President's Message

2007 has been a challenging year to say the least. Real estate markets are in decline around the United States and making it harder to sell homes. The unprecedented crisis in the mortgage industry has made it more difficult to obtain home loans in many parts of the United States, which is adding to the real estate market decline. The number of foreclosures is up dramatically, resulting in even more houses on the market. Given all the factors that we see, it is likely that these conditions will remain for two or three years until surplus housing inventory is absorbed.

In the mean time, clients with homesale programs in the United States should be making policy adjustments to better assist with the sale of homes. That means more incentives going both to the employee and to the potential buyer to encourage more sales. And, for those clients who currently implement Buyer Value Option programs, there should be a sunset clause. After 120 days on the market, we should be providing a Guaranteed Buy-Out offer to allow the employee and family to move on and focus on the new job. To do otherwise will just lead to additional temporary living and higher tax gross up costs, which could be even more expensive than having the home in inventory. This cycle, like others before it, too shall pass; but program adjustments are necessary to best manage costs and maintain an effective relocation program.

" I am pleased to report that Holland Relocation has become Paragon Relocation – Holland as our first franchise outside the United States. We are also in discussions to add many more countries to the Paragon family in 2008. Our goal to extend the Paragon brand to 45 countries in 75 cities is well underway."

However, all is not doom and gloom at Paragon. In January, we will begin the third year of our ten year plan. I am pleased to report that Holland Relocation has become Paragon Relocation Holland as our first franchise outside the United States. We are also in discussions to add many more countries to the Paragon family in 2008. In addition, plans are in the works to expand our company stores in the United Kingdom, Switzerland and Ireland as well as other countries. Our goal to extend the Paragon brand to 45 countries in 75 cities is well underway. In addition, we are completing work to become a national mortgage company under the GenEquity Mortgage banner fully owned by Paragon Financial Resources. We are doing this to provide our customers more mortgage options, which is necessary especially in light of current market conditions. Finally, we have expanded Paragon Career Resources to include more international transition services to work with our expatriate customers.

At the same time, our Learning Resources group implemented several thousand hours of training, including a boot camp for new Relocation Consultants that was impressive. Our Consulting Group was very busy with many new client implementations, group moves and policy benchmarking projects. Client and Corporate Accounting focused on process improvements, gaining efficiencies and fewer errors. Business Alliances was busy transferring many international contracts to our Dublin international headquarters. And, in addition to signing many new clients within the United States, we signed our first large client outside the United States, which is a Paragon milestone.

Though the real estate market in the United States may be down, Paragon is up as we continue along our growth path in accordance with our long term strategic plan. As always, we focus on our clients and customers as our primary concern. Our employees continue to exhibit dedication and hard work by going the extra mile to provide excellent customer service. Our supplier partners are always there when and where we need them to get the job done. While we are cautious about 2008, we are very bullish about our future. While other relocation companies face uncertainties, Paragon is well positioned to move forward in 2008 and beyond.