America Service Group Announces Second Quarter Results and Contract Update.

BRENTWOOD, Tenn. -- Company Selected As Medical Provider To Negotiate Renewal Contracts For New York City; Alameda County, California; And City Of Philadelphia

Second Quarter Highlights:

--Net income of $4.3 million for the quarter compared with net loss of $1.9 million in prior year quarter

--Adjusted EBITDA increase of 47% from the prior year period to $7.2 million

--Cash balances increased to $7.6 million

--Company benefits from reversal of deferred tax valuation allowance and records previously announced loss contract charge

America Service Group Inc. (NASDAQ:ASGR) announced today results for the second quarter and six months ended June 30, 2004.

Commenting on second quarter results, Michael Catalano, chairman, president and chief executive officer of America Service Group, said, "The Company's financial position is improving as cash balances continue to build. We are pleased that the Company has been selected as the medical provider to negotiate renewed contracts with New York City; Alameda County, California; and the City of Philadelphia."

FAS 144 Impact on Income Statement Presentation Format

As noted in our 2003 annual report on Form 10-K, the Company is applying the discontinued operations provisions of Financial Accounting Standards Board Statement of Financial Accounting Standards No. 144 ("FAS 144") to all service contracts that expire subsequent to January 1, 2002. FAS 144 requires the Company to follow the income statement presentation format described in FAS 144. The results of operations of contracts that expire, less applicable...

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