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AutoNation Reports First-Quarter Net Income from Continuing Operations of $0.72 Per Share

Apr. 28, 2003
* Excluding Benefit from Recent IRS Settlement, Record First-Quarter EPS from Continuing Operations of $0.29 Compared to $0.28 for the Period a Year Ago * $0.29 Exceeds The Analysts' Consensus Estimate of $0.27 * Fifth Consecutive Quarter of Record EPS

FORT LAUDERDALE, Fla., Apr 28, 2003 /PRNewswire-FirstCall via COMTEX/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of both new and used vehicles, today reported first-quarter net income from continuing operations of $211.9 million, or $0.72 per share, on revenue of $4.5 billion for the period ending March 31, 2003. The Company offset lower revenue and gross profit with a benefit resulting from the previously announced settlement with the Internal Revenue Service, continued share repurchases and lower operating expenses. The results compare with 2002 first-quarter net income from continuing operations of $91.7 million, or $0.28 per share, on revenue of $4.8 billion.

The 2003 first quarter results include a benefit of $127.5 million, or $0.43 per share, resulting from the settlement with the IRS of the tax treatment of certain Company transactions in 1997 and 1999. As a result of the tax settlement, the Company expects to incur pre-tax interest expense of $20 million or $0.04 per share for the full year, of which $1.9 million was incurred in the first quarter. The impact of the tax settlement is included in net income from continuing operations for the period. Excluding only the $127.5 million benefit, net income from continuing operations would have been $84.4 million, or a record first-quarter earnings per share from continuing operations of $0.29 per share, which exceeds first-quarter earnings per share of $0.28 for the period a year ago.

Mike Jackson, Chairman and Chief Executive Officer of AutoNation, stated, "AutoNation's scale, coupled with the resiliency of our business model, allowed our Company to perform despite a challenging economy."

The Company's first-quarter net income was impacted by two non-operating events. First, a loss from discontinued operations of $12.3 million after- tax, or $0.04 per share, due to a previously announced agreement with ANC Rental Corporation and its unsecured creditors' committee. As a result of the agreement, AutoNation's remaining after-tax exposure to ANC could be up to $12.0 million. Second, a charge of $14.6 million after-tax, or $0.05 per share, for the cumulative effect from an accounting change adopted in accordance with rules recently issued by the Emerging Issues Task Force (EITF). The accounting change relates primarily to floorplan assistance and took effect January 1, 2003. Including these items, the Company's 2003 first- quarter net income was $185.0 million, or $0.63 per share.

Other highlights in the first quarter included:
* The repurchase of over five percent of the Company's outstanding shares, or 16.6 million shares, at a cost of $204.6 million.
* A five percent reduction in selling, general and administrative expenses that contributed to a 10-basis point improvement in operating margin to 3.8 percent.
* The acquisition of 12 new vehicle franchises representing collective annual revenue of approximately $270 million. The closed acquisitions include the previously announced Vista Automotive Group, with six franchises in Corpus Christi, Texas, and Jim McNatt Honda of Dallas, Texas. Also included is a Pontiac GMC dealership in Houston, Texas and a Pontiac Buick GMC dealership in Hawthorne, California.

Looking ahead, Jackson said, "We believe that the automotive retail environment will continue to be challenging. We will continue to focus on cost reductions, operational improvements and efficient allocation of our capital. After considering all of these factors, we are maintaining our outlook for full-year earnings per share from continuing operations excluding the impact of the tax settlement."

The Company's earnings outlook, excluding the impact of the tax settlement, remains unchanged. However, in order to reflect the expected ongoing interest expense associated with the tax settlement of $0.04 per share for 2003, the Company is updating its full-year earnings guidance. As a result, the Company's previously announced estimate for full-year 2003 earnings per share from continuing operations of $1.25 to $1.30 (which did not reflect the impact of the tax settlement) is being adjusted to $1.21 to $1.26 per share. For the 2003 second quarter, the Company anticipates earnings per share of $0.29 to $0.31. On a GAAP basis for the full-year, the Company anticipates earnings per share from continuing operations of $1.64 to $1.69, which includes the impact of the Company's tax settlement. The reconciliation of the Company's earnings estimate is set forth in the table below:

    Original full-year guidance                             $1.25 - $1.30
    Full-year impact of interest
     related to IRS settlement                                     ($0.04)

    Adjusted full-year guidance                             $1.21 - $1.26
    Income tax benefit from IRS settlement                          $0.43
    Expected 2003 full-year GAAP EPS from continuing
     operations                                             $1.64 - $1.69

AutoNation will discuss its 2003 first-quarter results, its outlook and supporting assumptions later this morning during a 10 a.m., Eastern Time, conference call. To listen live to the conference call, dial 800-230-1766 or listen via the audio webcast offered at http://corp.AutoNation.com by clicking on its webcast link. A replay of the conference call will be available after 4:30 p.m., Eastern Time, through May 5, 2003. Replays can be accessed by calling 800-475-6701 (access code 681672) 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 No. 93 on the 2003 Fortune 500 and a component of the Standard and Poor's 500 Index, AutoNation employs approximately 28,500 people and owns and operates 373 new vehicle franchises in 17 states. For additional information, please visit http://corp.AutoNation.com or 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. This release contains certain non-GAAP financial measures as defined under SEC rules, including net income from continuing operations excluding the first-quarter tax benefit. The Company believes such non-GAAP financial measures improve the transparency of the Company's disclosure, provide a meaningful presentation of the Company's results from its core business operations excluding the impact of items not related to the Company's ongoing core business operations, and improve the period-to-period comparability of the Company's results from its core business operations. As required by SEC rules, the Company has provided reconciliations of those measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release.

                                AUTONATION, INC.
                     UNAUDITED CONSOLIDATED INCOME STATEMENTS
                       ($ in millions, except per share data)



                                                  Three Months Ended March 31,
                                                     2003               2002

         Revenue:
            New vehicle                           $2,609.5           $2,813.1
            Used vehicle                             906.7              947.0
            Parts and service                        599.4              611.9
            Finance and insurance                    122.2              121.1
            Other                                    221.5              257.6
         Total revenue                             4,459.3            4,750.7

         Cost of operations:
            New vehicle                            2,412.5            2,591.2
            Used vehicle                             803.1              838.5
            Parts and service                        338.7              347.1
            Other                                    196.9              234.0
         Total cost of operations                  3,751.2            4,010.8

         Gross profit                                708.1              739.9

         Selling, general and
          administrative expenses                    523.0              548.1
         Depreciation                                 16.9               15.7
         Amortization                                  0.6                0.6
         Loan and lease underwriting
          income, net                                 (2.9)              (0.2)
         Other losses                                  0.3                0.4

         Operating income                            170.2              175.3

         Floorplan interest expense                  (19.5)             (18.2)
         Interest expense - IRS
          settlement                                  (1.9)                --
         Other interest expense                      (13.7)             (11.7)
         Interest income                               1.1                3.3
         Other income (expense)                        1.1               (0.2)

         Income from continuing
          operations before income taxes             137.3              148.5

         Provision for income taxes                   52.9               56.8
         Income tax benefit from IRS
          settlement                                (127.5)                --

         Net income from continuing
          operations                                 211.9               91.7

         Loss from discontinued
          operations, net of income
          taxes                                      (12.3)                --

         Net income before cumulative
          effect of accounting change                199.6               91.7

         Cumulative effect of accounting
          change, net of income taxes                (14.6)                --

         Net income                                 $185.0              $91.7


         Diluted earnings per share:
            Continuing operations                    $0.72              $0.28
            Discontinued operations                  (0.04)                --
            Cumulative effect of
             accounting change                       (0.05)                --
            Net income                               $0.63              $0.28

         Weighted average common and
          common equivalent shares
          outstanding                                294.2              325.9

         Common shares outstanding                   282.5              320.8




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




                Operating Highlights          Three Months Ended March 31,

                                             2003     2002 $Variance %Variance


          Revenue:
            New vehicle                  $2,609.5  $2,813.1  $(203.6)  (7.2)
            Used vehicle                    906.7     947.0    (40.3)  (4.3)
            Parts and service               599.4     611.9    (12.5)  (2.0)
            Finance and insurance           122.2     121.1      1.1    0.9
            Other                           221.5     257.6    (36.1) (14.0)
                                         $4,459.3  $4,750.7  $(291.4)  (6.1)


          Gross profit:
            New vehicle                    $197.0    $221.9   $(24.9) (11.2)
            Used vehicle                    103.6     108.5     (4.9)  (4.5)
            Parts and service               260.7     264.8     (4.1)  (1.5)
            Finance and insurance           122.2     121.1      1.1    0.9
            Other                            24.6      23.6      1.0    4.2
                                            708.1     739.9    (31.8)  (4.3)

          Selling, general and
           administrative expenses          523.0     548.1     25.1    4.6

          Depreciation                       16.9      15.7     (1.2)
          Amortization                        0.6       0.6       --
          Loan and lease underwriting
           income, net                       (2.9)     (0.2)     2.7
          Other losses                        0.3       0.4      0.1
           Operating income                 170.2     175.3     (5.1)  (2.9)

          Floorplan interest expense        (19.5)    (18.2)    (1.3)  (7.1)
          Interest expense - IRS
           settlement                        (1.9)       --     (1.9)
          Other interest expense            (13.7)    (11.7)    (2.0) (17.1)
          Interest income                     1.1       3.3     (2.2) (66.7)
          Other income (expense)              1.1      (0.2)     1.3
            Income from continuing
             operations before income
             taxes                         $137.3    $148.5   $(11.2)  (7.5)

          Retail vehicle sales:
               New                         93,782   103,807  (10,025)  (9.7)
               Used                        59,716    62,825   (3,109)  (4.9)
                                          153,498   166,632  (13,134)  (7.9)

          Gross profit per vehicle
           retailed:
               New                         $2,101    $2,138     $(37)  (1.7)
               Used                        $1,735    $1,727       $8    0.5
               Finance and insurance         $796      $727      $69    9.5





               Operating Percentages    Three Months Ended March 31,
                                              % 2003     % 2002

          Revenue mix percentages:
            New vehicle                         58.5       59.2
            Used vehicle                        20.3       19.9
            Parts and service                   13.4       12.9
            Finance and insurance                2.7        2.6
            Other                                5.1        5.4
                                               100.0      100.0


          Operating items as a percentage
           of revenue:
            Gross profit:
               New vehicle                       7.5        7.9
               Used vehicle                     11.4       11.5
               Parts and service                43.5       43.3
               Finance and insurance           100.0      100.0
               Other                            11.1        9.2
                 Total                          15.9       15.6
            Selling, general and
             administrative expenses            11.7       11.5
            Operating income                     3.8        3.7

          Operating items as a percentage
           of total gross profit:
            Selling, general and
             administrative expenses            73.9       74.1
            Operating income                    24.0       23.7






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

                                   Three Months Ended
         Cash Flow Information          March 31,
                                    2003         2002


         Capital expenditures,
          excluding property
          operating lease
          buy-outs                 $23.9        $28.7
         Property operating
          lease buy-outs            $8.8          $--
         Stock repurchases        $204.6        $35.9
         Acquisitions              $45.1       $127.7
         Proceeds from exercises
          of stock options         $12.9        $20.2

          Floorplan Assistance     Three Months Ended March 31,
              and Expense           2003         2002  Variance

         Floorplan assistance
          (included in cost of
          operations)              $28.4        $29.4  $(1.0)
         Floorplan interest
          expense                  (19.5)       (18.2)  (1.3)

          Net inventory
           carrying benefit (cost)  $8.9        $11.2  $(2.3)


         Balance Sheet and
          Other Highlights

                             March 31, 2003  December 31, 2002  March 31,2002

         Cash and cash
          equivalents              $185.7        $176.2            $105.5
         Inventory               $2,803.5      $2,598.4          $2,363.1
         Floorplan notes
          payable                $2,563.2      $2,302.5          $2,031.0
         Non-vehicle debt          $712.0        $651.3            $653.5
         Equity                  $3,901.4      $3,910.2          $3,903.0
         Days supply
         (trailing 30 days):
                New               79 days       79 days           58 days
                Used              33 days       40 days           37 days



         Comparable Basis              Net Income           Diluted Earnings
          Reconciliation                                        Per Share
                                    Three Months Ended     Three Months Ended
                                         March 31,               March 31,
                                     2003          2002      2003       2002

         Net income, as reported   $185.0         $91.7     $0.63      $0.28

          Discontinued operations    12.3            --      0.04         --
          Cumulative effect of
           accounting change         14.6            --      0.05         --
         Net income from continuing
          operations, as reported   211.9          91.7      0.72       0.28
          Income tax benefit
           from IRS settlement     (127.5)           --     (0.43)        --
         Net income, excluding
          income tax benefit
          from IRS Settlement       $84.4         $91.7     $0.29      $0.28


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

              Operating Highlights            Three Months Ended March 31,
                                         2003     2002   $Variance %Variance
            Revenue:
              New vehicle            $2,547.0  $2,792.7   $(245.7)     (8.8)
              Used vehicle              884.6     937.4     (52.8)     (5.6)
              Parts and service         583.0     602.9     (19.9)     (3.3)
              Finance and insurance     119.5     119.8      (0.3)     (0.3)
              Other                     208.5     249.7     (41.2)    (16.5)
                                     $4,342.6  $4,702.5   $(359.9)     (7.7)

            Gross profit:
              New vehicle              $192.3    $220.4    $(28.1)    (12.7)
              Used vehicle              101.5     107.7      (6.2)     (5.8)
              Parts and service         253.0     260.8      (7.8)     (3.0)
              Finance and insurance     119.5     119.8      (0.3)     (0.3)
              Other                      19.9      20.9      (1.0)     (4.8)
                                       $686.2    $729.6    $(43.4)     (5.9)

            Store selling, general
             and administrative
             expenses                  $471.5    $503.9     $32.4       6.4

            Retail vehicle sales:
                 New                   91,957   102,998   (11,041)    (10.7)
                 Used                  58,511    62,031    (3,520)     (5.7)
                                      150,468   165,029   (14,561)     (8.8)

            Gross profit per vehicle
             retailed:
                 New                   $2,091    $2,140      $(49)     (2.3)
                 Used                  $1,735    $1,736       $(1)     (0.1)
                 Finance and insurance   $794      $726       $68       9.4


           Operating Percentages    Three Months Ended March 31,
                                       % 2003    % 2002

            Revenue mix percentages:
              New vehicle                58.7      59.4
              Used vehicle               20.4      19.9
              Parts and service          13.4      12.8
              Finance and insurance       2.8       2.5
              Other                       4.7       5.4
                                        100.0     100.0

            Operating items as a
             percentage of revenue:
              Gross Profit:
                 New vehicle              7.6       7.9
                 Used vehicle            11.5      11.5
                 Parts and service       43.4      43.3
                 Finance and insurance  100.0     100.0
                 Other                    9.5       8.4
                   Total                 15.8      15.5
              Store selling, general
               and administrative
               expenses                  10.9      10.7

            Operating items as a
             percentage of total gross
             profit:
              Store selling, general
               and administrative
               expenses                  68.7      69.1

SOURCE AutoNation, Inc.

Marc Cannon, AutoNation, Inc., +1-954-769-3146, or cannonm@AutoNation.com
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http://corp.autonation.com

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