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Leicester, New York, October 2, 1997 – CPAC,
Inc. (Nasdaq NNM: CPAK) today announced that it expects fiscal year 1998 second quarter
results to be down compared with last year. Contributing factors include the highly
competitive environment in the Imaging industry that has resulted in operating margin
pressure, and the 15-day UPS strike.
CPAC, Inc., which is based in Leicester, New York, expects
fiscal year 1998 second quarter earnings in the range of $0.24 to $0.27 per share, versus
$0.31 reported in the same period last year. Management expects Imaging Group sales to be
off by about 7% compared to last year, reflecting current pricing pressures by leading
industry competitors. In addition, the Stanley Home Products and Fuller Brush direct
selling businesses lost more than $350,000 in sales as a result of the UPS strike.
Distribution costs increased by an additional $100,000 from utilizing alternative delivery
sources.
President and Chief Executive Officer, Thomas N.
Hendrickson, stated, "Despite the factors affecting the imaging industry’s
current operating environment, we are focused on generating new global imaging business in
order to replace lost volume in this segment." Mr. Hendrickson continued,
"Reducing operating costs and improving manufacturing efficiencies will continue to
be a priority. We are committed to reviewing all strategic alternatives across our
businesses to ensure that CPAC reaches the operating performance our shareholders,
customers, and employees expect."
Commenting on the recently established Cleaning
Technologies Group, which CPAC formed after its July 23, 1997 acquisition of IVAX
Industries’ commercial cleaning chemical business, Mr.Hendrickson said, "The
integration of these recently acquired assets with our Cleaning and Personal Care segment
is on target, and we believe this acquisition will be accretive to earnings by the fourth
quarter of fiscal 1998. Moving forward our objective is to increase CPAC’s
marketshare in the commercial cleaning industry. We believe that by implementing a
selective acquisitions strategy and refocusing our marketing approach to emphasize our
established brands, new product introductions, and our private label capabilities, we will
be able to leverage our low-cost Great Bend manufacturing facility through incremental
volume flows.
Founded in 1969, CPAC, Inc. owns The Fuller Brush Company
in Great Bend, Kansas, as well as five imaging chemical facilities in the U.S. and Europe.
In July 1997, the Company acquired a portion of IVAX Industries with $25 million in sales,
and formed the Cleaning Technologies Group as a division of Fuller Brush. CPAC has over
250 registered trademarks for chemical and non-chemical products in the cleaning and
personal care industry and imaging market. Shares are traded over the Nasdaq National
Market System under the ticker symbol "CPAK." Additional information is
available on the Company's website (www.cpac-fuller.com).
Except for the historical matters contained herein,
statements in this press release are forward looking and are made pursuant to the safe
harbor provisions of the Securities Litigation Reform Act of 1995. Investors are cautioned
that forward looking statements involve risks and uncertainties which may affect CPAC's
business and prospects, including economic, competitive, governmental, technological, and
other factors discussed in CPAC's filings with the Securities and Exchange Commission.
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