This document contains edited transcripts of the presentations made by executives of CPAC, Inc. at its Annual Meeting held Wednesday, August 7^th in Mt. Morris, NY.

The comments made at this Annual Meeting may contain forward-looking statements that are based on current expectations, estimates, and projections about the industries in which the Company operates, as well as management's beliefs and assumptions. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve certain risks, uncertainties, and assumptions ("Future Factors") which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Thomas N. Hendrickson
President and Chief Executive Officer

"With Read McNamara leading the Fuller Brands segment as President, and Steve Baune as President of CPAC's Imaging segment, we now have the management structure in place to execute our strategic objectives.

"Our long-range plan is that Fuller Brands will expand into global markets as we have done with CPAC Imaging. Fuller Brands will accomplish this expansion using Imaging as a partner, leveraging the existing manufacturing facilities and distribution networks of the Imaging segment.

"There is no question: in today's economy, cash is king. CPAC has a strong cash position that has been maintained through sound decision-making and conservative spending policies. Our stated acquisition strategy requires that we use this valuable asset to fuel future growth. But rest assured - we have specific acquisition criteria that narrows potential candidates to only those that offer significant shareholder returns. In this way, we can remain profitable and continue to increase value to our investors."

Thomas J. Weldgen
Chief Financial Officer

"Our sales for the quarter were improved $340,000 to $24.6 million compared to $24.3 million last year - an increase of 1.4%. As we discussed in our December quarter release, and again in our year-end release in June, our markets continue to suffer from the current economic situation which has impacted business since the events of last September. While pleased with the modest increase in sales for our first quarter, we are not sure when we will see a more broad-based return to previous sales levels. We reported income per share of $.14, or relatively flat with last year, before the effects of an accounting change.

For Fuller Brands, sales for the quarter were $15 million versus $14.8 million. The current quarter sales were also up versus our fourth quarter of the most recent fiscal year. Thus the sales volume seems to have leveled off rather than continuing to fall, so we are cautiously optimistic at this time.

"Cost of sales for the quarter at roughly $7.3 million, represents an improvement to 48.5% of sales versus 49.4% last year. Selling, administrative and engineering expenses were 44.6% of sales versus 43% last year in the quarter. The increase in the percentage relationship is a function of our decision to increase our marketing efforts thus increasing our opportunity for future sales volume growth. We remain committed to profitable expansion of this segment and are pursuing a number of focused growth initiatives.

"In the Imaging Segment, sales for the quarter improved to $9.6 million from $9.5 million last year, so this segment of our business also held its own during this quarter. Cost of sales was relatively stable in relation to sales. The gross margin for the quarter was 36.5% of sales compared to 37.2% last year, as Imaging continues to feel global pricing and competitive pressure. We expect margins to remain in the 35% to 37% range in this segment for the next quarter. Selling, administrative and engineering expenses were 32.8% of sales versus 33.4% last year.

"On a combined basis, we finished the quarter with $1,085,000 in income before taxes and the effect of the accounting change. We have a tax rate of 34.4% this year versus 37% last year in the same quarter, due primarily to the impact of a tax holiday in Thailand. Depreciation and amortization in this quarter amounted to $654,000.

"Now, lets discuss the accounting change. During this quarter, CPAC adopted SFAS 142 for "Goodwill and Other Intangibles." Under this accounting pronouncement, companies are no longer allowed to amortize goodwill on their balance sheets. Instead, they must perform an annual impairment test of the goodwill. Our impairment test of the goodwill resulted in a one-time, after tax write-down of $6.3 million, or $1.22 per diluted share, relating to our 1997 acquisition of the Cleaning Technologies Group. This adjustment has no effect on cash flow. In addition, the rules provide for a special transition treatment, which allows us to show the accounting change on a separate line of our income statement. This highlights it as a non-recurring charge. We want you to understand that the rules we were using in the past allowed amortization of our goodwill and we used a 40-year life. This method was completely acceptable under Generally Accepted Accounting Principles, but the new rules are now applicable.

"We have included with our earnings release a Supplemental Pro Forma Income Comparison. In this comparison, we have removed the amortization expense from last year's first quarter results to present a better comparison of the results on the same basis as if we had adopted SFAS 142 last year.

"We want you to know that this adjustment does not change our minds about this portion of our business. We remain committed to the Cleaning Technology Group and are actively working for growth and expansion.

"It is important to note that our Tangible Net Book Value per share is $8.71 after this accounting change. Our share price closed at $6.20 per share yesterday in the market, so we are trading at 71% of this book value which, we believe, leaves us undervalued in the market. The adjustment and resulting net loss does not impact our operations and does not jeopardize our dividends.

"Therefore, the Board of Directors has approved a dividend of $0.07 per share to holders of record at the close of business on August 23, 2002. This will be distributed on September 20, 2002. Our dividend represents a 4.5% rate of return.

"There is a lot of turmoil in the economic results in the U.S., and no doubt you have all been concerned about the dramatic stock market swings in recent days. We are pleased to report that our stock price has been stable over the past nine months and we believe this is due to our ongoing dividends, along with our solid cash position and continued strong balance sheet relative to other companies.

"Our cash flow for the quarter started with $8 million in cash. During the first quarter, we invested $500,000 in new property and equipment, repaid $400,000 of debt, and paid dividends to our shareholders of $400,000. At June 30, we still have $7.4 million in cash, no outstanding balance against our $20 million line of credit with Bank of America, and working capital of $31 million, which gives us a working capital ratio of 3.84 to one. We continue to have a very strong balance sheet with substantial opportunity for leverage to achieve growth."

Wendy F. Clay
Vice President, Administration

"The theme of the annual report this year was "Two Worlds" - which marks the beginning of presenting more clearly our separate strategies for the two industries in which we do business.

"Our actions over the last year helped define these two distinct segments and our communications -- beginning with this year's annual report and 10K -- will continue to talk in terms of these unique, but still interconnected businesses.

"What I would like to discuss briefly this morning is Senior Management's role in developing Two Visions, Two Teams, Two Strategies and One Goal.

Charting a course for each segment required the creation of two separate mission statements that would encompass the broad objectives of the business units comprising each segment. The result of that exercise is represented in the introductions to each segment in our annual report. At its highest level, the vision of the Fuller Brands Segment is "to create clean, comfortable, healthy homes and businesses around the world." That simple statement represents both a dedication to cleaning products and the goal of worldwide market penetration.

"Imaging's vision was initiated by the business unit leaders, with input from the senior management team. The collaborative outcome of that endeavor was the following: "Through continuous pursuit of excellence and global alliances, CPAC Imaging will become a preeminent and preferred supplier of Imaging products and technologies." Again, this statement represents first a commitment to the imaging industry with respect to quality products and technologies - either silver halide or digital, and second, the desire to grow stronger internationally, via global alliances and partnerships.

"With the visions clearly established and endorsed, strong management teams needed to be in place in both segments. Last year, Read McNamara was introduced as the head of the Fuller Brands segment. In April of this year, another key individual joined the executive management team of Fuller Brands. Bob Gey, a seasoned veteran with expertise in developing and implementing sales growth initiatives, joined Fuller Brush as its new President. Bob's career with Pentair Corp., a $2 billion NYSE company, resulted in his bringing over $700 million worth of business to that company, both through internally generated projects, and in his role as the company's top executive for mergers and acquisitions. Bob also had full operating responsibility for two Pentair subsidiaries, giving him the expertise to effectively manage Fuller's manufacturing and service facility. Bob brings a fresh perspective to Fuller -- one that will be fully leveraged over the next year and in the future.

"In the Imaging segment, it was apparent that a leader was needed to unify decision making for the decentralized and diverse operating units, and to provide clarity of vision for the team. Such an individual was found with Steve Baune. Steve had an impressive career in Imaging, which includes nearly 26 years as a senior leader for Eastman Kodak.

"While at Kodak, Steve held a number of executive management positions, including General Manager and Vice President of US Sales, where he was responsible for revenues of $3 billion. When he left Kodak, Steve joined Coats plc. - the world's largest maker of thread for textile operations, as its CEO of North American operations. This group was responsible for $500 million in revenues, and was comprised of 19 facilities, and 5,000 employees. Steve was instrumental in furthering the sale of Coats' thread in all markets - but in particular in retail channels - an avenue that has not yet been explored by CPAC companies. Steve created a Global Key Account Program which included WalMart as a pivotal customer and resulted in Coats being named as WalMart's Co-Managed supplier of the Year - a notable distinction with this demanding customer.

"CPAC Imaging was further reorganized with the appointment of Brad Hendrickson as President of the "Imaging Americas". This new role supports the goal of uniting the U.S. Imaging operations - color photography, healthcare (medical and dental) and graphics - under one leader. Brad's entire career has been in the Imaging industry where he has most recently served as President of Allied Diagnostic Imaging, our Atlanta-based medical chemical manufacturing subsidiary. Taking on the position of President of Allied is Tom LeBlanc, former Vice President and General Manager of that Company, and also a very talented and creative individual.

"With sound executive teams in place, both segments of the business are poised to pursue strategic growth opportunities.

"I've talked about 2 visions and 2 teams - now we'll focus broadly on two strategies. Read and Steve will outline their specific initiatives for internal growth within each segment. By internal growth we mean the products, programs and opportunities that marketing has identified as revenue generating possibilities in each segment. But both segments also have an "external" component to their growth plans. That is, acquisitions. In the recent past we have talked about acquisitions but, for various reasons, have not completed one since 1997. Thus, to accelerate the process, in May we engaged an investment advisor to help us find and pursue strategic acquisitions. We developed a detailed list of criteria to define ideal candidates relative to sales, profitability, product lines etc. Our initial focus is on the Fuller Brands side of our business where we have excess manufacturing capacity. However, that does not mean that we would walk away from an investment opportunity in Imaging such as we found with Tura. It only says that our primary focus at the present time is companies that serve the cleaning and personal care industry.

"Since engaging the firm three months ago, we have targeted 40 companies, been in discussions with 15 or more, critically evaluated two and put an offer in on one. In some instances, the companies contacted are not interested in acquisition but instead, joint sales or manufacturing arrangements. Two such discussions that we hope will offer promise are currently underway.

"The bottom line is that we are committed to acquisitions as an important part of our growth strategy and we have invested in the talent to help us find the right company sooner, rather than later.

"Now we have addressed "two visions, two teams, and two strategies". Only "One goal" is left. That goal is to continue to provide value to our shareholders. By building on the separate strength within our segments, we are better able to capitalize on opportunities and communicate those outcomes. Our shareholders, our markets, our customers, the financial community, and the public in general will benefit from a stronger understanding of our story. Increased understanding - especially in today's market - leads to greater investor confidence, which ultimately drives value. As we continue to position and talk about each segment separately, we hope to further clarify the long term vision for CPAC, Inc.

"The current business climate is much different now than it was a year ago. September 11, economic turmoil, and questionable accounting all have rattled our sense of security. Despite these challenges, CPAC remained profitable and able to pay dividends to our shareholders throughout this unusual year. Our management team has always been conservative and judicious with expenditures, which has served us well -- particularly over this timeframe.

"Without question the Country will emerge from this difficult economic period. . . Investors will return again to stock market, looking for value companies with solid fundamentals. When they consider CPAC, our message will be simplified, our team honed, our strategy clear, and the future bright. We have taken bold steps in a new direction which we expect will position us to deliver greater value to our shareholders."

Read D. McNamara
President, Fuller Brands

"Last year at this time, I could really only tell you what we expected would happen. This year, I can talk about what we have accomplished, and then spend some time discussing the Fuller Brands strategy for growth in the coming year.

"First and foremost, we have succeeded in putting a brake on the sales deterioration of the previous 3-4 years. The Fuller Brush Company actually increased its FY '02 sales over prior year. And Stanley Home Products finished the year with ten of the twelve sales periods months showing growth versus prior year. We also began the process of creating exciting new channels of distribution, beginning with QVC.

"We defined an acquisition strategy for the Fuller Brands segment, then retained outside consultants to help us unearth attractive candidates, which we are now pursuing. And most recently, we made a significant management changes and now have visionary leadership in the field. The entire Fuller Brands team is focused on growth going forward. We have halted the decline in segment sales, and are now poised for real sales growth.

"How do we plan to accelerate growth? As outlined in the recent annual report, Fuller Brands has a three-tiered strategy for achieving its vision that centers on Growth Via Acquisition, Channel Expansion, and Product Development. We'll talk about each in turn, and why they make sense for our business.

"Wendy Clay has already given you senior management's insight into our first strategy: Growth via Acquisition. Our acquisition plan for achieving external growth in Fuller Brands is moving forward with the help of our outside advisors, and we are confident that the right-priced, right-sized acquisition opportunities are forthcoming. We have a board-approved and -endorsed acquisition strategy, and we are moving aggressively to execute it.

"What I'd like to focus on is organic growth. What are we doing INSIDE the segment to improve sales and profitability?

"Following Growth via Acquisition, our second strategy for profitable growth in the segment is through Channel Development. The Fuller Brands Segment uses a variety of channels to market its products. In our Consumer business, the primary channels are Direct Selling; Fuller Catalog and Internet; Retail Outlet Stores; and Direct Marketing Partners. We also Export certain consumer products.

"Just prior to the end of the last fiscal year, we embarked on a new channel -- television home shopping -- through a relationship with QVC. In this exciting new channel, Fuller consumer products are sold using televised demonstrations lasting from eight minutes to one hour.

"Why home shopping? First of all, exposure. As QVC promotes the 'Fuller Brush Household Care Hour' programs, we receive free advertising that reaches as many as 82 million U.S. homes. Secondly, based on the demographics of QVC's core audience, we believe that the equity in the Fuller name will resonate with this audience. Our expectations have been eclipsed by the actual results of this new arrangement.

"In only four short months, sales to QVC total more than $1million with additional 1-hour shows scheduled roughly every 6 weeks throughout the end of the calendar year. QVC has its own multi-channel strategy, and as a result we are negotiating with its Internet arm -- iQVC -- to sell a complementary assortment of products on-line. Several key Fuller products are already sold in QVC's flagship retail store at Minnesota's Mall of America, and we are in discussions with QVC TV in the UK and Germany.

"Let's now focus on Direct Marketing Partners. These are catalog companies, sweepstakes marketers, direct mail firms, and Internet marketers that promote Fuller-branded consumer products to their customers. This is profitable business for Fuller, and is an area of focus for FY '03 and beyond.

"Since the beginning of the year, we have established relationships with two new specialty catalog direct marketing partners, one of which also has a significant retail presence. Our aim is to identify several more specialty catalog partners this year.

"In addition to Direct Marketing Partners, we are also exploring opportunities to export certain Fuller-branded consumer products to Asia and South America using the Imaging Group's distribution channels as the conduit. This crossover between Fuller Brands and Imaging has tangible benefits and holds great promise for both segments of CPAC's business.

"For its Industrial products, Fuller Brands' primary channels are distributors, manufacturer's reps, and large buying groups, as well as our own national sales force that services the distribution network.

"Cleaning Technologies Group, the commercial cleaning entity of the Fuller Brands segment, recently introduced its "Clean Solutions" program to the retail food store channel. This combination of chemical products, chemical mixing equipment, service, and support has been very well received in that market.

"In both our Industrial and Consumer sectors, we see exciting opportunities for growth through these new and expanded channels, as well as through our more traditional distribution methods. We are challenging old taboos and paradigms, and will continue to seek out new channels that augment our current channels.

"Our third strategy for growth in FY '03 is Product Development. New products and product innovations are the lifeblood of any company, and the Fuller Brands segment is no exception.

"Stanley Home Products recently introduced a line of color cosmetic products is surpassing our sales targets. This product line is geared toward women aged 18-35, with the added benefit of attracting direct selling representatives from this age group. Launching cosmetics is consistent with our stated plan to introduce personal care items to complement Stanley's well-respected home cleaning line.

"Furthermore, at Stanley's annual convention, which Tom and I attended August 5-7, 2002, several days ago, ten new products were launched in both the home cleaning and the personal care categories. Enthusiasm is running high, as attendance at this year's convention is much greater than last year. Exciting things are happening at Stanley, and the new products our representatives are able to sell to their existing customers are driving much of this excitement.

"CTG's newly launched TRUMIX^TMsystem is contributing to the division's top-line sales growth. TRUMIX is a janitorial cleaning program of user-friendly mixing equipment and 15 proprietary chemicals featuring innovative packaging and labeling. We expect this product breakthrough to set a new standard for commercial cleaning.

"New products. New and expanded channels of distribution. And external growth through acquisition. The opportunities for growth at Fuller Brands are everywhere, and we intend to exploit them fully in FY '03 and beyond."

Steven E. Baune
President, CPAC Imaging

"It's a pleasure to be here with you to share our plans for achieving growth in CPAC's Imaging Segment for FY '03 and beyond.

"I just returned to the Imaging business with CPAC two months ago after a four-year hiatus. I was searching for that combination of a challenging position, on a dynamic / successful team in an exciting industry. I believe I have found that here at CPAC.

"Opportunities abound in Imaging, in the U.S. and abroad. Around the Imaging Group, there is a very positive can-do attitude. New products. New markets. New relationships. New ideas are everywhere, and we are filled with enthusiasm for the work ahead.

"You've probably heard that U.S. photographic film sales are down slightly over last year. That is true, but the upshot is that sales of single use cameras are up by about the same percentage. Both types need processing, which, of course, is where CPAC's products and services come into play.

"The relative difficulty of using a digital camera and obtaining pleasing prints -- as compared to film cameras -- is an obstacle to rapid acceptance in the U.S. and elsewhere, and gives us cause for confidence in traditional photographic processes for years to come. In the U.S., 72 % of households own at least one film camera -- which means lots and lots of prints still need to be developed. In fact, according to Info-trends 81% of families that own digital cameras still record a high percentage of their total pictures on film. On a global basis, only 36% of households even own a camera, pointing to the virtually unlimited opportunity abroad.

"We all know that the health care industry is moving toward digital and dry film systems for diagnostic imaging in medical and dental categories. There is some conversion taking place in all markets but, again, at a much slower pace abroad. And in developing economies -- where many of CPAC's products and services are just beginning to be introduced -- we see strong opportunities for x-ray developing chemicals, x-ray film, mixing equipment, and silver recovery equipment.

"Emerging markets account for only a small percentage of our imaging sales today. We're placing more and more emphasis on these markets as we continue to explore the facets of our expanding relationship with TURA AG. Presently, our foreign Imaging operations comprise nearly one-third of total Imaging sales. Quarter over quarter, we see improvements in foreign sales and profit contributions. Clearly, we will invest in this growth area using the resources at our disposal.

"The Global Imaging Group is working under a new vision -- a clear vision for the future -- to become a preeminent and preferred supplier of Imaging products and technologies in the global marketplace. The patient work of the last several years -- building a global manufacturing and distribution network; strengthening our reputation and position in world markets; innovating in chemical formulations and equipment -- has created the critical mass that enables us to create this vision for the future.

"Now, our eight separate imaging divisions are evolving into a single, stronger, unified entity called CPAC Imaging. I'm here to describe to you the specific growth strategy that will guide this evolution, and why it will be meaningful for our customers, employees, and shareholders.

"Strategy #1: We've talked before about acquisitions and alliances as a platform for growth in CPAC Imaging. We've publicly invited similar sized companies operating in the traditional silver halide arena to join in alliance with us as we expand our reach geographically to enter new markets, attract new customers, and introduce new products.

"But we will not limit our discussions to like-sized companies, as there are opportunities for us to partner with the major players in photo, as well as those in health care, and graphic arts. Since our concentration in foreign markets is primarily in color photography, we see vast untapped potential to make a move into medical and graphic arts outside of the U.S. It is a CPAC Imaging priority to establish and exploit alliances in all the markets we serve.

"Our expanding relationship with TURA has opened new doors for CPAC Imaging, and we expect that we will further enhance our position this year to build upon the strength of this cooperative venture.

"What does that mean? CPAC, Tura and our distributors can now approach customers with a full portfolio of film, paper, and chemistry offerings that can be branded to their liking meaning CPAC, Tura, or their own private label. This can be a very attractive option for someone competing directly against the major worldwide brands.

"Another example of an opportunity made possible via an alliance is taking place in our dental business. We have recently introduced a CPAC-branded dental x-ray film to help increase chemistry sales in this highly competitive market. By broadening our product offerings in dental and medical diagnostic imaging, we bring more value to our customer relationships and can command an increasing share of this market.

"Further, in partnership with Agfa North America, we recently developed a new chemistry, Autex A2HC+, to be offered as a package with their premier mammography film, HDR-C. This system of film and chemistry yields optimal image quality and satisfies the stringent demands and regulations associated with mammography and diagnostic imaging in general.

"So, our plan to develop our business through acquisition and alliances has already produced results. More good things are underway.

"The second major component of our strategy is to invest in the CPAC brand. We've undertaken a brand development initiative to create a strong, new identity that will define the unified CPAC Imaging segment. By so doing, we will increase awareness and drive preference for the CPAC brand worldwide. A solid branding strategy communicates a strong, consistent message about the value of the company, and will build the CPAC brand into one of the Company's most valuable assets.

"Our third strategy is to leverage all channels of distribution available to the Imaging Group. Our relationship with TURA is one catalyst for this change. Our joint distribution agreement means that CPAC companies can sell TURA products in all our markets, and vice versa, and both companies have access to each other's customer base. This opens new markets to both CPAC and to TURA, whose complementary products -- CPAC's chemicals, equipment and silver refining and TURA's film and paper -- fit together like a hand and glove.

"Another example of leveraging channels is by creating a new level of interactivity between the Imaging Group and CPAC's Fuller Brands segment. Each segment has product formulas, manufacturing capabilities, distribution networks, and customers that can be leveraged by the other. Read referred to this crossover a few moments ago from the perspective of Fuller Brands. CPAC Imaging will be promoting Fuller Brand product usage in all markets.

"So there you have our three-point strategy for growth: acquisitions and alliances, brand development, and channel expansion. We've already made some progress: first quarter Imaging segment sales are up 1% over prior year. It's a small increase, but an increase nonetheless and one we're rather proud of, in light of the difficult economic environment in which we find ourselves.

"In addition to these strategies, we are driving continuous improvement in the operations of our business. These improvements include such broad objectives as increasing our geographic reach; providing even better service to our customers; investing in the ongoing development of our people; and driving down the costs of doing business by consolidating those functions that lend themselves to it.

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