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PARAGON TECHNOLOGIES CONTINUES TO REDUCE LONG-TERM DEBT AND INTEREST EXPENSE
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Paragon Prepays $500,000 of Senior Debt and $500,000 of Subordinated Debt
EASTON, PA — August 5, 2003 -- Paragon Technologies, Inc. (AMEX: PTG), a leading supplier of “smart” material handling solutions, including systems, technologies, products and services, today announced that upon receiving approval from its principal bank, it elected to utilize a portion of its cash to prepay, without penalty, $500,000 of its term debt with its principal bank and $500,000 or twenty-five percent (25%) of its outstanding subordinated debt.  This action will result in lower interest expenses that will be reflected in the Company’s future statements of operations.  As a result of the debt prepayment, the Company expects to realize interest savings of approximately $185,000 through the original maturity of the subordinated debt, of which approximately $24,000 of interest savings will be realized in the current year.
To date, the Company has paid down approximately $12.8 million of term debt and $1.5 million of subordinated debt incurred in connection with the September 30, 1999 acquisition of Ermanco Incorporated.  In order to complete the purchase of Ermanco, the Company originally obtained $17 million in acquisition financing — $14 million from its principal bank and $3 million from the Ermanco selling shareholders.  Currently, the balance of the term debt with the Company’s principal bank is $1,225,000, while the balance of the subordinated debt is $1.5 million.
Bill Johnson, President and CEO of Paragon Technologies, states, “We remain focused on strengthening our balance sheet.  We believe that Paragon Technologies is well positioned to achieve profitable growth as economic conditions recover.” 

About Paragon Technologies

Paragon Technologies is a leader in integrating material 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.  One of the top material handling systems suppliers worldwide, Paragon’s leading clients have included the United States Postal Service, General Motors, IBM, BMG, DaimlerChrysler, Ford, Peterbilt, Harley-Davidson, Walgreens, and Clark Equipment.


Cautionary Statement. Certain statements contained herein are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the Securities and Exchange Commission rules, regulations and releases. Paragon intends that such forward-looking statements be subject to the safe harbors created hereby. Among other things, the forward-looking statements regard Paragon's earnings, liquidity, financial condition, and certain operational matters. Words or phrases denoting the anticipated results of future events, such as "anticipate," "does not anticipate," "should help to," "believe," "estimate," "is positioned," "expects," "may," "will," "is expected," "should," "continue," and similar expressions that denote uncertainty, are intended to identify such forward-looking statements. Paragon's actual results, performance, or achievements could differ materially from the results expressed in, or implied by, such "forward-looking statements:" (1) as a result of risks and uncertainties associated with Paragon's restructuring, including the failure to achieve anticipated operating savings, and the possibility that the restructuring charges will be greater than anticipated; (2) as a result of factors over which Paragon has no control, including the strength of domestic and foreign economies, sales growth, competition, and certain cost increases; or (3) if the factors on which Paragon's conclusions are based do not conform to its expectations.