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AutoNation Reports Q3 Net Income of $79.2 Million, or $0.24 Per Share, As Same-Store Sales Rise for F&I, Parts and Service, Used Vehicles

Oct. 25, 2001

FORT LAUDERDALE, Fla., Oct. 25 /PRNewswire/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of new and used vehicles, today reported third-quarter net income of $79.2 million, or $0.24 per share, for the three months ended September 30, 2001, meeting the analysts' consensus estimate, despite a challenging new vehicle sales environment, as same-store sales rose for the Company's finance and insurance products, parts and service and used vehicles.

The third-quarter net income of $0.24 per share earned on revenue of $5 billion also matched the Company's year-ago earnings per share of $0.24, which was based on net income of $86.3 million and revenue of $5.3 billion. The year-earlier result excludes one-time items that resulted in a net gain of $6.8 million, or $0.02 per share.

"Our strategic focus on higher-margin businesses continues to pay off, delivering solid results despite a challenging sales environment and a disruption to our business in September," said AutoNation Chief Executive Officer Mike Jackson. "This demonstrates the resiliency of our automotive retail model."

The Company said same-store revenue in the third quarter increased 11% for finance and insurance products, 5% for parts and service and 1% for used vehicles. Meanwhile, same-store sales revenue for new vehicles decreased 9%.

During the quarter, the Company also completed a $450 million senior note offering -- AutoNation's first-ever bond issuance. The Company is currently in the process of registering an exchange offer for the bonds, which is expected to result in the bonds trading publicly later this year. The bonds were part of a larger effort during the period to replace existing bank credit facilities with a more diverse mix of debt instruments offering longer maturities. As a result, the Company's long-term borrowing capacity now stands at $1.2 billion, of which only half is drawn.

"Given the conservative stance of today's credit markets, we're extremely pleased with the results of our re-capitalization efforts during the quarter, which included the bond offering that exceeded our expectations by $150 million," Mr. Jackson said. "These efforts have given AutoNation ample financial flexibility to capitalize on opportunities in the future."

Also during the third quarter, AutoNation:

  • Generated earnings before interest, taxes, depreciation and amortization (EBITDA) of $203.8 million.

  • Increased the sale of finance and insurance products by 25% on a per-vehicle-retailed basis to $723 from $579 a year ago.

  • Improved the gross margin on parts and service to 43.3%, a 30-basis-point improvement from a year ago.

  • Reduced non-vehicle debt, net of cash, by $139.1 million or 21% during the quarter to $530.5 million and by $242.1 million or 31% since December 31, 2000.

  • Repurchased 6.2 million of its shares at a cost of $63.1 million, leaving a board-authorized amount of $74.9 million for future repurchases as of September 30, 2001. As announced yesterday, the Company's Board of Directors authorized an additional $250 million for share repurchases.

Recognizing an uncertain business environment lies ahead, Mr. Jackson added: "We believe AutoNation's earnings for the fourth quarter ending December 31, 2001 will meet the analysts' consensus estimate of $0.19 per share or $0.86 per share for the full year. For 2002, industry forecasts point to a downturn in U.S. new vehicle sales of 5% to 10%. However, despite that environment, AutoNation believes its 2002 earnings per share will grow to an expected range of $0.98 to $1.03, including an estimated $0.14 per share from anticipated changes in goodwill amortization."

For the nine-month period ended September 30, 2001, the Company reported net income of $225.4 million, or $0.67 per share, versus net income of $254.4 million, or $0.70 per share, in the prior year. The year-ago result excludes income from discontinued operations of $1.8 million, or $0.01 per share. Also, for the nine-month period ended September 30, 2001, the Company had revenue of $14.8 billion versus revenue of $15.9 billion in the prior year.

AutoNation will discuss its third-quarter results, its earnings outlook and supporting assumptions later this afternoon during a 1 p.m., Eastern Time, conference call. To listen to the call, dial 800-288-8967 or listen via the audio webcast offered at www.autonation.com by clicking on the "Corporate Site" link and then clicking on the webcast icon. A playback of the conference call will be available after 4:30 p.m., Eastern Time, through November 2, 2001. The playback can be accessed by calling 800-475-6701 (access code 604743) or by visiting the "Audio Presentation" section of the Investor Relations page of AutoNation's corporate site.

ABOUT AUTONATION, INC.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest retailer of new and used vehicles, on and off the Web. A Fortune 100 company, AutoNation employs approximately 31,000 people and owns and operates 368 automotive retail franchises in 17 states. For additional information, please visit www.autonation.com , where more than 100,000 vehicles are available for sale.

FORWARD-LOOKING STATEMENTS

Certain statements and information included in this release constitute "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied in such forward-looking statements. Additional discussion of factors that could cause actual results to differ materially from management's projections, estimates and expectations is contained in the Company's SEC filings. The Company undertakes no duty to update its forward-looking statements, including its earnings outlook.

                               AUTONATION, INC.
          UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In millions, except per share data)

                                     Three Months Ended   Nine Months Ended
                                       September 30,         September 30,
                                       2001      2000       2001       2000

    Revenue                        $5,011.5  $5,338.1  $14,840.6  $15,907.8

    Cost of operations              4,252.2   4,560.7   12,588.2   13,594.3

      Gross margin                    759.3     777.4    2,252.4    2,313.5

    Selling, general and
     administrative expenses          554.8     547.3    1,649.4    1,650.4
    Depreciation                       18.0      14.6       50.0       42.4
    Amortization                       20.4      20.4       60.8       58.7
    Restructuring and impairment
     charges, net                      (0.6)     (2.2)       8.1       (2.2)
    Other gain                         (0.3)       --      (19.3)        --

    Operating income                  167.0     197.3      503.4      564.2

    Floorplan interest expense        (26.8)    (47.8)    (107.8)    (146.8)
    Other interest expense, net        (8.7)    (10.8)     (24.5)     (24.5)
    Other income (expense)             (1.6)     10.3       (2.4)      14.1

    Income from continuing
     operations before income
     taxes                            129.9     149.0      368.7      407.0

    Provision for income taxes         50.7      55.9      143.3      152.6

    Net income from continuing
     operations                        79.2      93.1      225.4      254.4

    Income from discontinued
     operations, net of income
     taxes and minority interest         --        --         --        1.8

    Net income                        $79.2     $93.1     $225.4     $256.2

    Diluted earnings per share:
     Continuing operations            $0.24     $0.26      $0.67      $0.70
     Discontinued operations             --        --         --       0.01
     Net income                       $0.24     $0.26      $0.67      $0.71

    Weighted average common and
     common equivalent
     shares outstanding               333.4     361.3      338.2      363.4

    Common shares outstanding         327.2     360.7      327.2      360.7


                               AUTONATION, INC.
                          UNAUDITED SUPPLEMENTARY DATA
             ($ in millions, except gross margin per vehicle data)

                                           Three Months Ended September 30,
                                               2001      %      2000      %

    Operating Highlights:
    Revenue:
      New vehicle                         $2,995.1   59.8  $3,258.1   61.0
      Used vehicle                           978.6   19.5     983.3   18.4
      Parts and service                      613.2   12.2     586.7   11.0
      F&I                                    130.2    2.6     112.9    2.1
      Other                                  294.4    5.9     397.1    7.5
                                          $5,011.5  100.0  $5,338.1  100.0

    Gross margin:
      New vehicle                           $234.9    7.8    $268.6    8.2
      Used vehicle                           107.8   11.0     109.7   11.2
      Parts and service                      265.8   43.3     252.1   43.0
      F&I                                    130.2  100.0     112.9  100.0
      Other                                   20.6    7.0      34.1    8.6
                                             759.3   15.2     777.4   14.6

    S,G&A - Store                            522.8   10.4     510.6    9.6
    Store performance                        236.5    4.8     266.8    5.0

    S,G&A - Corporate                         32.0    0.6      36.7    0.7
    Depreciation                              18.0    0.4      14.6    0.3
    Amortization                              20.4    0.4      20.4    0.3
    Restructuring and impairment
     charges, net                             (0.6)  (0.0)     (2.2)  (0.0)
    Other gain                                (0.3)  (0.0)       --    0.0
    Operating income                        $167.0    3.4    $197.3    3.7

    Retail vehicle sales:
      New                                  115,000          130,000
      Used                                  65,000           65,000
                                           180,000          195,000

    Gross margin per vehicle retailed:
      New                                   $2,043           $2,066
      Used                                  $1,658           $1,688
      F&I                                     $723             $579

    EBITDA                                   203.8            242.6

    Capital expenditures                     $33.6            $29.9


                               AUTONATION, INC.
                         UNAUDITED SUPPLEMENTARY DATA
            ($ in millions, except gross margin per vehicle data)

                                            Nine Months Ended September 30,
                                                2001      %       2000      %

    Operating Highlights:
    Revenue:
       New vehicle                          $8,804.0   59.3   $9,657.1   60.7
       Used vehicle                          2,928.1   19.7    2,995.0   18.8
       Parts and service                     1,814.2   12.2    1,763.4   11.1
       F&I                                     363.9    2.5      331.2    2.1
       Other                                   930.4    6.3    1,161.1    7.3
                                           $14,840.6  100.0  $15,907.8  100.0

    Gross margin:
       New vehicle                            $715.9    8.1     $805.0    8.3
       Used vehicle                            327.0   11.2      341.0   11.4
       Parts and service                       783.9   43.2      753.0   42.7
       F&I                                     363.9  100.0      331.2  100.0
       Other                                    61.7    6.6       83.3    7.2
                                             2,252.4   15.2    2,313.5   14.5

     S,G&A - Store                           1,543.5   10.4    1,530.0    9.6
     Store performance                         708.9    4.8      783.5    4.9

    S,G&A - Corporate                          105.9    0.7      120.4    0.7
    Depreciation                                50.0    0.3       42.4    0.3
    Amortization                                60.8    0.4       58.7    0.4
    Restructuring and impairment charges,
     net                                         8.1    0.1       (2.2)  (0.0)
    Other gain                                 (19.3)  (0.1)        --    0.0
    Operating income                          $503.4    3.4     $564.2    3.5

    Retail vehicle sales:
          New                                336,000           383,000
          Used                               194,000           199,000
                                             530,000           582,000

    Gross margin per vehicle retailed:
          New                                 $2,131            $2,102
          Used                                $1,686            $1,714
          F&I                                   $687              $569

    EBITDA                                     611.8             679.4

    Capital expenditures                       $86.3             $82.8

    Balance Sheet   September 30  June 30  March 31  December 31  September 30
     and Other              2001     2001      2001         2000          2000
     Highlights:
       Cash and cash
        equivalents        $89.1    $28.5     $85.4        $84.6        $135.8
       Inventory         2,248.8  2,443.6   2,602.7      2,774.4       2,403.3
       Floorplan notes
        payable          1,921.2  2,110.1   2,294.6      2,454.0       1,997.7
       Non-vehicle debt    619.6    698.1     832.2        857.2         933.6
       Equity            3,878.5  3,858.5   3,803.4      3,842.5       3,856.0
       Days supply (trailing 30 days):
              New        55 days  59 days   63 days      83 days       55 days
              Used       39 days  36 days   35 days      43 days       38 days


                               AUTONATION, INC.
                          UNAUDITED SAME STORE DATA
            ($ in millions, except gross margin per vehicle data)

                                           Three Months Ended September 30,
                                              2001       %       2000       %
    Revenue:
                New vehicle               $2,874.9    59.6   $3,149.5    61.5
                Used vehicle                 943.9    19.6      936.1    18.3
                Parts and service            590.1    12.2      562.3    11.0
                F&I                          123.3     2.6      110.6     2.1
                Other                        287.3     6.0      362.0     7.1
                                          $4,819.5   100.0   $5,120.5   100.0

    Gross margin:
                New vehicle                 $225.9     7.9     $261.6     8.3
                Used vehicle                 104.1    11.0      104.4    11.2
                Parts and service            255.8    43.4      241.7    43.0
                F&I                          123.3   100.0      110.6   100.0
                Other                         18.1     6.3       26.4     7.3
                                             727.2    15.1      744.7    14.5

     S,G&A - Store                           502.3    10.4      489.4     9.5

    Store performance                       $224.9     4.7     $255.3     5.0

    Retail vehicle sales:
                   New                     110,000            125,000
                   Used                     63,000             62,000
                                           173,000            187,000

    Gross margin per vehicle retailed:
                   New                      $2,054             $2,093
                   Used                     $1,652             $1,684
                   F&I                        $713               $591


                               AUTONATION, INC.
                          UNAUDITED SAME STORE DATA
            ($ in millions, except gross margin per vehicle data)

                                         Nine Months Ended September  30,
                                              2001      %       2000      %
    Revenue:
                New vehicle               $8,351.7   59.3   $9,234.3   61.3
                Used vehicle               2,774.1   19.7    2,798.5   18.5
                Parts and service          1,723.9   12.3    1,668.0   11.1
                F&I                          342.3    2.4      316.5    2.1
                Other                        883.2    6.3    1,051.3    7.0
                                         $14,075.2  100.0  $15,068.6  100.0

    Gross margin:
                New vehicle                 $680.8    8.2     $773.4    8.4
                Used vehicle                 305.9   11.0      318.3   11.4
                Parts and service            745.4   43.2      711.7   42.7
                F&I                          342.3  100.0      316.5  100.0
                Other                         54.3    6.1       68.1    6.5
                                           2,128.7   15.1    2,188.0   14.5

     S,G&A - Store                         1,461.3   10.4    1,437.7    9.5

    Store performance                       $667.4    4.7     $750.3    5.0

    Retail vehicle sales:
                   New                     317,000           366,000
                   Used                    184,000           186,000
                                           501,000           552,000

    Gross margin per vehicle retailed:
                   New                      $2,148            $2,113
                   Used                     $1,663            $1,711
                   F&I                        $683              $573

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SOURCE AutoNation, Inc.

CONTACT: Oscar Suris of AutoNation, +1-954-769-3576, or suriso@autonation.com/

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