Exhibit 99.1
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[PARAGON LETTERHEAD] News
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FOR: PARAGON TECHNOLOGIES, INC.
CONTACTS: Len Yurkovic, President and CEO
610-252-3205
610-252-3102 (Fax)
www.ptgamex.com
PARAGON TECHNOLOGIES COMPLETES ASSET SALE OF ERMANCO
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EASTON, PA -- August 8, 2005 -- Paragon Technologies, Inc. (AMEX:PTG), a leading
supplier of "smart" material handling solutions, including systems,
technologies, products and services, announced today that on August 5, 2005,
after receiving the approval of the Company's stockholders at a Special Meeting
of Stockholders held on August 3, 2005, the Company completed its previously
announced sale of substantially all of the assets and liabilities of Ermanco
Incorporated, Paragon's wholly-owned conveyor and sortation subsidiary located
in Spring Lake, Michigan, to TGW Transportgerate GmbH and its wholly owned
subsidiary, Malibu Acquisition, Inc. As a result of the completion of the sale,
the Company received cash consideration of approximately $23 million (subject to
a final working capital adjustment) in connection with the sale of substantially
all of the assets and liabilities of Ermanco.
As previously announced on May 23, 2005, the terms of the acquisition agreement
provided that TGW pay cash in the amount of $23 million (subject to working
capital adjustments) to the Company and assume certain liabilities of Ermanco.
In connection with the asset sale, the Company's Board received an opinion from
the Company's financial advisors, Boenning & Scattergood, Inc., that the
consideration received by Paragon in the transaction was fair from a financial
point of view to Paragon's stockholders.
Commenting on the transaction, Len Yurkovic, President and Chief Executive
Officer of Paragon Technologies said, "This transaction allows for a significant
redeployment of assets to address the needs of our core markets and our
investors. We are pleased with the support of our stockholders and wish to thank
our strategic transaction advisors, Board of Directors, and employees for their
dedication and effort to complete this transaction. We will continue to pursue
strategies intended to maximize stockholder value."
Ermanco, a manufacturer of Ermanco branded light to medium duty unit handling
and conveyor and sortation products, serving the material handling industry
through a network of approximately 100 experienced material handling equipment
distributors, was originally acquired by the Company on September 30, 1999.
The sale of Ermanco to TGW is the first major step in the Board of Paragon's
review of strategic alternatives announced earlier this year. The sale allows
the Company to focus its efforts and redirect its assets to potentially higher
growth markets, including markets served by the Company's SI Systems branded
Order Fulfillment technologies and SI Production & Assembly Systems branded
technologies. Paragon's Board plans to continue to pursue strategies intended to
maximize stockholder value.
Also, the Company's Board of Directors recently amended its existing stock
repurchase program by increasing the amount it has authorized management to
repurchase from up to $1,000,000 of the Company's common stock to up to
$5,000,000. The stock repurchases may, at the discretion of the Company's
management, be made from time to time on the open market or in privately
negotiated transactions. "The Board of Directors believes that the stock
repurchase program will allow the Company to take advantage of opportunities to
repurchase the Company's common stock at favorable prices in order to enhance
stock value," says Len Yurkovic, President and CEO.
[MORE]
We Build Productivity [LOGO]
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PARAGON TECHNOLOGIES, INC. o 600 Kuebler Road o Easton, PA 18040-9295
o 610.252.3205 o Fax 610.252.3102
www.ptgamex.com
[LOGO] Page 2
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Under the stock repurchase program, the Company may repurchase shares of its
common stock from time to time in compliance with SEC regulations and subject to
market conditions. The stock repurchase program does not require the Company to
acquire any specific number of shares, and the Company may terminate the program
at any time. Subject to the $5,000,000 limitation, of which approximately
$4,675,000 remains available for repurchases under the stock repurchase program,
the timing and quantity of any stock repurchases will be at the sole discretion
of the Company.
Paragon will continue to offer and sell products under its SI Systems Order
Fulfillment and SI Production & Assembly Systems brands, including material
handling solutions that address order fulfillment and unit assembly handling
applications.
The Company's SI Systems Order Fulfillment Systems capabilities have been
enhanced by providing sophisticated turnkey software and hardware products, and
fulfilling orders in distribution centers, ranging from health and beauty aids
to entertainment products in the music and computer fields. The Company has a
well established clientele in mail order operations, wholesale drug and chain
store drug distribution centers, and numerous other sophisticated warehouse
management operations.
The newly developed SINTHESIS(TM) Software Suite, offering 26 modules of
integrating software, enables expansion and growth potential in warehouse and
distribution management centers, beyond its current customer base. SINTHESIS(TM)
supports order fulfillment needs, from small manual systems to large
sophisticated systems, integrating proprietary as well as nonproprietary
products.
The Company's SI Production & Assembly Systems capabilities have enabled it to
become a market leader in serving customers in selected niches seeking
horizontal transport of unit load products. Its LO-TOW(R) Ergonomic Towline
Vehicle(TM) employs RFID (Radio Frequency Identification) technology to impart
ergonomic capability to the production of vehicles, ranging from golf carts,
motorcycles, and snowmobiles to the assembly of lawn mowers, motor assemblies,
and farming vehicles. This product line is installed in numerous government
facilities, ranging from the Defense Logistics Agency to the U.S. Postal
Service. Paragon's high precision CARTRAC(R) product line has a well established
customer base in the appliance and automotive industry, with new applications
possible in the radiation technology field, where the need for precision
guidance is paramount.
Paragon's SI Systems Order Fulfillment and SI Production & Assembly Systems
branded technologies drive productivity for Fortune 1000 companies and the
United States government.
As a result of the completion of the sale of substantially all of the assets and
liabilities of Ermanco, Paragon will file a report on Form 8-K describing the
transaction. Once filed, this document will be available free of charge at the
SEC's website at http:/www.sec.gov/ and from Paragon.
In other news, Steven Shulman resigned as a director of the Company. Mr. Shulman
became a director of the Company as a result of the Company's purchase of
Ermanco on September 30, 1999. Len Yurkovic expressed the Company's appreciation
for his contributions and years of service to the Company.
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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, review of strategic
alternatives, and other 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 factors over which Paragon has no control, including the strength of domestic
and foreign economies, sales growth, competition, and certain cost increases; and (2) if the factors on which Paragon's
conclusions are based do not conform to its expectations. Furthermore, achievement of the objectives of the Company following
the sale of Ermanco is subject to risks associated with business disruption resulting from the announcement of the sale and
other risks outlined in Paragon's filings with the Securities and Exchange Commission, including its annual report on Form 10-K
for the year ended December 31, 2004 and the most recent quarterly report on Form 10-Q for the first fiscal quarter ended March
31, 2005.
This press release and prior releases are available at www.ptgamex.com.