Argosy Education Group Reports Results for Second Quarter and First Half of FY 2001.

Business Editors

CHICAGO--(BUSINESS WIRE)--April 3, 2001

Argosy Education Group, Inc. (Nasdaq: ARGY), the nation's largest for-profit provider of doctoral level programs, today reported its financial results for the second quarter and first half of fiscal year 2001, which ended February 28, 2001.

Revenues for the quarter increased 18 percent to $12.5 million, from $10.6 million in the second quarter of fiscal 2000, due to higher student enrollment and tuition increases. Second quarter 2001 operating income was $1.0 million, compared to $1.3 million a year earlier. Net income in the current period was $0.1 million, or 2 cents per basic and diluted share, compared to $0.4 million, or 7 cents per basic and diluted share, a year ago.

Net income and operating income in the current quarter included a non-cash charge of $0.4 million, or 6 cents per share, representing the expense of stock purchase warrants issued to Leeds Equity Associates, L.P., in compensation for financial and management consulting services provided to Argosy by that firm. Excluding this charge, operating income would have been $1.4 million and net income would have been $0.5 million, or 8 cents per basic and diluted share.

For the first six months of fiscal 2001, revenues were $25.8 million, up 16 percent from the $22.2 million total of the prior year. First half 2001 operating income was $2.3 million, compared to $2.9 million in the same period last year. Net income through six months of fiscal 2001 was $0.7 million, or 10 cents per basic and diluted share, compared to $1.4 million, or 21 cents per basic and diluted share, in the first half of fiscal 2001. The six-month income totals for fiscal 2001 include a one-time non-cash charge of $0.9 million, or 13 cents per share related to the Leeds warrants. Excluding this charge, operating income would have been $3.1 million and net income would have been $1.5 million, or 23 cents per basic and diluted share.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $0.8 million in the current quarter and $2.2 million through the first six months of fiscal 2001, compared to $0.9 million and $2.7 million in the comparable year-earlier periods.

"Argosy's performance continues in line with our expectations for fiscal 2001," said Jim Otten, Ph.D., president and chief operating officer. "Although the costs associated with the Leeds warrants negatively affected first-half income, we anticipate that the long-term benefits of this relationship will far outweigh the short-term impact. We remain confident that Argosy will achieve net income per share of 16 to 18 cents in the third quarter and 23 to 25 cents for the full fiscal year."

Argosy's progress toward adoption of a university structure in September 2001 continued on schedule. "Operating nationally under the Argosy University brand will create exciting new growth opportunities and yield synergies that will help lower our cost structure," Dr. Otten said. "The North Central Association of Colleges and Schools will conduct a formal site visit in early April, which we are optimistic will result in positive action on the accreditation front."

Through the first six months of fiscal 2001, revenues increased 14 percent at the American Schools of Professional Psychology (ASPP), 31 percent at the University of Sarasota (UoS), 24 percent at the Medical Institute of Minnesota (MIM) and 8 percent at PrimeTech Institute. First-half revenues at John Marshall Law School/Atlanta, which Argosy has managed on a contract basis since September 1999 and which the company acquired in March 2001, declined 4 percent. Ventura Group, which provides preparatory courses and materials for licensure examinations in psychology, produced first-half revenues comparable to last year's.

Argosy's cost of education as a percent of revenue declined in the second quarter and six months of fiscal 2001 from year-earlier levels, reflecting the economies of scale resulting from increased student enrollment. Selling expenses as a percent of revenue increased in both the current quarter and first half, reflecting investments in advertising and recruiting that are contributing to enrollment gains.

"The remainder of fiscal 2001 will be one of the most significant periods in Argosy's history, as we complete our transition to Argosy University and incorporate Western State University College of Law and The Connecting Link, which we also acquired during March 2001," Dr. Otten said. "These events will help provide a solid foundation in which Argosy's future growth and success will be built."

Argosy Education Group, Inc. owns and operates six school groups - the American Schools of Professional Psychology, the University of Sarasota, Medical Institute of Minnesota, PrimeTech Institute, Western State University College of Law and John Marshall Law School/Atlanta - which together have 19 campuses in nine states and Ontario, Canada. Total student enrollment is approximately 6,850. Programs offered by Argosy's schools include doctoral and master's degrees in psychology, education, business and law; bachelor's degrees in business; associate degrees in allied health professions; and diplomas in information technology. In addition, Argosy owns Ventura Group, a leading provider of preparatory courses and materials for licensure examinations in psychology, counseling and related fields; and The Connecting Link, a leading provider of continuing professional education for grade K-12 teachers.

Argosy will host a conference call with financial analysts on Wednesday, April 4, 2001 at 10:00 a.m. (Central Time) to discuss its second quarter performance. Interested parties can listen to the conference call live through the Internet at www.argosyeducation.com or www.vcall.com, or by calling [phone] and citing confirmation code 788081. Following the conference call, a rebroadcast will be available for 90 days at www.vcall.com, or for seven days by calling [phone] and citing confirmation code 788081.

The forward-looking statements contained in this release are based on various assumptions, and certain risks and uncertainties could cause actual results to differ materially from those stated. Factors that could cause such differences include those matters disclosed in the company's filings with the Securities and Exchange Commission. Argosy Education Group assumes no obligation to update its forward-looking statements.

             ARGOSY EDUCATION GROUP, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except per share amounts)
                              (Unaudited)

                 Three Months Ended              Six Months Ended
             February 28,   February 29,   February 28,   February 29,
             ---------------------------   ---------------------------
                2001          2000(1)         2001           2000(1)
             ------------   ------------   ------------   ------------



Revenues:
  Tuition
   and fees,
   net           $11,691        $ 9,683        $24,363        $20,624
  Other              837            893          1,468          1,566
             ------------   ------------   ------------   ------------
    Total
     revenues,
     net          12,528         10,576         25,831         22,190
             ------------   ------------   ------------   ------------

Operating
 expenses:
  Cost of
   education       5,462          4,929         11,284          9,991
  Selling
   expenses        1,260            795          2,736          1,833
  General and
   administrative
   expenses        4,855          3,586          9,546          7,513
             ------------   ------------   ------------   ------------
    Total
     operating
     expenses     11,577          9,310         23,566         19,337
             ------------   ------------   ------------   ------------

  Income from
   operations        951          1,266          2,265          2,853

Other income
 (expense):
  Losses
   attributable to
   John Marshall    (577)          (570)          (872)          (749)
  Interest income    168            228            392            443
  Interest expense   (77)           (72)          (151)          (142)
  Other income       (13)           (68)            (8)           (49)
             ------------   ------------   ------------   ------------
    Total other
     income, net    (499)          (482)          (639)          (497)
             ------------   ------------   ------------   ------------

Income before
 provision for
 income taxes        452            784          1,626          2,356

Total income taxes   340            345            975            980
             ------------   ------------   ------------   ------------
Net income         $ 112          $ 439          $ 651        $ 1,376
             ============   ============   ============   ============

Net income per
 share:
             ------------   ------------   ------------   ------------
    Basic         $ 0.02         $ 0.07         $ 0.10         $ 0.21
             ============   ============   ============   ============

             ------------   ------------   ------------   ------------
    Diluted       $ 0.02         $ 0.07         $ 0.10         $ 0.21
             ============   ============   ============   ============

Weighted average
 shares
 outstanding:
    Basic          6,481          6,472          6,479          6,583
             ============   ============   ============   ============

    Diluted        6,486          6,472          6,488          6,583
             ============   ============   ============   ============


    EBITDA         $ 799          $ 941        $ 2,230        $ 2,718

(1) - The three- and six- month periods ended February 29, 2000 as
restated.