CPAC Announces Third Quarter Results

CPAC, Inc., a manufacturer and marketer with holdings in the cleaning and personal care and imaging industries, today reported third quarter and nine-month results for fiscal year 2003 ended December 31, 2002. Net sales for the quarter were up 2.3% to $23.7 million compared to $23.1 million for the same quarter last year. Net income was $500,000. For the nine months ended December 31, 2002, net sales declined 2.2% to $72.1 million. After the impact of SFAS No. 142, which resulted in an adjustment of $6.3 million recorded in the first quarter, the company reported a loss of $4.6 million or $0.89 per diluted share for the nine months.

Thomas N. Hendrickson, CPAC’s president and chief executive, stated, “Revenue improvements in the third quarter were driven primarily by achievements in the Fuller Brands segment. G. Robert Gey was appointed president of the Fuller Brands segment on January 19, 2003, assuming total financial and operational responsibility for all Fuller Brands business units, including Cleaning Technologies Group and Stanley Home Products.”

Fuller Brands’ sales rose 3.6% for the third quarter, due primarily to increases in the Fuller Brush home shopping initiative with QVC, and its own marketing via internet partners. These relationships continue to exceed expectations.

Cleaning Technologies Group sales in the quarter improved by more than 8% on the strength of the distributor sales network. In national accounts, the latest round of Kmart store closings will impact results going forward. CTG continues to monitor and work closely with this key account.

A 3% reduction in the number of direct selling representatives combined with general economic worries contributed to a 9% quarterly sales decline in the Stanley Home Products division, partially offsetting other segment increases. Plans are in place to restructure the compensation program to provide increased incentives and rewards for the field sales organization.

According to G. Robert Gey, “We are pleased with the sales results for The Fuller Brush Company. Cleaning Technologies Group is showing measurable improvements versus prior year despite the challenges present in its markets. Growth initiatives relative to new products and new channels are beginning to take hold, but operating income is disproportionate with the level of sales. We have assigned high priority to bringing SG&A expenses in line.”