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AMERICA SERVICE GROUP ANNOUNCES LOWER EARNINGS IN SECOND QUARTER

 NEW CASTLE, Del., July 28 /PRNewswire/ -- America Service Group Inc. (NASDAQ: ASGR) reported today that net income for the second quarter of 1993 ended June 30 was $80,766 or $.02 per share of common stock, compared with $427,635 or $.12 in the same 1992 period.
 Revenues for the second quarter were $25,773,387 vs. $18,871,873 in the comparable 1992 period.
 For the first six months of 1993, net income was $504,251 or $.15 a share on revenues of $50,639,597, compared with net income of $1,007,670 or $.27 a share on revenues of $36,962,966 for the first half of 1992.
 The decline in earnings in the second quarter of 1993 is due mainly to start-up costs associated with new contracts and the company's recently established pharmaceutical supply subsidiary, higher costs from outside medical providers, and contract pricing pressures from current customers, said Jeffrey A. Reasons, ASG president and chief executive officer.
 ASG manages health care programs for inmates of prisons and jails under contracts from state and local governments and provides health care services for military beneficiaries at federal hospitals and company-owned primary care centers.
 "We are addressing each of the issues and making progress in bringing about improvements," Reasons said. "We expect better results from the new contracts in the second half of the year, and are moving past the start-up phase in our UniSource in-house pharmacy business. UniSource will be an important contributor in our cost-control efforts to improve margins," Reasons said.
 Reasons added the company continues to focus on improved cost- reduction programs to alleviate the pressures on margins caused by stiffer competitive and contract pricing, and recent increases in charges from medical providers.
 He said that revenues for the year continue to increase at historical levels. Yearly gains have averaged above 25 percent over the past 10 years. Revenues in 1992 were $77.3 million.
 "We are probably looking at a full year that falls below our 1992 earnings of 49 cents a share, considering the six-month comparison," Reasons said.
 ASG also announced that it has learned its contract with Broward County, Fla., will not be renewed when it expires Sept. 30. The contract will generate $7 million in revenues through the first nine months of 1993. "At 13 years, it is our longest-standing contract, and we certainly intend to work at winning it back in the future," Reasons said.
 ASG said it has been selected for a four-year contract by the city of Philadelphia to manage health care services in its jail system. The value is $13.8 million a year. With start-up set for Aug. 1, the new contract will generate $5.7 million in revenues during the second half of 1993, the company said.
 "The Philadelphia assignment is larger than our Broward County operation, with five major facilities and approximately 5,000 inmates, compared with three major facilities and about 3,000 inmates in Broward. Over four years, the Philadelphia contract will generate $55.2 million in revenues," Reasons said.
 AMERICA SERVICE GROUP INC.
 (Unaudited; in thousands, except per-share amounts)
 Periods ended Quarter Six months
 June 30 1993 1992 1993 1992
 Revenue $25,773,387 $18,871,873 $50,639,597 $36,962,966
 Health care
 expenses 23,251,049 16,018,868 45,044,493 31,232,837
 Gross profit 2,522,338 2,853,005 5,595,104 5,730,129
 Selling, general
 & administrative
 expenses 2,479,208 2,346,869 4,999,471 4,470,318
 Income from
 operations 43,130 506,136 595,633 1,259,811
 Other income (expense):
 Interest income 114,000 185,668 269,214 370,901
 Interest expense (3,508) (2,071) (5,943) (5,438)
 Other expense (22,799) --- (45,596) ---
 Total other income 87,693 183,597 217,675 365,463
 Income before taxes 130,823 689,733 813,308 1,625,274
 Provision for
 income taxes 50,057 262,098 309,057 617,604
 Net income 80,766 427,635 504,251 1,007,670
 Earnings per common
 & common equivalent
 share $.02 $.12 $.15 $.27
 Common & common
 equivalent shares
 outstanding 3,299,651 3,708,952 3,283,592 3,780,314
 /delval/
 -0- 7/28/93
 /CONTACT: Jeffrey A. Reasons, president and CEO of America Service Group, 302-888-0200, ext. 118/
 (ASGR)


CO: America Service Group Inc. ST: Delaware IN: HEA SU: ERN

MK-MS -- PH004 -- 6631 07/28/93 09:08 EDT
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Date:Jul 28, 1993
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