CPAC, Inc. Announces Second Quarter
and Six Month Results
Company Declares Quarterly Cash Dividend

Leicester, NY, November 3, 1999. . . . CPAC Inc. (Nasdaq/NNM: CPAK)today reported second quarter and six month results for the period ended September 30, 1999. The Company also announced that on November 2, 1999, its Board of Directors had declared a quarterly cash dividend in the amount of $0.065 per share, payable on December 17, 1999, to shareholders of record at the close of business on November 19, 1999.

"At our August 1999 annual meeting, we announced our immediate plans to effect operational improvements in the Fuller Brands segment -- specifically the Cleaning Technologies Group (CTG) division," said Thomas N. Hendrickson, CPAC Chief Executive Officer. "Our initial step was to reduce CTG’s sales and marketing cost structure by more than $1,000,000 annually. This reduction will bring CTG’s sales and marketing expenses in line with industry standards and the current level of sales. During this second quarter we also focused on strengthening the Fuller Brands business, through additional cost reductions and increased productivity. We are confident that these programs now in place will enhance the competitiveness and profitability of this segment beginning in the third quarter and going forward." 

Consolidated net sales in the second quarter were $28 million compared to $29 million last year. Net income for the quarter was $1.3 million versus $1.6 million last year. Earnings per share for the quarter were down 9% to $0.21 from $0.23 per diluted share in the prior year. Fuller Brands segment sales for the quarter were $16.5 million versus $17.8 million in the comparable quarter last year. Operating profit in the second quarter was $1.45 million compared with $1.6 million last year. Imaging segment sales increased 3% for the quarter to $11.5 million versus $11.2 million last year. Imaging segment operating profit was $1.1 million, down 8%, compared with $1.2 million in last year's second quarter.

According to Mr. Hendrickson, the Fuller Brands business experienced reduced demand from a large national sweepstakes customer, which significantly impacted segment revenue in the second quarter. "Relative to CTG, sales were essentially flat compared with the prior year. We have been disappointed with CTG’s results over the last two years, however, we firmly believe that the strategy for acquiring CTG and the market opportunities it presents will result in positive returns going forward."

"In the first two quarters of fiscal 2000, we have downsized the Fuller segment workforce by 13%, and increased productivity by 19% throughout the plant," said Robert C. Isaacs, CPAC Chief Operating Officer. "We have reduced inventory levels by over $1,000,000 since the first quarter, and further actions are in progress to improve the profitability and competitiveness of the Fuller Brands segment."

Mr. Hendrickson commented, "While Imaging revenues were up for the quarter, operating expenses associated with the start up of CPAC Asia impacted profitability for the segment. Since production began at CPAC Asia in September 1999, we have continued to experience strong growth in the region consistent with our budgeted projections. As a result of our manufacturing presence in Asia, we are continuing to add new customers in all areas of the Pacific Rim."

For the six months ended September 30, 1999, CPAC, Inc. consolidated net sales were down 3% to $54.5 million, versus $56.0 million last year. Net income was $2.4 million compared with last year's results of $2.9 million. Earnings per share were down 5% to $0.39 from $0.41 per diluted share last year.

Fuller Brands segment sales for the first six months of fiscal 2000 were $32.6 million, down 7% from last year’s sales of $35.0 million. Operating profit was $2.8 million compared with $3.1 million in the same six months last year. Imaging segment sales increased 4% in the first half of this fiscal year to $21.8 million compared with $21.0 million last year. Operating profits year-to-date were up 5% to $2.0 million versus $1.9 million last year.

OUTLOOK

"We are continuing to drive national accounts business in the Fuller Brands segment, through partnerships that promote a total labor and product solution for the end-user. In the second quarter we acquired new business in the retail, supermarket and government sectors that will add solid annualized revenue increases. We are also pursuing Internet opportunities for CTG, and will be in a position to announce a business-to-business e-commerce partnership in the near future," Mr. Hendrickson stated. "We will continue to take cost out of the infrastructure of Fuller Brands and evaluate the progress of our efforts. As stated at the annual meeting, we remain committed to assessing the effectiveness of these actions on CTG by the end of this fiscal year, and pursuing an alternate strategy if sufficient shareholder value is not created within that timeframe."

Relative to the Imaging segment, Mr. Hendrickson said that while the industry remains price competitive, the Company's emphasis on new products and marketing programs has resulted in the revenue and profit improvements year-to-date.

CPAC, Inc. is a specialty chemical manufacturer operating in two business segments: Cleaning and Personal Care (Fuller Brands) and Imaging. Its Fuller Brands segment is comprised of The Fuller Brush Company, Stanley Home Products, and Cleaning Technologies Group. The Imaging segment serves the worldwide Imaging market and is comprised of Trebla Chemical Company, Allied Diagnostic Imaging Resources, Inc., CPAC Equipment Division, and four international chemical manufacturing operations. CPAC, Inc. shares are traded over the Nasdaq National Market System under the ticker symbol, ‘CPAK’.

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.

(UNAUDITED)