##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-Q
 
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission File Number: 0-20135
 
 AMERICA SERVICE GROUP INC.
  Delaware
    
    51-0332317(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 105 Westpark Drive, Suite 200
Brentwood, Tennessee
    
    37027(Address of principal executive offices)
    
    (Zip Code)
 (615) 373-3100
 þ o
 o o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



AMERICA SERVICE GROUP INC.
 QUARTERLY REPORT ON FORM 10-Q
INDEX
 PageNumberPART I. FINANCIAL INFORMATIONItem 1. Financial Statements (Unaudited)Condensed Consolidated Balance Sheets as of March 31, 2009 and December 31, 2008
    
    
    3Condensed Consolidated Statements of Income for the quarters ended March 31, 2009 and 2008
    
    
    4Condensed Consolidated Statements of Cash Flows for the quarters ended March 31, 2009 and 2008
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33Item 4. Controls and Procedures
    
    
    33PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    34Item 1A. Risk Factors
    
    
    38Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    38Item 3. Defaults Upon Senior Securities
    
    
    38Item 4. Submission of Matters to a Vote of Security Holders
    
    
    38Item 5. Other Information
    
    
    38Item 6. Exhibits
    
    
    39Signatures
    
    
    40EX-10.3EX-31.1EX-31.2EX-32.1EX-32.2
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##### Table of Contents



PART I:
 FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 AMERICA SERVICE GROUP INC.
 
 CONDENSED CONSOLIDATED BALANCE SHEETS  (shown in 000s except share and per share amounts)  (UNAUDITED)
 March 31,
    
    
    December 31,2009
    
    
    2008ASSETSCurrent assets:Cash and cash equivalents
    
    $
    28,042
    
    
    $
    24,855Accounts receivable, net of allowance for doubtful accounts of $338 and $417, respectively
    
    
    45,893
    
    
    
    41,007Inventories
    
    
    2,848
    
    
    
    2,933Prepaid expenses and other current assets
    
    
    13,634
    
    
    
    12,987Current deferred tax assets
    
    
    5,106
    
    
    
    5,333Total current assets
    
    
    95,523
    
    
    
    87,115Property and equipment, net
    
    
    6,785
    
    
    
    6,442Goodwill, net
    
    
    40,772
    
    
    
    40,772Contracts, net
    
    
    2,147
    
    
    
    2,217Other intangibles, net
    
    
    96
    
    
    
    154Other assets
    
    
    5,182
    
    
    
    5,183Total assets
    
    $
    150,505
    
    
    $
    141,883LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    19,134
    
    
    $
    19,570Accrued medical claims liability
    
    
    15,880
    
    
    
    14,743Accrued expenses
    
    
    38,650
    
    
    
    36,466Deferred revenue
    
    
    13,192
    
    
    
    8,052Total current liabilities
    
    
    86,856
    
    
    
    78,831Noncurrent portion of accrued expenses
    
    
    17,310
    
    
    
    17,146Noncurrent deferred tax liabilities
    
    
    2,025
    
    
    
    1,860Total liabilities
    
    
    106,191
    
    
    
    97,837Commitments and contingenciesStockholders equity:Preferred stock, $0.01 par value, 2,000,000 shares authorized at March 31, 2009 and
December 31, 2008; no shares issued or outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 20,000,000 shares authorized at March 31, 2009 and
December 31, 2008; 9,292,952 and 9,260,708 shares issued and outstanding at March 31,
2009 and December 31, 2008, respectively
    
    
    93
    
    
    
    93Additional paid-in capital
    
    
    37,616
    
    
    
    38,047Retained earnings
    
    
    6,605
    
    
    
    5,906Total stockholders equity
    
    
    44,314
    
    
    
    44,046Total liabilities and stockholders equity
    
    $
    150,505
    
    
    $
    141,883
 
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AMERICA SERVICE GROUP INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME  (shown in 000s except share and per share amounts)  (UNAUDITED)
 Quarter endedMarch 31,2009
    
    
    2008Healthcare revenues
    
    $
    130,453
    
    
    $
    123,404Healthcare expenses
    
    
    120,945
    
    
    
    114,225Gross margin
    
    
    9,508
    
    
    
    9,179Selling, general and administrative expenses
    
    
    7,245
    
    
    
    6,479Audit Committee investigation and related expenses
    
    
    13
    
    
    
    58Depreciation and amortization
    
    
    638
    
    
    
    915Income from operations
    
    
    1,612
    
    
    
    1,727Interest, net
    
    
    64
    
    
    
    272Income from continuing operations before income tax provision
    
    
    1,548
    
    
    
    1,455Income tax provision
    
    
    663
    
    
    
    635Income from continuing operations
    
    
    885
    
    
    
    820Income (loss) from discontinued operations, net of taxes
    
    
    (186
    )
    
    
    162Net income
    
    $
    699
    
    
    $
    982Net income (loss) per common share  basic:Income from continuing operations
    
    $
    0.10
    
    
    $
    0.09Income (loss) from discontinued operations, net of taxes
    
    
    (0.02
    )
    
    
    0.02Net income
    
    $
    0.08
    
    
    $
    0.11Net income (loss) per common share  diluted:Income from continuing operations
    
    $
    0.10
    
    
    $
    0.09Income (loss) from discontinued operations, net of taxes
    
    
    (0.02
    )
    
    
    0.02Net income
    
    $
    0.08
    
    
    $
    0.11Weighted average common shares outstanding:Basic
    
    
    8,939,478
    
    
    
    9,179,805Diluted
    
    
    9,024,683
    
    
    
    9,198,540
 
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AMERICA SERVICE GROUP INC.
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (shown in 000s)  (UNAUDITED)
 Quarter endedMarch 31,2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    699
    
    
    $
    982Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    643
    
    
    
    928Loss on retirement of fixed assets
    
    
    9
    
    
    
    8Finance cost amortization
    
    
    26
    
    
    
    13Deferred income taxes
    
    
    453
    
    
    
    709Share-based compensation expense
    
    
    476
    
    
    
    577Excess tax benefits from share-based compensation expense
    
    
    (61
    )
    
    
    Changes in operating assets and liabilities:Accounts receivable, net
    
    
    (4,886
    )
    
    
    (4,998
    )Inventories
    
    
    85
    
    
    
    (36
    )Prepaid expenses and other current assets
    
    
    (647
    )
    
    
    (1,331
    )Other assets
    
    
    (6
    )
    
    
    423Accounts payable
    
    
    (436
    )
    
    
    1,089Accrued medical claims liability
    
    
    1,137
    
    
    
    1,698Accrued expenses
    
    
    2,348
    
    
    
    1,825Deferred revenue
    
    
    5,140
    
    
    
    817Net cash provided by operating activities
    
    
    4,980
    
    
    
    2,704Cash flows from investing activities:Capital expenditures, net
    
    
    (885
    )
    
    
    (641
    )Net cash used in investing activities
    
    
    (885
    )
    
    
    (641
    )Cash flows from financing activities:Share repurchases
    
    
    (1,624
    )
    
    
    Excess tax benefits from share-based compensation expense
    
    
    61
    
    
    
    Issuance of common stock
    
    
    150
    
    
    
    74Exercise of stock options
    
    
    505
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (908
    )
    
    
    74Net increase in cash and cash equivalents
    
    
    3,187
    
    
    
    2,137Cash and cash equivalents at beginning of period
    
    
    24,855
    
    
    
    8,969Cash and cash equivalents at end of period
    
    $
    28,042
    
    
    $
    11,106
 
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AMERICA SERVICE GROUP INC.
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2009
 1. Basis of Presentation
   2. Description of Business
  3. Audit Committee Investigation
  6




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4. Recently Issued Accounting Pronouncements
 Fair Value Measurement. Fair Value Measurement
 Effective Date of FASB Statement No.
 Fair Value Option for Financial Assets and Financial Liabilities The Fair Value Option for Financial
Assets and Financial Liabilities
  Business Combinations. Business Combinations
 5. Share-Based Compensation
 Share-Based Payment
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Weighted Average
    
    Aggregate IntrinsicWeighted Average
    
    Remaining
    
    Value (inOptions
    
    Exercise Price
    
    Contractual Term
    
    thousands) (1)Outstanding, December 31, 2008
    
    
    1,177,011
    
    
    $
    17.26Granted
    
    
    
    
    
    
    Exercised
    
    
    (53,839
    )
    
    
    9.40Canceled
    
    
    (3,000
    )
    
    
    8.88Outstanding, March 31, 2009
    
    
    1,120,172
    
    
    $
    17.66
    
    
    
    5.55
    
    
    $
    558Exercisable, March 31, 2009
    
    
    985,663
    
    
    $
    18.43
    
    
    
    5.15
    
    
    $
    334
 
 (1)
    
    Based upon the difference between the closing market price of the Companys common stock on the last trading day of the
quarter and the exercise price of in-the-money options.  Weighted AverageRestricted Shares
    
    Grant-Date Fair ValueNonvested, December 31, 2008
    
    
    231,390
    
    
    $
    12.68Granted
    
    
    100,700
    
    
    
    10.84Vested
    
    
    
    
    
    
    Forfeited
    
    
    (1,500
    )
    
    
    13.99Nonvested, March 31, 2009
    
    
    330,590
    
    
    $
    12.11
 6. Discontinued Operations
 Accounting for the Impairment
or Disposal of Long-Lived Assets
  Quarter endedMarch 31,2009
    
    
    2008Healthcare revenues
    
    $
    419
    
    
    $
    4,964Healthcare expenses
    
    
    728
    
    
    
    4,677Gross margin
    
    
    (309
    )
    
    
    287Depreciation and amortization
    
    
    5
    
    
    
    13Income (loss) from discontinued operations before taxes
    
    
    (314
    )
    
    
    274Income tax provision (benefit)
    
    
    (128
    )
    
    
    112Income (loss) from discontinued operations, net of taxes
    
    $
    (186
    )
    
    $
    162
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7. Accounts Receivable
  March 31,
    
    
    December 31,2009
    
    
    2008Billed accounts receivable
    
    $
    28,576
    
    
    $
    16,064Unbilled accounts receivable
    
    
    18,862
    
    
    
    24,126Other accounts receivable
    
    
    482
    
    
    
    2,92347,920
    
    
    
    43,113Less: Allowances
    
    
    (338
    )
    
    
    (417
    )47,582
    
    
    
    42,696Less: Receivables reclassified as noncurrent
    
    
    (1,689
    )
    
    
    (1,689
    )$
    45,893
    
    
    $
    41,007
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8. Prepaid Expenses and Other Current Assets
  March 31,
    
    
    December 31,2009
    
    
    2008Prepaid insurance
    
    $
    6,116
    
    
    $
    6,079Prepaid cash deposits for
professional liability claims losses
    
    
    6,493
    
    
    
    6,130Prepaid performance bonds
    
    
    93
    
    
    
    110Prepaid other
    
    
    932
    
    
    
    668$
    13,634
    
    
    $
    12,987
 9. Property and Equipment
  March 31,
    
    
    December 31,
    
    
    Estimated2009
    
    
    2008
    
    
    Useful LivesLeasehold improvements
    
    $
    91
    
    
    $
    91
    
    
    5 yearsEquipment and furniture
    
    
    8,553
    
    
    
    8,342
    
    
    5 yearsComputer software
    
    
    4,155
    
    
    
    3,805
    
    
    3-5 yearsMedical equipment
    
    
    1,091
    
    
    
    1,101
    
    
    5 yearsAutomobiles
    
    
    66
    
    
    
    66
    
    
    5 yearsManagement information systems under development
    
    
    865
    
    
    
    712
    
    
    
    14,821
    
    
    
    14,117Less: Accumulated depreciation
    
    
    (8,036
    )
    
    
    (7,675
    )$
    6,785
    
    
    $
    6,442
  Accounting for the Costs of Computer Software Developed or Obtained for Internal
Use
 10. Other Assets
  March 31,
    
    
    December 31,2009
    
    
    2008Deferred financing costs
    
    $
    384
    
    
    $
    384Less: Accumulated amortization
    
    
    (290
    )
    
    
    (281
    )94
    
    
    
    103Prepaid insurance deposits
    
    
    3,277
    
    
    
    3,277Noncurrent receivables
    
    
    1,689
    
    
    
    1,689Other refundable deposits
    
    
    122
    
    
    
    114$
    5,182
    
    
    $
    5,183
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11. Contracts and Other Intangible Assets
  March 31,
    
    
    December 31,2009
    
    
    2008Contracts:Gross value
    
    $
    4,670
    
    
    $
    4,670Less: Accumulated amortization
    
    
    (2,523
    )
    
    
    (2,453
    )$
    2,147
    
    
    $
    2,217Other
intangible assets:Gross value
    
    $
    2,400
    
    
    $
    2,400Less: Accumulated amortization
    
    
    (2,304
    )
    
    
    (2,246
    )$
    96
    
    
    $
    154
   12. Accrued Expenses
  March 31,
    
    
    December 31,2009
    
    
    2008Salaries and employee benefits
    
    $
    20,164
    
    
    $
    20,013Professional liability claims
    
    
    23,686
    
    
    
    22,033Accrued workers compensation claims
    
    
    6,583
    
    
    
    6,263Other
    
    
    5,527
    
    
    
    5,30355,960
    
    
    
    53,612Less: Noncurrent portion of professional
liability and workers compensation
claims
    
    
    (17,310
    )
    
    
    (17,146
    )$
    38,650
    
    
    $
    36,466
 13. Reserve for Loss Contracts
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14. Banking Arrangements
      12




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15. Income Taxes
 Accounting for Income Taxes
   Accounting for Uncertainty in Income Taxes  an interpretation of FASB Statement No. 109
   16. Professional and General Liability Self-insurance Retention
  13




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17. Commitments and Contingencies
 Litigation and Claims
 Lysager Professional Liability Suit.
 Andrew Berkowitz, M.D., Individually and on behalf of all others similarly situated v. Prison
Health Services, Inc. and City of Philadelphia.
 Saint Josephs Regional Medical Center v. Correctional Health Services, et al.
 14




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Prison Health Services, Inc. v. Hillsborough County Sheriffs Office.
 Matters involving PHS and Baltimore County, Maryland.
  15




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Matters Related to the Audit Committee Investigation and Shareholder Litigation
  SEC and United States Attorney Informal Inquiries.
 Shareholder Litigation.
 16




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Delaware Department of Justice Inquiry
 Other Matters
  Performance Bonds
  18. Net Income (Loss) Per Share
  17




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Earnings Per Share,
 Quarter endedMarch 31,2009
    
    
    2008Numerator:Income from continuing operations
    
    $
    885
    
    
    $
    820Income (loss) from discontinued operations, net of taxes
    
    
    (186
    )
    
    
    162Numerator for basic and diluted net income per share
    
    $
    699
    
    
    $
    982Denominator:Denominator for basic net income (loss) per share 
weighted average shares
    
    
    8,939,478
    
    
    
    9,179,805Effect of dilutive securities:Employee stock options and restricted shares
    
    
    85,205
    
    
    
    18,735Denominator for diluted net income (loss) per share 
adjusted weighted average shares and assumed
conversions
    
    
    9,024,683
    
    
    
    9,198,540Net income (loss) per common share  basic:Income from continuing operations
    
    $
    0.10
    
    
    $
    0.09Income (loss) from discontinued operations, net of taxes
    
    
    (0.02
    )
    
    
    0.02Net income
    
    $
    0.08
    
    
    $
    0.11Net income (loss) per common share  diluted:Income from continuing operations
    
    $
    0.10
    
    
    $
    0.09Income (loss) from discontinued operations, net of taxes
    
    
    (0.02
    )
    
    
    0.02Net income
    
    $
    0.08
    
    
    $
    0.11
  Quarter endedMarch 31,2009
    
    
    2008Options excluded from computation of diluted
income per share as effect would be anti-dilutive
    
    
    997,144
    
    
    
    1,100,707Weighted average exercise price of excluded options
    
    $
    18.57
    
    
    $
    17.86Restricted shares excluded from computation of
diluted income per share as effect would be
anti-dilutive
    
    
    13,000
    
    
    
    122,730
 19. Comprehensive Income
  20. Share Repurchases
  18




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ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 General
    Forward-Looking Statements
  
    
    the Companys ability to retain existing client contracts and obtain new contracts at
acceptable pricing levels;
    
    whether or not government agencies continue to privatize correctional healthcare
services;
    
    risks arising from governmental budgetary pressures and funding;
    
    the possible effect of adverse publicity on the Companys business;
    
    increased competition for new contracts and renewals of existing contracts;
    
    risks arising from the possibility that the Company may be unable to collect accounts
receivable or that accounts receivable collection may be delayed;
    
    the Companys ability to limit its exposure for catastrophic illnesses, injuries or
medical malpractice claims in excess of amounts covered under contracts or insurance
coverage;
    
    the Companys ability to maintain and continually develop information technology and
clinical systems;
    
    the outcome or adverse development of pending litigation, including professional
liability litigation;
    
    the Companys determination whether to repurchase shares under its stock repurchase
program;
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
    
    the Companys dependence on key management and clinical personnel;
    
    risks arising from potential weaknesses or deficiencies in the Companys internal control
over financial reporting;
    
    risks associated with the possibility that the Company may be unable to satisfy covenants
under its credit facility;
    
    the risk that government or municipal entities (including the Companys government and
municipal customers) may bring enforcement actions against, seek additional refunds from, or
impose penalties on, the Company or its subsidiaries as a result of the matters investigated
by the Audit Committee in prior years or the previous restatement of the Companys financial
results;
    
    the Companys ability to expand its products beyond its
traditional correctional health client base; and
    
    the risks arising from shareholder litigation.
  Critical Accounting Policies And Estimates
 General
  
    
    revenue (net of contractual allowances) and cost recognition (including the
estimated cost of off-site medical claims);
    
    allowance for doubtful accounts;
    
    loss contracts;
    
    professional and general liability self-insurance retention;
    
    other self-funded insurance reserves;
    
    legal contingencies;
    
    impairment of intangible assets and goodwill;
    
    amortizable life of contract intangibles;
    
    income taxes; and
    
    share-based compensation.
  20




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Revenue and Cost Recognition
       Percentage of Revenue fromContinuing OperationsFor the Quarter
    
    For the QuarterContract Category
    
    Ended March 31, 2009
    
    Ended March 31, 2008Fixed Fee
    
    
    15.0
    %
    
    
    14.8
    %Population Based
    
    
    58.1
    %
    
    
    59.0
    %Cost Plus a Fee
    
    
    26.9
    %
    
    
    26.2
    %
 21




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22




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Allowance for Doubtful Accounts
        23




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Loss Contracts
    Professional and General Liability Self-Insurance Retention
    24




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Other Self-Funded Insurance Reserves
  Legal Contingencies
   Impairment of Intangible Assets and Goodwill
 Goodwill and Other
Intangible Assets,
 25




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
    
    significant underperformance or loss of key contracts relative to expected
historical or projected future operating results;
    
    significant changes in the manner of use of the Companys assets or in the
Companys overall business strategy; and
    
    significant negative industry or economic trends.
    Amortizable Life of Contract Intangibles
  Income Taxes
 Accounting for Income Taxes
   26




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Share-Based Compensation
 Share-Based Payment
 27




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Results of Operations
  Quarter endedMarch 31,Percentage of Healthcare Revenues
    
    2009
    
    2008Healthcare revenues
    
    
    100.0
    %
    
    
    100.0
    %Healthcare expenses
    
    
    92.7
    
    
    
    92.6Gross margin
    
    
    7.3
    
    
    
    7.4Selling, general and administrative expenses
    
    
    5.6
    
    
    
    5.3Audit Committee investigation and related expenses
    
    
    
    
    
    
    Depreciation and amortization
    
    
    0.5
    
    
    
    0.7Income from operations
    
    
    1.2
    
    
    
    1.4Interest, net
    
    
    
    
    
    
    0.2Income from continuing operations before income tax
provision
    
    
    1.2
    
    
    
    1.2Income tax provision
    
    
    0.5
    
    
    
    0.5Income from continuing operations
    
    
    0.7
    
    
    
    0.7Income (loss) from discontinued operations, net of taxes
    
    
    (0.2
    )
    
    
    0.1Net income
    
    
    0.5
    %
    
    
    0.8
    %
 Quarter Ended March 31, 2009 Compared to Quarter Ended March 31, 2008
 Healthcare
revenues.
 Healthcare expenses.
 Selling, general and administrative expenses.
 28




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Audit Committee investigation and related expenses.
 Depreciation and amortization
 Interest, net
 Income tax provision.
 Income from continuing operations.
 Income (loss) from discontinued operations, net of taxes
 Net income.
 Liquidity and Capital Resources
 Overview
    29




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Share Repurchases
  Credit Facility
     30




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Liquidity and Capital Resources Outlook
  Other Financing Transactions
  Contractual Obligations and Commercial Commitments
  Current
    
    
    2-3 years
    
    
    4-5 years
    
    
    After 5 yearsOperating leases
    
    $
    875
    
    
    $
    2,330
    
    
    $
    2,316
    
    
    $
    1,581Workers compensation claims
    
    
    3,305
    
    
    
    2,193
    
    
    
    967
    
    
    
    118Professional and general liability claims
    
    
    9,654
    
    
    
    10,355
    
    
    
    3,071
    
    
    
    606Total
    
    $
    13,834
    
    
    $
    14,878
    
    
    $
    6,354
    
    
    $
    2,305
  31




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##### Table of Contents



Off-Balance Sheet Transactions
  Inflation
  Recently Issued Accounting Pronouncements
 Fair Value Measurement. Fair Value Measurement
 Effective Date of FASB Statement No.
 Fair Value Option for Financial Assets and Financial Liabilities The Fair Value Option for Financial
Assets and Financial Liabilities
  Business Combinations. Business Combinations
 32




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  
 ITEM 4. CONTROLS AND PROCEDURES
    33




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PART II:
 OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
 Lysager Professional Liability Suit.
 Andrew Berkowitz, M.D., Individually and on behalf of all others similarly situated v. Prison
Health Services, Inc. and City of Philadelphia.
 Saint Josephs Regional Medical Center v. Correctional Health Services, et al.
 34




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##### Table of Contents



Prison Health Services, Inc. v. Hillsborough County Sheriffs Office.
 Matters involving PHS and Baltimore County, Maryland.
  35




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##### Table of Contents



Matters Related to the Audit Committee Investigation and Shareholder Litigation
  SEC and United States Attorney Informal Inquiries.
 Shareholder Litigation.
 36




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##### Table of Contents



Delaware Department of Justice Inquiry
 Other Matters.
 37




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##### Table of Contents



ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  (c) Total Number of
    
    (d) Maximum Number (orShares Purchased as
    
    Approximate Dollar Value)Part of Publicly
    
    of shares that May Yet Be(a) Total of Number
    
    (b) Average Price
    
    Announced Plans or
    
    Purchased Under the PlansPeriod
    
    of Shares Purchased
    
    Paid per Share
    
    Programs
    
    or Programs (1)January 2009
(1/1/09 to 1/31/09)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    February 2009
(2/1/09 to 2/28/09)
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    March 2009 (3/1/09
to 3/31/09)
    
    
    140,000
    
    
    $
    11.60
    
    
    
    140,000
    
    
    $
    11,002
 
 (1)
    
    On February 27, 2008, the Companys Board of Directors approved a stock repurchase
program to repurchase up to $15 million of the Companys common stock through the end of 2009. As
of March 31, 2009, the Company has repurchased and retired a total of 386,900 common shares at an
aggregate cost of approximately $4.0 million.  
 ITEM 3. DEFAULTS UPON SENIOR SECURTIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 ITEM 5. OTHER INFORMATION
  38




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##### Table of Contents



ITEM 6. EXHIBITS
 3.1 
    
    Amended and Restated Certificate of Incorporation of America Service Group Inc.
(incorporated herein by reference to Exhibit 3.1 to the Companys Quarterly Report on Form
10-Q for the three month period ended June 30, 2002).3.2 
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation of America
Service Group Inc. (incorporated herein by reference to Exhibit 3.4 to the Companys Quarterly
Report on Form 10-Q for the three month period ended June 30, 2004).3.3 
    
    Amended and Restated By-Laws of America Service Group Inc. (incorporated herein by
reference to Exhibit 3.1 to the Companys Current Report on Form 8-K filed on
March 3, 2009).4.1 
    
    Specimen Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the
Companys Quarterly Report on Form 10-Q for the three month period ended June 30, 2002).4.2 
    
    Certificate of Designation of the Series A Convertible Preferred Stock (incorporated
herein by reference to Exhibit 99.3 to the Companys Current Report on Form 8-K filed on
February 10, 1999).10.1 
    
    Employment Agreement, dated as of January 26, 2009, between America Service Group Inc. and
Jonathan Walker (incorporated herein by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K filed on March 13, 2009).10.2 
    
    Form of March 2009 Employee Stock Grant Certificate under the America Service Group Inc.
Amended and Restated 1999 Incentive Stock Plan (incorporated herein by reference to Exhibit
10.2 to the Companys Current Report on Form 8-K filed on March 13, 2009).10.3 
    
    2009 Incentive Compensation Plan of America Service Group Inc.*+10.4 
    
    Contract between Prison Health
Services, Inc., and the State of Michigan, dated February 10, 2009
(incorporated herein by reference to Exhibit 10.1 to the
Companys Current Report on Form 8-K filed on February 13, 2009).11
    
    Computation of Per Share Earnings.*31.1 
    
    Certification of the Chief Executive Officer pursuant to Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2 
    
    Certification of the Chief Financial Officer pursuant to Rule 13a-14(a), as adopted
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 *
    
    Data required by SFAS No. 128, Earnings Per
Share, is provided in Note 18 to the condensed
consolidated financial statements in this report.+
    
    Indicates that portions of this agreement have been omitted and filed separately with the SEC in
a confidential treatment request pursuant to Rule 24b-2 of the Exchange Act. 39




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SIGNATURES
  AMERICA SERVICE GROUP INC./s/ RICHARD HALLWORTHRichard HallworthPresident & Chief Executive Officer
(Duly Authorized Officer)/s/ MICHAEL W. TAYLORMichael W. TaylorExecutive Vice President & Chief Financial Officer
(Principal Financial Officer)  40