PARAGON TECHNOLOGIES REPORTS PROFITABLE 2003 FIRST QUARTER RESULTS
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Paragon Bolsters Backlog of Orders and Continues to Reduce Bank Debt and Strengthen Its Balance Sheet

EASTON, PA — May 14, 2003 -- Paragon Technologies, Inc. (AMEX: PTG), a leading supplier of "smart" material handling solutions, including systems, technologies, products and services, today announced results for the first quarter ended March 31, 2003..

Net earnings for the first quarter of 2003 rose to $1,011,000 or $.24 basic earnings per share, compared to net earnings of $343,000 or $.08 basic earnings per share in the first quarter of 2002. Earnings before interest, taxes, depreciation, and amortization ("EBITDA") for the first quarter of 2003 were approximately $2.04 million compared to $1 million for the first quarter of 2002. Sales for the first quarter of 2003 were approximately $8.6 million compared to sales of approximately $10.8 million in the first quarter of 2002. During the first quarter of 2003, the Company received orders totaling approximately $11.74 million, and finished the quarter ended March 31, 2003 with a backlog of orders of approximately $10.1 million, versus a $6.9 million backlog of orders at the end of the fourth quarter of 2002.

Contributing to pre-tax earnings for the first quarter of 2003 was other income of $1,363,000 from the sale of the Company's Easton, Pennsylvania facility for $2,925,000 and leaseback of 25,000 square feet of office space, and a restructuring credit of $170,000 pertaining to the final settlement of remaining pension obligations associated with the Company's terminated pension plan. Contributing to pre-tax earnings for the first quarter of 2002 was other income from the short-term licensing of real property of $150,000 and a gain on the sale of excess fixed assets of $108,000.

The Company continues to strengthen its Balance Sheet. During the first quarter of 2003, Paragon prepaid $1.4 million of its bank debt, which stands at approximately $4 million of which approximately $1 million is escrowed at the end of the first quarter of 2003. As a result, the current ratio remains strong at 1.62, while working capital approximates $6.3 million.

Bill Johnson, Paragon's President and Chief Executive Officer, commented, "We are pleased with the level of orders received during the first quarter of 2003 as we target active sectors of the marketplace, including those that have shown resiliency during this current economic slowdown. Notwithstanding the overall market for capital goods, we continue to make investments in product development to build upon our strategic competitive advantages. It is particularly encouraging that our efforts to broaden our product offerings have been successful as evidenced by an order for our new material handling software."

The Company will host a conference call to discuss these results on Wednesday, May 14, 2003 at 11:00 a.m. ET. To participate in the call, please dial 888-331-0044 and ask for the Paragon Technologies teleconference. Simultaneous with the conference call, an audio webcast of the call will be available via a link on the Paragon website, www.paragontechnologiesinc.com.

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.

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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.

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Paragon Technologies, Inc.

Consolidated Statements of Operations

Selected Financial Data

(In Thousands, Except Per Share Information)

 

Paragon Technologies, Inc.

Supplemental Financial Information

Reconciliation of Pre-Tax Earnings to EBITDA

(In Thousands)

	First Quarter Ended March 31,
	2003	2002
Earnings before income taxes........................................	$     1,678	573
Add: Interest expense....................................................	218	272
Add: Depreciation and amortization expense ............	147	160
EBITDA............................................................................	$     2,043	1,005