:
Leonard Block, Thomas Block, Peggy Danziger and Michael Danziger.

       (b)   Executive Officers of the Registrant

       The  following is a list of each  executive  officer of the Company,  the
date  his/her  present  term of office  will  expire,  and all  other  positions
presently held with the Company:

<PAGE>44

                                   PART III

Item 10. Directors and Executive Officers of the Registrant: (Continued)
<TABLE>
<CAPTION>
<S>                             <C>           <C>                  <C>              <C>
                                                  Date of            Date Term
             Name                   Age         Appointment           Expires                         Positions
=============================== ========== ===================== =================  ============================================
Leonard N. Block                    87             10/88               6/00           Senior Chairman of the Board(1)
James A. Block                      62             10/88               6/00           Chairman of the Board(1)
Thomas R. Block                     54             10/88               6/00           President(1)
Peter M. Block                      32             5/97                6/00           President, International
                                                                                      Division(1)
Donald H. LeSieur                   63             10/88             See below        Executive Vice President and
                                                                                      President, International
                                                                                      Division(1)(3)
Michael C. Alfano,                  51             5/87              See below        Senior Vice President, Research
D.M.D., Ph.D.                                                                         and Technology(2)(3)
Peter Anderson                      44             5/99                6/00           Senior Vice President, Chief
                                                                                      Financial Officer(2)
Claus E. Blach                      60             5/98                6/00           Senior Vice President,
                                                                                      Continental Group(2)(3)
Rodger Bogardus                     58             1/99                6/00           Senior Vice President, Research
                                                                                      and Technology(2)
Melvin Kopp                         69             10/72               6/00           Senior Vice President(2)(3)
Peter C. Mann                       57             11/79               6/00           President, Americas Division(2)(3)
John E. Peters                      57             12/78               6/00           Senior Vice President, General
                                                                                      Counsel and Secretary(2)(3)
James S. Rigby                      48             5/98                6/00           Senior Vice President, UK
                                                                                      Group(2)(3)
Gilbert Seymann                     60             5/84                6/00           Senior Vice President,
                                                                                      Worldwide Operations(2)(3)
William G. Whiteside                58             5/98                6/00           Senior Vice President, Canada,
                                                                                      Japan, N. Asia Group(2)(3)
=============================== ========== ===================== =================  ============================================
</TABLE>

       Leonard N. Block is Senior  Chairman of the Board of Directors,  a Member
  of the Executive Committee and the Office of the Chief Executive.

       James A.  Block is  Chairman  of the  Board,  a Member  of the  Executive
Committee,  the Office of the Chief Executive,  and is directly  responsible for
U.S.  marketing,  sales,  corporate  development,  research and  development and
corporate quality.

       Thomas R. Block is President of the  Company,  a Member of the  Executive
Committee,  the Office of the Chief Executive,  and is directly  responsible for
all operations,  including manufacturing,  engineering and corporate,  financial
and administrative functions.


(1) Member - Office of the Chief Executive
(2) Consultant - Office of the Chief Executive
(3) Covered under the Change in Control Agreement described in Item 13.

<PAGE>45

                                       PART III

Item 10. Directors and Executive Officers of the Registrant: (Continued)

       Peter M. Block is President,  International Division, a Consultant to the
Office of the Chief Executive,  and is responsible for the Company's  businesses
in Europe, Africa, the Middle East and Asia.

       Donald H. LeSieur,  who retired in December,  1998,  was  Executive  Vice
President and President,  International  Division, a Member of the Office of the
Chief Executive,  and had direct  responsibility  for businesses in Japan, North
Asia, Latin America and Canada.

       Michael C.  Alfano,  D.M.D.,  Ph.D.,  Senior  Vice  President  - Director
Research and  Technology,  who resigned on July 3, 1998, was responsible for all
research, development and quality assurance activities of the Company.

       Peter Anderson is Senior Vice President and Chief Financial Officer.

       Claus E. Blach, Senior Vice President, Continental Group is responsible
for the Company's businesses in Continental Europe.

       Rodger  Bogardus,  Senior  Vice  President,   Research  &  Technology  is
responsible for all research, development and corporate quality activities.

       Melvin Kopp is Senior Vice President of the Company.

       Peter C. Mann, President,  Americas Division, is responsible for all U.S.
marketing,  sales and corporate development and is responsible for the Company's
businesses in Canada and Latin America.

       John E. Peters, Senior Vice President, General Counsel and Secretary, is
the Chief Legal Officer of the Company.

       James S. Rigby,  Senior Vice President,  UK Group, is responsible for the
Company  businesses in the U.K.,  the Middle East,  Africa and certain  European
markets.

       Gilbert  Seymann,  Senior  Vice  President  -  Worldwide  Operations,  is
responsible for manufacturing and corporate engineering activities worldwide.

       William G.  Whiteside,  Senior Vice  President,  Canada/Japan/North  Asia
Group is responsible for the Company's businesses in those areas.

       All  executive  officers of the Company have been employed by the Company
in the same or similar  capacities  for at least the last five years  except for
Mr.  Bogardus  and Mr.  Anderson  who joined the  Company on 1/4/99 and  5/18/99
respectively.

<PAGE>46

                                  PART III

Item 11. Executive Compensation

       The following table sets forth information in respect of compensation for
the fiscal years ended March 31, 1999,  1998 and 1997,  for the five most highly
compensated executive officers of the Company based upon total annual salary and
bonus for the fiscal year ended March 31, 1999 (the "Named Executives").

<TABLE>
<CAPTION>

                                                                                          Long Term Compensation
                                                                                     ===============================
                                                         Annual Compensation                 Awards          Payouts
                                               ====================================  ======================  ======= ==============
                                                                        Other         Restricted
                                                                        Annual        Stock        Options    LTIP     All Other**
        Name and Principal          Fiscal     Salary        Bonus      Compen-       Award(s)      /SARs    Payouts   Compensation
             Position                Year        $            $         sation ($)      ($)          ($)       ($)           ($)
<S>                                  <C>      <C>           <C>        <C>            <C>           <C>      <C>         <C>
Leonard N. Block                     1999     394.556       90,700        *              *            *         *            35,588
 Senior Chairman of the              1998     382,031      153,700                                                           35,480
 Board                               1997     375,768      165,000                                                           35,144
James A. Block                       1999     367,064       86,300        *              *            *         *            13,607
 Chairman of the Board               1998     357,083      148,900                                                           13,527
                                     1997     346,345      167,500                                                           10,500
Thomas R. Block                      1999     367.064       92,800        *              *            *         *             8,076
 President                           1998     357,083      151,400                                                            7,574
                                     1997     346,345      168,400                                                            7,181
Donald H. LeSieur                    1999     322.310       52,400        *              *            *   $3,385,003         10,528
 Executive Vice President,           1998     492,006      232,000                                              ****         13,925
 Pres. International Division        1997     402,369      405,400                                                 -         13,560
Peter C. Mann                        1999     343.743      162,500        *              *            *       68,448***       9,802
 President, Americas Division        1998     322,146      153,900                                           144,220***       9,709
                                     1997     309,992      175,700                                            14,905***       7,549
</TABLE>


  *  None to be reported.
 **  Other   compensation   includes  the  value  of  the   Company's   matching
     contribution for the 401-K and group life insurance imputed income.
***  Payments  made  pursuant  to awards  under the  Special  Stock Unit Plan as
     follows:
     The 1999 payout is based upon one award granted in December, 1993; The 1998
     payout is based upon two awards granted in January 1993; the 1997 payout is
     based upon one award granted in February, 1992;
**** Includes $820,350 in Special Stock Units; $1,564,653 in excess pension and
     $1,000,000 in deferred compensation.  Mr. LeSieur retired on 12/31/98.

<PAGE>47

Employment Agreements

      On January 1, 1981, the Company entered into an Employment  Agreement with
Leonard N. Block,  which was amended on April 29, 1997 to run through  April 30,
2007. The agreement  provides for a minimum  annual base salary of  $209,242.00,
which will be adjusted in accordance with certain  economic  factors.  Mr. Block
may, for a period not to exceed twenty years, elect to perform his services on a
reduced basis at a reduced  level of  compensation.  The agreement  provides for
payment of an amount (based upon an average of Mr.  Block's salary for the three
years in which the highest salary was paid) to certain designated  beneficiaries
for a period not to exceed twenty years.  Leonard Block has been employed by the
Company since 1933.

      On September 1, 1984,  the Company  entered into an  Employment  Agreement
with James A. Block,  which was  amended on April 29, 1997 to run through  April
30,  2007.  The  agreement   provides  for  a  minimum  annual  base  salary  of
$164,792.00, which will be adjusted in accordance with certain economic factors.
The terms of this employment agreement are substantially  identical to the above
described  employment  agreement  with  Leonard  Block.  James A. Block has been
employed by the Company since 1959.

      On May 1, 1987,  the Company  entered into an  Employment  Agreement  with
Thomas R. Block,  which was  amended on April 29, 1997 to run through  April 30,
2007.  Pursuant to the agreement,  Thomas R. Block's annual base salary is to be
no less than  $234,451.00,  which will be adjusted in  accordance  with  certain
economic  factors.  The terms of this  employment  agreement  are  substantially
identical to the above described employment agreement with Leonard Block. Thomas
R. Block has been employed by the Company since 1968.

     Effective November 1, 1997, the Company entered into an Employment
Agreement with Peter M. Block to run through April 30, 2007. Pursuant to the
agreement, Peter M. Block's annual base salary is to be no less than $225,000,
which shall be adjusted annually by the same factor used by the Company to
increase the salaries of Company executives who are not in salary ranges and
additionally as deemed appropriate by the Company's Office of the Chief
Executive to reflect additional assignments and enhanced responsibilities.
Peter M. Block has been employed by the Company since 1991.

      Donald H.  LeSieur was covered by an  Employment  Agreement  dated July 1,
1997. He retired from the Company on December 31, 1998. Mr.  LeSieur's  deferred
compensation,  pension and other  benefits  were  calculated  as though he was a
full-time  employee earning his gross salary  ($430,718) as of June 30, 1998, as
adjusted ("Adjusted Salary"). Upon retirement, he received deferred compensation
equal to one-third of his average annual  Adjusted  Salary for three years prior
to his retirement,  which compensation vested at the rate of 1 1/4% per quarter.
Mr. LeSieur had been employed by the Company since 1973.

      Effective May 1, 1997, the Company  entered into the following  agreements
with Melvin  Kopp,  Senior Vice  President:  (i) a  Consulting  Agreement  which
expires on February 28, 2005.  Under the  Consulting  Agreement,  Mr. Kopp,  now
retired, will continue to provide the Company with his services for a minimum of
one hundred days annually.  Mr. Kopp's compensation for each day of service as a
Consultant  will be  equivalent to the daily cost to the Company if he continued
as an employee after his retirement in 1995. His  compensation  will be adjusted
annually in accordance with the Company's salary  administration  policy, (ii) a
Change in Control  Agreement  (CIC)  which  mirrors the  provisions  of the CICs
entered  into  with  key  executives  of  the  Company,  and  (iii)  a  Deferred
Compensation  Agreement,  the  provisions  of  which  mirror  the  terms  of the
Company's Special Stock Unit Plan.

<PAGE>48

Employment Agreements (Cont'd)

      The Company's compensation program for nonemployee directors provides that
each nonemployee director receive an annual fee of $8,500,  payable in quarterly
installments. During the 1998 calendar year, nonemployee directors also received
$1,150 for each board of directors  meeting  attended.  This  attendance fee was
increased to $1,250 for the 1999  calendar  year.  In  addition,  members of the
audit  committee  and  compensation  committee  receive  fees of $900 and  $450,
respectively,  for each committee meeting attended. With the exception of Melvin
Kopp, employees of the Company receive no additional  compensation for acting as
a director or member of a committee of the board of directors.  The Company also
reimburses  directors for expenses  incurred in connection  with meetings of the
board of committees.

      The Company  maintains  defined  benefit  pension plans under which annual
costs are  actuarially  computed  based on the overall assets in these plans and
the actuary's estimates of the present value of overall benefits.  The following
table sets forth  benefits that will be received  under these plans based on the
participants'  final average  compensation  and payable on  retirement  years of
service:


                                   1999 Table of
                          Annual Pension Benefits by Final
                  Average Compensation and Service Classifications
================================================================================
                                Years of Service at Age 65
Final Average
Compensation
                  10             20                30                 40
========  =============== ================= ================  ==================
$ 50,000       $ 5,248.20        $10,496.40       $15,744.60         $22,494.00
 100,000        12,528.60         25,057.20        37,585.80          51,762.00
 150,000        20,028.60         40,057.20        60,085.80          81,762.00
 200,000        27,528.60         55,057.20        82,585.80         111,762.00
 250,000        35,028.60         70,057.20       105,085.80         130,000.00*
 300,000        42,528.60         85,057.20       127,585.80         130,000.00*
 350,000        50,028.60        100,057.20       130,000.00*        130,000.00*
========  ===============  ================  ===============  ==================

* Maximum permissible benefit under IRC Sec. 415, effective January 1, 1999.

      The Company's  domestic  pension  expense for the fiscal years ended March
31, 1999 and 1998 was $1,726,000 and $100,000 respectively. The plans are in a
fully funded  status,  and  accordingly,  the  Company's  financial  statements
do not reflect a domestic pension funding  contribution for the fiscal year
ended March 31, 1999.

      The  compensation  covered  by these  plans is the  total  regular  salary
excluding  any  bonuses,  overtime or other  special  compensation.  (The "Final
Average Compensation")

      Benefits  payable  from  these  plans  are  based  on  the  Final  Average
Compensation  for the 60  highest  consecutive  months of the last 120 months of
employment,  the years of  service  as a member of these  plans and the  primary
federal social security benefit.

<PAGE>49

Employment Agreements (Cont'd)

      With  respect  to the  figures  of the table on page 45,  the  accrual  of
pension benefits is estimated using only the individual's base salary calculated
on a calendar  rather than a fiscal year basis.  The base  salaries used for the
estimation  of pension  benefits  for the  individuals  listed in the table are:
James A. Block ($364,798.71);  Thomas R. Block ($364,798.71);  Donald H. LeSieur
($504,937.76); and Peter C. Mann ($328,299.92).

      Leonard  Block reached age 65 in December,  1976.  In accordance  with the
terms of this plan,  he elected to  receive a lump sum  benefit.  The  actuarial
equivalent of his pension at that time as adjusted through December 31, 1980 was
segregated  into a separate  account.  No  additional  benefits have accrued for
Leonard Block since December 31, 1980. Upon retirement or death,  the balance in
the   segregated   account  will  be   distributed  to  him  or  his  designated
beneficiaries  subject to limitations set forth in the provisions of Section 415
of the Internal Revenue Code.

      As of March 31, 1999, the four (4) employees  described in Item 11 had the
following  credited years of service in these plans:  James A. Block,  37 years;
Thomas R. Block, 29 years; Donald H. LeSieur,  25 years (retired 12/31/98);  and
Peter C. Mann, 26 years.

<PAGE>50

                           Special Stock Unit Plan

     This plan is intended to provide greater motivation and incentive for those
eligible  employees of the Company and its  Subsidiaries  who are making and can
continue to make significant  contributions  to the success of the business,  to
attract and to retain  employees of  outstanding  caliber and  competence and to
enhance the identity of interests  between the  shareholders  of the Company and
the employees who are  participants in this plan. With the May 27, 1998 adoption
of the  Company's  Stock Option  Plan,  all new  eligible  employees  may become
participants  in  only  the  Stock  Option  Plan.  Current  Special  Stock  Unit
participants may irrevocably elect to receive any future awards in Stock Options
(new, not replacement  awards) instead and, as of March 31, 1999,  approximately
59% had so elected.

     The purpose of the plan is to provide  supplemental  income,  at  intervals
specified in the plan, to  participants  during their  employment and to provide
deferred compensation,  which is considered as qualified retirement benefits, to
participants upon their retirement.

     Under this plan,  units (the value of which is based on a formula,  the key
component of which is a multiple of earnings per share of Class A Common  Stock)
may be awarded  from time to time to employees  by the  Committee  administering
this plan, which consists of Leonard Block, James Block,  Thomas Block and Peter
Block,  who do not  participate in the Plan. The  participant (or beneficiary in
the case of death) will be entitled to receive,  subject to certain  conditions,
an  amount  reflecting  the  maximum  appreciation  in  value  (not  subject  to
reduction) of such units (as determined under this plan) between the date of the
award and the dates  provided  in this plan for valuing  units.  As of March 31,
1999, the units were valued at $107.23.

     Subject  to  certain  conditions  participants  are  required  to  make  an
irrevocable  decision whether to receive payment of the compensation amount when
the special  stock units become fully vested or to defer payment to a subsequent
date.

     Awards become fully vested on the fifth  anniversary  of the award provided
the participant is still employed with the Company. When there is termination of
employment of a participant due to death, disability, or normal retirement,  all
special  stock units  become  fully  vested,  irrespective  of the length of the
period between the award date and the date of termination of employment.

     When a  compensation  payment is made,  a  replacement  award  equal to the
original  dollar value of the award for which payment is made is issued,  at the
election of the  participant  either in the form of special stock units or stock
options under the Company's Stock Option Plan.  Once a stock option  replacement
award is elected,  any future replacement awards arising from that award will be
in the form of stock  options.  A  replacement  Special Stock Unit award becomes
fully  vested in five  years and does not take the  place of  additional  awards
which  can be  made  at  the  discretion  of  the  Committee.  The  issuance  of
replacement awards is contingent upon participant's employment with the Company.
The Company has not  established,  nor is it required to  establish a special or
separate  fund or has it  segregated  assets to  assure  or secure  payment
nor does the Company guarantee payment of the compensation amount.

     The total number of units which may be credited to all participants in this
plan at any one time,  exclusive of units  awarded to former  employees,  cannot
exceed five  percent of the total number of the then  outstanding  shares of all
classes of Common Stock.

     As of March 31, 1999, a total of 286,761  units had been awarded  having an
average  value of $96.07 per unit. Of those  286,761  units,  41,045 units at an
average value of $105.54 per unit were awarded during the past fiscal year.

<PAGE>51

                         Special Stock Unit Plan (Cont'd)

     During the year ended March 31, 1999, an aggregate  amount of $3,637,632.18
was paid in lump sum  payments to the  participants  in the  Special  Stock Unit
plan.



           Long-Term Incentive Plans - Awards In Last Fiscal Year
                                                Estimated Future Payouts Under
                                                           Non-Stock
                                                      Price-Based Plans
                                 Performance or
                  No. of Shares,  Other Period     **        ***        No
                  Units or Other Until Maturity Threshold   Target    Maximum
Name                    Rights      or Payout      ($)        ($)        ($)
================= ============== ============== =========  =========  ==========
Peter C. Mann           1,915*      5 Years        323      125,000       -
================= ============== ============== =========  =========  ==========
                        3,737*                     634      244,000
================= ============== ============== =========  =========  ==========


*  During fiscal year 1999, the following units were awarded to executives:
   1,915 units at $107.05 per unit and 3,737 units at $107.05 per unit to
   Peter C. Mann.

** Minimum vested value as of March 31, 1999  ***Projected  value at maturity,
   based on assumed 10% annual compounded Earnings Per Share increase over the
   five-year period from inception of the award to maturity.
   Note:  See accompanying description of Plan above.


                                  Stock Option Plan

     On May 27,  1998,  the  Company's  Stock  Option  Plan was  adopted  by the
Company. This Plan affords to its Participants the right to purchase,  from time
to time,  pursuant to the terms and  conditions of the Plan and options  granted
thereunder,  Class A Common Stock, $.10 par value per share, of the Company. The
purpose of this Plan is to provide  greater  motivation  and incentive for those
eligible  employees of the Company and its  Subsidiaries  who are making and can
continue to make  significant  contributions  to the Company's  success,  and to
attract and retain  employees of outstanding  caliber and competence and enhance
the common  interests of  stockholders  and employees.  The aggregate  number of
shares available for issuance pursuant to options is equal to ten percent of the
total  number of  outstanding  shares  of all  classes  of  common  stock of the
Company.  Currently 1,000,000 shares have been registered for issuance under the
Plan. The Committee administering this Plan is comprised of Leonard Block, James
Block, Thomas Block and Peter Block, who do not participate in the Plan. Options
vest in three  years,  although  early  vesting  may  occur  in cases of  death,
disability  or normal  retirement  and later  vesting may be required in certain
foreign  countries and generally expire ten years after grant. The first options
were issued in June,  1998, and as of March 31, 1999,  Options have been granted
for  101,786  shares at an average  price of  approximately  $36.74 per share of
which only 7,182 were vested.

<PAGE>52

Item 12.  Securities Ownership of Certain Beneficial Owners and Management

     (a)  Securities ownership of certain beneficial owners:

          The following  table sets forth, as of June 8, 1999, each person who
     owns of record, or is known by the Company to beneficially own more than 5%
     of the outstanding Class B Common Stock of the Company,  which stock is the
     only class of voting securities of the Company.


                                                    Amount and Nature
                 Name and Address                   of Beneficial     Percent
 Title of Class  of Beneficial Owner                Ownership         of Class
==============  ==================================  =============     ==========
Class B Common  Leonard Block, Representative       4,209,404 (1)       50%
                Leonard Block Family Shareholders'
                Agreement dated April 18, 1991
                257 Cornelison Avenue
                Jersey City, N.J.  07302-9988
Class B Common  James A. Block, Trustee             4,209,404 (2)       50%
                Voting Trust Agreement
                dated January 11, 1990
                257 Cornelison Avenue
                Jersey City, N.J.  07302-9988

            (1)  Pursuant to a  shareholders'  agreement,  dated April 18, 1991,
     Leonard  Block has sole  voting  power with  respect to these  shares.  The
     following  shares  are  beneficially  owned  by the  Leonard  Block  Trust,
     421,162;  the Thomas Block Trust,  1,894,121 and the Peggy Danziger  Trust,
     1,894,121.

            (2) James A.  Block has sole  voting  power  with  respect  to these
     shares as a result of a Voting Trust  Agreement  entered into as of January
     11, 1990. The voting trust  agreement  grants the trustee the power to vote
     the shares which are subject to the agreement.  The Voting Trust  Agreement
     is for a 21 year term.  James A. Block is a co-trustee  of the trusts which
     are parties to the Voting Trust  Agreement  and  pursuant to these  trusts,
     James A.  Block has sole  investment  power with  respect to these  shares.
     James A. Block disclaims  beneficial ownership to all 2,104,702 shares held
     in trust for the benefit of Susan B. Stearns.

     (b) Securities ownership of management:


     The  following  table  sets  forth,  as of June  8,  1999,  the  securities
ownership of all directors and Named Executives, individually, and all Directors
and Officers of the Company, as a group.

<PAGE>53

Item 12. Securities Ownership of Certain Beneficial Owners and Management
         (Cont'd)


                             BLOCK DRUG COMPANY, INC.
                          SECURITIES BENEFICIALLY OWNED

                       Class A Common Stock Beneficially Owned
                     --------------------------------------------
                                                                  Class B Common
Name of Beneficial   No Shared   Shared     401-K Plan            Stock
Owner                Investment  Investment 401-K Plan Percentage Beneficially
                     Power       Power      Holdings   Owned      Owned
                    -----------  ---------- ---------- ---------- --------------
Leonard Block       1,155,697       -        1,149     8%         4,209,404-50%
(1) (4) (7)
James A. Block      2,658,236       -        2,366    18%         4,209,404-50%
(2) (3) (5)
Thomas Block          111,437  2,374,788     1,649    17%              -
(4) (7)
Peter M. Block      1,313,138       -          559     9%              -
(2) (5)
Peter Anderson           -          -         -        -               -
Claus Blach               340       -         -        *               -
Rodger Bogardus          -          -         -        -               -
Michael P. Danziger    98,368  1,066,891      -        8%              -
(6) (7)
Peggy Danziger        115,076  1,314,637      -       10%              -
(4) (6) (7) (9)
Dominick P. DePaola      -          -         -        -               -
Gordon J. Girvin         -          -        1,260     *               -
William T. Golden       6,598     14,837      -        *               -
Donald H. LeSieur       7,182**     -         -        *               -
Melvin Kopp             2,275       -         -        *               -
Peter C. Mann             893        112     2,140     *               -
John E. Peters           -         2,216     1,855     *               -
Peter J. Repetti (8)      279       -         -        *               -
James S. Rigby           -          -         -        -               -
Gilbert M. Seymann        159       -        1,738     -               -
Susan B. Stearns         -          -         -        -               -
(2) (3)
Mary C. Tanner           -          -         -        -               -
William G. Whiteside      295       -         -        *               -
All Directors and        -          -         -       53%              -
Officers as a Group
(22 persons)

*  Represents less than one percent (1%) of Class A Common Stock of the Company.
** Represents shares under options exercisable within sixty (60) days.

<PAGE>54

Item 12. Securities Ownership of Certain Beneficial Owners and Management
         (Cont'd)

     (1)    Leonard  Block  owns  342,193  shares  (not  including   401-K  Plan
            Holdings);  is deemed to be the  beneficial  owner of but  disclaims
            ownership of:  809,128 shares owned by Adlen  Corporation,  of which
            Leonard Block is the sole  shareholder;  4,376 shares owned by Adele
            Block, his wife.

     (2)    James A. Block owns 122 shares (not including 401-K Plan Holdings);
            is deemed to be the beneficial owner of: 183,791 shares owned by a
            trust for the benefit of James A. Block of which he is a co-trustee
            (with Peter and Valerie Block, his children) and has sole investment
            powers with respect to the shares held by such trust; 1,129,271
            shares owned by a trust for the benefit of James A. Block of which
            he is a co-trustee (with Susan B. Stearns, his sister, and Peter and
            Valerie Block, his children).  James A. Block has sole investment
            powers with respect to the shares held by such trust.  For the
            purpose of reporting shares for which a beneficial owner has sole
            investment power in the tabular presentation on page 54, all
            1,313,062 shares of these two trust have been included in the total
            number of shares reported for both James A. Block and Peter Block,
            and as a result such shares have been reported twice; and 1,345,052
            shares owned by two trusts for the benefit of Susan B. Stearns of
            which James A. Block is the co-trustee (with Susan B. Stearns, his
            sister) and has sole investment powers with respect to the shares
            held by such trusts.  James A. Block disclaims ownership to all
            1,345,052 Class A shares and 2,104,702 Class B shares owned by the
            trusts for the benefit of Susan B. Stearns of which he is a trustee
            or co-trustee.  In computing the percentage of Class A shares owned
            by a beneficial owner, 1,313,062 shares (representing the total
            number of shares owned by the two trusts in which Peter Block is a
            co-trustee with James A. Block) were allocated to James A. Block and
            1,313,062 shares were allocated to Peter Block, and as a result, the
            percentage of Class A shares owned has been attributed to both
            parties.  In computing the aggregate number of shares owned by
            directors and officers as a group, the 1,313,062 shares owned by
            these two trusts were counted only once.

     (3)    James A. Block has sole voting power with respect to the Class B
            shares as a result of voting trust agreement entered into as of
            January 11, 1990.  The voting trust agreement grants the trustee the
            power to vote the shares which are subject to the agreement.  The
            voting trust agreement is for a 21 year term.  James A. Block is a
            co-trustee of the trusts which are parties to the voting trust
            agreement and pursuant to these trusts, James A. Block has sole
            investment power with respect to the Class B shares.  James A. Block
            disclaims beneficial ownership to all  2,104,702 shares held in
            trust for the benefit of Susan B. Stearns, his sister who is not
            active in the business.

     (4)    Thomas Block owns 42,822 shares (not including 401-K Plan Holdings);
            is deemed to be the beneficial owner but disclaims ownership of:
            26,248 shares owned by Marilyn Friedman, his wife; 42,367 shares
            held by Marilyn Friedman, as Custodian under the New York State
            Uniform Gifts to Minors Act for Jonathan Block and Alison Block, the
            children of Thomas Block; 132,146 shares owned by two trusts for the
            benefit of Jonathan Block and Alison Block, his children, of which
            Thomas Block is a co-trustee (with Marilyn Friedman, his wife) and
            shares investment powers with respect to the shares held by such
            trusts; 1,972,441 shares owned by a trust for the benefit of
            Thomas Block of which Thomas Block is a co-trustee (with Adele
            Block, his mother, and Peggy Danziger, his sister) and shares
            investment powers with respect to the shares held by such trust;
            270,201 shares owned by four trusts of which Thomas Block is a
            co-trustee (with Peggy Danziger, his sister) and shares investment
            powers with respect to the shares held by such trusts; for the
            purposes of reporting shares for which a beneficial owner shares
            investment power in the tabular presentation on page 54, all
            270,201 shares of these four trusts have been included in the total
            number of shares reported for Thomas Block and Peggy Danziger, and
            as a result have been reported twice.  In computing the percentage
            of Class A shares owned by a beneficial owner, 270,201 shares
            (representing of the total number of shares

<PAGE>55

Item 12.    Securities Ownership of Certain Beneficial Owners and Management
            (Cont'd)

            owned by the four trusts) were allocated to Thomas Block and 270,201
            shares  were  allocated  to  Peggy  Danziger  and  as a  result  the
            percentage  of Class A shares  owned  has  been  attributed  to both
            parties.

            In computing the  aggregate  number of shares owned by directors and
            officers as a group,  the 270,201  shares owned by these four trusts
            were counted only once.  Thomas Block  disclaims  ownership of those
            shares in which he shares investment powers with Peggy Danziger.

     (5)    Peter Block owns 76 shares (not including 401-K Plan Holdings);
            1,313,062 shares owned by two trusts for the benefit of
            James A. Block of which Peter Block is co-trustee. James A. Block
            has sole investment powers with respect to the shares held by such
            trusts.  For the purpose of reporting shares for which a beneficial
            owner has no shared investment power in the tabular presentation on
            page 54, all 1,313,062 shares of these two trusts have been
            included in the total number of shares reported for James A. Block
            and Peter Block, and as a result such share have been reported
            twice.  In computing the percentage of Class A shares owned by a
            beneficial owner, 1,313,062 shares (representing the total number of
            shares owned by the two trusts in which Peter Block is a co-trustee
            with James A Block) were allocated to James A. Block and 1,313,062
            shares were allocated to Peter Block.  In computing the aggregate
            number of shares owned by directors and officers as a group, the
            1,313,062 shares owned by these two trusts were counted only once.

     (6)    Michael Danziger owns 10,895 shares, is deemed to be the beneficial
            owner but disclaims ownership of 6,989 shares owned by Elizabeth
            Danziger, his wife, 17,513 shares held by Michael Danziger as
            Custodian under the Massachusetts Uniform Gifts to Minors Act for
            James, Robert and Charles Danziger, his children; 62,971 shares held
            in trust for Michael Danziger, beneficiary of such trust; 26,893
            shares owned by a trust for the benefit of Michael Danziger of which
            Michael Danziger is a co-trustee (with Richard Danziger, his father,
            and Katherine Danziger Horowitz, his sister) and shares investment
            powers with respect to the shares held by such trust; 1,039,998
            shares owned by a trust for the benefit of Peggy Danziger of which
            Michael Danziger is a co-trustee (with Peggy Danziger, his mother,
            and Katherine Danziger Horowitz, his sister) and shares investment
            power with respect to the shares held by such trust; for the purpose
            of reporting shares for which a beneficial owner shares investment
            power in the tabular presentation on page 54, all 1,039,998 shares
            of such trust have been included in the total number of shares
            reported for Michael Danziger and Peggy Danziger, and as a result
            have been reported twice.  In computing the percentage of Class A
            shares owned by a beneficial owner, 1,039,998 shares (representing
            the total number of shares owned by said trust) were allocated to
            Michael Danziger and 1,039,998 shares were allocated to Peggy
            Danziger.  In computing the aggregate number of shares owned by
            directors and officers as a group, the 1,039,998 shares owned by
            such trust were counted only once.

            Michael  Danziger  disclaims  ownership  to those shares in which he
            shares investment powers with Peggy Danziger.

<PAGE>56

Item 12.   Securities Ownership of Certain Beneficial Owners and Management
           (Cont'd)

     (7)    Peggy Danziger owns 115,076 shares; 1,039,998 shares owned by a
            trust for the benefit of Peggy Danziger of which she is a co-trustee
            (with Michael Danziger, her son, and Katherine Danziger-Horowitz,
            her daughter) and of which she shares investment powers with respect
            to the shares held by such trusts; for the purpose of reporting
            shares for which a beneficial owner shares investment power in the
            tabular presentation on page 40, all 1,039,998 shares of such trust
            have been included in the total number of shares reported for Peggy
            Danziger and Michael Danziger, and as a result have been reported
            twice.  In computing the percentage of Class A shares owned by a
            beneficial owner, 1,039,998 (representing the total number of shares
            owned by said trust) were allocated to Peggy Danziger and 1,039,998
            shares were allocated to Michael Danziger and as a result, the
            percentage of Class A shares owned has been attributed to both
            parties.  In computing the aggregate number of shares owned by
            directors and officers as a group, the 1,039,998 shares owned by
            said trust were counted only once; 270,201 shares owned by four
            trusts of which Peggy Danziger is a co-trustee (with Thomas Block,
            her brother) and shares investment powers with respect to the shares
            held by such trusts; for the purpose of reporting shares for which a
            beneficial owner shares investment power in the tabular presentation
            on page 52, all 270,201 shares of these four trusts have been
            included in the total number of shares reported for Thomas Block and
            Peggy Danziger, and as a result such shares have been reported
            twice; and all 4,438 shares owned by two testamentary trusts of
            which Richard Danziger, her husband, is a co-trustee with another
            party having shared investment powers with respect to the shares
            held by such trusts.  In computing the percentage of Class A shares
            owned by a beneficial owner, 270,201 shares (representing the total
            number of shares owned by the four trusts in which Peggy Danziger is
            a co-trustee with Thomas Block) were allocated to Thomas Block and
            270,201 shares were allocated to Peggy Danziger and as a result, the
            percentage of Class A shares owned has been attributed to both
            parties.  In computing the aggregate number of shares owned by
            directors and officers as a group, the 270,201 shares owned by these
            four trusts were counted only once.

            Peggy  Danziger  disclaims  beneficial  ownership of one-half of the
            shares for which she is co-trustee.

     (8)    Peter J. Repetti disclaims beneficial ownership of 279 shares owned
            by his wife.

     (9)    Peggy Danziger disclaims beneficial ownership to all 4,438 shares of
            which Richard M.  Danziger,  her husband is co-trustee  with a third
            party.

<PAGE>57

Item 13. Certain Relationships and Related Transactions

     On April 14, 1999, Peter C. Mann,  President,  Americas  Division,  entered
into a Loan Agreement  with the Company for the amount of $440,000.  The loan is
collateralized  by a mortgage on certain  real  estate  owned by Mr.  Mann.  The
principal of the loan is due on or before April 14, 2000. Interest on the unpaid
principal  balance  accrues at 1% over the Prime Rate,  as published in the Wall
Street Journal,  and shall be adjusted  semi-annually on July 1 and January 1 of
each year.  The loan  agreement  provides for immediate  repayment of the unpaid
principal balance upon the occurrence of any one of a number of events.

     On  December  31,  1998,  Donald H.  LeSieur,  retired  as  Executive  Vice
President,  United States and repaid in full the remaining principal balances on
all outstanding loans.

Change in Control Agreement

     Claus Blach,  Melvin Kopp,  Peter C. Mann, John E. Peters,  James S. Rigby,
Gilbert  Seymann and William  Whiteside  have entered  into a  Change-In-Control
Agreement (CIC) with the Company to assure continuity in management in the event
the  Block  family  divests  itself  of more  than  fifty  percent  (50%) of the
Company's voting stock.

     The Agreements were created to provide a continuing  rolling five year term
with automatic three year  extensions,  subject to termination  upon the covered
executive's  sixty-fifth birthday with the exception of Mr. Kopp whose CIC would
terminate December 31, 2001 or upon the termination of his consulting  agreement
with the Company,  whichever is earlier.  The  Agreements  define the formula by
which  a  covered  Executive's  severance,  compensation  and  benefits  will be
calculated and paid in the event  Executive's  employment is either:  terminated
within  one year of the  change in  control;  if  circumstances  of  Executive's
employment  are changed  within three (3) years of the change in control;  or if
the  Executive's  employment is terminated 180 days prior to the execution of an
agreement which, if concluded, will activate the CIC.

Compensation Committee Interlocks and Insider Participation

     The Company  does not have a  Compensation  and  Benefits  Committee  which
determines the compensation of its Executive Officers.  The Company utilizes the
services of independent  expert  compensation  consultants to evaluate the total
compensation   of   the   Company's   Executive   Officers.   The   consultants'
recommendations  are  submitted to the members of Office of the Chief  Executive
for  consideration.  During  fiscal year 1999,  Leonard  Block,  James A. Block,
Thomas R.  Block and Peter M.  Block  were  members  of the  Office of the Chief
Executive.

<PAGE>58

                                    PART IV

Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

     (a) The following documents are filed as a part of this report:

            1.  Financial Statements and Supplementary Data:

                Report of PricewaterhouseCoopers LLP, dated June 8, 1999.

                Consolidated Balance Sheets - March 3l, 1999 and 1998,

                Consolidated  Statements of Income and Retained Earnings for the
                Years ended March 3l, 1999, 1998 and 1997,

                Consolidated Statements of Comprehensive Income for the Year
                ended March 31, 1999, 1998, 1997,

                Consolidated Statements of Cash Flows for the Years ended
                March 3l, 1999, 1998 and 1997,

                Notes to Consolidated Financial Statements

                Supplementary Data:

                Selected  quarterly  data for the two years ended March 3l,
                1999.

            2.  Additional Financial Statement Data:

                Supplemental Auditors' Reports

            3.  Financial Statement Schedule:  II

     Schedules other than those listed  above are omitted  because they are not
required or not applicable.

            4.  Index to Exhibits:

                Exhibit 3(a)     Restated Certificate of Incorporation,  as
                                 amended  June  14,  1971,  December  10,  1985,
                                 October   9,  1987  and   October   31,   1990,
                                 incorporated  by reference  from Exhibit 4.1 in
                                 the   Company's   Form  S-8   filed   with  the
                                 Securities  and Exchange  Commission on June 3,
                                 1998.

                Exhibit 3(b)     Amended and Restated  By-Laws,  as amended
                                 through   January  8,  1998,   incorporated  by
                                 reference  from  Exhibit  4.2 in the  Company's
                                 Form S-8 filed with the Securities and Exchange
                                 Commission on June 3, 1998.

                Exhibit 3(c)     Certified  Resolution  dated June 19, 1998
                                 of the Board of Directors Resolution dated June
                                 2, 1998 amending the Company By-Laws.

<PAGE>59

                                        PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K
          (Cont'd)

                Exhibit 10(a)    Block Drug  Company,  Inc.  Stock  Option
                                 Plan,  dated  May  27,  1998,  incorporated  by
                                 reference to Exhibit 99.1 to the Company's Form
                                 S-8  filed  with the  Securities  and  Exchange
                                 Commission on June 3, 1998.

                Exhibit 10(b)    Block Drug Company,  Inc.'s Special Stock
                                 Unit Plan,  amended and  restated as of January
                                 31, 1997.

                Exhibit 10(c)    Block  Drug  Company,   Inc.'s  Restated
                                 Excess Benefit Pension Plan,  effective May 31,
                                 1983.

                Exhibit 10(d)    Employment Agreement effective
                                 November 1, 1997, between Block Drug Company,
                                 Inc. and Peter M. Block, President European
                                 Division.

                Exhibit 10(e)    Consulting Agreement effective May 1, 1997,
                                 between Block Drug Company, Inc. and Melvin
                                 Kopp, Senior Vice President.

                Exhibit 10(f)    Form of Award Letter under the
                                 Stock  Option Plan,  with  changes  required by
                                 laws of foreign jurisdiction  relating to local
                                 labor law consideration and tax matters.

                Exhibit 21       Subsidiaries of the Company.

                Exhibit 27       The Financial Data Schedule.

  (b) Reports on Form 8-K.

        No reports on Form 8-K have been  filed  during the last  quarter of the
        period covered by this report.

<PAGE>60

Ernst & Young
Wirtschaftsprufungs- und
Steuerberatungsgesellschaft m.b.H.

Praterstra e 23
(Postfach 290)
A-1021 Wien

REPORT OF INDEPENDENT AUDITORS

We have audited the  accompanying  balance sheets of Block Austria G.m.b.H as of
December  31, 1997 and 1998,  and the  related  statements  of income,  retained
earnings and cash flows for the years then ended (not  included  herein).  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Block Austria  G.m.b.H as of
December 31, 1997 and 1998, and the results of its operations and its cash flows
for the years then ended,  in conformity with  accounting  principles  generally
accepted in the United States of America.


Ernst & Young
Wirtschaftsprufungs- und
Steuerberatungsgesellschaft m.b.H.


         (Rolf Kapferer)                          (Elfriede Sixt)
Certified Austrian Public Accountants

Date: April 19, 1999

<PAGE>61

To the Board of Directors of STAFFORD-MILLER CONTINENTAL N.V.
Nijverheidsstraat 9

2260        OEVEL-WESTERLO



Dear Sirs,

We have audited the accompanying  balance sheets of Stafford-Miller  Continental
N.V. as of December  31, 1998 and 1997,  and the related  statements  of income,
retained earnings and cash flows for each of the three years in the period ended
December 31, 1998 (not presented separately herein).  These financial statements
are the  responsibility of the Company's  management.  Our  responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

Generally  accepted  accounting  principles  require that a Company's  financial
statements be  consolidated  with those of its  subsidiaries.  The  accompanying
financial  statements of  Stafford-Miller  Continental N.V. are not consolidated
with those of its subsidiary Laboratoires Stafford-Miller S.a.r.l.

In our  opinion,  except for the  effects  of not  consolidating  the  financial
statements of a subsidiary  referred to in the preceding paragraph and described
in Note 1, the  financial  statements  referred to above  present  fairly in all
materials respects the financial position of Stafford-Miller Continental N.V. at
December 31, 1998 and 1997 and the results of its  operations and its cash flows
for each of the three years in the period ended  December 31, 1998 in conformity
with accounting principles generally accepted in the United States of America.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial statements taken as a whole. The accompanying  additional  information
is presented for purposes of  additional  analysis and is not a required part of
the basic financial statements.  Such additional  information has been subjected
to the  auditing  procedures  applied  in the  audits  of  the  basic  financial
statements  and, in our opinion,  is fairly  stated in all material  respects in
relation to the basic financial statements taken as a whole.



Ernst & Young

April 21, 1999

<PAGE>62

                    REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders of
Laboratoires Stafford-Miller, S.A.R.L.

We have audited the accompanying balance sheets of Laboratoires Stafford-Miller,
S.A.R.L. (the Company) at December 31, 1998 and 1997, and the related statements
of income and retained earnings and cash flows for the three years in the period
ended December 31, 1998. These financial  statements are the  responsibility  of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Laboratoires  Stafford-Miller,
S.A.R.L.  at December 31, 1998 and 1997,  and the results of its  operations and
its cash flows for each of the three  years in the  period  ended  December  31,
1998, in conformity with accounting  principles generally accepted in the United
States of America.

Our audits have been made primarily for the purpose of forming an opinion on the
basic  financial  statements  taken  as a  whole.  The  accompanying  additional
information  is  presented  for  purposes of  additional  analysis  and is not a
required part of the basic financial statements. Such additional information has
been  subjected  to the auditing  procedures  applied in our audits of the basic
financial  statements  mentioned above and, in our opinion,  is fairly stated in
all material  respects in relation to the basic financial  statements taken as a
whole.


Ernst & Young Entrepreneurs
Departement d'E'Y Audit



Christian Colineau

February 10, 1999

<PAGE>63

                     REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Shareholders
Stafford-Miller S.r.l.

We have audited the accompanying  balance sheets of Stafford Miller S.r.l. as of
December  31,  1998 and 1997,  and the  related  statements  of  operations  and
retained earnings and cash flows for each of the three years in the period ended
December 31, 1998.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Stafford  Miller  S.r.l.  at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for each of the three years in the period ended  December 31, 1998 in conformity
with accounting principles generally accepted in the United States of America.

Our audits  were  conducted  for the  purpose of forming an opinion on the basic
financial   statements  taken  as  a  whole.   The  accompanying   supplementary
information  as of and for the year ended December 31, 1998 is presented for the
purposes  of  additional  analysis  and  is not a  required  part  of the  basic
financial  statements.  Such  information  has been  subjected  to the  auditing
procedures  applied in our audits of the basic financial  statements and, in our
opinion,  is fairly  stated in all  material  respects  in relation to the basic
financial statements taken as a whole.


Reconta Ernst & Young SpA


March 31, 1999

<PAGE>64

                       REPORT OF INDEPENDENT AUDITORS


The Board of Directors
Stafford-Miller Nederland B.V.

We have audited the  accompanying  balance sheets of  Stafford-Miller  Nederland
B.V. at December 31, 1998 and 1997,  and the  statements  of income and retained
earnings  and cash  flows for the years  1998,  1997 and 1996.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion the financial statements referred to above present fairly, in all
material respects,  the financial position of Stafford-Miller  Nederland B.V. at
December 31, 1998 and 1997, and the results of its operations and its cash flows
for the years  1998,  1997 and 1996 in  conformity  with  accounting  principles
generally accepted in the United States of America.

Our audits have been made  primarily for the purpose of expressing an opinion on
the basic financial  statements taken as a whole.  The  accompanying  additional
information  is  presented  for  purposes of  additional  analysis  and is not a
required part of the basic financial statements. Such additional information has
been  subjected  to the auditing  procedures  applied in the audits of the basic
financial  statements  and, in our  opinion,  is fairly  stated in all  material
respects in relation to the basic financial statements taken as a whole.


Moret Ernst & Young Accountants


April 23, 1999

<PAGE>65

                       REPORT OF INDEPENDENT AUDITORS


The Management
Block Drug Company, Inc.

Ratingen Branch

We have audited the  accompanying  balance  sheets of Block Drug Company,  Inc.,
Ratingen  Branch,  as of March 31, 1999 and 1998 and the related  statements  of
operations  and retained  earnings and cash flows for each of the three years in
the  period  ended  March 31,  1999 (not  presented  separately  herein).  These
financial  statements are the  responsibility  of the Branch's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the  financial  position of Block Drug  Company,  Inc.,
Ratingen  Branch,  as of  March  31,  1999  and  1998,  and the  results  of its
operations  and its cash flows for each of the three  years in the period  ended
March 31, 1999, in conformity with accounting  principles  generally accepted in
the United States of America.

Our audits have been made  primarily for the purpose of expressing an opinion on
the basic financial statements taken as a whole. The accompanying  supplementary
information (pages 1 to 16) is presented for purposes of additional analysis and
is not a required  part of the basic  financial  statements.  The  supplementary
information has been subjected to the auditing  procedures applied in the audits
of the basic financial  statements and, in our opinion,  is fairly stated in all
material  respects  in  relation to the basic  financial  statements  taken as a
whole.

                                         Schitag Ernst & Young
                                         Deutsche Allgemeine Treuhand AG
                                         Wirtschaftsprufungsgesellschaft

                                         Beyer               Dingler
                                         Wirtschaftsprufer   Wirtschaftsprufer
                                         (Independent Public (Independent Public
                                          Accountant)         Accountant)

Dusseldorf,
April 23, 1999

<PAGE>66

                      REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors of
Block Drug Company (Japan), Inc.:

We have audited the  accompanying  balance sheets of Block Drug Company (Japan),
Inc. (a Japanese  corporation) as of December 31, 1998 and 1997, and the related
statements  of  operations,  stockholder's  equity  and cash flows for the three
years in the period ended December 31, 1998. These financial  statements are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Block Drug Company  (Japan),
Inc. as of December 31, 1998 and 1997, and the results of its operations and its
cash flows for each of the three years in the period ended  December 31, 1998 in
conformity with accounting principles generally accepted in the United States of
America.

Arthur Andersen
Osaka, Japan
March 30, 1999

<PAGE>67
                                SGV & CO
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


The Stockholders and the Board of Directors
Block Drug Co. (Philippines), Inc.

We have audited the accompanying  balance sheets of Block Drug Co. (Philippines)
Inc. (a wholly owned subsidiary of Block Drug Company,  Inc.) as of December 31,
1998 and 1997,  and the related  statements of income and retained  earnings and
cash flows for each of the three years in the period  ended  December  31, 1998.
These financial  statements are the responsibility of the Company's  management.
Our responsibility is to express an opinion on these financial  statements based
on our audits.

We conducted our audits in  accordance  with United  States  generally  accepted
auditing  standards.  Those standards require that we plan and perform the audit
to obtain reasonable  assurance about whether the financial  statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting  the amounts and  disclosures in the financial  statements.  An audit
also includes assessing the accounting principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Block Drug Co.  (Philippines),
Inc. as of December 31, 1998 and 1997, and the results of its operations and its
cash  flows  for the  three  years in the  period  ended  December  31,  1998 in
conformity with generally accepted accounting principles.

Our audits have been made  primarily for the purpose of expressing an opinion on
the basic financial  statements taken as a whole. The supplementary  information
accompanying  the financial  statements are presented for purposes of additional
analysis  and are not  required  part of the  basic  financial  statements.  The
supplementary  information has been subjected to the auditing procedures applied
in the audits of the basic financial  statements and, in our opinion,  is fairly
stated in all  material  respects in relatio to the basic  financial  statements
taken as a whole.


Sycip, Gorres,Velayo & Co.
Makati City, Philippines

February 11, 1999

<PAGE>68

Schedule II

                       BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES

                            Valuation and Qualifying Accounts

                       Years Ended March 31, 1999, 1998 and 1997

                             Balance      Additions
                               at         Charged
Description                Beginning      to Costs                    Balance at
                              of            and                         End of
                            Period        Expenses      Deductions      Period
=======================  ============   =============  ============= ===========
1999

Allowances for
discounts, doubtful       $4,446,000    $24,787,000    $24,483,000    $4,750,000
accounts and returns
=======================  ============   =============  ============= ===========
1998

Allowances for
discounts, doubtful       $4,504,000    $27,095,000    $27,153,000    $4,446,000
accounts and returns
=======================  ============   =============  ============= ===========
1997

Allowances for
discounts, doubtful       $4,188,000    $27,867,000    $27,551,000   $4,504,000
accounts and returns
=======================  =============  =============  ============= ===========

<PAGE>69

                                                      EXHIBIT 21

                                              Subsidiaries of Registrant

     The  following  list shows the Company and its  subsidiaries,  all of which
(except  as  indicated)  are  wholly  owned  and  included  in the  Consolidated
Financial Statements in this report.
                                                           Jurisdiction
Identification                                           of Incorporation

Block Drug Company, Inc.                                   New Jersey
Stafford-Miller International, Inc.                        New Jersey
Reedco, Inc.                                               Delaware
Dentco, Inc.                                               Delaware
Block Drug Corporation                                     New Jersey
Block Austria Gmbh                                         Austria
Block Uruguay, S.A.                                        Uruguay
Block Drug Company (Canada) Limited                        Ontario, Canada
Block Drug Company (Japan), Inc.                           Japan
Block Drug Company (Philippines), Inc.                     Manila, Philippines
Block Drug Company (Thailand) Limited                      Thailand
Block Drug Company (Korea) Limited                         Korea
Laboratoires Stafford-Miller S.A.R.L. (a)                  France
Stafford Miller Argentina S.A.                             Argentina
Stafford-Miller Continental, NV-SA                         Belgium
Stafford-Miller de Espana, S.A.                            Spain
Stafford-Miller de Mexico, S.A. de C.V.                    Mexico
Stafford-Miller Industria Ltda.                            Brazil
Stafford-Miller Foreign Sales Corporation                  St. Thomas, Virgin
                                                             Islands
Stafford-Miller (Ireland) Limited                          Ireland
Stafford-Miller Limited                                    Great Britain
Stafford-Miller Nederland B.V.                             Netherlands
Stafford-Miller (N.Z.) Limited                             New Zealand
Stafford-Miller (Portugal) Quimico-Farmaceutica, Lda.      Portugal
Stafford-Miller RE Limited (b)                             Great Britain
Stafford-Miller S.r.l.                                     Italy
Stafford-Miller Scandinavia Aktiebolag                     Sweden

(a)    Wholly-owned subsidiary
       of Stafford-Miller
       Continental, NV-SA.

(b)    Wholly-owned subsidiary
       of Stafford-Miller
       (Ireland) Limited.

<PAGE>70

                                    SIGNATURES

       Pursuant  to the  requirements  of Section 13 or 15(d) 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 on the 8th day of June,
1999.
                            BLOCK DRUG COMPANY, INC.
                                                              (Registrant)
                                                           PETER ANDERSON
                                      BY                   Peter Anderson
                                                    Senior Vice President, Chief
                                                           Financial Officer

       Pursuant to the  requirements  of Securities  Exchange Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities indicated on the 8th day of June, 1999.

Principal Executive Officer:

       JAMES A. BLOCK
       James A. Block
       Chairman of the Board

Principal Financial and Accounting Officer:

        PETER ANDERSON
        Peter Anderson
Senior Vice President, Chief Financial Officer

Directors:
     LEONARD BLOCK                                           JAMES A. BLOCK
     Leonard Block                                           James A. Block

     THOMAS R. BLOCK                                         PETER M. BLOCK
     Thomas R. Block                                         Peter M. Block

     MICHAEL P. DANZIGER                                     PEGGY DANZIGER
     Michael P. Danziger                                     Peggy Danziger

     DOMINICK P. DEPAOLA                                     WILLIAM T. GOLDEN
     Dominick P. DePaola, D.D.S., Ph.D.                      William T. Golden

     MELVIN KOPP                                             PETER C. MANN
     Melvin Kopp                                             Peter C. Mann

     JOHN E. PETERS                                          PETER J. REPETTI
     John E. Peters                                          Peter J. Repetti

     MARY C. TANNER
     Mary C. Tanner


<PAGE>71