Morgan Group Reports First Quarter 2002 Results

    ELKHART, Ind.--May 15, 2002--The Morgan Group, Inc. (AMEX:MG), today announced operating results for the first quarter ended March 31, 2002.
    Revenues for the first quarter decreased by $7.4 million or 31% to $16.3 million from $23.7 million in the first quarter of 2001. The revenue decrease was related primarily to a decline of $6.7 million, or 46%, in the first quarter for the Company's manufactured housing division.
    The operating loss was $1,428,000 for the quarter compared to an operating loss in the first quarter 2001 of $475,000.
    Net loss before the cumulative effect of an accounting change for the quarter was $378,000 compared to a loss of $541,000 in 2001. The improvement was attributable to a federal income tax benefit of $1.1 million recorded in the first quarter 2002. The benefit was the result of enactment of the Job Creation and Worker Assistance Act of 2002 on March 8, 2002. The Act allowed federal net operating tax losses to be carried back five years instead of two years providing the opportunity for the Company to file for refunds of previously paid income taxes.
    The net loss was $2.7 million in the first quarter of 2002 including a $2.3 million non-cash charge for impairment of goodwill. In the first quarter 2002, the Company was required to adopt Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets." This standard requires companies to value goodwill and to record any impairment on those assets. Goodwill no longer will be amortized as a result of implementing this standard.
    Anthony T. Castor, III, President and Chief Executive Officer of The Morgan Group, said: "We continue to operate in a mixed revenue environment. The manufactured housing industry continues to be sluggish for the first quarter down slightly from a year ago. The recreational vehicle industry is flourishing. We are confident that our extensive cost reductions as well as our aggressive sales programs have positioned the company for a return to profitability this year."
    Units shipped as reported by industry associations indicate that manufactured housing shipments were relatively flat compared to year ago with unit shipments of 41,533 and 41,630 for the quarters ended March 31, 2002 and 2001, respectively. Recreational vehicle industry shipments were up 7.8% with unit shipments of 70,800 and 65,700 for the respective quarters ended March 31, 2002 and 2001.
    Shipments of manufactured homes tend to decline in the winter months in areas where poor weather conditions inhibit transport. This usually reduces operating revenues in the first and fourth quarters of the year. The Company's operating revenues, therefore, tend to be stronger in the second and third quarters.
    During the quarter, the Company received $535,000 cash proceeds from exercise of warrants. The Company intends to use proceeds from the exercise of the warrants and the $1.6 million income tax refund received for short-term working capital purposes and to repay a temporary $500,000 over-advance in its credit facility due May 31. In addition, the cash and letter of credit requirements for the Company's insurance renewal on July 1, 2002, are unknown at this time. While the Company is out of compliance with certain financial covenants under its facility at March 31, 2002, the lender has continued to make advances thereunder.
    The Morgan Group, Inc., through its subsidiaries Morgan Drive Away, Inc., and TDI, Inc., is the nation's largest provider of transportation services for manufactured homes, recreational vehicles, commercial vehicles and specialized equipment in the United States.

    This press release contains forward-looking statements, including initiatives relating to changes in the manufactured housing industry, sales growth and profitability. Such statements are subject to a number of material factors that could cause the statements or projections contained therein to be materially inaccurate. Such factors include, without limitation, successful implementation of profit initiatives, overall economic conditions, competition for customers and drivers, and risks associated with business operations, acquisitions, expansion into new business lines, and changes in the regulatory environment.

THE MORGAN GROUP, INC.
FINANCIAL HIGHLIGHTS (unaudited)                Three Months Ended
(In 000s, except per-share amounts)                  March 31,
                                                  2002       2001 
                                                --------------------

Operating revenues                              $ 16,308   $ 23,701
Operating loss                                    (1,428)      (475)
Net loss before cumulative 
 effect of accounting change                        (378)      (541)
                        
Accounting change - goodwill impairment           (2,290)       --
Net loss                                          (2,668)      (541)

Weighted average shares outstanding                3,448      2,448
Net loss per share                               ($0.77)    ($0.22)