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AutoNation Reports Record Third Quarter; As EPS Rises 38% To $0.33, Net Income Rises 35% To $106.7 Million

Oct. 24, 2002
* EPS, Operating Income, EBITDA Set 3Q Records * Total Revenue Increases 4% * Revenue Increases 6% for New Vehicles, 7% for F&I * Board Authorizes $500 million for Share Repurchases

FORT LAUDERDALE, Fla., Oct 24, 2002 /PRNewswire-FirstCall via COMTEX/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of both new and used vehicles, today reported third-quarter earnings per share of $0.33 that set a record for the period and exceeded by 38% a year-earlier $0.24 per share. Net income rose 35% to $106.7 million from last year's third-quarter result of $79.2 million and operating income rose 29% to $180.7 million from $140.2 million a year earlier as higher revenue and gross margin, as well as lower inventory-carrying costs drove improved performance. The Company's remaining consumer loan portfolio contributed $0.01 per share of after-tax income. On a comparable basis -- after excluding $0.04 per share of after-tax goodwill amortization from last year's results -- the Company's third-quarter performance improved 18% to $0.33 per share versus $0.28 per share a year ago.

Total revenue for the third quarter ended September 30, 2002 increased 4% to $5.2 billion from $5.0 billion reported a year earlier as total revenue rose 6% for new vehicles, 7% for finance and insurance and 2% for parts and service. Total gross margin increased 4% to $764.1 million from $731.8 million a year ago.

Commenting on the 2002 third-quarter performance, Mike Jackson, AutoNation's Chief Executive Officer, said, "American vehicle buyers continue to respond to a powerful combination of great products and great values. That, combined with the resiliency of our diversified business model, led to another record quarter of results. So far this year we've delivered a 34% increase in net income, demonstrating again our ability to deliver strong results in this current business environment."

Other Company highlights in the third quarter included:

* An agreement to acquire six new vehicle franchises from the Vista Automotive Group in Corpus Christi, Texas. The acquisition, which is expected to close later this year, includes Toyota, Chevrolet, Cadillac, Oldsmobile, Mitsubishi and Isuzu franchises. Last year, these franchises generated approximately $151 million of revenue. Also the Company recently agreed to acquire Jim McNatt Honda of Dallas with approximately $48 million in revenue.

* Closing the acquisition of Claridge's BMW in Fremont, Calif. In 2001, Claridge's BMW had revenue of approximately $63 million. Through the third quarter, AutoNation has closed acquisitions representing approximately $500 million in annual revenue.

* Record earnings before interest, taxes, depreciation and amortization of $201.7 million, up 14% from $177 million in the year-ago period.

* The repurchase of 4 million of the Company's shares at a cost of $47.9 million.

Separately, the Company also announced today that its Board of Directors has authorized an additional $500 million for the repurchase of its common stock. The Board's decision extends the Company's previously authorized $2 billion of share repurchase programs. Since August 1998, the Company has repurchased $1.9 billion worth of its common stock pursuant to these programs. In addition, and in connection with the share repurchase program, the Board has authorized the Company to conduct a consent solicitation to amend the terms of its 9% senior notes due in 2008 to provide an additional $400 million of share repurchase capacity.

Looking ahead, Mr. Jackson said, "We expect 2002 fourth-quarter earnings per share to be in the range of $0.25 to $0.27 and 2002 full-year earnings per share to be in the range of $1.18 to $1.20. Our full-year 2003 EPS outlook is $1.25 to $1.30 as we anticipate delivering earnings growth in a market where we expect U.S. sales of new vehicles to decline 3-to-5% from 2002."

For the nine-month period ended September 30, 2002, the Company earned net income of $302.2 million, or $0.93 per share, up 34% from prior-year net income of $225.4 million, or $0.67 per share. The Company's revenue during the nine-month period totaled $15.0 billion, up from prior-year revenue of $14.8 billion.

AutoNation will discuss its 2002 third-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 888-428-4473 or listen via the audio webcast offered at corp.AutoNation.com by clicking on the webcast link. A replay of the conference call will be available after 2:30 p.m., Eastern Time, through October 31, 2002. Replays can be accessed by calling 800-475-6701 (access code 654049) or by visiting corp.AutoNation.com and accessing the "Investors" section.

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 374 automotive retail franchises in 17 states. For additional information, please visit the "About AutoNation, Inc." section of www.AutoNation.com, where consumers can find more than 88,000 vehicles available for sale, or visit corp.AutoNation.com.

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 CONSOLIDATED INCOME STATEMENTS
                       (In millions, except per share data)

                                       Three Months Ended  Nine Months Ended
                                          September 30,       September 30,
                                         2002      2001      2002      2001

      Revenue:
         New vehicle                   $3,174.6  $2,995.1  $8,967.9  $8,804.0
         Used vehicle                     980.2     978.6   2,925.9   2,928.1
         Parts and service                626.5     613.2   1,861.0   1,814.2
         Finance and insurance            138.9     130.2     393.4     363.9
         Other                            273.5     293.7     811.8     933.2
      Total revenue                     5,193.7   5,010.8  14,960.0  14,843.4

      Cost of operations:
         New vehicle                    2,956.0   2,786.8   8,328.4   8,195.1
         Used vehicle                     878.3     871.0   2,610.3   2,601.9
         Parts and service                353.3     347.4   1,050.3   1,030.3
         Other                            242.0     273.8     734.6     868.7
      Total cost of operations          4,429.6   4,279.0  12,723.6  12,696.0

      Gross margin                        764.1     731.8   2,236.4   2,147.4

      Selling, general and
       administrative expenses            568.7     554.8   1,672.4   1,649.4
      Depreciation                         18.0      18.0      50.6      50.0
      Amortization                          0.5      20.4       1.9      60.8
      Loan and lease underwriting
       losses (income), net                (6.0)     (0.7)     (8.9)      6.9
      Restructuring and related
       impairment charges
       (recoveries), net                    --       (0.6)      1.2       4.0
      Other losses (income)                 2.2      (0.3)      3.3     (19.3)

      Operating income                    180.7     140.2     515.9     395.6

      Other interest expense              (13.0)    (11.2)    (36.7)    (30.6)
      Interest income                       2.6       2.5       8.6       6.1
      Other income (expense)                2.5      (1.6)      1.6      (2.4)

      Income before income taxes          172.8     129.9     489.4     368.7

      Provision for income taxes           66.1      50.7     187.2     143.3

      Net income                         $106.7     $79.2    $302.2    $225.4

      Diluted earnings per share          $0.33     $0.24     $0.93     $0.67

      Weighted average common and
       common equivalent shares
       outstanding                        321.9     333.4     325.5     338.2

      Common shares outstanding           314.6     327.2     314.6     327.2


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


              Operating Highlights        Three Months Ended September 30,
                                            2002     2001  $Variance %Variance
      Revenue:
        New vehicle                      $3,174.61  $2,995.1    $179.5    6.0
        Used vehicle                         980.2     978.6       1.6    0.2
        Parts and service                    626.5     613.2      13.3    2.2
        Finance and insurance                138.9     130.2       8.7    6.7
        Other                                273.5     293.7     (20.2)  (6.9)
                                          $5,193.7  $5,010.8    $182.9    3.7
      Gross margin:
        New vehicle                         $218.6    $208.3     $10.3    4.9
        Used vehicle                         101.9     107.6      (5.7)  (5.3)
        Parts and service                    273.2     265.8       7.4    2.8
        Finance and insurance                138.9     130.2       8.7    6.7
        Other                                 31.5      19.9      11.6   58.3
                                             764.1     731.8      32.3    4.4

      S,G&A - Store                          536.1     522.8     (13.3)  (2.5)
      Store performance                      228.0     209.0      19.0    9.1

      S,G&A - Corporate                       32.6      32.0      (0.6)  (1.9)
      Depreciation                            18.0      18.0       --
      Amortization                             0.5      20.4      19.9
      Loan and lease underwriting losses
       (income), net                          (6.0)     (0.7)      5.3
      Restructuring and related impairment
       charges (recoveries), net                --      (0.6)     (0.6)
      Other losses (gains)                     2.2      (0.3)     (2.5)
      Operating income                      $180.7    $140.2     $40.5   28.9

      Retail vehicle sales:
           New                             117,533   114,835     2,698    2.3
           Used                             64,420    65,569    (1,149)  (1.8)
                                           181,953   180,404     1,549    0.9

      Gross margin per vehicle retailed:
           New                              $1,860    $1,814       $46    2.5
           Used                             $1,582    $1,641      $(59)  (3.6)
           Finance and insurance              $763      $722       $41    5.7


                  Operating Highlights      Nine Months Ended September 30,
                                            2002     2001  $Variance %Variance
      Revenue:
        New vehicle                        $8,967.9   $8,804.0  $163.9    1.9
        Used vehicle                        2,925.9    2,928.1    (2.2)  (0.1)
        Parts and service                   1,861.0    1,814.2    46.8    2.6
        Finance and insurance                 393.4      363.9    29.5    8.1
        Other                                 811.8      933.2  (121.4) (13.0)
                                          $14,960.0  $14,843.4  $116.6    0.8

      Gross margin:
        New vehicle                          $639.5     $608.9   $30.6    5.0
        Used vehicle                          315.6      326.2   (10.6)  (3.2)
        Parts and service                     810.7      783.9    26.8    3.4
        Finance and insurance                 393.4      363.9    29.5    8.1
        Other                                  77.2       64.5    12.7   19.7
                                            2,236.4    2,147.4    89.0    4.1

      S,G&A - Store                         1,569.8    1,543.5   (26.3)  (1.7)
      Store performance                       666.6      603.9    62.7   10.4

      S,G&A - Corporate                       102.6      105.9     3.3    3.1
      Depreciation                             50.6       50.0    (0.6)
      Amortization                              1.9       60.8    58.9
      Loan and lease underwriting losses
       (income), net                           (8.9)       6.9    15.8
      Restructuring and related
       impairment charges (recoveries),
       net                                      1.2        4.0     2.8
      Other losses (gains)                      3.3      (19.3)  (22.6)
      Operating income                       $515.9     $395.6  $120.3   30.4


      Retail vehicle sales:
           New                              331,478    335,899  (4,421)  (1.3)
           Used                             191,990    194,504  (2,514)  (1.3)
                                            523,468    530,403  (6,935)  (1.3)

      Gross margin per vehicle retailed:
           New                               $1,929     $1,813    $116    6.4
           Used                              $1,644     $1,677    $(33)  (2.0)
           Finance and insurance               $752       $686     $66    9.6


              Operating Percentages      Three Months Ended  Nine Months Ended
                                             September 30,       September 30,
                                            % 2002   % 2001     % 2002 % 2001

      Revenue mix percentages:
        New vehicle                          61.1      59.8       59.9   59.3
        Used vehicle                         18.9      19.5       19.6   19.7
        Parts and service                    12.1      12.2       12.4   12.2
        Finance and insurance                 2.7       2.6        2.6    2.5
        Other                                 5.2       5.9        5.5    6.3
                                            100.0     100.0      100.0  100.0

      Operating items as a percentage of
       revenue:
        Gross margin:
           New vehicle                        6.9       7.0        7.1    6.9
           Used vehicle                      10.4      11.0       10.8   11.1
           Parts and service                 43.6      43.3       43.6   43.2
           Finance and insurance            100.0     100.0      100.0  100.0
           Other                             11.5       6.8        9.5    6.9
             Total                           14.7      14.6       14.9   14.5
        S,G&A - Store                        10.3      10.4       10.5   10.4
        Store performance                     4.4       4.2        4.5    4.1
        S,G&A - Corporate                     0.6       0.6        0.7    0.7
        Operating income                      3.5       2.8        3.4    2.7
        Net income                            2.1       1.6        2.0    1.5

      Other operating items as a percentage
       of total gross margin:
        S,G&A - Store                        70.2      71.4       70.2   71.9
        Store performance                    29.8      28.6       29.8   28.1
        S,G&A - Corporate                     4.3       4.4        4.6    4.9
        Total S,G&A                          74.4      75.8       74.8   76.8
        Operating income                     23.6      19.2       23.1   18.4



                                 AUTONATION, INC.
                     UNAUDITED SUPPLEMENTARY DATA, Continued
                                 ($ in millions)

                                   Three Months Ended  Nine Months Ended
         Cash Flow Information        September 30,      September 30,
                                      2002      2001      2002     2001

       EBITDA                        $201.7    $177.0    $570.0  $504.0

       Capital expenditures,
        excluding property
         operating lease buy-outs     $39.9     $33.5     $99.9   $86.3
       Property operating lease
        buy-outs                       $5.6      $--      $11.0    $--
       Stock repurchases              $47.9     $58.0    $199.0  $187.2
       Acquisitions                   $32.6     $50.0    $164.2   $83.2
       Proceeds from exercises of
        stock options                  $0.9      $2.1     $75.6    $2.5


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

    New vehicle gross margin,
      before floorplan               $204.1     6.4      $202.0     6.7
    Floorplan assistance               33.1     1.0        33.0     1.1
    Floorplan interest expense        (18.6)    (.6)      (26.7)    (.9)
    New vehicle gross margin,
      as presented                   $218.6     6.9      $208.3     7.0


                                               Nine Months Ended
                                                 September 30,
                                       2002       %        2001       %

    New vehicle gross margin,
      before floorplan               $598.7     6.7      $608.4     6.9
    Floorplan assistance               96.1     1.1       107.6     1.2
    Floorplan interest expense        (55.3)    (.6)     (107.1)   (1.2)
    New vehicle gross margin,
      as presented                   $639.5     7.1      $608.9     6.9



         Balance Sheet and Other Highlights

                                Sept. 30, 2002  Dec. 31, 2001   Sept. 30, 2001
    Cash and cash equivalents        $169.7          $128.1         $89.1
    Inventory                      $2,251.7        $2,178.5      $2,248.8
    Floorplan notes payable        $1,818.0        $1,900.7      $1,921.2
    Non-vehicle debt                 $647.0          $655.2        $619.6
    Equity                         $4,020.1        $3,827.9      $3,878.5
    Days supply
     (trailing 30 days):
      New                           59 days         61 days       55 days
      Used                          37 days         35 days       39 days


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

                Operating Highlights    Three Months Ended   September 30,
                                      2002        2001   $ Variance % Variance
       Revenue:
          New vehicle              $3,082.0     $2,990.7      $91.3       3.1
          Used vehicle                944.4        978.0      (33.6)     (3.4)
          Parts and service           605.4        609.2       (3.8)     (0.6)
          Finance and insurance       135.4        128.8        6.6       5.1
          Other                       253.3        288.9      (35.6)    (12.3)
                                   $5,020.5     $4,995.6      $24.9       0.5

       Gross margin:
          New vehicle                $211.4       $208.1       $3.3       1.6
          Used vehicle                 99.0        107.5       (8.5)     (7.9)
          Parts and service           263.5        263.8       (0.3)     (0.1)
          Finance and insurance       135.4        128.8        6.6       5.1
          Other                        29.1         16.1       13.0      80.7
                                      738.4        724.3       14.1       1.9

       S,G&A - Store                  519.7        519.9        0.2       0.0

       Store performance             $218.7       $204.4      $14.3       7.0

       Retail vehicle sales:
             New                    115,080      114,674        406       0.4
             Used                    63,089       65,535     (2,446)     (3.7)
                                    178,169      180,209     (2,040)     (1.1)

       Gross margin per vehicle
        retailed:
             New                     $1,837       $1,815        $22       1.2
             Used                    $1,569       $1,640       $(71)     (4.3)
             Finance and insurance     $760         $715        $45       6.3



           Operating Highlights            Nine Months Ended September 30,
                                      2002        2001   $ Variance % Variance
       Revenue:
          New vehicle            $8,719.3      $8,731.9       $(12.6)    (0.1)
          Used vehicle            2,833.4       2,904.7        (71.3)    (2.5)
          Parts and service       1,803.8       1,789.4         14.4      0.8
          Finance and insurance     384.3         360.1         24.2      6.7
          Other                     764.2         902.9       (138.7)   (15.4)
                                $14,505.0     $14,689.0      $(184.0)    (1.3)

       Gross margin:
          New vehicle              $619.6        $605.0        $14.6      2.4
          Used vehicle              307.4         324.0        (16.6)    (5.1)
          Parts and service         784.3         773.1         11.2      1.4
          Finance and insurance     384.3         360.1         24.2      6.7
          Other                      69.3          56.6         12.7     22.4
                                  2,164.9       2,118.8         46.1      2.2

       S,G&A - Store              1,520.6       1,523.3          2.7      0.2

       Store performance           $644.3        $595.5        $48.8      8.2

       Retail vehicle sales:
             New                  325,090       333,102       (8,012)    (2.4)
             Used                 188,265       192,930       (4,665)    (2.4)
                                  513,355       526,032      (12,677)    (2.4)

       Gross margin per vehicle
        retailed:
             New                   $1,906        $1,816          $90      5.0
             Used                  $1,633        $1,679         $(46)    (2.7)
             Finance and insurance   $749          $685          $64      9.3


       Operating Percentages          Three Months Ended   Nine Months Ended
                                         September 30,       September 30,
                                     % 2002      % 2001    % 2002    % 2001

       Revenue mix percentages:
          New vehicle                  61.4        59.9      60.1      59.4
          Used vehicle                 18.8        19.6      19.5      19.8
          Parts and service            12.1        12.2      12.4      12.2
          Finance and insurance         2.7         2.6       2.6       2.5
          Other                         5.0         5.7       5.4       6.1
                                      100.0       100.0     100.0     100.0


       Operating items as a percentage
        of revenue:
          Gross margin:
             New vehicle                6.9         7.0       7.1       6.9
             Used vehicle              10.5        11.0      10.8      11.2
             Parts and service         43.5        43.3      43.5      43.2
             Finance and insurance    100.0       100.0     100.0     100.0
             Other                     11.5         5.6       9.1       6.3
               Total                   14.7        14.5      14.9      14.4
          S,G&A - Store                10.4        10.4      10.5      10.4
          Store performance             4.4         4.1       4.4       4.1

       Other operating items as a
        percentage of total
        gross margin:
          S,G&A - Store                70.4        71.8      70.2      71.9
          Store performance            29.6        28.2      29.8      28.1


                     
SOURCE AutoNation, Inc.

CONTACT: Oscar Suris, AutoNation, +1-954-769-3576, or suriso@autonation.com Photo: http://www.newscom.com/cgi-bin/prnh/20001017/AUTONATIONLOGO AP Archive: http://photoarchive.ap.org PRN Photo Desk, 888-776-6555 or 212-782-2840 Company News On-Call: http://www.prnewswire.com/gh/cnoc/comp/750525.html

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