UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

          Yes [ X ]          No [    ]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:

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CPAC, INC. AND SUBSIDIARIES

INDEX

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Note: The balance sheet at March 31, 2002 has been taken from the audited financial statements as of that date.

The accompanying notes are an integral part of the financial statements.

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CPAC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE SIX MONTHS ENDED

SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001

UNAUDITED

The accompanying notes are an integral part of the financial statements.

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CPAC, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

FOR THE THREE MONTHS ENDED

SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001

UNAUDITED

The accompanying notes are an integral part of the financial statements.

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The accompanying notes are an integral part of the financial statements.

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Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's March 31, 2002, Annual Report to Shareholders. The results of operations for the interim periods presented are not necessarily indicative of the operating results for the full year.

Inventory is summarized as follows:

Basic earnings per share are based upon the weighted-average number of common shares outstanding during the period. Diluted net income per share is computed using the weighted-average common shares outstanding during the period plus the dilutive effect of shares issuable through stock options and warrants. The shares used in calculating basic and diluted earnings per share are reconciled as follows:

Unexercised stock options to purchase 903,686 and 1,005,311 shares of the Company's common stock as of September 30, 2002 and 2001, respectively, were not included in the computations of diluted earnings per share because the options' exercise prices were greater than the average market price of the Company's common stock during the respective periods. These options, issued at various dates from 1995 to 2002, are still outstanding at the end of the period.

Other comprehensive income (loss) includes foreign currency translation adjustments.

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Sales between segments are not material.

Information concerning the Company's business segments' identifiable assets at September 30, 2002 and March 31, 2002 are as follows:

General Corporate assets include short-term investments held for future use amounting to $5,372,487 and $4,974,251 at September 30, 2002 and March 31, 2002, respectively.

On April 1, 2002, the Company adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets." The pronouncement required an annual impairment test (comparison of estimated fair value to carrying value) in lieu of monthly amortization for goodwill. In connection with adoption of SFAS No. 142, the Company completed in the first quarter of fiscal 2003 the impairment test for goodwill. To determine potential impairment, fair value of the applicable business units was determined by computing the present value of expected future cash flows. The effect was to reduce the carrying value of goodwill by approximately $6.3 million, net of income tax benefit of $4.2 million, or $1.22 per diluted share. The impairment adjustment was related to the Fuller Brand's Cleaning Technologies Group (CTG) operation, acquired in fiscal 1998, and was a result of a combination of factors, including operating performance, as well as new measurement techniques and methodologies as prescribed by SFAS No. 142. The adjustment is shown as a cumulative effect of change in accounting principle in the consolidated statements of operations and comprehensive income for the six months ended September 30, 2002.

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The following table presents prior year earnings and earnings per share as if the non-amortization provisions of SFAS No. 142 had been applied in the prior year:

At September 30, 2002 and March 31, 2002, amortizable intangibles consisted primarily of a contractual license agreement allowing the Company to manufacture and distribute products through the use of the trademarks and formulas of Stanley Home Products. The license is being amortized over the contract period, which expires on March 31, 2010. The cost pertaining to this intangible at September 30, 2002 and March 31, 2002 was $2,250,000, while accumulated amortization at September 30, 2002 and March 31, 2002 were $1,125,000 and 1,050,000, respectively.

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In April 2002, SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, amendment of FASB Statement No. 13, and Technical Corrections," was issued. SFAS No. 145 rescinds SFAS No. 4 and SFAS No. 64 related to classification of gains and losses on debt extinguishment and amends SFAS No. 13 with respect to sales-leaseback transactions. The pronouncement was effective for the Company April 1, 2002 and had no impact on the Company's reported results of operations and financial position.

In June 2002, SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" was issued. SFAS No. 146 nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity," and requires companies to recognize a liability for costs associated with an exit or disposal activity when the liability is incurred, as opposed to the date of an entity's commitment to an exit plan (as required under EITF No. 94-3). The pronouncement, effective for exit or disposal activities that are initiated after December 31, 2002, with earlier application allowed, is not expected to have any impact on the Company's reported results of operations and financial position.

No material litigation is pending to which the Company and/or its subsidiaries are a party, or which property of the Company and/or its subsidiaries is the subject.

Certain March 31, 2002 financial statement and related footnote amounts have been reclassified to conform to the September 30, 2002 presentation.

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Item 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The Company operates in two industry segments: the Fuller Brands segment, which is involved in developing, manufacturing, distributing, and marketing branded industrial and consumer cleaning and personal care products in North America and internationally, and the CPAC Global Imaging Group (Imaging) segment, which includes the Company's color photographic, health care, and graphic arts imaging operations in the United States, Belgium, Italy, South Africa, and Thailand. The products of each segment are manufactured and marketed both in the U.S. and in other parts of the world. Sales between segments are not material.

The Company's financial results for the six months ended September 30, 2002 reflect the adoption of SFAS No. 142 during the Company's first quarter of fiscal 2003. Adoption included the recording of a one-time, non-cash expense of $6,281,251, net of a tax benefit of $4,188,000, or $1.22 per diluted share. The adjustment related to the Fuller Brands segment's Cleaning Technologies Group (CTG) investment in fiscal 1998, whose goodwill was determined to be impaired, based on calculating the present value of future, discounted cash flows. CTG had been impacted by several factors, including continued, reduced operating performance, since it was acquired (see footnote 6).

The Company's net sales decreased 9.4% for the quarter ended September 30, 2002, as compared to the comparable quarter last year, and decreased 4.2% for the six months ended September 30, 2002, as compared to the six months ended September 30, 2001. For the Fuller Brands segment, net sales decreased 7.3% and 2.9% respectively, for the quarter and six months ended September 30, 2002, as compared to comparable periods last year. The decline was largely attributable to a decrease slightly in excess of $1,000,000, or 16%, in Cleaning Technologies Group sales during the second quarter, as well as a 5% falloff in Stanley Home Products' sales. The CTG decline is partially due to the reduction in sales to Kmart Corporation, which due to a restructuring of their business, has reduced purchases. This was mitigated by sales increases in the Fuller Brush division business, largely as the result of its successful entrance into the QVC home shopping network. In the Imaging segmen t, net sales decreased 12.4% and 6.1%, respectively, for the quarter and six months ended September 30, 2002, as compared to comparable periods last year. The declines were present in both worldwide photochemical sales and the domestic, medical imaging business. Worldwide slowdown in picture taking, coupled with recessionary pressures in many of the economies in which the segment operates (U.S., Japan, Italy, etc.), has hampered growth initiatives. In addition, healthcare cost pressures, as well as intensified competition in the Medical Imaging arena and the impact of digital imaging, have made business conditions difficult.

Consolidated gross margins (net sales less cost of sales expressed as a percentage of net sales) were 44.8% for this quarter versus 44.7% for the year ended March 31, 2002, and 43.4% for the same quarter last year. Gross margins in the Fuller Brands segment were 49.9%, 49.3%, and 46.2% respectively, for the quarter ended September 30, 2002, the year ended March 31, 2002, and the quarter ended September 30, 2001. Improvements in gross margins were a function of product mix being sold. Fuller's QVC business resulted in higher gross margins, coupled with higher selling and marketing costs, while CTG blended margins have risen, due to less volume of competitively priced national accounts' business. Gross margins in the Imaging segment were 37.0%, 38.1%, and 39.3%, respectively, for the quarter ended September 30, 2002, the year ended March 31, 2002, and the quarter ended September 30, 2001. Worldwide economic slowdowns have made for an extremely competiti ve marketplace in both the photochemical and healthcare imaging marketplace, causing pressures on pricing. It appears that margins will continue to be in the 36%--37% range for the remainder of the fiscal year.

Consolidated selling, administrative, and engineering costs this quarter were 39.7% of net sales, versus 38.9% for the year ended March 31, 2002, versus 35.8% for the same quarter last year. For the Fuller Brands segment, selling, administrative, and engineering expenses for this quarter were 41.9% of net sales, as compared to 43.7% and 39.5%, respectively, for the year ended March 31, 2002 and the same quarter last year. While the quarter's percentage was lower than the entire, last fiscal year, it still is higher than the comparable quarter. The segment's strategy remains to continue to invest in various sales and marketing initiatives to gain increased business, once the domestic economy rebounds. In the Imaging segment, selling, administrative, and engineering costs for the quarter ended September 30, 2002 were 35.2% of net sales, as compared to 32.9% and 30.7% for the year ended March 31, 2002 and the quarter ended September 30, 2001. This increase was par tially caused by a $.04 per diluted share charge the Company took in the second quarter related to a past due distributor receivable at the Company's Asian subsidiary (see foreign operations discussion below). This expense increased selling, general, and administrative expenses, as a percentage of net sales for the Imaging Segment and the Company by 2.0% and .8%, respectively. Expense levels, in light of currently depressed revenue levels, are currently being reviewed in the Imaging segment to determine if selling, general, and administrative expenses need to be reduced due to the expected, prolonged, U.S. economic slowdown in the photographic and medical imaging businesses.

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Net interest expense for the quarter and six months ended September 30, 2002 decreased, as compared to the second quarter and six months ended in fiscal 2002, primarily due to lower debt levels.

The provision for income taxes, as a percentage of pretax income, was 40.9% for the quarter ended September 30, 2002 as compared to 34.7% for the year ended March 31, 2002, as compared to 36.1% for the quarter ended September 30, 2001. The significant change was primarily attributed to CPAC Asia's $0.04 per diluted share increase to its allowance for doubtful accounts reserve. Since CPAC Asia continues to operate under a seven-year tax holiday in Thailand, the increase to the doubtful accounts reserve did not attract tax benefit in this jurisdiction, therefore, increasing the Company's overall effective tax rate. It is expected that the effective rate in future quarters will decline below 40%, absent any other unusual expenses or events.

Net income for the quarter ended September 30, 2002, as compared to the proforma net income for the corresponding quarter last year, declined $624,499 or 54%. Income before the cumulative effect of a change in accounting principle for the six months ended September 30, 2002, as compared to the proforma net income for the corresponding six months last year, declined $680,711 or 35.6%. The significant decline in sales in both segments, coupled with the CPAC Asia charge, contributed to these declines.

During the second quarter, CPAC Asia increased its allowance for doubtful accounts by approximately $242,000, due to financial difficulties experienced by one of its major distributors in Japan. This equated to a charge, net of minority interest impact, of approximately $.04 a diluted share recognized during the quarter.

Combined net sales for the Company's operations in Belgium, Italy, South Africa, and Thailand for the second quarter, as compared to the comparable quarter last year, had a net decline of 2.5%. Declines in both Asia and Italy were somewhat offset by revenue gains in Belgium, as a result of the Company's relationship with TURA AG (the German distributorship in which the Company has a 19% ownership interest). Combined net sales for the first six months of fiscal 2003, as compared to the corresponding period last year, increased 2.2%, again led by Belgian increases largely offsetting Italian sales decreases.

Combined pretax profits for the second quarter, as compared to the comparable period last year, exclusive of the CPAC Asia doubtful accounts provision, declined by almost 42%. One of the reasons for the decline was CPAC Italia, where due to start-up expenses related to its facility relocation and the current worldwide economic slowdown, pretax profits declined approximately $126,000. Combined pretax profits for the first six months in fiscal 2003, as compared to last year's first six months, exclusive of the CPAC Asia doubtful accounts provision, declined 30%, again led by CPAC Italia. Due to continued weakness in the worldwide photographic imaging markets, sales and pretax profits are not expected to increase substantially, as compared to last year, for the remainder of the fiscal year.

The Company has historically financed its operations and acquisitions with internally generated cash flows, supplemented with outside borrowings. The following table summarizes CPAC, Inc.'s consolidated cash flow information (in thousands):

Consolidated net cash provided by operating activities decreased for the six months ended September 30, 2002, versus the comparable period last year, due partially to lower net income (exclusive of the cumulative effect accounting change) and lower non-cash items such as depreciation and amortization expenses.

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Consolidated cash used in financing activities decreased for the six months ended September 30, 2002, versus the comparable period last year due to a reduction in common stock repurchased.

The following table presents working capital information at September 30, 2002, March 31, 2002 and September 30, 2001:

In the second quarter, the Company finalized its line of credit agreement with Bank of America, which extended its maturity date until October 31, 2004. The agreement provides for a $20,000,000 maximum borrowing capacity, interest at LIBOR plus 1.25% to 2% based on a ratio of funded debt to EBITDA parameters and various financial covenants to be met. The Company was in compliance with all covenants as of September 30, 2002. The Agreement also contains a $6.2 million letter of credit facility, which the Company uses to collateralize the Fuller Brands' Industrial Revenue Bonds.

The Company's majority owned subsidiary, CPAC Asia Imaging Products Limited has a line of credit with an international bank of 20 million baht (approximately $481,000 based on the second-quarter conversion rate in Thailand). Interest is payable at prime (prime rate in Thailand was 5% at the end of the second quarter) with the line collateralized by a standby letter of credit (LOC) guaranteed by CPAC, Inc. At September 30, 2002, CPAC Asia Imaging Products Limited had reduced the line of credit borrowings to zero.

Management believes that its existing available lines of credit and cash flows from operations should be adequate to meet normal working capital needs, based on operations as of September 30, 2002. It is expected that additional financing may be necessary to allow the Company to pursue additional acquisitions.

This Form 10-Q contains 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") that 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.

The Future Factors that may affect the operations, performance and results of the Company's business include the following:

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Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements. The Company does not intend to update forward-looking statements.

There has been no material change in the Company's assessment of its sensitivity to interest rate or foreign currency risks since its disclosure in Item 7(a) of the Company's Form 10-K.

Within the 90 days prior to the date of this Form 10-Q, an evaluation was performed under the supervision and with the participation of the Company's management, including the CEO and CFO, of the effectiveness of the design and operation of the Company's disclosure controls and procedures. Based on that evaluation, the Company's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of September 30, 2002. There have been no significant changes in the Company's internal control or in other factors that could significantly affect internal controls subsequent to September 30, 2002.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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I, Thomas N. Hendrickson, Chief Executive Officer of CPAC, Inc. hereby certify that:

1.     I have reviewed this quarterly report on Form 10-Q of CPAC, Inc.

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date;

5.      The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.      The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequently to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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I, Thomas J. Weldgen, Chief Financial Officer of CPAC, Inc. hereby certify that:

1.     I have reviewed this quarterly report on Form 10-Q of CPAC, Inc.

2.     Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.     Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.     The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a)  designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b)  evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and

c)  presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluations as of the Evaluation Date;

5.      The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

a)  all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6.      The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequently to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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