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AutoNation Reports 4Q Net Income of $79.4 Million, Record Full-Year EPS of $1.19

Feb. 06, 2003
FORT LAUDERDALE, Fla., Feb 6, 2003 /PRNewswire-FirstCall via COMTEX/ --

* 4Q Net Income of $79.4 Million, or $0.26 per Share, Exceeds Year-Ago Net Income of $6.9 Million, or $0.02 per Share * Full-Year Net Income of $381.6 Million, or $1.19 per Share, Exceeds Year-Ago Net Income of $232.3 Million, or $0.69 per Share * 4Q EPS of $0.26 Exceeds Analysts' Consensus Estimate of $0.23 * Company Reconfirms 2003 EPS Outlook of $1.25 to $1.30

AutoNation, Inc. (NYSE: AN), America's largest retailer of both new and used vehicles, today reported 2002 fourth-quarter net income of $79.4 million, or $0.26 per share, versus year-ago net income of $6.9 million, or $0.02 per share. The fourth-quarter results capped off a year of record earnings per share of $1.19 that surpassed earnings per share of $0.69 in 2001.

On a comparable basis, adjusting for goodwill amortization and one-time items, the Company earned net income in the fourth quarter of $0.25 per share, or $76.4 million, versus $0.27 per share, or $87.6 million, a year ago. The Company's 2001 fourth quarter was impacted primarily by a charge stemming from the Company's decision to stop underwriting consumer loans and the assumption of certain obligations from its former vehicle rental business. For full-year 2002, comparable net income increased 6.6% to $373.9 million, or $1.16 per share, versus $350.6 million, or $1.05 per share, in the prior year. The increase came even though 2002's revenue of $19.5 billion was a decline from $20 billion in 2001, which was the second-best year for U.S. sales of light vehicles.

For the 2002 fourth quarter, revenue totaled $4.5 billion, which compares to a record $5.1 billion reached in the year-ago period that featured the debut of zero-percent financing offers that led to a record October for the U.S. light vehicle market. The Company partially offset the fourth-quarter revenue decline by expanding gross and store-performance margins as a percentage of revenue, increasing per-vehicle gross margins, and decreasing store-level selling, general and administrative expenses as a percentage of gross margin.

Commenting on the 2002 fourth-quarter performance, Mike Jackson, AutoNation's Chairman and Chief Executive Officer, said, "Even without the benefit of an expanding U.S. light vehicle market, our vehicle sales, parts and service, and finance and insurance areas delivered strong cash flow that fueled our acquisitions, share repurchases and ongoing strategic initiatives. This illustrates the resiliency of our diversified business model and speaks to the growth opportunities we have in automotive retail."

The Company's other fourth-quarter highlights included:

* Earnings before interest, taxes, depreciation and amortization of $157.7 million, up 89% from $83.4 million in the year-ago period.

* The repurchase of 16.9 million of the Company's shares at a cost of $190.9 million, leaving a board-authorized amount of $370.4 million for future repurchases as of December 31, 2002.

* Agreements to acquire Vista Toyota of Corpus Christi, an acquisition that closed Monday, February 3; and Jim McNatt Honda of Dallas, a deal which is expected to close during the first quarter of 2003.

FULL-YEAR

Commenting on the Company's 2002 performance, Jackson said, "Following a 106% improvement in 2001, AutoNation's share price rose a category-leading 2% in 2002, a performance that surpassed the Standard & Poor's 500 Index by 25 percentage points. We believe AutoNation's market value will increase further as we continue to generate strong cash flow, integrate acquisitions successfully and deliver EPS growth."

Jackson said the Company's 2002 accomplishments included:

* Four quarters of reported earnings per share that set Company records and exceeded the consensus estimates of analysts.

* A 6.6% improvement in comparable net income despite a 2.6% decline in total revenue.

* Record earnings before interest, taxes, depreciation and amortization of $727.7 million.

* Closed acquisitions representing an annual revenue run rate of approximately $500 million.

* The repurchase of approximately 10% of the Company's outstanding common shares (30.7 million shares) at a cost of $389.9 million.

Looking ahead, Jackson said, "We continue to foresee industry sales of new vehicles that will exceed 16 million units in 2003. We also reaffirm our previous full-year 2003 guidance of $1.25 to $1.30 per share and expect 2003 first-quarter earnings per share of $0.28 to $0.30."

AutoNation will discuss its 2002 fourth-quarter and full-year results, its 2003 outlook and supporting assumptions later this morning during an 11 a.m., Eastern Time, conference call. To listen live to the conference call, dial 877-209-9923 or listen via the audio webcast offered at http://corp.AutoNation.com by clicking on the webcast link. A replay of the conference call will be available after 4:30 p.m., Eastern Time, through February 14, 2003. Replays can be accessed by calling 800-475-6701 (access code 669580) or by visiting the "Investors" section of http://corp.AutoNation.com.

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 more than 370 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 92,000 vehicles available for sale, or visit http://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      Year Ended
                                        December 31,         December 31,
                                      2002      2001      2002       2001

     Revenue:
        New vehicle                 $2,726.9  $3,196.0  $11,694.8  $12,000.0
        Used vehicle                   860.7     955.1    3,786.6    3,883.2
        Parts and service              592.3     590.7    2,453.3    2,404.9
        Finance and insurance          116.8     125.7      510.2      489.6
        Other                          221.8     278.4    1,033.6    1,211.6
     Total revenue                   4,518.5   5,145.9   19,478.5   19,989.3

     Cost of operations:
        New vehicle                  2,531.3   2,967.0   10,859.7   11,162.1
        Used vehicle                   773.3     854.8    3,383.6    3,456.7
        Parts and service              334.7     335.4    1,385.0    1,365.7
        Other                          203.9     262.2      938.5    1,130.9
     Total cost of operations        3,843.2   4,419.4   16,566.8   17,115.4

     Gross margin                      675.3     726.5    2,911.7    2,873.9

     Selling, general and
      administrative expenses          528.5     557.8    2,200.9    2,207.2
     Depreciation                       16.7      20.7       67.3       70.7
     Amortization                        0.5      20.4        2.4       81.2
     Loan and lease underwriting
      losses (income), net              (5.0)     82.7      (13.9)      89.6
     Other losses (gains)               (1.1)      0.5        3.4      (14.8)

     Operating income                  135.7      44.4      651.6      440.0

     Other interest expense            (13.7)    (13.1)     (50.4)     (43.7)
     Interest income                     1.8       2.9       10.4        9.0
     Other income (expense)              4.8      (2.1)       6.4       (4.5)

     Income before income taxes        128.6      32.1      618.0      400.8

     Provision for income taxes         49.2      12.5      236.4      155.8

     Net income from continuing
      operations                        79.4      19.6      381.6      245.0

     Loss from discontinued
      operations, net of income
      taxes                             --       (12.7)      --        (12.7)

     Net income                        $79.4      $6.9     $381.6     $232.3


     Diluted earnings per share:
        Continuing operations          $0.26     $0.06      $1.19      $0.73
        Discontinued operations         --       (0.04)      --        (0.04)
        Net income                     $0.26     $0.02      $1.19      $0.69

     Weighted average common and
      common equivalent shares
       outstanding                     309.4     326.1      321.5      335.2

     Common shares outstanding         298.0     321.7      298.0      321.7




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


        Operating Highlights                  Three Months Ended December 31,
                                                                 $       %
                                             2002     2001   Variance Variance


      Revenue:
        New vehicle                        $2,726.9  $3,196.0  $(469.1) (14.7)
        Used vehicle                          860.7     955.1    (94.4)  (9.9)
        Parts and service                     592.3     590.7      1.6    0.3
        Finance and insurance                 116.8     125.7     (8.9)  (7.1)
        Other                                 221.8     278.4    (56.6) (20.3)
                                           $4,518.5  $5,145.9  $(627.4) (12.2)


      Gross margin:
        New vehicle                          $195.6    $229.0   $(33.4) (14.6)
        Used vehicle                           87.4     100.3    (12.9) (12.9)
        Parts and service                     257.6     255.3      2.3    0.9
        Finance and insurance                 116.8     125.7     (8.9)  (7.1)
        Other                                  17.9      16.2      1.7   10.5
                                              675.3     726.5    (51.2)  (7.0)

      S,G&A -- Store                          490.0     528.5     38.5    7.3
      Store performance                       185.3     198.0    (12.7)  (6.4)

      S,G&A -- Corporate                       38.5      29.3     (9.2) (31.4)
      Depreciation                             16.7      20.7      4.0
      Amortization                              0.5      20.4     19.9
      Loan and lease underwriting losses
       (income), net                           (5.0)     82.7     87.7
      Other losses (gains)                     (1.1)      0.5      1.6
      Operating income                       $135.7     $44.4    $91.3  205.6


      Retail vehicle sales:
           New                               95,228   117,958  (22,730) (19.3)
           Used                              55,375    64,019   (8,644) (13.5)
                                            150,603   181,977  (31,374) (17.2)

      Gross margin per vehicle retailed:
           New                               $2,054    $1,941     $113    5.8
           Used                              $1,578    $1,567      $11    0.7
           Finance and insurance               $776      $691      $85   12.3



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


      Operating Highlights                       Year Ended December 31,
                                                                 $       %
                                           2002       2001   Variance Variance

     Revenue:
       New vehicle                       $11,694.8  $12,000.0  $(305.2)  (2.5)
       Used vehicle                        3,786.6    3,883.2    (96.6)  (2.5)
       Parts and service                   2,453.3    2,404.9     48.4    2.0
       Finance and insurance                 510.2      489.6     20.6    4.2
       Other                               1,033.6    1,211.6   (178.0) (14.7)
                                         $19,478.5  $19,989.3  $(510.8)  (2.6)


     Gross margin:
       New vehicle                          $835.1     $837.9    $(2.8)  (0.3)
       Used vehicle                          403.0      426.5    (23.5)  (5.5)
       Parts and service                   1,068.3    1,039.2     29.1    2.8
       Finance and insurance                 510.2      489.6     20.6    4.2
       Other                                  95.1       80.7     14.4   17.8
                                           2,911.7    2,873.9     37.8    1.3

     S,G&A -- Store                        2,059.8    2,072.0     12.2    0.6
     Store performance                       851.9      801.9     50.0    6.2

     S,G&A -- Corporate                      141.1      135.2     (5.9)  (4.4)
     Depreciation                             67.3       70.7      3.4
     Amortization                              2.4       81.2     78.8
     Loan and lease underwriting losses
      (income), net                          (13.9)      89.6    103.5
     Other losses (gains)                      3.4      (14.8)   (18.2)
     Operating income                       $651.6     $440.0   $211.6   48.1


     Retail vehicle sales:
          New                              426,706    453,857  (27,151)  (6.0)
          Used                             247,365    258,523  (11,158)  (4.3)
                                           674,071    712,380  (38,309)  (5.4)

     Gross margin per vehicle retailed:
          New                               $1,957     $1,846     $111    6.0
          Used                              $1,629     $1,650     $(21)  (1.3)
          Finance and insurance               $757       $687      $70   10.2




             Operating Percentages          Three Months Ended    Year Ended
                                               December 31,       December 31,
                                           %  2002   %  2001   %  2002 %  2001

      Revenue mix percentages:
        New vehicle                            60.3      62.1     60.0   60.0
        Used vehicle                           19.0      18.6     19.4   19.4
        Parts and service                      13.1      11.5     12.6   12.0
        Finance and insurance                   2.6       2.4      2.6    2.4
        Other                                   5.0       5.4      5.4    6.2
                                              100.0     100.0    100.0  100.0


      Operating items as a percentage of
       revenue:
        Gross margin:
           New vehicle                          7.2       7.2      7.1    7.0
           Used vehicle                        10.2      10.5     10.6   11.0
           Parts and service                   43.5      43.2     43.5   43.2
           Finance and insurance              100.0     100.0    100.0  100.0
           Other                                8.1       5.8      9.2    6.7
             Total                             14.9      14.1     14.9   14.4
        S,G&A -- Store                         10.8      10.3     10.6   10.4
        Store performance                       4.1       3.8      4.4    4.0
        S,G&A -- Corporate                      0.9       0.6      0.7    0.7
        Operating income                        3.0       0.9      3.3    2.2
        Net income                              1.8       0.1      2.0    1.2

      Other operating items as a
       percentage of total gross margin:
        S,G&A -- Store                         72.6      72.7     70.7   72.1
        Store performance                      27.4      27.3     29.3   27.9
        S,G&A -- Corporate                      5.7       4.0      4.8    4.7
        Total S,G&A                            78.3      76.8     75.6   76.8
        Operating income                       20.1       6.1     22.4   15.3





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


                                         Three Months Ended    Year Ended
             Cash Flow Information          December 31,        December 31,
                                            2002     2001     2002     2001

         Net income from continuing
          operations                        $79.4    $19.6   $381.6   $245.0
         Plus: Depreciation                  16.7     20.7     67.3     70.7
                  Amortization                0.5     20.4      2.4     81.2
                  Other interest expense     13.7     13.1     50.4     43.7
                  Provision for income
                   taxes                     49.2     12.5    236.4    155.8
         Less: Interest income               (1.8)    (2.9)   (10.4)    (9.0)

       EBITDA                              $157.7    $83.4   $727.7   $587.4

       Capital expenditures, excluding
        property operating
         lease buy-outs                     $63.5    $70.2   $163.4   $156.5
       Property operating lease buy-outs     $8.8     $7.1    $19.8     $7.1
       Stock repurchases                   $190.9    $69.6   $389.9   $256.8
       Acquisitions                          $2.3     $8.8   $166.5    $92.0
       Proceeds from exercises of stock
        options                              $3.1     $6.6    $78.7     $9.1


         Floorplan Assistance
         and Expense                        Three Months Ended December 31,
                                             2002      %       2001      %

       New vehicle gross margin, before
        floorplan                           $183.3     6.7    $215.4     6.7
       Floorplan assistance                   31.8     1.2      33.2     1.0
       Floorplan interest expense            (19.5)   (0.7)    (19.6)   (0.6)

               New vehicle gross margin,
                as presented                $195.6     7.2    $229.0     7.2


         Floorplan Assistance
         and Expense                            Year Ended December 31,
                                            2002      %       2001      %
       New vehicle gross margin, before
        floorplan                           $782.0     6.7    $823.8     6.9
       Floorplan assistance                  127.9     1.1     140.8     1.2
       Floorplan interest expense            (74.8)   (0.6)   (126.7)   (1.1)

               New vehicle gross margin,
                as presented                $835.1     7.1    $837.9     7.0



             Balance Sheet and Other
                    Highlights

                                      December 31, 2002      December 31, 2001

       Cash and cash equivalents            $176.2                     $128.1
       Inventory                          $2,598.4                   $2,178.5
       Floorplan notes payable            $2,302.5                   $1,900.7
       Non-vehicle debt                     $651.3                     $655.2
       Equity                             $3,910.2                   $3,827.9
       Days supply (trailing 30 days):
              New                               79 days                61 days
              Used                              40 days                35 days




                                                      Net Income
       Comparable Basis                  Three Months Ended    Year Ended
        Reconciliation                       December 31,      December 31,
                                            2002    2001    2002     2001
       As reported                          $79.4    $6.9   $381.6   $232.3
       Certain charges and gains:
          Discontinued operations            --      12.7     --       12.7
          Goodwill amortization              --      15.4     --       59.8
          Asset impairment and related
           charges -- loan underwriting
           business                          --      52.3     --       52.3
          Gain on sale of outdoor media
           business                          --      --       --       --
          Loan and lease underwriting
           activity                          (3.1)   --       (8.6)    --
          Gain on sale of Flemington
           dealership group                  --      --        --     (11.8)
          Other items, net                    0.1     0.3      0.9      5.3

       Excluding certain charges
        and gains                           $76.4   $87.6   $373.9   $350.6



                                             Diluted Earnings Per Share
       Comparable Basis                  Three Months Ended     Year Ended
        Reconciliation                       December 31,      December 31,
                                            2002     2001     2002     2001
       As reported                          $0.26    $0.02    $1.19    $0.69
       Certain charges and gains:
          Discontinued operations            --       0.04     --       0.04
          Goodwill amortization              --       0.05     --       0.18
          Asset impairment and related
           charges -- loan underwriting
           business                                   0.16     --       0.16
          Gain on sale of outdoor media
           business                           --      --       --       --
          Loan and lease underwriting
           activity                         (0.01)    --      (0.03)    --
          Gain on sale of Flemington
           dealership group                  --       --       --      (0.04)
          Other items, net                   --       --       --       0.02

       Excluding certain charges
        and gains                           $0.25    $0.27    $1.16    $1.05



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



          Operating Highlights               Three Months Ended December 31,
                                                                $        %
                                             2002      2001  Variance Variance


       Revenue:
          New vehicle                      $2,646.6  $3,177.6  $(531.0) (16.7)
          Used vehicle                        833.2     949.9   (116.7) (12.3)
          Parts and service                   571.8     584.1    (12.3)  (2.1)
          Finance and insurance               113.7     124.9    (11.2)  (9.0)
          Other                               205.8     271.7    (65.9) (24.3)
                                           $4,371.1  $5,108.2  $(737.1) (14.4)


       Gross margin:
          New vehicle                        $189.0    $227.9   $(38.9) (17.1)
          Used vehicle                         85.4      99.7    (14.3) (14.3)
          Parts and service                   247.9     252.7     (4.8)  (1.9)
          Finance and insurance               113.7     124.9    (11.2)  (9.0)
          Other                                14.4      13.8      0.6    4.3
                                              650.4     719.0    (68.6)  (9.5)

       S,G&A -- Store                         471.9     520.0     48.1    9.3

       Store performance                     $178.5    $199.0   $(20.5) (10.3)



       Retail vehicle sales:
             New                             93,265   117,267  (24,002) (20.5)
             Used                            54,207    63,655   (9,448) (14.8)
                                            147,472   180,922  (33,450) (18.5)

       Gross margin per vehicle retailed:
             New                             $2,026    $1,944      $82    4.2
             Used                            $1,575    $1,566       $9    0.6
             Finance and insurance             $771      $690      $81   11.7




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




        Operating Highlights                   Year Ended December 31,
                                                               $         %
                                           2002      2001   Variance  Variance


       Revenue:
          New vehicle                    $11,327.2  $11,873.7  $(546.5)  (4.6)
          Used vehicle                     3,652.1    3,837.3   (185.2)  (4.8)
          Parts and service                2,364.9    2,363.4      1.5    0.1
          Finance and insurance              496.7      485.0     11.7    2.4
          Other                              955.5    1,172.4   (216.9) (18.5)
                                         $18,796.4  $19,731.8  $(935.4)  (4.7)


       Gross margin:
          New vehicle                       $804.7     $830.5   $(25.8)  (3.1)
          Used vehicle                       391.5      422.4    (30.9)  (7.3)
          Parts and service                1,027.2    1,021.0      6.2    0.6
          Finance and insurance              496.7      485.0     11.7    2.4
          Other                               75.0       70.0      5.0    7.1
                                           2,795.1    2,828.9    (33.8)  (1.2)

       S,G&A -- Store                      1,983.2    2,025.9     42.7    2.1

       Store performance                    $811.9     $803.0     $8.9    1.1



       Retail vehicle sales:
             New                           416,917    448,984  (32,067)  (7.1)
             Used                          241,453    255,329  (13,876)  (5.4)
                                           658,370    704,313  (45,943)  (6.5)

       Gross margin per vehicle
        retailed:
             New                            $1,930     $1,850      $80    4.3
             Used                           $1,621     $1,654     $(33)  (2.0)
             Finance and insurance            $754       $689      $65    9.4




              Operating Percentages         Three Months Ended    Year Ended
                                               December 31,      December 31,
                                           %  2002   %  2001   %  2002 %  2001

       Revenue mix percentages:
          New vehicle                          60.5      62.2     60.3   60.2
          Used vehicle                         19.1      18.6     19.4   19.4
          Parts and service                    13.1      11.4     12.6   12.0
          Finance and insurance                 2.6       2.4      2.6    2.5
          Other                                 4.7       5.4      5.1    5.9
                                              100.0     100.0    100.0  100.0


       Operating items as a percentage of
        revenue:
          Gross margin:
             New vehicle                        7.1       7.2      7.1    7.0
             Used vehicle                      10.2      10.5     10.7   11.0
             Parts and service                 43.4      43.3     43.4   43.2
             Finance and insurance            100.0     100.0    100.0  100.0
             Other                              7.0       5.1      7.8    6.0
               Total                           14.9      14.1     14.9   14.3
          S,G&A -- Store                       10.8      10.2     10.6   10.3
          Store performance                     4.1       3.9      4.3    4.1

       Other operating items as a
        percentage of total gross margin:
          S,G&A -- Store                       72.6      72.3     71.0   71.6
          Store performance                    27.4      27.7     29.0   28.4

SOURCE AutoNation, Inc.

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