Argosy Education Group Reports Results for Third Quarter and Nine Months.

Business Editors

CHICAGO--(BUSINESS WIRE)--July 12, 2000

Argosy Education Group, Inc. (Nasdaq: ARGY), the nation's largest for-profit provider of doctoral level programs, today reported its financial results for the third quarter and first nine months of fiscal 2000, which ended May 31, 2000.

Revenues in the quarter increased 19 percent to $12.7 million, from $10.7 million in the same 1999 period, driven by a gain in total student enrollment and annual tuition increases. Operating income in the current quarter totaled $2.8 million, down slightly from $2.9 million a year earlier.

Net income in the third quarter of FY 2000 was $1.7 million, or 27 cents per basic and diluted share, compared to $2.6 million, or 38 cents per basic and diluted share, in FY 1999. The 2000 total includes a net increase of $0.8 million, or 12 cents per share, in the company's provision for income taxes, along with a charge of $0.2 million, or 4 cents per share, for settlements of minor disputes. Per-share data reflects a net decrease in the number of shares outstanding on May 31, 2000, the result of the company's initial public offering and the repurchase of 482,000 shares during the first quarter of 2000 under a board-authorized share repurchase program.

Through the first nine months of fiscal 2000, revenues increased 20 percent to $34.9 million, from $29.1 million in fiscal 1999's first three quarters. Factors contributing to the gain included increases in enrollment and tuition and the inclusion of nine months of revenues from PrimeTech. The 1999 nine-month total included revenue from PrimeTech only for the six months following its acquisition. Operating income for the 2000 period was $5.9 million, up from $5.7 million last year.

Net income through nine months of fiscal 2000 was $3.7 million, or 56 cents per basic and diluted share, compared to $5.2 million, or 95 cents per basic and diluted share, in the comparable 1999 period. The current net income total includes a net increase of $2.1 million, or 32 cents per share, in the company's provision for income taxes.

"Argosy's performance through the first nine months of fiscal 2000 is in line with our expectations," said Jim Otten, Ph.D., president and chief operating officer. "Revenues are up at all four of our school groups, and operating income is solid even though start-up costs continue at our three newest campuses and the Argosy Institute, our Internet campus."

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $3.2 million in the third quarter of FY 2000, down slightly from $3.3 million in the year-earlier period. Through nine months, the EBITDA totals for FY 2000 and FY 1999 were $6.9 million and $6.6 million, respectively.

The cost of education as a percent of revenue declined in both the third quarter and first nine months of 2000 compared to the comparable 1999 periods. "This continuing trend reflects the efficiencies we realize through enrollment increases and the resulting economies of scale," Dr. Otten said.

Dr. Otten said that significant progress is being achieved in implementing Argosy's recently-announced six-point strategy for growth. These initiatives include adoption of a university structure; product expansion, through both the export of existing curricular products to new campuses and the development of new products; productivity improvements, particularly in functions affecting student recruitment; geographic expansion; increased emphasis on technology in course content and delivery; and acquisitions.

"Achievements to date include the establishment of a product committee that will guide the development and implementation of new curricular products at all campuses; and expansion of our marketing capabilities with the previously-announced appointment of Terrance Sanford to the newly-created position of vice president of admissions. We also are continuing to evaluate opportunities to grow through geographic expansion and strategic acquisitions," he said.

"Work also is continuing toward implementation of a university concept encompassing all of our schools," Dr. Otten said. "We have begun discussions with the various regulatory and accrediting bodies that are involved, and anticipate a successful conclusion in the near future. We also are planning the necessary organizational changes to implement the university concept."

Argosy Education Group, Inc. provides academically-oriented, practitioner-focused educational programs. The company is accredited to offer doctoral and master's degrees in psychology, education and business; bachelor's degrees in business; and associate degrees in allied health professions; and is approved to award diplomas in information technology and paralegal studies.

Argosy owns and operates four school groups - the American Schools of Professional Psychology, the University of Sarasota, the Medical Institute of Minnesota and PrimeTech Institute - which together have 17 campuses in nine states and Ontario, Canada. Total current student enrollment is approximately 5,400. Argosy also manages John Marshall Law School of Atlanta, Georgia, on a contract basis. In addition, Argosy's Ventura Group is a leading provider of preparatory courses and materials for licensure examinations in psychology, counseling and related fields.

The statements herein which are not historical facts, including statements about future expectations, are "forward-looking statements" that are based on various assumptions. Certain risks and uncertainties could cause actual future results to differ materially from those stated. These risks are spelled out more fully in the company's SEC filings. The company 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    Nine Months Ended
                                May 31,   May 31,    May 31,   May 31,
                               ------------------    -----------------
                                 2000      1999       2000      1999
                               -------   -------    -------   -------
Net Revenue                    $12,696   $10,695    $34,886   $29,115
                               -------   -------    -------   -------
Operating Expenses:
 Cost of education               5,285     4,838     15,276    13,593
 Selling expenses                  900       307      2,733     1,086
 General and
  administrative
  expenses                       3,702     2,607     11,025     8,103
 Related party general
  and administrative
  expense                            -        13          -       668
                               -------   -------    -------   -------
    Total operating
    expenses                     9,887     7,765     29,034    23,450
                               -------   -------    -------   -------

 Income from Operations          2,809     2,930      5,852     5,665

Other income (expense):
 Interest income                   206       244        649       557
 Interest expense                  (79)     (181)      (221)     (504)
 Other income (expense)            (15)        -        (64)        -
                               -------   -------    -------   -------
    Total other income
     (expense), net                112        63        364        53
                               -------   -------    -------   -------
Income before provision
 for income taxes                2,921     2,993      6,216     5,718

Income taxes:
 Income tax provision
  on C corporation
  income subsequent to
  March 8, 1999                  1,197     1,182      2,553     1,182
 Income tax provision
  on S corporation
  income prior to
  March 8, 1999                      -         -          -        62
 Deferred income taxes
  recorded in
  conjunction with
  termination of S
  corporation election
  on March 7, 1999                   -      (764)         -      (764)
                               -------   -------    -------   -------
  Total income taxes             1,197       418      2,553       480
                               -------   -------    -------   -------
Net income                     $ 1,724   $ 2,575    $ 3,663   $ 5,238
                               =======   =======    =======   =======
Net income per share:
   Basic and diluted            $ 0.27    $ 0.38     $ 0.56    $ 0.95
                               =======   =======    =======   =======
Weighted average
 shares outstanding:
  Basic                          6,476     6,748      6,547     5,523
                               =======   =======    =======   =======
  Diluted                        6,478     6,748      6,547     5,523
                               =======   =======    =======   =======
Other Data:
 Earnings before
 interest, taxes
 depreciation and
 amortization                    3,234     3,284      6,891     6,626