Paragon Technologies News Releases

EASTON, PA -- August 10, 2001 - Paragon Technologies, Inc. [AMEX: PTG], a leading deliverer of "smart" materials handling systems, including systems, technologies, products and services, today announced results for the second quarter and six months ended June 30, 2001.

Results for the second quarter and sixth months of 2001 were impacted by the sluggishness associated with the recent economic slowdown and restructuring charges of $1,538,000, and $330,000 of charges related to a strategic transaction that was not completed. EBITDA, excluding the aforementioned charges, for the second quarter and six months of 2001 were $1,089,000 and $1,954,000, respectively. Without the restructuring and special charges, pre-tax earnings for the second quarter and six months of 2001 would have been $462,000 and $666,000, respectively, while basic earnings per share for the second quarter and six months of 2001 would have been approximately $0.07 and $0.10, respectively.

Sales for the second quarter of 2001 were $12.2 million compared to $16.7 million in the second quarter of 2000. Net loss, including restructuring and special charges, for the second quarter of 2001 was $(808,000) or $(0.19) basic loss per share, compared with net earnings of $785,000, or $0.19 basic earnings per share in the second quarter of 2000. For the six months ended June 30, 2001, sales were $26.2 million compared to $35.0 million for the first half of 2000. Net loss, including substantial restructuring and special charges, for the first half of 2001 was $(682,000) or $(0.16) basic loss per share, compared to net earnings of $1.6 million or $0.37 basic earnings per share for the six months ended June 30, 2000.

Backlog of orders rose approximately 12% to $19.9 million at the end of the second quarter of 2001 from $17.8 million at the end of the first quarter of 2001. Contributing to the rise in backlog was a broad range of orders for automated materials handling systems from customers in various industries.

The Board of Directors is in the process of taking steps to reincorporate the Company from Pennsylvania to Delaware. It is anticipated that a Special Meeting of Shareholders will be called to vote on the reincorporation prior to the end of the calendar year.

Bill Johnson, president and chief executive officer, commented, "While we are disappointed in our calendar year 2001 second quarter and six months results, we took steps to consolidate the Company and improve the Company's cost structure. Paragon is now positioned to achieve better profitability with an improvement in our markets. Concurrently, sales and marketing efforts have been consolidated with an aggressive focus on profitable growth. We continue to invest in marketing and product development to find new applications and innovations for our industry-leading technologies. We are confident that by investing in Paragon's future and improving its cost structure, Paragon will be well positioned to enhance value for all its shareholders," added Mr. Johnson.

The Company will host a conference call to discuss these results on Friday, August 10, 11:00 A.M. EDT. To listen, please call 888-540-0559, ID code: PARAGON. The conference call will also be webcast live on http://www.videonewswire.com/PARAGON/081001.

About Paragon Technologies

Paragon Technologies is a leader in integrating materials handling systems and creating automated solutions for material flow applications. Ermanco's branded conveyor technologies and material handling solutions address the needs of the distribution, assembly, and manufacturing marketplace. SI Systems' branded technologies and material handling solutions address unit assembly handling and order fulfillment applications. Paragon Technologies' Quality Management System at its Easton, Pennsylvania location is certified to the ISO 9001 standard. The scope of the Quality Management System governs the design, manufacture, assembly, installation, and servicing of automated materials handling and distribution systems. One of the top materials handling systems suppliers worldwide, Paragon's leading clients include the United States Postal Service, General Motors, IBM, BMG, Daimler Chrysler, Johnson & Johnson, Ford, Peterbilt, Harley-Davidson, Walgreens, and Clark Equipment.

Certain statements contained herein are not based on historical fact and are to be viewed as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Words or phrases used in this News Release denoting the anticipated results of future events, such as " believe," "affords us," "grow," "will be," "will spur additional opportunities," and similar expressions that denote optimism and uncertainty, are intended to identify such forward-looking statements. SI Handling's actual results, performance, or achievements could differ materially from the results expressed in, or implied by, such "forward-looking statements" if the factors on which their conclusions are based do not conform to their expectations.