CPAC, Inc. Reports Second Quarter
And Six Month Results
Company Reinstates Quarterly Cash Dividend of $0.065 Per Share

Leicester, NY . . .November 3, 1998 CPAC, Inc. (Nasdaq NNM: CPAK) today announced strong sales for the second quarter and six months ended September 30, 1998, and that its Board of Directors had approved the reinstatement of a quarterly cash dividend of $0.065 per share.

For the second quarter ended September 30, 1998, CPAC sales were up 4% to $29.0 million, from $27.8 million last year. Net income for the period was $1.59 million, or $0.23 per diluted share, versus $1.97 million, or $0.27 per diluted share, for the same period last year.

On a segment basis, Fuller Brands’ sales (which account for more than 60% of CPAC’s business) increased 9% to $17.8 million from $16.4 million last year. Operating income was $1.60 million versus $1.89 million for the same period last year. Thomas N. Hendrickson, Chief Executive Officer for CPAC, said, "With the consolidation of manufacturing operations completed, we are now focused on generating internal growth for this segment through increased new product development activity and new marketing initiatives."

In the Imaging segment, sales in the second quarter were $11.2 million, down 2% from the prior year’s sales of $11.4 million. Operating income for the segment was $1.17 million for the quarter versus $1.39 million for the same period last year. Mr. Hendrickson commented, "Strong competition in the color imaging chemical marketplace continues to curb growth in the U.S. Despite this competitive environment, we have been able to maintain our margins through increased cost reductions and manufacturing efficiencies. In addition, we are moving forward with the introduction of new and unique products, as well as our plans for international expansion, which include the opening of our CPAC Asia plant in Thailand. We anticipate significant growth when the new plant is operational in March 1999.

For the six month period, CPAC, Inc. consolidated sales were up 12% to $56.0 million from $49.8 million last year. Net income was $2.85 million or $0.41 per diluted share versus $3.65 million or $0.50 per diluted share for the same period last year.

Fuller Brands’ sales rose 26% for the six month period to $35.0 million from $27.7 million for the same period last year. Operating income was $3.1 million versus $3.6 million last year. Mr. Hendrickson said, "Our Cleaning Technologies Group (CTG) recently introduced new marketing programs and labor-saving products at the ISSA (International Sanitation Supply Association) - the leading industry trade show for this sector. We expect to benefit greatly from these initiatives starting with our fiscal third quarter." He noted that programs designed to position CTG as a primary supplier to national accounts in the food service, hospital and education industries will remain the highest priority for generating internal sales growth.

Imaging sales year-to-date were down 5% to $21.0 million versus $22.2 million last year. Operating income for the segment was $1.89 million compared with $2.28 million for the same period last year. "The six month shortfall was a result of the continuing competitive pressures in the domestic color chemical market, which we are addressing," Mr. Hendrickson said.

Separately it was announced that the company’s Board of Directors had approved the reinstatement of a quarterly cash dividend of $0.065 per share, to be payable on December 11, 1998 to shareholders of record at the close of business on November 20,1998. Mr. Hendrickson said, "We believe that our cash flow and balance sheet are strong enough to support both a dividend payment to shareholders, and an aggressive business investment or acquisition strategy. We have been actively reviewing acquisition candidates on the Cleaning and Personal Care side of our business and will continue to pursue this strategy to enhance revenue growth."

CPAC, Inc. is a chemical manufacturer in two different industries – Cleaning and Personal Care and Imaging. Its Fuller Brands segment, serving the Cleaning and Personal Care industry, is comprised of the Fuller Brush Company, Stanley Home Products, and Cleaning Technologies Group; The CPAC Imaging segment, serving the worldwide Imaging market, is comprised of Allied Diagnostic Imaging Resources, Inc., Trebla Chemical Company, CPAC Equipment Division, and three international chemical manufacturing subsidiaries. CPAC Inc. shares are traded over the NASDAQ National Market System under the ticker symbol, ‘CPAK’.

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(UNAUDITED)