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PARAGON ANNOUNCES SECOND QUARTER EARNINGS

 FEDERAL WAY, Wash., July 23 /PRNewswire/ -- Paragon Trade Brands Inc. (NYSE: PTB) today announced net earnings of $6,625,000 or 58 cents per share for the second quarter ended June 27, 1993, doubling the pro forma net earnings of $3,311,000 or 29 cents a share for the same period a year ago. Net sales increased 17.5 percent to $138,452,000 compared to $117,826,000 in the second quarter of 1992. For the first six months of 1993, Paragon's pro forma net earnings were up 83 percent to $13,860,000 on net sales of $280,316,000 versus pro forma net earnings of $7,589,000 on net sales of $226,971,000 for the first half of 1992.
 "The quarter was better than we anticipated," stated Bobby Abraham, president and chief executive officer of Paragon, "especially with all of the pricing activity following Procter and Gamble's April 17 price reduction announcement." Volume was up 17 percent over the prior year's quarter, while operating profit margins improved due to higher margins on Training Pants and Canadian operations; lower material prices, particularly pulp; improved operating efficiency; and lower selling commissions.
 "We have a tremendous group of people at Paragon who are dedicated to servicing the customer," Abraham said. "With all the competitive activity in the marketplace, our people are working with our customers to continue to deliver a top quality product, while at the same time working aggressively on cost reduction actions. Our prices will be lower in the third quarter and we are making every effort to bring down costs proportionately. Every Paragon employee is working to reduce costs by benchmarking every operation and through the use of more efficient capital equipment. Our goal is to become the lowest-cost diaper producer and to be prepared for any further price reductions in the event they materialize."
 Paragon's balance sheet at the end of the second quarter has over $197.6 million in assets, $135.6 million in equity, no debt and $17.5 million in cash. The company spent $18.7 million in capital expenditures in the first six months of 1993 and expects to spend approximately $50 to $55 million during fiscal 1993.
 Paragon Trade Brands is the leading manufacturer of private label infant disposable diapers in the United States and Canada. Paragon manufactures a line of premium and economy diapers, which are distributed throughout the United States and Canada, primarily through grocery and food stores, mass merchandisers, warehouse clubs, toy stores and drug stores that market the products under the own store brand names.
 PARAGON TRADE BRANDS INC.
 PRO FORMA EARNINGS STATEMENTS
 (dollar amounts in thousands except per share amounts, unaudited)
 Thirteen Weeks Ended Thirteen Weeks Ended
 June 27, 1993 June 28, 1992
 Private
 Label
 Diaper
 Paragon Business Adjustments Pro Forma
 Sales, net of
 discounts and
 allowances $138,452 $117,826 $ - $117,826
 Cost of sales 113,032 98,938 - 98,938
 Gross profit 25,420 18,888 - 18,888
 Selling, general
 and administrative
 expense 12,721 10,772 1,042 (a) 11,814
 Research and
 development
 expense 1,678 1,818 - 1,818
 Total expenses 14,399 12,590 1,042 13,632
 Operating profit 11,021 6,298 (1,042) 5,256
 Interest expense 85 - 51 (b) 51
 Other income
 (expense), net (429) 83 - 83
 Earnings before
 income taxes 10,507 6,381 (1,093) 5,288
 Provision for
 income taxes 3,882 2,391 (414) (c) 1,977
 Net earnings $ 6,625 $ 3,990 $ (679) 3,311
 Net earnings per
 common share (d) $ 0.58 $ 0.29
 PRO FORMA EARNINGS STATEMENTS
 (dollar amounts in thousands except per share amounts, unaudited)
 Twenty-six Weeks Ended June 27, 1993
 Paragon and
 Private
 Label
 Diaper Paragon Paragon
 Business Adjustments Pro Forma
 Sales, net of
 discounts and
 allowances $280,316 $ - $280,316
 Cost of sales 229,892 - 229,892
 Gross profit 50,424 - 50,424
 Selling, general
 and administrative
 expense 24,050 424 (a) 24,474
 Research and
 development
 expense 2,896 - 2,896
 Total expenses 26,946 424 27,370
 Operating profit 23,478 (424) 23,054
 Interest expense (income) 198 53 (b) 251
 Other income
 (expense), net (578) - (578)
 Earnings before
 income taxes 22,702 (477) 22,225
 Provision for
 income taxes 8,547 (182) (c) 8,365
 Net earnings $ 14,155 $ (295) $ 13,860
 Net earnings per
 common share (d) $ 1.21
 PRO FORMA EARNINGS STATEMENTS, CONTINUED
 (dollar amounts in thousands except per share amounts, unaudited)
 Twenty-six Weeks Ended June 28, 1992
 Private
 Label
 Diaper Paragon Paragon
 Business Adjustments Pro Forma
 Sales, net of
 discounts and
 allowances $226,971 $ - $226,971
 Cost of sales 188,209 - 188,209
 Gross profit 38,762 - 38,762
 Selling, general
 and administrative
 expense 21,160 2,085 (a) 23,245
 Research and
 development
 expense 3,220 - 3,220
 Total expenses 24,380 2,085 26,465
 Operating profit 14,382 (2,085) 12,297
 Interest expense (income) - 205 (b) 205
 Other income
 (expense), net 71 - 71
 Earnings before
 income taxes 14,453 (2,290) 12,163
 Provision for
 income taxes 5,440 (866) (c) 4,574
 Net earnings $ 9,013 $ (1,424) $ 7,589
 Net earnings per
 common share (d) $ 0.66
 (a) To reflect the excess of expected insurance and other costs to
 Paragon in excess of the historical charges by Weyerhaeuser to
 the Private Label Diaper Business and to reflect the expected
 costs of corporate, administrative and public financial
 reporting activities not previously undertaken by the Private
 Label Diaper Business and the costs of implementing Paragon's
 employee retirement benefits program.
 (b) To reflect (i) amortization of deferred financing costs related
 to the Bank Credit Facility, (ii) interest expense, at an
 assumed rate equal to the average LIBOR rate for the relevant
 period plus 1.75 percent, (iii) commitment fees of .5 percent
 per Annum on the unused portion of the Bank Credit Facility and
 (iv) interest income at an assumed rate equal to the average
 LIBOR rate for the period.
 (c) To provide for the federal and state tax effects of the pro
 forma adjustments described in Notes (a) and (b) above.
 (d) Net earnings per common share are computed assuming
 11,500,000 shares of common stock are outstanding for the
 entire periods presented. Paragon has granted options to
 purchase 387,500 shares of common stock to certain executive
 officers.
 CONSOLIDATED BALANCE SHEET
 (dollar amounts in thousands)
 As of As of
 June 27, 1993 Dec. 27, 1992
 unaudited
 Assets
 Cash and short-term
 investments $ 17,527 $ 58
 Receivables 45,546 42,076
 Inventories 21,244 24,286
 Other current assets 3,037 4,884
 Total current assets 87,354 72,304
 Net property plant and
 equipment 83,891 74,949
 Deferred income taxes 22,932 -
 Other assets 3,458 3,371
 Total assets $197,635 $150,624
 Liabilities and
 investment by
 Weyerhaeuser Co./
 stockholders' equity
 Accounts payable 39,913 27,964
 Accrued liabilities 22,085 12,411
 Total current liabilities 61,998 40,375
 Deferred income taxes - 1,415
 Total liabilities 61,998 41,790
 Investment by Weyerhaeuser - 108,834
 Total stockholders' equity 135,637 -
 Total liabilities and
 investment by Weyerhaeuser
 Co./stockholders'
 equity $197,635 $150,624
 The Dec. 27, 1992 balances represent the Private Label Business of Weyerhaeuser Co.
 -0- 7/23/93 R
 /CONTACT: Cliff Bickell, vice president, chief financial officer and treasurer, of Paragon Trade Brands, 206-924-4568/


CO: Paragon Trade Brands ST: Washington IN: PAP SU: ERN

JH-LM -- SE003R -- 5094 07/23/93 11:23 EDT
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Date:Jul 23, 1993
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