BLOCK DRUG CO INC, 10-K, 1996-06-28

BLOCK DRUG CO INC
10-K, 1996-06-28
PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS

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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, 1996 Commission File No. 0-6436

BLOCK DRUG COMPANY, INC.
(Exact name of registrant as specified in its charter)

New Jersey
(State or other jurisdiction of incorporation or organization)

22-1375645
(I.R.S. Employer Identification No.)

257 Cornelison Avenue, Jersey City, New Jersey
(Address of principal executive offices)

07302-9988
(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
None

Name of each exchange on which registered
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 4, 1996, nonaffiliates held no voting shares of the Registrant;
therefore, the aggregate market value of voting shares held by nonaffiliates
is zero.

As of June 4, 1996, there were 13,115,073 shares of Class A Common Stock and
7,704,400 shares of Class B Common Stock of Registrant outstanding.

Documents Incorporated by Reference: None

Exhibit Index: Page 50
<PAGE>

PART I
Item 1. Business

REVIEW OF OPERATIONS

Block Drug Company, Inc. is a worldwide manufacturer and marketer of
denture care products, dental products, consumer over-the-counter medicines
and specialty household products.

DENTURE CARE PRODUCTS

Worldwide denture care products, including denture cleansers and\
adhesives, are an integral part of Block Drug Company's line of products. The
Company's international brands are among the best known in the category such
as Polident , Corega and Poli-Grip brands.

The Polident denture cleanser brand became the number one denture
cleanser in the U.S. This year, the Company renewed its strategic focus on
core product lines, continuing to support these and other brands with effective
advertising and promotion.

Meaningful product enhancements are anticipated to help the Company
maintain its leadership in the denture care products category. Several line
extensions of the Polident brand have been introduced in recent years,
including an improved Polident formula that works in five minutes, and Polident
Overnight, a denture cleanser that works all night. The Dentu-Creme denture
cleanser paste brand sold throughout the U.S. and in many countries appeals
to a specific consumer segment.

The Polident brand, which is sold as Corega in Europe and Latin America,
is also popular in international markets. The Company's denture cleansers are
the leaders in many countries including Germany, Italy, Japan and Canada.

The Company's denture adhesive business is exhibiting growth, particularly
the Poli-Grip line. That brand's sales are strong in Europe; and Poli-Grip is
the number one denture adhesive in the U.K. and France. Last year's
introduction of the Poli-Grip Free brand, an adhesive with no artificial
flavors or colors, was an important addition to the Company's adhesive product
line in the U.S.

DENTAL PRODUCTS

Global brands that meet well-defined customer needs form the core of the
Company's Dental Products Group. Sensodyne , a specialty toothpaste for the
treatment of dentinal hypersensitivity, is the number one desensitizing
dentifrice in the U.S. and in many other countries. It is recommended by
dentists more often than any other brand in its category. Meaningful line
extensions and product improvements are critical to its on-going growth. The
Sensodyne brand with Baking Soda was introduced throughout the U.S. last year,
and is the fastest growing product in this category. This launch and other
product line enhancements in the U.S. and in other countries, plus customer
loyalty, have enabled the Sensodyne brand to consistently maintain market
leadership.

During fiscal year 1996, the Company added to its dental care line with
the acquisition of the Parodontax brand toothpaste. This specialty gum care
toothpaste formulated from natural ingredients is available in 30 countries.
Gum care is an increasingly important part of preventive oral health care.
<PAGE>
In fiscal year 1996, the Company also acquired an exclusive license for
the PerioGlas brand of bioactive glass used in the treatment of periodontal
disease. This bone implant material is used by dental professionals in the
U.S. and will be added to our line of products sold directly to the profession.

The Company markets its professional dental products through a dedicated
salesforce that calls on dentists, oral surgeons and periodontists throughout
the U.S. and most major markets worldwide, as well as through an expanding group
of trained telephone sales representatives. The Company's unique focus on
direct sales to the professional dental market provides opportunities to promote
its oral health care products and those of other companies.

The professional dental products line includes Lodine *, a non-steroidal
anti-inflammatory analgesic introduced during fiscal year 1995, and Habitrol **,
a smoking cessation patch introduced during fiscal 1993, which the Company
promotes through agreements with Wyeth-Ayerst and Ciba Self-Medication, Inc.,
respectively. As a result of focused marketing efforts, Lodine is now the
leading analgesic (NSAID) prescribed by dentists.

CONSUMER OVER-THE-COUNTER MEDICINES

Around the world, important consumer health and quality of life concerns
are being met by the Company's over-the-counter medicines. Phazyme brand
anti-gas products, Balmex brand diaper rash ointment, Nytol brand sleep-aid,
Goody's and BC brand headache powders are among the Company's brand names in
this category.

Last year, the Phazyme line of gas relief products became the number one
anti-gas product in the U.S. Much of this growth came from increased awareness
generated through effective advertising. The Company anticipates growth in
sales of this brand, particularly in international markets.

During the year, the Company expanded distribution of its Balmex brand
diaper rash ointment which is now available throughout the U.S. and in several
international markets. The Balmex brand was the fastest growing diaper rash
baby ointment. The Company anticipates continued growth, both in the U.S. and
in international markets.

Nytol over-the-counter sleep-aid is a well known brand in North America
and, while these markets are substantially smaller, Nytol became the number one
over-the-counter sleep-aid in the U.K., as it is in Canada. The product's
growth in these countries is testimony to the Company's ability to effectively
convey product attributes to the consumer.

* Lodine is a registered trademark of Wyeth-Ayerst, Inc.
** Habitrol is a registered trademark of Ciba Self-Medication, Inc.

CONSUMER OVER-THE-COUNTER MEDICINES (Cont'd)

The U.K. is also the home of a brand acquired this past fiscal year,
Setlers antacid. Well known throughout the U.K., the Setlers brand has the
potential for solid growth in other markets. The Phazyme and Setlers brands
provide the Company with an important base and growing expertise in the
digestive aid product category worldwide. Complementing this expertise is
the Nature's Remedy brand, a natural laxative, which was also acquired in
fiscal 1996.
<PAGE>
Headache powders are specialty analgesics sold in the Southern U.S. where
there is a strong tradition of taking pain relief medication in powder form.
The Company's Goody's brand, acquired in fiscal year 1995, and the BC brand,
the Company's long-established product, lead the headache powder market and
enjoy tremendous consumer loyalty. Effective advertising and promotional
campaigns have helped these products maintain their positions in the
over-the-counter powdered analgesic marketplace.

HOUSEHOLD PRODUCTS

The Company's Household Products Division continues to build its specialty
brands which address specific consumer household problems and engender strong
customer loyalty. These products are primarily sold throughout the U.S. and
Canada, but distribution is increasing in Latin America as well.

The 2000 Flushes line of automatic toilet bowl cleaners remained the
number one brand in its category this year. Through strategic marketing,
product innovation and line extensions, including the launch of the
2000 Flushes Blue plus Bleach brand this fiscal year, 2000 Flushes competes
effectively in a challenging marketplace.

In the household cleaner market, the X-14 brand has provided a solid
foundation for developing a full line of hard surface cleaners under a strong
brand name. The X-14 line continued to grow this year throughout the U.S. and
Canada fueled, in part, by product innovations and variations. The line now
includes X-14 Instant Mildew Stain Remover, X-14 Soap Scum Remover and X-14
Kitchen Cleaner. Growth prospects for this product in Latin America offer
additional opportunity in the coming years.

Capitalizing on the Company's expertise in the automatic toilet bowl
cleaner category, X-14 Toilet Bowl Cleaner was introduced last fiscal year in
the short duration category. Products in this line include X-14 Chlorine Clear
and X-14 Blue plus Fragrance. These new products have exhibited growth to date
and continued progress is expected.

Acquisitions continue to be an important part of the Company's on-going
strategy in Household Products. Two strong brands were acquired in fiscal
year 1996: Lava brand soap and Carpet Fresh brand rug and room deodorizers.
As a well known and respected brand name, Lava enjoys widespread consumer
recognition as a soap for extra-dirty hands. The Company anticipates the Lava
brand soap will become an important product to the Division. Similarly, the
Carpet Fresh brand is a well known name in its product category of rug and
room deodorizers. Two new fragrances were introduced this year.

REGULATORY AFFAIRS

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.
<PAGE>
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 consumer,
dental, personal care and household 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 personal
care products through its national sales force. In-store merchandising is
provided by a national food broker merchandising force. Sales are made
directly to food and drug chains, wholesalers, mass merchandisers and
independent food and drug stores. Food brokers are retained for sales of
household products. In addition, the Company employs marketing and sales
representatives in foreign countries.

PATENTS AND TRADEMARKS

Certain of the Company's products are covered by patents owned by the
Company or manufactured under license from others. While the Company believes
its patents, licenses and formulae to be of material value, it does not
consider its business as a whole to be dependent upon patent protection.

The Company's principal trademarks are of material importance to its
business. Many of the Company's principal trademarks appear in this report in
capital letters. These trademarks are owned by the Company or its wholly-owned
subsidiaries.

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 revenues to national advertising, the
Company believes its advertising and marketing expertise enable it to compete
effectively.
<PAGE>
The primary competitive factors affecting proprietary over-the-counter
medicines and household products are product formulation, reputation,
advertising and consumer promotion. In the ethical pharmaceutical market, the
Company competes against significantly larger companies in selected therapeutic
areas. It relies upon clinical evidence, the reputation of its brand names
and its marketing force concentrating its efforts to promote to medical
specialists, internists and family practitioners. In the household products
segment of its business, the Company relies heavily on advertising and
consumer promotion to compete.

MANUFACTURING

Most of the principal raw materials used by the Company in its domestic
manufacturing operation are purchased domestically and are generally obtainable
from a number of sources at competitive prices. Certain raw materials are
available only from single sources of supply and in these cases the Company
sees no likelihood of the termination of such sources of supply. The Company
maintains adequate inventories of raw materials.

During the course of the fiscal year ended March 31, 1996, there were no
substantial raw material shortages. The Company was able to obtain at
competitive prices all raw materials required for its normal operations.

The Company manufactures the majority of its products. Some products are
manufactured by independent third parties.

Item 2.Proprties:
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 2,427,000
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 the properties.

Among these properties are the following: (1) corporate headquarters,
Jersey City, New Jersey; (2) dental product manufacturing: Humacao, Puerto
Rico (Dentco, Inc.); Glendale, Wisconsin (leased); Dungarvan, Ireland; and
Cwmbran, Wales; (3) manufacturing plants for more than one product group:
Memphis, Tennessee; Dayton (South Brunswick), New Jersey: Humacao, Puerto Rico
(Reedco, Inc.); Mississauga, Canada; Plymouth, Great Britain; Oevel, Belgium;
Sydney Australia; Mexico City, Mexico; Buenos Aires, Argentina; and Rio de
Janeiro, Brazil.

The Company owns land contiguous to the Memphis, South Brunswick, Toronto,
Plymouth, Oevel and Dungarvan facilities. Additional warehouse facilities are
in Memphis and in South Brunswick. Facilities in Zaragoza, Spain serve as a
distribution center.

The Company also has offices in buildings which it owns in Welwyn Garden
City, Great Britain and Ratingen, Germany.

In Puerto Rico, the Company owns land, building and equipment which it
leases to an independent supplier of metal tubes for some of its products.

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, are regarded by management as
adequate for current requirements and for those of the next several years.
<PAGE>
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 cash flows.

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

On June 4, 1996 by waiver and unanimous consent of the Class B
shareholders of the Company, the Board of Directors, consisting of the persons
named in Item 10, was elected in its entirety.

Leonard N. Block, James A. Block and Thomas R. Block were reappointed
Members of the Executive Committee of the Board of Directors which, upon
unanimous consent of all its Members, may exercise all the authority of the
Board of Directors, subject to certain statutory limitations.

PART II

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

STOCK PRICE AND DIVIDEND INFORMATION

Market Price Range Cash Dividends
of Class A Common Declared Per Share
Stock*

Fiscal Year Ended High Low
March 31, 1996

First Quarter $37 1/4 $32 1/4 $0.27 Class A Shares

Second Quarter 40 33 3/4 $0.27 Class A Shares
$0.10 Class B Shares

Third Quarter 40 34 $0.29 Class A Shares
$0.10 Class B Shares

Fourth Quarter 42 3/8 33 $0.29 Class A Shares**
$0.10 Class B Shares**

Fiscal Year Ended
March 31, 1995

First Quarter 32 3/4 29 1/2 $0.26 Class A Shares

Second Quarter 32 1/4 29 $0.26 Class A Shares

Third Quarter 38 30 1/2 $0.27 Class A Shares

Fourth Quarter 37 3/4 33 $0.27 Class A Shares***
<PAGE>
* 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 2, 1996 to Class
A and B shareholders in Class A Common Stock.

*** In addition, a 3% stock dividend was paid on January 3, 1995 to Class
A and B shareholders in Class A Common Stock.

The following table indicates the approximate number of shareholders of each
class of the Company's equity securities as of June 4, 1996:

Title of Class Number of Shareholders

Common Stock, Class A (non-voting) 547

Common Stock, Class B (voting) 5

Item 6. Selected Financial Data

Fiscal Year Ended March 31
1996 1995 1994 1993 1992

Net Sales
from
Continuing
Operations $715,242,000 $621,139,000 $566,772,000 $577,305,000 $520,261,000

Interest,
Dividends
& Other
Income 30,157,000 23,026,000 23,383,000 26,490,000 22,328,000

Income
from
Continuing
Operations
before
Income Taxes 65,501,000 57,870,000 54,147,000 69,446,000 60,969,000

Income Taxes 11,798,000 11,944,000 8,135,000 13,026,000 8,343,000

Income from
Continuing
Operations 53,703,000 45,926,000 46,012,000 56,420,000 52,626,000

Average Number
of Common
Shares
Outstanding(1) 20,796,000 20,753,000 20,718,000 20,692,000 20,676,000

Income from
Continuing
Operations,
Per Share
of Common
Stock(1) $2.58 $2.21 $2.22 $2.73 $2.55
<PAGE>

Net Income
Per Share of
Common Stock(1) $4.26 $2.43 $2.31 $2.97 $2.77

Cash Dividends
Declared Per
Share of
Class A Common $1.12 $1.06 $1.02 $ .95 $ .85

Cash Dividends
Declared Per
Share of
Class B Common $0.30 - - - -

Stock Dividends
Declared Per
Share of
Class A Common 3% 3% 3% 3% 3%

Stock Dividends
Declared Per
Share of
Class B Common(2) 3% 3% 3% 3% 3%

Depreciation $ 19,012,000 $ 16,031,000 $ 13,580,000 $ 10,727,000 $ 9,059,000

Working
Capital 106,050,000 26,095,000 32,637,000 51,203,000 69,563,000

Current Ratio 1.5 1.1 1.2 1.3 1.4

Total Assets $929,117,000 $871,320,000 $771,068,000 $726,497,000 $649,608,000

Long-Term
Debt and
Notes Payable 56,143,000 15,273,000 17,880,000 19,160,000 19,435,000

Shareholders'
Equity 641,042,000 562,531,000 515,121,000 485,298,000 446,550,000

Number of
Employees 3,600 3,521 3,491 3,505 3,301

Management's Discussion and Analysis of Operating Results and Financial
condition is presented on pages 8 to 12 of this report.

(1) Restated to reflect stock dividends declared on Class A and Class B
Common Stock by the Company in 1996 and previously.

(2) Payable in Class A Common Stock.

Prior years income statement numbers are restated to reflect discontinued
operations
<PAGE>
Item 7. Management's Discussion and Analysis of Operating Results and Financial
Condition

In June of 1995, the Company sold its U.S. Reed & Carnrick Pharmaceutical
Division. The discussion of Operations that follows excludes that Division,
which has been treated as a discontinued operation for all periods presented.
For additional information see "Discontinued Operations" in the Notes to
Consolidated Financial Statements on page 26.

Operating Results

Consolidated worldwide net sales for the fiscal year ended March 31, 1996
were $715.2 million, an increase of 15% from the prior fiscal 1995, which
recorded an increase of 10%. Domestic and international sales increased in
both fiscal 1996 and 1995 over the preceding year. Domestic sales in fiscal
1996 increased 14%, reflecting volume growth of 12% and price increases of 2%.
International sales in fiscal 1996 increased 16%. Excluding the impact of
foreign currency exchange rate fluctuations, fiscal year 1996 international
sales would have risen 10%.

Not included in the Company's sales is its 50% interest in a Japanese
Joint Venture company, Kobayashi-Block Company Ltd., which is accounted for
under the equity method. Total sales of the Joint Venture for fiscal 1996 were
$147.1 million, a 22% increase over fiscal 1995, which had total sales of
$120.4 million, 30% higher than fiscal 1994.

The Company's largest business segment, dental products, increased 13% to
$496 million, following a 12% increase in the prior year. Consumer product
sales increased to $219 million, a 22% increase compared to a 4% increase in
the previous year.

Interest, dividends and other income increased in the current year primarily
due to increased equity income from Kobayashi-Block Joint Venture and
co-promotion arrangements in the dental products segment. Investment income in
fiscal 1995 approximated fiscal 1994.

The cost of goods sold percentage to sales was 32.8% in fiscal 1996 compared
to 33.5% in fiscal 1995 and 34.1% in fiscal 1994. These improved percentages
reflect continuing cost containment efforts and mix of products sold, in
addition to selective price increases.

Selling, general and administrative expenses represent 62.2%, 60.9% and
60.5% of sales in fiscal 1996, 1995 and 1994 respectively. The major portion
of such expenses are advertising and promotional expenditures essential to do
business in the highly competitive environment in which the Company operates.
These expenses were increased and reflect a major effort to meet significant
competition and build brand equities.

Due to these factors, income before taxes was 9.2% of sales in fiscal 1996
as compared to 9.3% and 9.6% in fiscal 1995 and 1994, respectively.

The effective income tax rates of 18.0%, 20.6% and 15.0% in fiscal 1996,
1995 and 1994, respectively, reflect tax-exempt interest from government
securities and income from the lower tax areas of Puerto Rico and Ireland.
For additional information, see "Income Taxes" in the Notes to Consolidated
Financial Statements.
<PAGE>
The Company's foreign operations measure profitability in terms of U.S.
Dollars and are subject to foreign exchange risk. If the U.S. Dollar
strengthens, the profitability of foreign operations can be affected adversely.
The profitability of foreign operations will benefit, however, if the U.S.
Dollar weakens. During fiscal 1996 and 1995, the U.S. Dollar generally
weakened. This had a favorable impact on profits for both years.

The Company is not engaged in a hedging program for foreign currency.

Although inflation has been moderate throughout fiscal 1996 and 1995, the
Company has continued to utilize selective price increases and budgetary
monitoring of advertising, personnel and other operating expenses to control
its operating margins. Research and Development outlays have been increased in
the continuing effort to develop new and improved products and line extensions.

The Company has realigned its business strategy during the past 12 months,
renewing its focus on the marketing and manufacturing of its core business
segments: dental, and consumer products and other. This fundamental change in
strategy led to the divestiture of the Reed & Carnrick domestic pharmaceutical
division and the subsequent purchase of a number of key brands in support of
core segments.

In January, 1996 the Company acquired the Lava soap brand from Procter and
Gamble. During the third quarter, the Nature's Remedy Laxative brand in the
United States and the Setlers Antacid brand in the United Kingdom were
acquired from SmithKline Beecham; and the Parodontax line of oral hygiene
products was purchased from Madaus AG for European, Asian and Latin American
markets.

The Company signed an agreement to terminate its joint venture agreement in
Japan with Kobayashi and acquired sole ownership of the Joint Venture Company
in April, 1996. The Company desired more involvement in the day to day
management of the business in Japan which represents a significant portion of
the Company's international operations in over-the-counter oral care products.

Also during the past year, the Company entered into an agreement with U.S.
Biomaterials Corporation for the marketing and selling of PerioGlas brand
dental implant material to dental professionals. The PerioGlas material is
indicated for the treatment of intrabony defects caused by periodontal disease.
This product is detailed to dentists through the Company's Dental Consultants.
Detailing, advertising and telemarketing of PerioGlas commenced in the third
fiscal quarter.

Other product line acquisitions completed as part of the strategic
realignment include the Goodys brand of headache powders from Goody's
Pharmaceuticals in December 1994, and the Carpet Fresh and Neutra-Air brands
of carpet fresheners from Reckitt & Colman in August 1995.

Liquidity and Capital Resources

Cash increased to $16.4 million at March 31, 1996 from $13.7 million at
March 31, 1995 and $8.9 million at March 31, 1994.

Net cash flows from operating activities were $43 million in fiscal 1996,
$7 million less than the prior year. The sale of the U.S. Reed & Carnrick
Division accounted for a $19 million reduction together with increases in
accounts receivable and inventories more than offsetting increases in accounts
payable. In fiscal 1995, net cash flows from operating activities were
$50 million, $26 million less than the prior year. Increases in accounts
receivable and inventories more offset an increase in accounts payable and a
decrease in other current assets. Accounts receivable at year-end 1996, 1995
and 1994 represented 2.1, 2.1 and 1.9 average months of sales, respectively.
Inventory levels comprised 6.4, 6.2, and 5.2 months supply at year-end 1996,
1995, and 1994 respectively.
<PAGE>
Net cash from investing activities in fiscal 1996 was $16 million, compared
to net cash used in fiscal 1995 of $70 million. The sale of the U.S. Reed &
Carnrick Division provided $64 million and together with net proceeds of
securities more than offset payments for products acquired and additions to
property, plant and equipment. In fiscal 1995, payments for products acquired,
additions to property, plant and equipment, and purchase of long-term
securities more than offset proceeds from sales of securities. In fiscal 1994,
the net cash outflow for investing activity was $58 million. Throughout the
three year period, the Company, consistent with its plans for growth and
expansion, continued the modernization and expansion of its manufacturing,
distribution and office facilities, domestically and internationally.

Net capital expenditures of $33 million in fiscal 1996 approximated fiscal
1995 and 1994.

Domestically, major projects over this three year period have been the
modernization and expansion of laboratories and office facilities at the
Jersey City, New Jersey corporate headquarters, a new distribution and
manufacturing facility in Dayton, New Jersey and the renovations and expansions
of production and warehouse facilities at the Memphis, Tennessee,
South Brunswick, New Jersey and Puerto Rico plants. In fiscal 1996, the
Company undertook an extensive reengineering project to improve internal
business processes to better serve our customers. This new focus on technical
efficiency and computerization will be a key to both current and future
productivity.

The Company's foreign facilities were also expanded in fiscal 1996.
Expenditures continued to be made for renovation and expansion of production
and warehousing facilities in Ireland and England. Expansion is expected to
continue in fiscal 1997. The Company anticipates future capital spending to
approximate 5% of net sales, and expects to fund modernization and expansion
through internally generated funds and through short-term borrowings, as needed.

Net cash used in financing activities was $56 million in fiscal 1996,
compared to net cash provided of $25 million in fiscal 1995. In fiscal 1994,
there was a net cash outflow of $15 million. The financing outflows arose from
the payment of debt as well as dividends to shareholders. The financing
inflows in fiscal 1995 arose from the proceeds from debt issuance to help
finance the acquisition of Goody's Pharmaceuticals, Inc. which more than offset
dividends to shareholders and debt repayment.

An overall weakening of the U.S. dollar in relation to foreign currencies
resulted in net foreign currency translation gains of $600,000 in fiscal 1996.
In fiscal 1995, net foreign currency translation gains of $6.7 million were
reported. These amounts were charged directly to Shareholders' Equity in the
balance sheet.

In fiscal 1995, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 115 "Accounting For Certain Investments In Debt and
Equity Securities" and has classified all long-term securities as "available
for sale". These long term securities reported at fair value resulted in
unrealized holding gains of $6 million, net of taxes of $1.3 million as of
March 31, 1996, and $1.8 million, net of taxes of $.6 million as of
March 31, 1995.

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 1997. The Company had uncommitted
lines of credit totaling $303 million and $249 million at March 31, 1996 and
1995, respectively.
<PAGE>

Item 8. Financial Statements and Supplementary Data

REPORT OF INDEPENDENT ACCOUNTANTS

We have audited the consolidated financial statements and the financial
statement schedules of Block Drug Company, Inc. and Subsidiaries listed in
the index on page 51 of this Form 10-K. These financial statements and
financial statements schedules are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and financial statement schedules 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 11 percent and 28 percent, respectively, in the
year ended March 31, 1996, 10 percent and 26 percent, respectively, in the
year ended March 31, 1995 and 11 percent and 23 percent, respectively, in the
year ended March 31, 1994 of the corresponding consolidated totals. These
statements were audited by other auditors whose reports were furnished to us.
Our opinion expressed herein, insofar as its relates to the amounts for such
subsidiaries and branches, is based solely upon such reports.

We conducted our audits in accordance with 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, based on our audits and the reports of other auditors, the
financial statements referred to above present fairly, in all material
respects, the consolidated financial position of Block Drug Company, Inc. and
subsidiaries as of March 31, 1996 and 1995, and the consolidated results of
their operations and their cash flows for each of the three years in the period
ended March 31, 1996 in conformity with generally accepted accounting
principles. In addition, in our opinion, the financial statement schedules
referred to above, when considered in relation to the basic financial
statements taken as a whole, present fairly, in all material respects, the
information required to be included therein.

COOPERS & LYBRAND L.L.P.

New York, New York
June 4, 1996
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
MARCH 31
1996 1995
ASSETS
<S> <C> <C>
Current Assets:
Cash. . . . . . . . . . . . . . . . . . . . . . . . $ 16,388,000 $ 13,706,000
Marketable securities, at market (Note 4) . . . . . 13,433,000 24,061,000
Accounts receivable, less allowances of $4,188,000
(1996) and $3,222,000 (1995) . . . . . . . . . . . 124,816,000 114,656,000
Inventories (Note 1 and 2). . . . . . . . . . . . . 124,368,000 113,419,000
Other current assets. . . . . . . . . . . . . . . . 33,200,000 30,045,000

Total current assets. . . . . . . . . . . . . . . 312,205,000 295,887,000

Property, plant and equipment, less accumulated
depreciation (Notes 1 and 3) . . . . . . . . . . . 242,552,000 229,446,000
Long-term securities, at market (Note 4). . . . . . 222,667,000 260,076,000
Goodwill and other intangible assets, less accumulated
amortization of $9,627,000 (1996) and $9,865,000 (1995)
(Note 1). . . . . . . . . . . . . . . . . . . . . 127,047,000 64,040,000
Other assets. . . . . . . . . . . . . . . . . . . . 24,646,000 21,871,000

Total assets. . . . . . . . . . . . . . . . . . . $929,117,000 $871,320,000

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Notes and bonds payable (Note 5). . . . . . . . . $ 75,559,000 $155,591,000
Accounts payable and accrued expenses (Note 6). . 118,273,000 101,952,000
Income taxes payable (Note 7) . . . . . . . . . . 7,751,000 8,884,000
Dividend payable. . . . . . . . . . . . . . . . . 4,572,000 3,365,000

Total current liabilities. . . . . . . . . . . . 206,155,000 269,792,000

Notes and bonds payable (Note 5). . . . . . . . . . 56,143,000 15,273,000
Deferred income taxes (Note 7). . . . . . . . . . . 10,413,000 13,086,000
Deferred compensation and other liabilities
(Notes 1 and 8) 15,364,000 10,638,000

Total liabilities. . . . . . . . . . . . . . . . 288,075,000 308,789,000

Shareholders' equity (Notes 1 and 9):
Class A common stock non-voting par value
$.10-15,000,000 shares (1996 and 1995) authorized,
13,111,962 (1996) and 12,466,172 (1995) shares
issued and outstanding . . 1,311,000 1,247,000
Class B common stock, par value $.10-30,000,000 shares
authorized, 7,704,400 shares issued and outstanding. 770,000 770,000
Capital in excess of par value. . . . . . . . . . . 219,207,000 194,426,000
Retained earnings . . . . . . . . . . . . . . . . . 416,200,000 367,325,000
Cumulative foreign currency translation adjustment
(Note 1). . . . . . . . . . . . . . . . . . . . . (2,476,000) (3,054,000)
Unrealized holding gain on marketable securities
(Note 4) 6,030,000 1,817,000
Total shareholders' equity. . . . . . . . . . . . . 641,042,000 562,531,000

Total liabilities and shareholders' equity. . . . $ 929,117,000 $ 871,320,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME AND RETAINED EARNINGS
For the Years Ended March 31, 1996, 1995 and 1994
<CAPTION>

1996 1995 1994
Revenues:
<S> <C> <C> <C>
Net sales . . . . . . . . . . . . . $715,242,000 $621,139,000 $566,772,000
Interest, dividends and other income. . 30,157,000 23,026,000 23,383,000
745,399,000 644,165,000 590,155,000

Cost and Expenses:
Cost of goods sold. . . . . . . . . 234,782,000 207,793,000 193,315,000
Selling, general and administrative . . 445,116,000 378,502,000 342,693,000
679,898,000 586,295,000 536,008,000

Income from Continuing Operations
before income taxes . . . . . . . . 65,501,000 57,870,000 54,147,000

Income Taxes (Note 7):
Current . . . . . . . . . . . . . . 17,602,000 11,225,000 7,682,000
Deferred. . . . . . . . . . . . . . (5,804,000) 719,000 453,000
11,798,000 11,944,000 8,135,000

Income from Continuing Operations. . 53,703,000 45,926,000 46,012,000

Discontinued Operations (Note 11):
Income from discontinued operations, net
of taxes of $32,000 (1996), $1,336,000 (1995)
and $1,127,000 (1994) . . . . . . . 52,000 4,443,000 1,840,000

Gain on sale of division, net of taxes
of $21,406,000. . . . . . . . . . . 34,925,000

Income from discontinued operations 34,977,000 4,443,000 1,840,000

Net Income . . . . . . . . . . . . . 88,680,000 50,369,000 47,852,000

Retained earnings at beginning of year.. . 367,325,000 349,500,000 331,633,000
Less: Cash dividends declared-$1.12
(1996), $1.06 (1995) and $1.02 (1994)
per share of Class A common stock (14,164,000) (12,731,000) (11,632,000)
Cash dividends declared $0.30 (1996)
per share of Class B common stock (2,311,000)
Stock dividend 3% (1996, 1995 and 1994)
to Class A and Class B shareholders
payable in Class A common stock
(Note 9). . . . . . . . . . . . . . (23,330,000) (19,813,000) (18,353,000)

Retained earnings at end of year . . $416,200,000 $367,325,000 $349,500,000

Earnings per share of common stock
(Notes 1 and 9):
From Continuing Operations. . . . . $ 2.58 $ 2.21 $ 2.22
From Discontinued Operations. . . . 1.68 .22 .09

Net Earnings Per Share . . . . . . . $ 4.26 $ 2.43 $ 2.31

</TABLE>

See notes to consolidated financial statements.
<PAGE>
<TABLE>
BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
For the Years Ended March 31, 1996, 1995 and 1994
<CAPTION>
1996 1995 1994

CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net income . . . . . . . . . . . . . $88,680,000 $50,369,000 $47,852,000
Adjustments to reconcile net income to
net cash provided by operating activities:
Gain on sale of discontinued operation. . . . . (34,925,000)
Depreciation and amortization . . 21,470,000 17,071,000 14,539,000
Deferred income tax provision . . (5,804,000) 719,000 453,000
Deferred compensation provision . 1,979,000 2,700,000 1,773,000
Equity in net income of joint venture . (4,111,000) (2,836,000) (1,780,000)
(Gain) loss on sales of long-term securities (919,000) 10,000 (42,000)
Employee savings plan provision . 1,515,000 1,303,000 1,347,000
Other, net. . . . . . . . . . . . 986,000 644,000 (64,000)

Changes in assets and liabilities that
provided (used) cash, net of effects from
purchase of products acquired

Accounts receivable . . . . . . . (10,817,000) (11,311,000) (5,286,000)
Inventories . . . . . . . . . . . (10,725,000) (20,108,000) 5,224,000
Accounts payable and accrued expenses . 16,173,000 11,122,000 19,558,000
Other current assets. . . . . . . (923,000) 5,873,000 (2,482,000)
Other assets. . . . . . . . . . . 275,000 (1,656,000) (2,523,000)
Income taxes and dividends payable. . 249,000 (1,738,000) (1,180,000)
Payments of deferred compensation and
other noncurrent liabilities. . (1,381,000) (2,453,000) (1,451,000)
Changes from sale of division, net. . (19,063,000)

Net cash flow from operating activities. . 42,659,000 49,709,000 75,938,000

CASH FLOW FROM INVESTING ACTIVITIES

Proceeds from sales of U.S. Pharmaceutical
Division, net of cash expenses. . . 64,431,000
Additions to property, plant and equipment . . . . (32,693,000) (34,542,000) (35,215,000)
Decrease in marketable securities. . 4,924,000 3,951,000 6,945,000
Dispositions of long-term securities . . 74,808,000 37,807,000 23,910,000
Purchase of long-term securities . . (25,858,000) (28,686,000) (52,992,000)
Payment for products acquired. . . . (69,870,000) (48,957,000) (250,000)

Net cash provided by (used in) investing
activities. . . . . . . . . . . . . 15,742,000 (70,427,000) (57,602,000)

CASH FLOW FROM FINANCING ACTIVITIES

Dividends paid to shareholders . . . (16,475,000) (12,731,000) (11,631,000)
Proceeds from issuance of debt . . . 50,000,000 40,570,000
Payment of debt. . . . . . . . . . . (89,288,000) (2,612,000) (3,643,000)

Net cash (used in) provided by
financing activities. . . . . . . . (55,763,000) 25,227,000 (15,274,000)

Effects of exchange rates on cash. . 44,000 301,000 (793,000)

Increase in cash . . . . . . . . . . 2,682,000 4,810,000 2,269,000

Cash, beginning of year. . . . . . . 13,706,000 8,896,000 6,627,000

Cash, end of year. . . . . . . . . . $16,388,000 $ 13,706,000 $ 8,896,000

SUPPLEMENTAL CASH FLOW DATA

Cash Paid During the Year:

Interest. . . . . . . . . . . . . . . . . $ 8,850,000 $ 7,676,000 $ 6,979,000
Income Taxes. . . . . . . . . . . . . . . $39,812,000 $13,646,000 $13,627,000
</TABLE>

See notes to consolidated financial statements.
<PAGE>

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. The Company's investment in a 50%-owned joint venture (Kobayashi-Block
Company Ltd.) is accounted for under the equity method. With the exception of
the March 31 year-end accounts of Germany, Japan 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.

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), certain
assets and liabilities are translated at historical exchange rates and
resulting translation gains and losses are included in the determination of net
income. In all cases, foreign currency transaction gains and losses are
included in the determination of net income.

Net foreign exchange gains and (losses) of $379,000, ($2,951,000) and
($1,789,000), were included in selling, general and administrative expenses in
the determination of net income for fiscal years 1996, 1995 and 1994,
respectively.

1996 1995 1994

Transactions $ 826,000 ($ 649,000) ($ 383,000)

Translation relating
to highly inflationary
countries ( 447,000) ( 2,302,000) ( 1,406,000)

Total $ 379,000 ($2,951,000) ($1,789,000)

CUMULATIVE TRANSLATION
ADJUSTMENT RECONCILIATION 1996 1995 1994

Balance -Beginning (3,054,000) (9,705,000) (2,225,000)

Translation Adjustment 578,000 6,651,000 (7,480,000)

Balance-Ending (2,476,000) (3,054,000) (9,705,000)

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.
<PAGE>
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
50 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.
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. Intangible assets are periodically
reviewed to determine the recoverability of unamortized balances using
undiscounted cash flows.
Amortization of goodwill and other intangible assets was $2,458,000,
$1,040,000 and $959,000 in the years ended March 31, 1996, 1995 and 1994,
respectively.

Marketable Securities and fair value of financial instruments:

Marketable securities classified as current assets include cash equivalents
(i.e. interest bearing securities with maturities of 90 days or less at time
of purchase) that are recorded at cost (which approximates market) and other
debt instruments with less than one year remaining until maturity that are
treated as available for sale and recorded at market value.

On April 1, 1994, the Company adopted SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Current and non current marketable
securities were reclassified from held-to-maturity to available-for-sale under
SFAS No. 115 as of the beginning of the fourth fiscal quarter of fiscal 1995.
The fair values of such securities are determined by independent pricing
services and/or securities dealers.

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 Statement of Financial
Accounting Standards (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.

In fiscal 1994, the Company adopted Statement of Financial Accounting
Standards No. 106 (SFAS 106), "Employers Accounting for Postretirement Benefits
Other Than Pensions." This standard requires that the estimated cost of these
benefits, which are for health care, be accrued during the employee's active
working career. Prior to the adoption of SFAS 106, these costs were recognized
when benefits were paid. 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.
<PAGE>
Research and development expenditures:
Research and development expenditures are charged to operations as incurred.
The charges for the years ended March 31, 1996, 1995 and 1994 were $23,959,000,
$23,465,000 and $21,568,000, respectively.

Net income per share of common stock:
Net income per share of common stock is based on the combined weighted average
number of shares of Class A and Class B Common Stock outstanding during each
period, which was 20,796,000, 20,753,000 and 20,718,000 in fiscal year 1996,
1995 and 1994, respectively.

New accounting standards:

In March, 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." This pronouncement establishes accounting standards
for when impairment losses relating to long-lived assets, identifiable
intangibles, and goodwill related to those assets should be recognized and how
the losses should be measured. The Company will implement SFAS No. 121 in
fiscal 1997. The adoption of SFAS No. 121 is not expected to have a
significant impact on the Company's consolidated financial position or results
of operations.

Risk and Uncertainties:

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

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 from those estimates.

Reclassification:

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

Note 2. Inventories:
Major classes of inventories comprise: March 31
1996 1995

Raw and packaging materials. . . . . . . . . $ 42,868,000 $41,033,000
Finished goods . . . . . . . . . . . . . . . 81,500,000 72,386,000

Total . . . . . . . . . . . . . . . . . . . . $124,368,000 $ 113,419,000
<PAGE>
Note 3. Property, Plant and Equipment:
Major classes of property, plant and equipment
are summarized as follows: March 31
1996 1995

Land . . $ 21,066,000 $ 20,585,000
Building and related improvements. . . . . 149,274,000 147,138,000
Machinery and equipment. . . . . . . . . . 136,408,000 119,224,000
Furniture and fixtures . . . . . . . . . 44,951,000 36,223,000
Construction in progress . . . . . . . . . 5,577,000 4,825,000
357,276,000 327,995,000

Less: Accumulated depreciation 114,724,000 98,549,000

Total $242,552,000 $229,446,000

Depreciation expense for the years ended March 31, 1996, 1995 and 1994 was
$19,012,000, $16,031,000 and $13,580,000, respectively. Certain of the above
properties are pledged as collateral for the bonds (Note 5).

Note 4. Marketable Securities:

On April 1, 1994, the Company adopted SFAS No. 115. "Accounting for Certain
Investments in Debt and Equity Securities." It classified its marketable
securities as hold-to-maturity and reported at amortized cost. On January 1,
1995, the Company reclassified all of its marketable securities as available-
for-sale. This reclassification is primarily a result of changing economic
circumstances. As a result of this change in classification, on January 1,
1995, the Company recorded an unrealized holding loss of $4,020,000, net of a
tax effect of $127,000, in a separate component of shareholders' equity.
There was no effect on net income as a result of this adoption or change in
portfolio classification.

The marketable securities, both current and non current, as of March 31, 1996
consisted of the following:

Unrealized Holding

Fair Value Gains Losses

U.S government and
its agencies $ 93,280,000 $2,818,000 $1,378,000

Municipal and state 132,314,000 5,894,000

Other, principally
money market 10,506,000

$236,100,000 $8,712,000 $1,378,000

The above unrealized holding gains and losses, net of income taxes of
$1,304,000, are reflected as "unrealized holding gain on marketable securities"
in shareholders' equity.
<PAGE>
The marketable securities, both current and non-current, as of March 31, 1995
consisted of the following:

Unrealized Holding

Fair Value Gains Losses

U.S government and
its agencies $ 73,178,000 $1,781,000 $ 922,000

Municipal and state 195,530,000 3,906,000 2,371,000

Other, principally
money market 15,429,000
$284,137,000 $5,687,000 $3,293,000

The above unrealized holding gains and losses, net of income taxes of
$577,000, are reflected as "unrealized holding gain on marketable securities"
in shareholders' equity.

The maturities of the Company's investment in debt securities, at fair value,
as of March 31, 1996 and 1995 were as follows:

1996 1995

Within 1 year $ 13,433,000 $ 24,061,000

After 1 year through 5 years 53,115,000 19,539,000

After 5 years through 10 years 70,099,000 154,437,000

After 10 years 99,453,000 86,100,000

$ 236,100,000 $ 284,137,000

The proceeds from the sales of available-for-sale securities (excluding normal
principal payments on government agency obligations, bond redemptions and
maturities) were $60,558,000 and $10,161,000 for the years ended March 31, 1996
and 1995, respectively. Gross realized gains and gross realized losses from
these transactions were $1,066,000 and $89,000 for the year ended March 31,
1996 and $270,000 and $258,000 for the year ended March 31, 1995, respectively.
The cost of marketable securities sold was determined by specific
identification.

Note 5. Notes and Bonds Payable:

Short-term notes payable consist primarily of borrowings from various banks at
interest rates ranging from 4.2% to 13.6%. At March 31, 1996 and 1995, the
Company maintained short term uncommitted bank lines of credit aggregating
$303,384,000 and $248,810,000, respectively. Of these amounts, $235,559,000
and $93,513,000 was unused at March 31, 1996 and 1995, respectively.
<PAGE>
Long-term notes and bonds payable are comprised of the following:

March 31
1996 1995

11.75% Bonds due fiscal 1996 through fiscal 2001(a) $ $ 5,625,000
7.3% to 7.5% Notes due fiscal 1997 . . . . . . 3,380,000
7.0% Notes due fiscal 2000 . . . . . . . . . . 1,693,000 1,818,000
6.47% Senior note due fiscal 2007. . . . . . . 50,000,000
Variable rate bonds (currently 4.2%), due
fiscal 2010 . . . . . . . . . . . . . . . . . 4,450,000 4,450,000
$56,143,000 $15,273,000
(a) called 6/1/96

Certain properties of the Company (approximate book value $10,657,000) are
pledged as collateral for the bonds (Note 3). The requirements of the bond
indentures include the maintenance by the Company of minimum consolidated net
worth and net working capital including long-term marketable securities of
$250,000,000 and $50,000,000, respectively.

Interest expense on all borrowings aggregated $8,374,000 in fiscal 1996,
$8,292,000 in fiscal 1995 and $7,029,000 in fiscal 1994.

Long-term debt at March 31, 1996 is payable as follows:

Year ended March 31

2000 . . . . . . . . . . . $ 1,693,000
2001 and later . . . . . . 54,450,000
$56,143,000

The Company entered into interest rate cap agreements to reduce the impact of
increases in interest rates on its short-term floating rate debt. They cover
a $100 million notional value for the period 6/1/93 to 6/1/02 and an additional
$50 million for the period 6/1/95 to 6/1/02. The agreements, which are spread
equally among six counterparties, entitle the Company to receive quarterly
amounts, if any, by which interest on the notional value at the 90 day LIBOR
rate exceeds 4% at quarterly reset dates during the year beginning 6/1/93, 5%
during the year beginning 6/1/94, 7% during the two years beginning 6/1/95 and
9% during the five years beginning 6/1/97. The premium is paid for the term
of the agreements in quarterly installments of $127,236 on the $100 million
beginning 6/1/93 and $116,013 on the $50 million beginning 6/1/95. The
additional $50 million cap protection was discontinued in July, 1995. The
Company received payments totaling $319,000 during the year pursuant to these
agreements and recorded the payment as a reduction of interest expense. As of
March 31, 1996, the fair market value of the $100 million notional amount of
these agreements, net of the present value of premium installment payments
due, was an off-balance sheet liability of $1,289,000.

Note 6. Accounts Payable and Accrued Expenses:

Accounts payable and accrued expenses are comprised of the following:

March 31
1996 1995

Accounts payable - trade . . . . . . . . . . . . . $ 29,323,000 $ 31,568,000
Accrued salaries, wages, vacation pay and bonuses. 31,936,000 28,114,000
Accrued advertising and selling expenses . . . . . 28,071,000 26,505,000
Other current liabilities. . . . . . . . . . . . . 28,943,000 15,765,000
$118,273,000 $101,952,000
<PAGE>
Note 7. Income Taxes:

Income taxes on continuing operations consisted of:

Current Deferred Total

For the year ended March 31, 1996
Federal. . . . . . . . . . . .. $ 7,361,000 $(6,115,000) $ 1,246,000
Foreign . . . . . . . . . . . .. 9,466,000 835,000 10,301,000
State . . . . . . . . . . . . .. 775,000 (524,000) 251,000
$17,602,000 $(5,804,000) $11,798,000

For the year ended March 31, 1995
Federal. . . . . . . . . . . .. $ 2,095,000 $ 1,123,000 $ 3,218,000
Foreign . . . . . . . . . . . .. 7,836,000 (500,000) 7,336,000
State . . . . . . . . . . . . .. 1,294,000 96,000 1,390,000
$11,225,000 $ 719,000 $11,944,000

For the year ended March 31, 1994
Federal. . . . . . . . . . . .. $(2,134,000) $ (270,000) $(2,404,000)
Foreign . . . . . . . . . . . .. 9,107,000 746,000 9,853,000
State . . . . . . . . . . . . .. 709,000 (23,000) 686,000
$ 7,682,000 $ 453,000 $ 8,135,000

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:

1996 1995 1994

For the year ended March 31:
Depreciation. . . . . . . . . . .. . . . $2,025,000 $2,140,000 $1,786,000
Expenses (not) currently
deductible for
tax purposes. . . . . . . . . .. . . . (7,999,000) (699,000) (1,437,000)
Other . . . . . . . . . . . . . .. . . . 170,000 (722,000) 104,000
. . . . . . . . . . . . .. (5,804,000) $ 719,000 $ 453,000

A reconciliation of the provision for income taxes on income from continuing
operations 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:

Percent of Income Before Income Taxes

1996 1995 1994
For the year ended March 31:
U.S. statutory income tax rate . . . . . .. 35.0% 35.0% 35.0%
Tax exempt state and municipal bond income. (6.0) (6.0) (6.2)
Irish operating income taxed at lower rate. (5.3) (4.9) (9.4)
Reduction in taxes resulting from Puerto Rico
source income subject to lower tax rate . (6.8) (4.0) (3.3)
Other, net. . . . .. . .. . .. . . . . . .. 1.1 0.5 (1.1)

18.0% 20.6% 15.0%
<PAGE>
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 $194,886,400
as of March 31, 1996, 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.

Deferred tax assets and liabilities consisted of the following:*

Deferred tax assets: March 31,
1996 1995

Coupon accrual, sales discounts,
and workers compensation. . . $3,816,000 $3,331,000
Employee benefits. . .. . .. . .. . .. . .. . 5,982,000 4,708,000
Accrual on vacation. .. . .. . .. . .. . .. . 1,489,000 1,055,000
Deferred compensation.. . .. . .. . .. . .. . 3,049,000 2,770,000
Capital gain. . .. . .. . .. . .. . .. . .. . 7,801,000
Other .. . .. . .. . .. . .. . .. . .. . .. . 894,000 2,047,000

$23,031,000 $13,911,000

Deferred tax liabilities:
Property, plant and equipment. .. . .. . $17,768,000 $16,361,000
SFAS No. 115 adjustment . .. . .. . .. . .. 1,304,000 578,000
Other .. . .. . .. . .. . .. . .. . .. . .. 2,775,000 676,000

$21,847,000 $17,615,000

* As of March 31, 1996 and 1995, recoverable income taxes reflected in the
balance sheet in "Other current assets" included current deferred tax
assets of $11,597,000 and $9,382,000, respectively. The remaining
deferred tax liabilities, net of deferred tax assets, were reflected in
the balance sheet as "Deferred income taxes".

Note 8. Retirement and Deferred Compensation Plans:

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. Net pension
expense includes the following components:

1996 1995 1994

Service cost. . . .. . .. . .. . . $5,196,000 $4,822,000 $4,151,000
Interest cost on projected benefit
obligation . . . . . . . . . . 5,399,000 4,404,000 3,776,000
Actual return on plan assets. . . . . (12,860,000) (1,216,000) (5,106,000)
Net amortization and deferral . . . . 6,697,000 (4,928,000) (616,000)
Net periodic pension cost . . . . . $ 4,432,000 $3,082,000 $2,205,000
<PAGE>
The following table sets forth the present value of benefit obligations and
funded status for the Company's foreign and domestic plans:

1996 1995

Actuarial present value of benefit
obligations, including vested
enefits of $51,091,000 in 1996
and $42,403,000 in 1995. . . . . . $52,304,000 $41,664,000

Projected benefit obligations. . . 72,154,000 $62,824,000

Plan assets at fair value
(primarily invested in stocks,
bonds and government obligations) 79,693,000 $67,763,000
Add: Unrecognized prior
service cost 3,352,000 2,988,000

Less: Unrecognized, net gain on
assets 19,204,000 13,432,000
Unamortized transition asset
established as of
February 28, 1985 3,002,000 3,653,000
Adjustment for minimum
liability 399,000 634,000
One time purchase price
liability - 60,440,000 315,000 52,717,000
Net pension liability. . . . . . . $11,714,000 $10,107,000

The expected long-term rate of return on plan assets was 8% for 1996 and 1995.
The weighted average discount rate was 7.5% for 1996 and 8.0% in 1995. The
rate of increase in future compensation levels used in determining the
actuarial present value of projected benefit obligations was 5.0% for 1996 and
6.0% for 1995.

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, 1996, 1995
and 1994 were $923,000, $559,000 and $718,000, respectively. Deferred
compensation payable included $3,124,000 at March 31, 1996 and $2,801,000 at
March 31, 1995, 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 their employment or death.
<PAGE>
In addition to providing pension benefits the Company provides certain
retiree health care 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 postretirement benefit liability as of March 31, 1996 and 1995 is
as follows:

1996 1995

Retirees . . . . . . . . . . . . . . . . . $3,664,000 $3,080,000
Fully eligible active plan participants. . . . . . . 860,000 858,000
Other active plan participants . . . . . . . . . 3,661,000 3,263,000

Total accumulated postretirement
benefit obligation . . . . . . 8,185,000 7,201,000

Less: Plan assets at fair value and accruals . . . . - -
Unrecognized net loss from past experience
different from that assumed and from
changes in assumptions . . . . . . . . 374,000 168,000
Unrecognized transition obligation. . . . . 4,772,000 5,052,000

Accrued postretirement benefit cost
recognized in the Balance Sheet .. . . . $3,039,000 $1,981,000

The cost of providing postretirement benefits for the period ending March 31,
1996 and 1995 includes the following:
1996 1995

Service cost benefits attributed to service
during the period. . . . $ 288,000 $ 273,000
Interest cost on the accumulated
postretirement benefit obligation . . . . . . 572,000 508,000
Estimated return on plan assets. . . . . . . . . . . - -
Amortization of transition obligation. . . . . . . . 281,000 281,000

Net periodic postretirement benefit cost. . $1,141,000 $1,062,000

The accumulated postretirement benefits obligation was determined by
application of the terms of the medical plan together with relevant actuarial
assumptions and a health-care cost trend rate of 9% in 1996 decreasing
gradually to 5.5% in 2001 and thereafter. These costs also reflect the
implementation of a $2,000 per year cost cap and contribution schedule of 0%
to 75% of cost based on years of service at retirement for new retirements
after October 1, 1993. The effect of a 1% annual increase in these assumed
cost trend rates would have a minimal effect due to the cost cap. The
increase in the accumulated postretirement benefit obligation would be
approximately $650,000 and the aggregate of the service and interest cost
components of net postretirement health care cost for 1996 would be
approximately $67,000.

Measurement of the accumulated postretirement benefit obligation was based
on an assumed discount rate of 7.5% and 8.0% for 1996 and 1995, respectively.
<PAGE>
Note 9. 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 October 31, 1995, the Company declared an increased cash dividend of $.29
on the Class A Common Stock and a Class A Common Stock dividend of 3% on both
the Class A and Class B Common Stock, payable on January 2, 1996 to
shareholders of record as of December 1, 1995. On August 8, 1995 the Company
declared an increased cash dividend of $.10 on the Class B Common Stock.

On October 25, 1994, the Company declared an increased cash dividend of $.27
on the Class A Common Stock and a Class A Common Stock dividend of 3% on both
the Class A and Class B Common Stock, payable on January 3, 1995 to
shareholders of record as of December 1, 1994.

On October 26, 1993, the Company declared an increased cash dividend of $.26
on the Class A Common Stock and a Class A Common Stock dividend of 3% on both
the Class A and Class B Common Stock, payable on January 4, 1994 to
shareholders of record as of December 1, 1993.

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

Changes in Class A Common Stock, Class B Common Stock and capital in excess
of par value during fiscal 1996, 1995 and 1994 were as follows:

CLASS A CLASS B
COMMON STOCK COMMON STOCK
Capital in
Issued Issued Excess of
Shares Amount Shares Amount Par Value

Balance, March 31, 1993 11,241,000 $1,124,000 7,704,400 $770,000 $153,996,000

3% Stock Dividend 569,000 $ 57,000 $ 18,296,000
Savings Incentive Plan(1) 37,000 4,000 1,344,000
Repurchase of Shares (8,000) (1,000) (264,000)

Balance, March 31, 1994 11,839,000 $1,184,000 7,704,400 $770,000 $173,372,000

3% Stock Dividend 587,000 $ 59,000 $ 19,755,000
Savings Incentive Plan(1) 40,000 4,000 1,299,000

Balance, March 31, 1995 12,466,000 $1,247,000 7,704,400 $770,000 $194,426,000

3% Stock Dividend 606,000 60,000 23,269,000
Savings Incentive Plan(1) 40,000 4,000 1,512,000

Balance, March 31, 1996 13,112,000 $1,311,000 7,704,400 $770,000 $219,207,000
<PAGE>
(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.

Note 10. 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 or results of operations.

Note 11. Discontinued Operations:

On June 30, 1995, the Company sold its U.S. Reed & Carnrick Pharmaceutical
Division. In connection therewith, the Company recorded a gain on disposal of
$34,925,000, net of taxes of $21,406,000 ($1.68 per share). The U.S. Reed &
Carnrick Pharmaceutical business is reported as a discontinued operation for
all periods presented. The statements of consolidated income and related
notes to consolidated financial statements have been restated to conform to
the discontinued operations presentation.

The sales for the U.S. Reed & Carnrick Pharmaceutical business for the
quarter ended June 30, 1995 (through the date of disposition) were $10,039,000.
Sales for the fiscal years ended March 31, 1995 and 1994, were $48,715,000 and
$46,511,000, respectively. Income from discontinued operations for the fiscal
years ended March 31, 1996, 1995, 1994, net of taxes, was $52,000, $4,443,000
and $1,840,000, respectively.

Note 12. Product Segments:

The Company develops, manufactures and sells products classified into two
segments. The dental segment includes products used for cleansing and
retention of dentures, toothpastes, toothbrushes and other products for
general dental care. The consumer product segment consists of a variety of
household cleaning products, over-the-counter products including anti-gas
preparations, headache powders, sleep-aid tablets, digestive aids, diaper rash
ointments, and medicated shampoos.

The following table presents information concerning the Company's continuing
operations by product segment and geographic area for the years ended
March 31, 1996, 1995 and 1994.
<PAGE>
PRODUCT SEGMENTS 1996 1995 1994
(in thousands)
Net Sales:
Dental. . . . . . . . . . . . . . . . . $495,798 $440,531 $393,613
Consumer Products and other . . . . . . 219,444 180,608 173,159
Consolidated net sales. . . . . . . . . $715,242 $621,139 $566,772

Operating Income:
Dental. . . . . . . . . . . . . . . . . $ 60,170 $ 58,742 $ 46,177
Consumer Products and other . . . . . . 31,623 19,929 29,042

Total operating income. . . . . . . . . 91,793 78,671 75,219
General corporate expenses. . . . . . . (26,292) (20,801) (21,072)
Consolidated income before income taxes $ 65,501 $ 57,870 $ 54,147

Assets:
Dental. . . . . . . . . . . . . . . . . . $376,988 $333,188 $325,325
Consumer Products and other . . . . . . . 302,466 228,035 172,662

Total identifiable assets . . . . . . . . 679,454 561,223 497,987
General corporate assets. . . . . . . . . 249,663 310,097 273,081
Consolidated assets . . . . . . . . . . . $929,117 $871,320 $771,068

Depreciation and Amortization:
Dental. . . . . . . . . . . . . . . . . . $ 13,389 $ 9,951 $ 8,554
Consumer Products and other . . . . . . . 8,081 7,120 5,985
Consolidated depreciation and
amortization $ 21,470 $ 17,071 $ 14,539

Capital Expenditures, Net:
Dental. . . . . . . . . . . . . . . . . $ 23,406 $ 22,234 $ 18,836
Consumer Products and other . . . . . . 9,287 12,308 16,379
Consolidated capital expenditures . . . $ 32,693 $ 34,542 $ 35,215

GEOGRAPHIC AREA
Net Sales:
United States . . . . . . . . . . . . . $334,614 $291,313 $272,154
Europe. . . . . . . . . . . . . . . . . 285,245 242,424 211,539
Other . . . . . . . . . . . . . . . . . 95,383 87,402 83,079
Consolidated net sales. . . . . . . . . $715,242 $621,139 $566,772

Operating income:
United States . . . . . . . . . . . . . $45,564 $ 36,022 $ 26,996
Europe. . . . . . . . . . . . . . . . . 32,834 29,932 31,068
Other . . . . . . . . . . . . . . . . . 13,395 12,717 17,155
Total operating income. . . . . . . . . 91,793 78,671 75,219
General corporate expenses. . . . . . . (26,292) (20,801) (21,072)
Consolidated income before income taxes $65,501 $ 57,870 $ 54,147

Assets:
United States . . . . . . . . . . . . . $361,543 $314,149 $243,437
Europe. . . . . . . . . . . . . . . . . 270,641 212,830 203,767
Other . . . . . . . . . . . . . . . . . 47,270 34,244 50,783
Total identifiable assets . . . . . . . 679,454 561,223 497,987
General corporate assets. . . . . . . . 249,663 310,097 273,081
Consolidated assets . . . . . . . . . . $929,117 $871,320 $771,068
<PAGE>
General corporate expenses consist of administrative expenses, translation
losses relating to highly inflationary countries and interest less investment
income. General corporate assets consist principally of marketable and long-
term securities. 1995 and 1994 amounts are reclassified to conform to 1996
presentation.

Note 13. Subsequent Event

QUARTERLY FINANCIAL INFORMATION
(Unaudited)

The following is a tabulation of quarterly results of operations for the
years ended March 31, 1996 and 1995 (in thousands, except per share amounts):

Fiscal 1996 Quarters
First Second Third Fourth

Net sales. . . . . . . $178,810,000 $172,234,000 $174,351,000 $189,847,000
Gross profit . . . . . 123,130,000 113,573,000 116,261,000 127,496,000
Income from Continuing
Operations Before
Income Taxes . . . . 17,926,000 16,178,000 17,412,000 13,985,000
Income from Continuing
Operations. . . . . .. 14,248,000 12,899,000 13,087,000 13,469,000
Income (Loss) from
Discontinued
Operations. . . . . . 43,088,000 (79,000) (1,241,000) (6,791,000)
Net Income . . . . . . . 57,336,000 12,820,000 11,846,000 6,678,000
Earnings per share of
Common Stock
From Continuing
Operations(1) . . . . $0.69 $0.62 $0.63 $0.64
Earnings per share of
Common stock
From Discontinued
Operations(1) . . . . $2.07 $0.00 ($0.06) ($0.33)

Fiscal 1995 Quarters
First Second Third Fourth

Net sales. . . . . . . .$146,728,000 $154,976,000 $148,676,000 $170,759,000
Gross profit . . . . . .. 99,531,000 103,654,000 102,596,000 107,565,000
Income from Continuing
Operations
Before Income Taxes . 13,299,000 15,393,000 13,400,000 15,778,000
Income from Continuing
Operations. . . . . . 10,518,000 11,636,000 10,925,000 12,847,000
Income from Discontinued
Operations. . . . . . 1,405,000 746,000 1,295,000 997,000
Net Income . . . . . . . 11,923,000 12,382,000 12,220,000 13,844,000
Earnings per share of
Common Stock
From Continuing
Operations(1) . . . . . $0.50 $0.56 $0.53 $0.62
Earnings per share of
Common stock
From Discontinued
Operations(1) . . . . $0.07 $0.04 $0.06 $0.05

(1) Restated to reflect the three percent stock dividends (see Note 9).
<PAGE>

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

Not applicable.

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:

Name Age Date Term Other Positions Held
Expires (or principal occupation)

Leonard Block 84 6/96 Senior Chairman of the Board*

James A. Block 59 6/96 Chairman of the Board*

Thomas R. Block 51 6/96 President and Treasurer* **

Donald H. LeSieur 60 6/96 Executive Vice President and
President, International Division
Michael C. Alfano,
D.M.D., Ph.D. 48 6/96 Senior Vice President, Research
and Technology

Alfred E. Brown, Ph.D. 79 6/96 Director of Scientific Affairs**
Celanese Corporation (Retired)

Peggy Danziger 56 6/96 Private Investor

William T. Golden 86 6/96 Corporate Director and Trustee**

Melvin Kopp 66 6/96 Senior Vice President and Chief
Financial Officer

Peter Mann 54 6/96 President, U.S. Division

John E. Peters 54 6/96 Senior Vice President, General
Counsel and Secretary

Peter J. Repetti 78 6/96 Member, Fulbright & Jaworski
L.L.P. (Retired)

Susan B. Stearns 51 6/96 Private Investor

Mary C. Tanner 46 6/96 Managing Director, Lehman
Brothers

* Member of the Executive Committee
** Member of the Audit Committee

(a) Directors of the Registrant (Continued)
<PAGE>
The following family relationships exist among the Directors of the
Company: Leonard Block is the father of Thomas R. Block and Peggy Danziger,
and is the uncle of James A. Block and Susan B. Stearns, who are brother and
sister. Thomas R. Block and Peggy Danziger are brother and sister and are
first cousins of James A. Block and Susan B. Stearns.

Each director of the Company has been employed by the Company for the
past five years except for (i) Susan B. Stearns who is a private investor,
(ii) William T. Golden who is a director and trustee of various organizations,
(iii) Alfred E. Brown, Ph.D., formerly Director, Scientific Affairs, Celanese
Corporation, now retired, (iv) Peter J. Repetti who is an attorney and a
retired member of the New York law firm of Fulbright & Jaworski L.L.P.,
(v) Peggy Danziger who is a private investor, and (vi) Mary C. Tanner, a
Managing Director of Lehman Brothers.

All Directors have served as Directors for a period in excess of five
(5) years, except for Peter C. Mann, President of the Company's U.S. Division,
and Mary C. Tanner, who were elected this year.

None of the Directors serve on the Boards of Directors of any other
public corporation, except for (1) William T. Golden who serves on the Board
of Directors Verde Exploration Ltd.; and (2) Peter J. Repetti who serves on
the Board of Directors of Pulitzer Publishing Company.

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. They further stated their awareness that the sentiments expressed
in the letter 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, Susan B.
Stearns, and Peter J. Repetti (attorney); and the Leonard Block family group
has three (3) representatives on the Board of Directors: Leonard Block,
Thomas Block, and Peggy Danziger.

(b) Executive Officers of the Registrant
<PAGE>
The following is a list of each executive officer of the Company, the
date his present term of office will expire, and all other positions presently
held with the Company:

Name Age Date of Date Term Positions
Appointment Expires

Leonard N. Block 84 10/88 6/96 Senior Chairman of the
Board (1)

James A. Block 59 10/88 6/96 Chairman of the Board (1)

Thomas R. Block 51 10/88 6/96 President and Treasurer (1)

Donald H. LeSieur 60 10/88 6/96 Executive Vice President
and President,
International Division
(1)(3)

Michael C. Alfano,
D.M.D., Ph.D. 48 5/87 6/96 Senior Vice President,
Research and
Technology (2)(3)

Melvin Kopp 66 10/72 6/96 Senior Vice President and
Chief Financial
Officer (2)(3)

Peter C. Mann 54 11/79 6/96 President, U.S.
Division (2)(3)

John E. Peters 54 12/78 6/96 Senior Vice President,
General Counsel and
Secretary (2)(3)

Gilbert Seymann 57 5/84 6/96 Senior Vice President,
Operations (2)(3)

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 and Treasurer 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.

Donald H. LeSieur is Executive Vice President and President,
International Division, a Member of the Office of the Chief Executive, and has
direct responsibility for all international operations.

(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>

Michael C. Alfano, D.M.D., Ph.D., Senior Vice President - Director
Research and Technology, is responsible for all research, development and
quality assurance activities of the Company.

Melvin Kopp, Senior Vice President, is the Chief Financial Officer
of the Company.

Peter C. Mann, President, U.S. Division, is responsible for all
domestic marketing, sales and corporate development.

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

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

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.

No family relationships exist between the executive officers of the
Company, except as noted above between the Directors who are also executive
officers.
<TABLE>
Item 11. Executive Compensation
<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 Block (1) 1996 362,347 136,500 * * * * 34,950
Senior Chairman 1995 357,469 89,500 34,537
of the Board 1994 340,832 79,000 34,504

James A. Block (2) 1996 336,252 119,600 * * * * 9,449
Chairman of 1995 327,948 88,900 9,099
the Board 1994 316,219 90,600 9,011

Thomas R. Block (3) 1996 336,252 125,400 * * * * 6,702
President and 1995 327,948 92,000 6,641
Treasurer 1994 316,219 93,500 5,832

Donald H. LeSieur (4) 1996 393,248 243,800 * * * - 13,074
Executive Vice 1995 342,288 148,100 122,031 9,981
Pres. International 1994 329,148 110,100 151,289 9,011

Peter C. Mann 1996 297,300 184,600 * * * 92,986 6,687
President, U.S. 1995 258,638 94,500 78,941 6,269
Division 1994 248,625 65,600 - 6,164
</TABLE>
*None to be reported
<PAGE>

(1) On January 1, 1981, the Company entered into an Employment Agreement with
Leonard N. Block, which runs through April 30, 1997. 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.

(2) On September 1, 1984, the Company entered into an Employment Agreement
with James A. Block, which runs through April 30, 1997. 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.

(3) On May 1, 1987, the Company entered into an Employment Agreement with
Thomas R. Block, which runs through April 30, 1997. 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.

(4) On September 1, 1984, the Company entered into an Employment Agreement
with Donald H. LeSieur for a one (1) year period renewable for three (3)
consecutive five (5) year terms. Mr. LeSieur's annual base salary is to be no
less than $164,600.00, which will be adjusted in accordance with certain
economic factors. Mr. LeSieur will receive deferred compensation equal to
one-third of his average annual salary for three (3) years prior to his
termination, which compensation vests at the rate of one and one-quarter
percent per quarter, except that such compensation will become one-hundred
percent vested if termination occurs due to death or disability. Such
payments shall continue for a period of 13 1/2 years. Should termination
occur by Company action other than for cause, a further payment equal to
one-half his annual salary as of the date of termination for a maximum of five
(5) years or until his 65th birthday, whichever first occurs. Donald H.
LeSieur has been employed by the Company since 1973.

During calendar year 1995, the director's annual fee was $8,500 and
remains unchanged for calendar year 1996. Executive officers who are
directors receive no director's, attendance, audit committee or compensation
committee fees. During calendar year 1995, five directors each received
attendance fees of $850 per meeting. The fee of $850 per meeting was
increased to $950 for calendar year 1996. During the calendar year 1995, two
directors each received audit committee attendance fees of $850. The fee of
$850 per meeting was increased to $900 for calendar 1996. During the calendar
year 1995, two directors each received compensation committee attendance fees
of $425. The fee of $425 per meeting was increased to $450 for calendar 1995.
The total includes payments of $8,500 made to each of six directors, and $4,250
to one director, including three payments to each of six such directors of
$2,125, and one payment of $2,125 to one such director in calendar year 1995
and one payment of $2,125 to each of seven such directors during the first
quarter of calendar year 1996. This total further includes an aggregate of
$15,900 paid to six directors as director's attendance fees, an aggregate of
$6,900 paid to two directors as audit committee member fees, and an aggregate
of $2,600 paid to two directors as compensation committee member fees.
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 years of service:

<PAGE>
1996 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 $ 5,352.60 $10,705.20 $16,057.80 $22,842.00

100,000 12,750.00 25,500.00 38,250.00 52,500.00

150,000 20,250.00 40,500.00 60,750.00 82,500.00

200,000 27,750.00 55,500.00 83,250.00 112,500.00

250,000 35,250.00 70,500.00 105,750.00 120,000.00*

300,000 42,750.00 85,500.00 120,000.00* 120,000.00*

350,000 50,250.00 100,500.00 120,000.00* 120,000.00*

* Maximum permissible benefit under IRC Sec. 415, effective January 1, 1996.

The Company's domestic pension expense for the fiscal years ended
March 31, 1996 and 1995 was $2,745,938 and $1,475,938, respectively. The
plans are not in a fully funded status, and accordingly, the Company's
financial statements reflect a domestic pension funding contribution of
$851,425 for the fiscal year ended March 31, 1996.

The remuneration covered by these plans is the total regular salary
excluding any bonuses, overtime or other special 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.

With respect to the figures of the table on page 32, the accrual of
pension benefits is estimated using only the individual's base salary. The
base salaries used for the estimation of pension benefits for the individuals
listed in the table are: James A. Block ($333,849.96); Thomas R. Block
($333,849.96); Donald H. LeSieur ($382,954.15); and Peter C. Mann
($291,561.42). 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, 1996, the five (5) employees described in Item 10 had the
following credited years of service in these plans: Leonard Block, 47 years;
James A. Block, 34 years; Thomas R. Block, 26 years; Donald H. LeSieur,
22 years; and Peter C. Mann, 23 years.
<PAGE>

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.

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. 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 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, 1996, the units were valued at $92.60.

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, 1996, a total of 282,234 units had been awarded having an
average value of $87.82 per unit. Of those 282,234 units, 70,422 units at an
average value of $92.57 per unit were awarded during the past fiscal year.
During fiscal year 1996, the following units were awarded to executives:
4,230 units at $92.20 per unit to Donald H. LeSieur and 590 units at $93.30
per unit and 1,865 units at $93.30 per unit to Peter C. Mann.

During the year ended March 31, 1996, $1,425,435 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 * **
Unit or Other Until Maturity Threshold Target Maximum
Name Rights or Payout ($) ($) ($)

Donald H. LeSieur 4,357 5 Years 2,018 238,000 -

0 0 0

Peter C. Mann 608 5 Years 63 34,000 -

1,921 194 106,000

* Minimum value as of March 31, 1996
** 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.
<PAGE>

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 4, 1996, 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.

Title of Class Name and Address Amount and Nature Percent
Address of of Beneficial of Class
Beneficial Owner Ownership

Class B Common Leonard Block, Representative 3,852,200(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 3,852,200(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 all subject to the shareholders' agreement beneficially owned by the
Leonard Block Trust, the Thomas Block Trust and the Peggy Danziger Trust,
respectively, 385,424; 1,733,388; and 1,733,388.

(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 1,926,100 shares held in trust for the benefit of
Susan B. Stearns.
<PAGE>
(b) Securities ownership of management:

The following table sets forth, as of June 4, 1996, the securities ownership
of all directors, naming them, and all Directors and Officers of the Company,
as a group, without naming them:

BLOCK DRUG COMPANY, INC.
SECURITIES BENEFICIALLY OWNED

Class A Common Stock Class B Common
Stock Benefically Stock Beneficially
Owned Owned

Name of No Shared Shared 401-K Percentage
Beneficial Investment Investment Plan Owned
Owner Power Power Holdings

Leonard Block 1,090,728 - 887 8% 3,852,200 - 50%
(1) (4) (5)

James A. Block 2,432,672 - 1,677 19% 3,852,200 - 50%
(2) (3)

Thomas Block 155,360 2,173,396 1,077 17% -
(4) (5)

Donald H. LeSieur 103 515 1,709 - -

Michael C. Alfano - - 1,339 - -

Alfred E. Brown 1,298 - - - -
(6)

Peggy Danziger 160,309 1,343,458 - 11% -
(5) (8)

William T. Golden 6,039 13,579 - - -

Melvin Kopp 2,083 - - - -

Peter C. Mann 818 103 1,484 - -

John E. Peters - 2,030 1,245 - -

Peter J. Repetti 257 - - - -
(7)

Gilbert M. Seymann 1,118 - 1,148 - -

Susan B. Stearns - - - - -
(2) (3)

Mary C. Tanner - - - - -

As of June 4, 1996, all directors and officers as a group owned 55% of the
Company's Class A Common Stock. The number of shareholders of Class A Common
Stock is 547.
<PAGE>

(1) Leonard Block owns 350,487 shares (not including 401-K Plan Holdings); is
deemed to be the beneficial owner of but disclaims ownership of: 740,468
shares owned by Adlen Corporation, of which Leonard Block is the sole
shareholder; 4,006 shares owned by Adele Block, his wife.

(2) James A. Block owns 113 shares (not including 401-K Plan Holdings); is
deemed to be the beneficial owner of: 168,196 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; 1,033,447 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) and has sole investment powers with
respect to the shares held by such trust; 1,230,916 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) and has sole investment powers with respect to the
shares held by such trusts. James A. Block disclaims ownership to all
1,230,916 Class A shares and 1,926,100 Class B shares owned by the trusts for
the benefit of Susan B. Stearns of which he is a trustee or co-trustee.

(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 1,926,100 shares held in trust for the benefit of
Susan B. Stearns.

(4) Thomas Block owns 95,338 shares (not including 401-K Plan Holdings); is
deemed to be the beneficial owner but disclaims ownership of: 22,761 shares
owned by Marilyn Friedman, his wife; 37,261 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; 120,935 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;
1,805,065 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; 247,396 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 43, all 247,396 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, 123,698 shares
(representing one-half of the total shares owned by the four trusts) were
allocated to Thomas Block and 123,698 shares were allocated to Peggy Danziger.
The impact of this treatment of these shares on the percentages reported for
Thomas Block and Peggy Danziger is negligible.

In computing the aggregate number of shares owned by directors and officers
as a group, the 247,396 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.
<PAGE>
(5) Peggy Danziger owns 160,309 shares; 1,091,999 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;
247,396 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 purposes of reporting shares for which
a beneficial owner shares investment power in the tabular presentation on page
43, all 247,396 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; and all 4,063 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, 123,698 shares (representing one-half of the total shares owned by the
four trusts in which Peggy Danziger is a co-trustee with Thomas Block) were
allocated to Thomas Block and 123,698 shares were allocated to Peggy Danziger.
The impact of this treatment of these shares on the percentages reported for
Thomas Block and Peggy Danziger is negligible. In computing the aggregate
number of shares owned by directors and officers as a group, the 247,396
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.

(6) Alfred E. Brown disclaims beneficial ownership to all 1,298 shares owned
by his wife.

(7) Peter J. Repetti disclaims beneficial ownership to 257 shares owned by
his wife.

(8) Peggy Danziger disclaims beneficial ownership to all 4,063 shares of
which Richard M. Danziger, her husband is co-trustee with a third party.

Item 13. Certain Relationships and Related Transactions

On March 1, 1989, Donald H. LeSieur, Executive Vice President, United
States, gave a promissory note to the Company in the amount of $200,000
pursuant to an agreement under which two previous loans were consolidated
into a single loan evidenced by a single promissory note. Under the terms of
the consolidated loan agreement the previous loans were cancelled. On May 26,
1989, Mr. LeSieur received an additional loan in the amount of $20,000 also
secured by a promissory note. These loans are collateralized by sums to which
Mr. LeSieur is entitled as deferred compensation under the Company's Special
Stock Unit Plan or under any other deferred compensation program in which
Mr. LeSieur participates and a mortgage on certain real estate owned by
Mr. LeSieur and his wife. The principal of each loan is payable on or before
June 30, 2007. Interest on the unpaid principal balance accrues at the seven
year Treasury Bill rate as published by The New York Times, said interest to
be adjusted semi-annually on July 1 and January 1 of each year. Interest
only on the unpaid principal balance is due and payable monthly. Principal of
the consolidated loan is to be repaid at the rate of $12,000 per annum.
Principal of the May 26, 1989 loan is to be repaid at the rate of $1,200 per
annum, commencing June 1, 1991. The loan agreement provides for immediate
repayment of the unpaid principal balance upon the occurrence of any one of a
number of specified events.
<PAGE>
On October 27, 1992, the Company entered into a Consulting Agreement with
Melvin Kopp. The term of this agreement commenced March 1, 1995 and expires
on February 28, 2005. Under this agreement, after his retirement and on a
part time basis, Mr. Kopp will continue to provide the Company with his
services for a minimum of sixty days annually. Mr. Kopp's compensation for
each day of service as a Consultant, will be equivalent to the daily cost to
the Company for Mr. Kopp's service as an employee at the time of his
retirement. His compensation will be adjusted annually in accordance with
the Company's salary administration policy.

On June 1, 1993, John E. Peters, Senior Vice President, General Counsel
and Secretary, gave a Promissory Note to the Company in the amount of
$100,000.00 pursuant to an agreement under which the Company loaned
$100,000.00 to Mr. Peters. This loan is collateralized by sums to which
Mr. Peters is entitled as deferred compensation under the Company's Special
Stock Unit Plan and by a mortgage on certain real estate owned by Mr. Peters
and his wife. The principal of the loan is payable on or before May 31, 1998.
Interest on the unpaid principal balance accrues at the seven year Treasury
Bill rate as published in The New York Times, said interest to be adjusted
semi-annually on July 1 and January 1 of each year. Interest only on the
unpaid principal balance is due and payable semi-monthly. Principal is to be
repaid at the rate of $5,000.00 per annum, which is to be deducted from sums
to which Mr. Peters is entitled under the Company's Executive Incentive
Plan. The loan agreement provides for immediate repayment of the unpaid
principal balance upon the occurrence of any one of a number of specified
events.

On January 26, 1994, the Company entered into an agreement with Peter Mann,
President,U.S. Division, under which the minimum value of the 1991 special
stock unit award to Mr. Mann, and only the 1991 special stock unit award, under
the Company's Special Stock Unit Plan would, subject to the vesting rules under
the Plan, be guaranteed to be no less than $83.30 per special stock unit.

Change in Control Agreement

Certain key executives 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 Agreement expired on December 31, 1995, or upon the covered
executive's sixty-fifth (65) birthday, but provided for automatic extensions
which effectively create a continuing rolling five year term. The Agreement
also provides for an automatic three (3) year extension. The Agreement
defines 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 1996, Leonard Block, James A. Block,
Thomas R. Block and Donald H. LeSieur were members of the Office of the Chief
Executive.
<PAGE>

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 Independent Accountants

Consolidated Balance Sheets - March 3l, 1996 and 1995,

Consolidated Statements of Income and Retained Earnings for the Years
ended March 3l, 1996, 1995 and 1994,

Consolidated Statements of Cash Flows for the Years ended March 3l,
1996, 1995 and 1994,

Notes to Consolidated Financial Statements

Supplementary Data:

Selected quarterly data for the two years ended March 3l, 1996.

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. Exhibits: The Exhibits Index is on page 50.

(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>
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, 1995 and 1994, and the related statements of income,
retained earnings and cash flows for each of the three years in the period
ended December 31, 1995. 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 Continental
N.V. at December 31, 1995 and 1994 and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 1995
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 respect in relation to the basic financial statements taken as
a whole.

Ernst & Young

J. Englishstraat 54
21 Borgerhout (Antwerpen)

April 19, 1996

<PAGE>
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, 1995 and 1994, and the statements of income and retained
earnings and cash flows for the years 1995, 1994 and 1993. 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. Those standards require that we plan a 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.

The Company is a wholly-owned subsidiary of Block Drug Company, Inc. and has
material transactions with affiliated companies. The terms and conditions of
these transactions are reflected in the accompanying financial statements on a
basis determined by the affiliated group.

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, 1995 and 1994, and the results of its operations and its
cash flow for the years 1995, 1994 and 1993 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, 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

Drentestraat 20
1083 HK Amsterdam, The Netherlands
PO Box 7883
1008 AB Amsterdam

February 9, 1996
<PAGE>

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, 1995 and 1994 and the related statements of income and
retained earnings, and cash flows for each of the three years in the period
ended December 31, 1995. 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 S.r.l. at
December 31, 1995 and 1994 and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995 in
conformity with accounting principles generally accepted in the United States.

Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplementary
information for the year ending December 31, 1995, is presented for purposes of
additional analysis and is not 16 a required part of the basic financial
statements. Such information has been subjected to 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
Via Torino 68
20123 Milano

February 9, 1996

<PAGE>

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
at December 31, 1995 and 1994, and the related statements of income and
retained earnings and cash flows for each of the three years in the period
ended December 31, 1995. 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. (a wholly owned subsidiary of Block Drug Company, Inc.) as at
December 31, 1995 and 1994, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 1995, in
conformity with United States 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 for the year ending December 31, 1995, accompanying the financial
statements is not necessary for the fair presentation of the financial
position, results of operations, and cash flows of Block Drug Co.
(Philippines), Inc. (a wholly owned subsidiary of Block Drug Company, Inc.),
in conformity with generally accepted accounting principles. The
supplementary information is presented only for purposes of additional
analysis. The supplementary information has been subjected to the auditing
procedures applied in the examination 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.

Sycip, Gorres,Velayo & Co.
PTR No. 5148781
Makati, Metro Manila

January 30, 1996
<PAGE>

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, 1996 and 1995 and the related statements of
income and retained earnings and cash flows for each of the three years in
the period ended March 31, 1996. 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 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 Company, Inc.,
Ratingen Branch, as of March 31, 1996 and 1995, and the results of its
operations and its cash flows for each of the three years in the period ended
March 31, 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
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.

Ernst & Young GmbH
Wirtschaftsprufungsgesellschaft

Hans Dingler Reinhard Beyer
Wirtschaftsprufer Wirtschaftsprufer
Am Wehrhahn 50
40211 Dusseldorf
April 19, 1996

<PAGE>

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, 1995 and 1994 and the related
statements of income and retained earnings and cash flows for each of the
three years in the period ended December 31, 1995. 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 materials respects, the financial position of Laboratoires Stafford-
Miller, S.A.R.L. at December 31, 1995 and 1994 and the results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, 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
Department d'E&Y Audit
RC.S. Paris B 344366315

Christian Colineau

February 9, 1996
<PAGE>

Schedule II

BLOCK DRUG COMPANY, INC. AND SUBSIDIARIES

Valuation and Qualifying Accounts

Years Ended March 31, 1996, 1995 and 1994

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

1996

Allowances for
discounts, doubtful
accounts and returns $3,222,000 $23,645,000 $22,679,000 $4,188,000

1995

Allowances for
discounts, doubtful
accounts and returns $2,815,000 $31,622,000 $31,728,000 $2,709,000

1994

Allowances for
discounts, doubtful
accounts and returns $2,439,000 $28,158,000 $27,782,000 $2,815,000

<PAGE>

INDEX TO EXHIBITS

Exhibit No. Description

22 Subsidiaries of Registrant.

EXHIBIT 22

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 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 (Japan), Inc. Japan
Block Drug Company (Korea) Limited Korea
The Guangzhou Representative Office of Block Drug China
Company, Inc. (China)
Kobayashi-Block Company, Ltd. Japan
Laboratoires Stafford-Miller S.A.R.L. (a) France
Stafford Miller Argentina S.A. Argentina
Stafford-Miller (Canada) Inc. (b) Ontario, Canada
Stafford-Miller Chile Limitada Santiago, Chile
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 Limited (Greece) Greece
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
Stafford-Miller Limited-Dubai Branch (United Arab Dubai
Emirates)

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

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

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 4th day of
June, 1996.

BLOCK DRUG COMPANY, INC.
(Registrant)

BY MELVIN KOPP
Melvin Kopp
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 4th day of June, 1996.

Principal Executive Officer:

LEONARD N. BLOCK
Leonard N. Block
Senior Chairman

Principal Financial and Accounting Officer:

MELVIN KOPP
Melvin Kopp
Senior Vice President & Chief Financial Officer

Directors:

LEONARD N. BLOCK JAMES A. BLOCK
Leonard N. Block James A. Block

THOMAS R. BLOCK SUSAN B. STEARNS
Thomas R. Block Susan B. Stearns

PEGGY DANZIGER MELVIN KOPP
Peggy Danziger Melvin Kopp

DONALD H. LESIEUR PETER J. REPETTI
Donald H. LeSieur Peter J. Repetti

ALFRED E. BROWN, PH.D. JOHN E. PETERS
Alfred E. Brown, Ph.D. John E. Peters

MICHAEL C. ALFANO, D.M.D., PH.D. WILLIAM T. GOLDEN
Michael C. Alfano, D.M.D., Ph.D. William T. Golden

PETER C. MANN MARY C. TANNER
Peter C. Mann Mary C. Tanner

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