Paragon Announces First Quarter Loss, Increased Sales Volume andImproved Earnings Anticipated in Second Half Norcross, Ga. (ots-PRNewswire) - Paragon Trade Brands, Inc.(NYSE:PTB) today reported a net loss of $7.2 million, or $.60 pershare,for the quarter ended March 28, 1999 compared to net earnings of$6.0million, or $.50 per share for the first quarter of 1998. Netsalesfor the quarter were $126.2 million, compared to $138.3 millionforthe first quarter of 1998. Earnings before interest, taxes,depreciation and amortization and bankruptcy costs (EBITDA) forthefirst quarter totaled $2.7 million. The Company believes that the decrease in sales was due to anumber of factors, including some previously announced productperformance issues and competitive pressures related to pricingandpromotional activities. Operating results were impacted by highercost of sales resulting from increased raw material costs,manufacturing inefficiencies due to changeovers to redesignedproducts, lower volume and royalty payments to The Procter &GambleCompany (P&G) and Kimberly-Clark Corporation (K-C) as a result oflicensing agreements which became effective during the firstquarter.In addition, operating results were also impacted by a priceconcession made to an export customer to address productacceptanceissues. Selling, General and Administrative (SG&A) expense wasnegatively impacted by increased promotional expenses,informationtechnology and sales and marketing expenses. In addition,depreciation and amortization charges included in SG&A increasedas aresult of the Company's newly installed SAP R-3 enterpriseresourceplanning system. Commenting on the first quarter results, Chief ExecutiveOfficer,Bobby Abraham, said, "In announcing our 1998 year-end results, weanticipated that results for 1999 would be negatively impacted bylower volume, increased raw material costs, increasedmanufacturingcosts from machine changeovers and increased marketing costs aswellas royalties payable to P&G and K-C. The first quarter reflectstheimpact of all these factors. Although we anticipate the impact ofsome of these factors to continue through the second quarter, webelieve the conversion to a dual cuff diaper product, coupledwiththe introduction of an improved super-absorbent polymer, both ofwhich were completed as of the end of the first quarter, willhelp usgrow sales volume and improve our bottom line during the secondhalfof the year." Paragon Trade Brands is the leading manufacturer of storebrandinfant disposable diapers in the United States and Canada.Paragonmanufactures a line of premium and economy diapers, trainingpants,feminine care and adult incontinence products, which aredistributedthroughout the United States and Canada, primarily throughgroceryand food stores, mass merchandisers, warehouse clubs, toy storesanddrug stores that market the products under their own store brandnames. Paragon has also established international joint venturesinMexico, Argentina, Brazil and China for the sale of infantdisposablediapers and other absorbent personal care products. Statements made in this press release, other than thoseconcerninghistorical information, should be considered forward-lookingstatements. Such statements are subject to certain risks anduncertainties that could cause actual results to differmateriallyfrom those expressed in the Company's forward-looking statements.Factors which could affect the Company's financial results,including, but not limited to: the Company's Chapter 11 filing;increased raw material prices and product costs; new product andpackaging introductions by competitors; increased price andpromotionpressure from competitors; new competitors in the market; Year2000compliance issues; and patent litigation, are described in theCompany's Annual Report on Form 10-K filed with the SecuritiesandExchange Commission. Readers are cautioned not to place unduereliance on the forward-looking statements contained herein,whichspeak only as of the date hereof, and which are made bymanagementpursuant to the "safe harbor" provisions of the PrivateSecuritiesLitigation Reform Act of 1995.

PARAGON TRADE BRANDS, INC. AND SUBSIDIARIES

Consolidated Earnings Statements

(Amounts In Thousands Except Per Share Data)

(Unaudited)

Thirteen Weeks Ended

March 28, 1999 March 29,1998 Sales, net of discounts and allowances $ 126,244 $138,297 Cost of sales

109,537 110,799 Gross profit

16,707

27,498 Selling, general and administrative expense

21,443

19,052 Research and development expense

1,008

1,402 Total expenses

22,451

20,454 Operating profit (loss)

(5,744)

7,044 Other income, net

765

1,058 Earnings (loss) before income taxes and bankruptcy costs

(4,979)

8,102 Bankruptcy costs

1,927

1,646 Earnings (loss) before income taxes

(6,906)

6,456 Provision for income taxes

313

450 Net earnings (loss)

$ (7,219) $ 6,006 Basic earnings (loss) per share

$

(.60) $

.50 Average common shares outstanding

11,950

11,934

PARAGON TRADE BRANDS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Dollar Amounts In Thousands)

(Unaudited)

As of

As of

March 28, 1999 December 27,1998 Assets Cash and short-term investments

$ 25,274 $22,625 Receivables

59,32479,156 Inventories

51,99953,282 Current portion of deferred income taxes

3,3344,260 Other current assets

5,0824,323

Total current assets

145,013163,646 Net property, plant and equipment

130,205125,826 Assets held for sale

1,4634,691 Goodwill

32,34032,819 Investment in and advances to Unconsolidated subsidiaries

90,28088,784 Other assets

13,30813,521

Total assets

$412,609$429,287 Liabilities and Shareholders' Equity (Deficit) Accounts payable

$ 40,278 $44,849 Accrued liabilities

29,99433,646 Total current liabilities

70,27278,495 Liabilities subject to compromise

406,527406,859 Other long-term liabilities

4,7975,773

Total liabilities

481,596491,127 Total shareholders' equity (deficit)

(68,987)(61,840)

Total liabilities and shareholders'

equity (deficit)

$412,609$429,287ots Original Text Service: Paragon Trade Brands, Inc.Internet: http://www.newsaktuell.deContact:Kurt P. Ross, kpross1@msn.com, orGuy B. Lawrence, both of K.P. Ross(USA) 212-308-3333, for Paragon Trade Brandse-mail:

NA_global@newsaktuell.de

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