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AutoNation Reports 23% Increase In Second-Quarter EPS To $0.32, Raises Full-Year Outlook After Record Quarter

Jul. 25, 2002

* Net Income Increases 20% * Net Margin Of 2.1%, Up 40 Basis Points * 2002 EPS Outlook Raised to $1.15 - $1.17

FORT LAUDERDALE, Fla., July 25 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE:AN), America's largest retailer of both new and used vehicles, today reported record second-quarter earnings per share of $0.32, up 23% from $0.26 a year earlier, as higher gross margin, lower inventory- carrying costs and the elimination of goodwill amortization drove results. Net income also rose 20% to $103.8 million from $86.3 million last year.

Last year's results include two cents of net gain resulting primarily from the sale of the Company's Flemington Group of dealerships. On a comparable basis -- after excluding the net gain and approximately $14 million, or $0.04 per share, of after-tax goodwill amortization from last year's results -- the Company's second-quarter earnings per share rose 14% ($0.32 versus $0.28).

Commenting on the 2002 second-quarter performance, Mike Jackson, AutoNation's Chief Executive Officer, said, "AutoNation delivered another record quarter of earnings per share, demonstrating again the strength of our operations. We continue to benefit from lower inventory-carrying costs, a diverse portfolio of vehicle brands and local markets, and significant profits from higher-margin areas such as finance and insurance and parts and service."

Total revenue for the second quarter ended June 30, 2002 increased to $5.02 billion from $4.95 billion a year ago as total revenue grew 9.2% for finance and insurance, 3.9% for parts and service, 2.7% for used vehicles and 1.3% for new vehicles. Total gross margin increased to $750.6 million, up from $723.1 million last year as gross margin percentage rose 40 basis points to 15%. Net margin rose 40 basis points to 2.1%.

The Company also reported that in accordance with new accounting rules it performed a required impairment analysis of its goodwill and other intangibles that resulted in no adjustments.

Other Company highlights in the second quarter included:

  • The signing of an agreement to acquire Claridge's BMW in Fremont, Calif. The acquisition is expected to close during this year's third quarter. In 2001, Claridge's BMW had revenue of approximately $63 million.
  • Record earnings before interest, taxes, depreciation and amortization of $195.1 million, up 5.7% from last year's $184.5 million.
  • The repurchase of 7 million of the Company's shares at a cost of $115.2 million, leaving a board-authorized amount of $109.2 million for future repurchases.

Looking ahead, Mr. Jackson said, "Based on our continued confidence in our operations and the U.S. vehicle market's relative health, we're raising our full-year 2002 outlook for earnings per share to the range of $1.15 to $1.17 and expect our third-quarter earnings per share to be in the range of $0.28 to $0.30."

For the six-month period ended June 30, 2002, the Company earned net income of $195.5 million, or $0.60 per share, up 34% from net income of $146.2 million, or $0.43 per share, in the prior year. The Company's revenue during the six-month period ended June 30, 2002 totaled $9.77 billion, down from revenue of $9.83 billion during the prior year.

AutoNation will discuss its 2002 second-quarter results, its earnings outlook and supporting assumptions later this morning during an 11 a.m., Eastern Time, conference call. To listen live to the conference call, dial 877-209-9922 or listen via the audio webcast offered at http://www.AutoNation.com by viewing the "About AutoNation, Inc." section and clicking on the webcast link. A playback of the conference call will be available after 4:30 p.m., Eastern Time, through August 9, 2002. Playbacks can be accessed by calling 800-475-6701 (access code 642312) or by visiting http://www.AutoNation.com and accessing the "Investors" section found under "About AutoNation, Inc."

ABOUT AUTONATION, INC.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest retailer of both new and used vehicles. Ranked #101 on the 2002 Fortune 500 survey of America's largest corporations, AutoNation employs approximately 30,000 people and owns and operates 373 automotive retail franchises in 17 states. For additional information, please visit http://www.AutoNation.com, where consumers can find more than 100,000 vehicles 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 INCOME STATEMENTS
                       (In millions, except per share data)

                                       Three Months Ended    Six Months Ended
                                              June 30,            June 30,
                                           2002      2001      2002      2001

       Revenue:
          New vehicle                  $2,980.2  $2,941.2  $5,793.3  $5,808.9
          Used vehicle                    998.7     972.4   1,945.7   1,949.5
          Parts and service               622.6     599.5   1,234.5   1,201.0
          Finance and insurance           133.4     122.2     254.5     233.7
          Other                           280.7     309.7     538.3     639.5

       Total revenue                    5,015.6   4,945.0   9,766.3   9,832.6

       Cost of operations:
          New vehicle                   2,763.0   2,734.1   5,372.4   5,408.3
          Used vehicle                    893.5     860.8   1,732.0   1,730.9
          Parts and service               349.9     339.2     697.0     682.9
          Other                           258.6     287.8     492.6     594.9

       Total cost of operations         4,265.0   4,221.9   8,294.0   8,417.0

       Gross margin                       750.6     723.1   1,472.3   1,415.6

       Selling, general and
        administrative expenses           555.6     544.5   1,103.7   1,094.6
       Depreciation                        16.9      16.4      32.6      32.0
       Amortization                         0.8      20.4       1.4      40.4
       Loan and lease underwriting
        losses (income), net              (2.7)       7.0     (2.9)       7.6
       Restructuring and impairment
        losses, net                         1.2       5.4       1.2       4.6
       Other losses (income)                0.7    (19.0)       1.1    (19.0)

       Operating income                   178.1     148.4     335.2     255.4

       Other interest expense, net        (9.3)     (6.2)    (17.7)    (15.8)
       Other expense                      (0.7)     (0.7)     (0.9)     (0.8)

       Income before income taxes         168.1     141.5     316.6     238.8

       Provision for income taxes          64.3      55.2     121.1      92.6

       Net income                        $103.8     $86.3    $195.5    $146.2

       Diluted earnings per share         $0.32     $0.26     $0.60     $0.43

       Weighted average common and
        common equivalent shares
        outstanding                       328.8     337.0     327.4     340.7

       Common shares outstanding          318.5     333.1     318.5     333.1

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

       Operating Highlights
                                                 Three Months Ended June 30,
                                               2002     2001  $Variance  %Var.

       Revenue:
          New vehicle                       $2,980.2  $2,941.2   $39.0    1.3
          Used vehicle                         998.7     972.4    26.3    2.7
          Parts and service                    622.6     599.5    23.1    3.9
          Finance and insurance                133.4     122.2    11.2    9.2
          Other                                280.7     309.7   (29.0)  (9.4)
                                            $5,015.6  $4,945.0   $70.6    1.4
       Gross margin:
          New vehicle                         $217.2    $207.1   $10.1    4.9
          Used vehicle                         105.2     111.6   (6.4)  (5.7)
          Parts and service                    272.7     260.3    12.4    4.8
          Finance and insurance                133.4     122.2    11.2    9.2
          Other                                 22.1      21.9     0.2    0.9
                                               750.6     723.1    27.5    3.8

       S,G&A - Store                           520.7     511.3   (9.4)  (1.8)
       Store performance                       229.9     211.8    18.1    8.5

       S,G&A - Corporate                        34.9      33.2   (1.7)  (5.1)
       Depreciation                             16.9      16.4   (0.5)     --
       Amortization                              0.8      20.4    19.6     --
       Loan and lease underwriting losses
        (income), net                          (2.7)       7.0     9.7     --
       Restructuring and impairment losses,
        net                                      1.2       5.4     4.2     --
       Other losses (income)                     0.7    (19.0)  (19.7)     --
       Operating income                       $178.1    $148.4   $29.7   20.0

       Retail vehicle sales:
             New                             110,138   112,059 (1,921)  (1.7)
             Used                             64,745    64,410     335    0.5
                                             174,883   176,469 (1,586)  (0.9)

       Gross margin per vehicle retailed:
             New                              $1,972    $1,848    $124    6.7
             Used                             $1,625    $1,733  $(108)  (6.2)
             Finance and insurance              $763      $692     $71   10.3

                                                  Six Months Ended June 30,
                                              2002      2001  $Variance  %Var.
       Revenue:
           New vehicle                      $5,793.3  $5,808.9 $(15.6)  (0.3)
           Used vehicle                      1,945.7   1,949.5   (3.8)  (0.2)
           Parts and service                 1,234.5   1,201.0    33.5    2.8
           Finance and insurance               254.5     233.7    20.8    8.9
           Other                               538.3     639.5 (101.2) (15.8)
                                            $9,766.3  $9,832.6 $(66.3)  (0.7)

       Gross margin:
           New vehicle                        $420.9    $400.6   $20.3    5.1
           Used vehicle                        213.7     218.6   (4.9)  (2.2)
           Parts and service                   537.5     518.1    19.4    3.7
           Finance and insurance               254.5     233.7    20.8    8.9
           Other                                45.7      44.6     1.1    2.5
                                             1,472.3   1,415.6    56.7    4.0

       S,G&A - Store                         1,033.7   1,020.7  (13.0)  (1.3)
       Store performance                       438.6     394.9    43.7   11.1

       S,G&A - Corporate                        70.0      73.9     3.9    5.3
       Depreciation                             32.6      32.0   (0.6)     --
       Amortization                              1.4      40.4    39.0     --
       Loan and lease underwriting losses
        (income), net                          (2.9)       7.6    10.5     --
       Restructuring and impairment losses,
        net                                      1.2       4.6     3.4     --
       Other losses (income)                     1.1    (19.0)  (20.1)     --
       Operating income                       $335.2    $255.4   $79.8   31.2

       Retail vehicle sales:
           New                               213,945   221,064 (7,119)  (3.2)
           Used                              127,570   128,935 (1,365)  (1.1)
                                             341,515   349,999 (8,484)  (2.4)

       Gross margin per vehicle retailed:
           New                                $1,967    $1,812    $155    8.6
           Used                               $1,675    $1,695   $(20)  (1.2)
           Finance and insurance                $745      $668     $77   11.5

         Operating Percentages

                                                Three Months      Six Months
                                               Ended June 30,   Ended June 30,
                                               %2002    %2001    %2002  %2001

       Revenue mix percentages:
          New vehicle                           59.4      59.5    59.3   59.1
          Used vehicle                          19.9      19.7    19.9   19.8
          Parts and service                     12.4      12.1    12.6   12.2
          Finance and insurance                  2.7       2.5     2.6    2.4
          Other                                  5.6       6.2     5.6    6.5
                                               100.0     100.0   100.0  100.0


       Operating items as a percentage of revenue:
          Gross margin:
             New vehicle                         7.3       7.0     7.3    6.9
             Used vehicle                       10.5      11.5    11.0   11.2
             Parts and service                  43.8      43.4    43.5   43.1
             Finance and insurance             100.0     100.0   100.0  100.0
             Other                               7.9       7.1     8.5    7.0
               Total                            15.0      14.6    15.1   14.4
          S,G&A - Store                         10.4      10.3    10.6   10.4
          Store performance                      4.6       4.3     4.5    4.0
          S,G&A - Corporate                      0.7       0.7     0.7    0.8
          Operating income                       3.6       3.0     3.4    2.6
          Net income                             2.1       1.7     2.0    1.5

       Other operating items as a
        percentage of total gross margin:
          S,G&A - Store                         69.4      70.7    70.2   72.1
          Store performance                     30.6      29.3    29.8   27.9
          S,G&A - Corporate                      4.6       4.6     4.8    5.2
          Total S,G&A                           74.0      75.3    75.0   77.3
          Operating income                      23.7      20.5    22.8   18.0

      Cash Flow Information
                                         Three Months            Six Months
                                         Ended June 30,         Ended June 30,
                                         2002      2001        2002      2001

    EBITDA                             $195.1    $184.5      $368.3    $327.0

    Capital expenditures,
     excluding property operating
     lease buy-outs                      $31.3     $28.8       $60.0     $46.5

    Property operating
     lease buy-outs                       $5.4      $--         $5.4      $6.3

    Stock repurchases                   $115.2     $30.9      $151.1    $129.1

    Acquisitions                          $3.9     $11.2      $131.6     $33.2

    Proceeds from exercises of
     stock options                       $54.5      $0.4       $74.7      $0.4

    Floorplan
    Assistance        Three Months Ended June 30,   Six Months  Ended June
    and Expense       2002    %      2001     %      2002    %    2001     %


    New vehicle
     gross margin,
     before
     floorplan      $202.2   6.8    $205.3   7.0    $394.6  6.8  $406.4   7.0

    Floorplan
     assistance       33.5   1.1      36.7   1.2      63.0  1.1    74.6   1.3

    Floorplan
     interest
     expense        (18.5) (0.6)    (34.9) (1.2)    (36.7)(0.6)  (80.4) (1.4)

    New vehicle
     gross margin,
     as presented    $217.2  7.3    $207.1   7.0    $420.9  7.3  $400.6   6.9

    Balance Sheet and Other Highlights

                     June 30, 2002     December 31, 2001    June 30, 2001

    Cash and cash
     equivalents            $100.2                $128.1            $28.5
    Inventory             $2,507.3              $2,178.5         $2,443.6
    Floorplan notes
     payable              $2,142.3              $1,900.7         $2,110.1
    Non-vehicle
     debt                   $649.4                $655.2           $698.1
    Equity                $3,949.9              $3,827.9         $3,858.5
    Days supply
    (trailing 30 days):
           New             66 days               61 days          59 days
           Used            38 days               35 days          36 days

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

                                      Three Months Ended June 30,
                              2002          2001   $ Variance    % Variance

    Revenue:
      New vehicle         $2,884.9      $2,932.4      $(47.5)         (1.6)
      Used vehicle           962.9         970.1        (7.2)         (0.7)
      Parts and service      602.1         594.8          7.3           1.2
      Finance and insurance  130.0         120.7          9.3           7.7
      Other                  263.9         304.4       (40.5)        (13.3)
                          $4,843.8      $4,922.4      $(78.6)         (1.6)

    Gross margin:
      New vehicle           $209.5        $206.9         $2.6           1.3
      Used vehicle           101.9         110.3        (8.4)         (7.6)
      Parts and service      263.3         258.6          4.7           1.8
      Finance and insurance  130.0         120.7          9.3           7.7
      Other                   18.8          19.3        (0.5)         (2.6)
                             723.5         715.8          7.7           1.1

    S,G&A - Store            501.2         509.1          7.9           1.6

    Store performance       $222.3        $206.7        $15.6           7.5

    Retail vehicle sales:
      New                  107,845       111,640      (3,795)         (3.4)
      Used                  63,502        64,210        (708)         (1.1)
                           171,347       175,850      (4,503)         (2.6)

    Gross margin per
     vehicle retailed:
      New                   $1,943        $1,853          $90           4.9
      Used                  $1,605        $1,718       $(113)         (6.6)
      Finance and insurance   $759          $686          $73          10.6

                                        Six Months Ended June 30,
                              2002         2001      $ Variance   % Variance

    Revenue:
      New vehicle         $5,637.5      $5,741.2     $(103.7)         (1.8)
      Used vehicle         1,893.5       1,926.6       (33.1)         (1.7)
      Parts and service    1,201.8       1,181.8         20.0           1.7
      Finance and insurance  248.9         231.0         17.9           7.7
      Other                  509.0         614.3      (105.3)        (17.1)
                          $9,490.7      $9,694.9     $(204.2)         (2.1)

    Gross margin:
      New vehicle           $408.2        $396.7        $11.5           2.9
      Used vehicle           208.7         216.4        (7.7)         (3.6)
      Parts and service      522.4         510.1         12.3           2.4
      Finance and insurance  248.9         231.0         17.9           7.7
      Other                   38.1          38.0          0.1           0.3
                           1,426.3       1,392.2         34.1           2.4

    S,G&A - Store          1,001.1       1,003.7          2.6           0.3

    Store performance       $425.2        $388.5        $36.7           9.4

    Retail vehicle sales:
      New                  210,010       218,428      (8,418)         (3.9)
      Used                 125,592       127,395      (1,803)         (1.4)
                           335,602       345,823     (10,221)         (3.0)

    Gross margin per
     vehicle retailed:
      New                   $1,944        $1,816         $128           7.0
      Used                  $1,662        $1,699        $(37)         (2.2)
      Finance and
      insurance               $742          $668          $74          11.1

    Operating Percentages
                                 Three Months           Six Months Ended
                                Ended June 30               Ended June 30,
                             %2002         %2001        %2002         %2001

    Revenue mix percentages:
      New vehicle             59.6          59.6         59.4          59.2
      Used vehicle            19.9          19.7         20.0          19.9
      Parts and service       12.4          12.1         12.7          12.2
      Finance and insurance    2.7           2.5          2.6           2.4
      Other                    5.4           6.1          5.3           6.3
                             100.0         100.0        100.0         100.0

    Operating items as a
     percentage of revenue:
      Gross margin:
       New vehicle             7.3           7.1          7.2           6.9
       Used vehicle           10.6          11.4         11.0          11.2
       Parts and service      43.7          43.5         43.5          43.2
       Finance and
        insurance            100.0         100.0        100.0         100.0
       Other                   7.1           6.3          7.5           6.2
        Total                 14.9          14.5         15.0          14.4
    S,G&A - Store             10.3          10.3         10.5          10.4
    Store performance          4.6           4.2          4.5           4.0

    Other operating items
     as a percentage of
     total gross margin:

    S,G&A - Store             69.3          71.1         70.2          72.1
    Store performance         30.7          28.9         29.8          27.9

SOURCE AutoNation, Inc.

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

URL: http://www.autonation.com http://www.prnewswire.com

Copyright (C) 2002 PR Newswire. All rights reserved.

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