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AutoNation Reports Record Second-Quarter EPS of $0.37, Exceeding Year-Ago Results by 16%

Jul. 24, 2003

* Higher revenue and net income
* Continued SG&A expense reduction
* Sixth consecutive record quarter of EPS from continuing operations
* Company raises full-year EPS outlook

FORT LAUDERDALE, Fla., July 24 /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 $0.37, 16% above a year- earlier $0.32 per share, driven by initiatives aimed at maximizing operating efficiencies that allowed the Company to further leverage its cost structure and the continued repurchase of outstanding shares. The Company reported operating income of $207 million and net income of $106 million, increases of 5% and 2%, respectively.

Total revenue for the second-quarter ended June 30, 2003 increased to $5.1 billion compared to $5.0 billion a year ago driven by revenue growth of 4% for new vehicles and 6% for finance and insurance. Selling, general and administrative expense (SG&A) was $549 million or 71.1% as a percentage of total gross profit, a 110 basis point improvement compared to a year ago.

Commenting on the second-quarter performance, AutoNation Chairman and Chief Executive Officer Mike Jackson said, "AutoNation delivered another record quarter of earnings per share coupled with increases in revenue and net income, demonstrating the strength of our operation and the commitment of our team. We benefited from the continued success of our cost containment initiatives and operational improvements, particularly in the area of new and used vehicles and finance and insurance, allowing us to expand our operating margin."

Other highlights in the second quarter include:
* The repurchase of 10.4 million of the Company's outstanding shares at a cost of $149 million.
* Record finance and insurance gross profit per vehicle retailed of $804.
* The successful launch of two market brands, Power in Southern California and Champion in Houston, Austin and Corpus Christi; bringing the Company's number of branded markets to 13.
* The appointment of two new board members: Alan S. Dawes, vice chairman and chief financial officer of Delphi Corporation, a leading automotive electronics and components supplier; and Frederick J. Schwab, former president and chief executive officer of Porsche Cars North America, Inc., the North American operating unit of Porsche AG.

For the six-month period ended June 30, 2003, the Company earned net income from continuing operations of $318 million or $1.10 per share. Excluding the benefit of the first quarter 2003 IRS tax settlement, earnings per share from continuing operations was $0.66, a 10% increase versus the prior year. The Company's revenue for the six-month period totaled $9.5 billion, down 2% versus the prior year.

AutoNation also announced that it will now report new vehicle days supply utilizing the industry standard of selling days inclusive of fleet. Prior to this change, the Company reported new vehicle days supply using calendar days excluding fleet, which at the end of the second quarter stood at 72 days. Using the industry metric, the Company's new vehicle inventory at the end of the second quarter was 65 days, compared to the industry at 63 days.

Looking ahead, Mr. Jackson said, "While we are hopeful that efforts to stimulate the economy will take hold, we believe that the auto retail environment will remain challenging for the remainder of the year. Based on our performance this quarter, we are raising our full-year 2003 outlook for earnings per share from continuing operations by $0.07 to the range of $1.28 to $1.33, excluding the benefit of the first quarter tax settlement, and offer third-quarter earnings per share guidance of $0.34 to $0.36."

The Company's earnings outlook for the full year on a GAAP basis is $1.72 to $1.77 per share from continuing operations. The reconciliation of the Company's earnings estimate is set forth in the table below:


    Revised full-year guidance            $1.28 - $1.33
    Q1 2003 income tax benefit from
     IRS settlement                               $0.44
    Expected 2003 full-year GAAP EPS
     from continuing operations           $1.72 - $1.77 

AutoNation will discuss these results, the Company's outlook and supporting assumptions during a conference call and audio webcast this morning at 10:00 a.m. Eastern Time. To listen to the live conference call, dial (800) 288-8968 or listen to the audio webcast via the Internet at www.AutoNation.com by clicking on the "About Us" link, then clicking on "Investors" and then "Webcasts." A playback of the conference call will be available after 1:30 p.m. Eastern Time, through July 31, 2003 by calling (800) 475-6701 (access code #691101) or via the Internet as outlined above.

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 370 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   Six Months Ended
                                            June 30,            June 30,
                                          2003      2002      2003      2002

    Revenue:
       New vehicle                     $3,091.4  $2,980.2  $5,700.9  $5,793.3
       Used vehicle                       988.1     998.7   1,894.8   1,945.7
       Parts and service                  621.3     622.6   1,220.7   1,234.5
       Finance and insurance              141.1     133.4     263.3     254.5
       Other                              226.7     280.7     448.2     538.3
    Total revenue                       5,068.6   5,015.6   9,527.9   9,766.3

    Cost of sales:
       New vehicle                      2,867.9   2,744.5   5,280.4   5,335.7
       Used vehicle                       879.2     893.5   1,682.3   1,732.0
       Parts and service                  349.7     349.9     688.4     697.0
       Other                              199.7     258.6     396.6     492.6
    Total cost of sales                 4,296.5   4,246.5   8,047.7   8,257.3

    Gross profit                          772.1     769.1   1,480.2   1,509.0

    Selling, general and
     administrative expenses              548.9     555.6   1,071.9   1,103.7
    Depreciation                           16.9      16.9      33.8      32.6
    Amortization                            0.4       0.8       1.0       1.4
    Loan and lease underwriting
     income, net                           (3.1)     (2.7)     (6.0)     (2.9)
    Other losses                            2.1       1.9       2.4       2.3

    Operating income                      206.9     196.6     377.1     371.9

    Floorplan interest expense            (19.5)    (18.5)    (39.0)    (36.7)
    Interest expense - IRS settlement      (5.9)       --      (7.8)       --
    Other interest expense                (14.7)    (12.1)    (28.4)    (23.8)
    Interest income                         0.9       2.8       2.0       6.1
    Other income (expense)                  5.2      (0.7)      6.3      (0.9)

    Income from continuing operations
     before income taxes                  172.9     168.1     310.2     316.6

    Provision for income taxes             66.6      64.3     119.5     121.1
    Income tax benefit from IRS
     settlement                              --        --    (127.5)       --

    Net tax provision (benefit) -
     continuing operations                 66.6      64.3      (8.0)    121.1

    Net income from continuing
     operations                           106.3     103.8     318.2     195.5

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

    Net income before cumulative
     effect of accounting change          106.3     103.8     305.9     195.5

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

    Net income                           $106.3    $103.8    $291.3    $195.5

    Diluted earnings per share:
       Continuing operations              $0.37     $0.32     $1.10     $0.60
       Discontinued operations               --        --     (0.04)       --
       Cumulative effect of accounting
        change                               --        --     (0.05)       --
       Net income                         $0.37     $0.32     $1.01     $0.60

    Weighted average common and common
      equivalent shares outstanding       285.2     328.8     289.6     327.4

    Common shares outstanding             274.6     318.5     274.6     318.5


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

          Operating Highlights              Three Months Ended June 30,
                                      2003     2002     $ Variance  % Variance

    Revenue:
      New vehicle                  $3,091.4  $2,980.2      $111.2       3.7
      Used vehicle                    988.1     998.7       (10.6)     (1.1)
      Parts and service               621.3     622.6        (1.3)     (0.2)
      Finance and insurance           141.1     133.4         7.7       5.8
      Other                           226.7     280.7       (54.0)    (19.2)
                                   $5,068.6  $5,015.6       $53.0       1.1

    Gross profit:
      New vehicle                    $223.5    $235.7      $(12.2)     (5.2)
      Used vehicle                    108.9     105.2         3.7       3.5
      Parts and service               271.6     272.7        (1.1)     (0.4)
      Finance and insurance           141.1     133.4         7.7       5.8
      Other                            27.0      22.1         4.9      22.2
                                      772.1     769.1         3.0       0.4

    Selling, general and
     administrative expenses          548.9     555.6         6.7       1.2

    Depreciation                       16.9      16.9          --
    Amortization                        0.4       0.8         0.4
    Loan and lease underwriting
     income, net                       (3.1)     (2.7)        0.4
    Other losses                        2.1       1.9        (0.2)
    Operating income                  206.9     196.6        10.3       5.2
    Floorplan interest expense        (19.5)    (18.5)       (1.0)     (5.4)
    Interest expense - IRS
     settlement                        (5.9)       --        (5.9)
    Other interest expense            (14.7)    (12.1)       (2.6)    (21.5)
    Interest income                     0.9       2.8        (1.9)    (67.9)
    Other income (expense)              5.2      (0.7)        5.9
     Income from continuing
      operations before
      income taxes                   $172.9    $168.1        $4.8       2.9

    Retail vehicle sales:
       New                          109,684   110,138        (454)     (0.4)
       Used                          65,857    64,745       1,112       1.7
                                    175,541   174,883         658       0.4

    Revenue per vehicle retailed:
       New                          $28,185   $27,059      $1,126       4.2
       Used                         $15,004   $15,425       $(421)     (2.7)

    Gross profit per vehicle
     retailed:
       New                           $2,038    $2,140       $(102)     (4.8)
       Used                          $1,654    $1,625         $29       1.8
       Finance and insurance           $804      $763         $41       5.4


         Operating Highlights              Six Months Ended June 30,
                                      2003     2002    $ Variance   % Variance
    Revenue:
      New vehicle                 $5,700.9  $5,793.3       $(92.4)       (1.6)
      Used vehicle                 1,894.8   1,945.7        (50.9)       (2.6)
      Parts and service            1,220.7   1,234.5        (13.8)       (1.1)
      Finance and insurance          263.3     254.5          8.8         3.5
      Other                          448.2     538.3        (90.1)      (16.7)
                                  $9,527.9  $9,766.3      $(238.4)       (2.4)

    Gross profit:
      New vehicle                   $420.5    $457.6       $(37.1)       (8.1)
      Used vehicle                   212.5     213.7         (1.2)       (0.6)
      Parts and service              532.3     537.5         (5.2)       (1.0)
      Finance and insurance          263.3     254.5          8.8         3.5
      Other                           51.6      45.7          5.9        12.9
                                   1,480.2   1,509.0        (28.8)       (1.9)

    Selling, general and
     administrative expenses       1,071.9   1,103.7         31.8         2.9

    Depreciation                      33.8      32.6         (1.2)
    Amortization                       1.0       1.4          0.4
    Loan and lease underwriting
     income, net                      (6.0)     (2.9)         3.1
    Other losses                       2.4       2.3         (0.1)
    Operating income                 377.1     371.9          5.2         1.4
    Floorplan interest expense       (39.0)    (36.7)        (2.3)        6.3
    Interest expense - IRS
     settlement                       (7.8)       --         (7.8)
    Other interest expense           (28.4)    (23.8)        (4.6)       19.3
    Interest income                    2.0       6.1         (4.1)      (67.2)
    Other income (expense)             6.3      (0.9)         7.2
    Income from continuing
      operations before
      income taxes                  $310.2    $316.6        $(6.4)       (2.0)

    Retail vehicle sales:
       New                         203,466   213,945      (10,479)       (4.9)
       Used                        125,573   127,570       (1,997)       (1.6)
                                   329,039   341,515      (12,476)       (3.7)

    Revenue per vehicle retailed:
       New                         $28,019   $27,078         $940         3.5
       Used                        $15,089   $15,252        $(163)       (1.1)

    Gross profit per vehicle
     retailed:
       New                          $2,067    $2,139         $(72)       (3.4)
       Used                         $1,692    $1,675          $17         1.0
       Finance and insurance          $800      $745          $55         7.4


             Operating Percentages       Three Months Ended   Six Months Ended
                                                June 30,           June 30,
                                           % 2003    % 2002    % 2003  % 2002

    Revenue mix percentages:
      New vehicle                           61.0      59.4       59.8    59.3
      Used vehicle                          19.5      19.9       19.9    19.9
      Parts and service                     12.3      12.4       12.8    12.6
      Finance and insurance                  2.8       2.7        2.8     2.6
      Other                                  4.4       5.6        4.7     5.6
                                           100.0     100.0      100.0   100.0

    Operating items as a percentage
     of revenue:
      Gross profit:
       New vehicle                           7.2       7.9        7.4     7.9
       Used vehicle                         11.0      10.5       11.2    11.0
       Parts and service                    43.7      43.8       43.6    43.5
       Finance and insurance               100.0     100.0      100.0   100.0
       Other                                11.9       7.9       11.5     8.5
         Total                              15.2      15.3       15.5    15.5
    Selling, general and administrative
     expenses                               10.8      11.1       11.3    11.3
    Operating income                         4.1       3.9        4.0     3.8

    Operating items as a percentage
     of total gross profit:
     Selling, general and administrative
      expenses                              71.1      72.2       72.4    73.1
     Operating income                       26.8      25.6       25.5    24.6


                               AUTONATION, INC.
                   UNAUDITED SUPPLEMENTARY DATA, Continued
                    ($ in millions, except per share data)

    Cash Flow Information
                          Three Months Ended      Six Months Ended
                              June 30,                June 30,
                          2003      2002            2003      2002

    Capital expenditures,
     excluding property
     operating lease
     buy-outs            $25.4      $31.3          $49.3     $60.0
    Property operating
     lease buy-outs       $1.0        $--           $9.8      $5.4
    Stock repurchases   $148.8     $115.2         $353.4    $151.1
    Acquisitions           $--       $3.9          $45.1    $131.6
    Proceeds from
     exercises of stock
     options             $25.8      $54.5          $38.7     $74.7


    Floorplan Assistance
     and Expense
                       Three Months Ended           Six Months Ended
                            June 30,                    June 30,
                        2003       2002   Variance  2003      2002  Variance

    Floorplan assistance
     (included in cost
     of operations)    $30.6      $33.5   $(2.9)   $59.0     $63.0    $(4.0)
    Floorplan interest
     expense           (19.5)     (18.5)   (1.0)   (39.0)    (36.7)    (2.3)

    Net inventory
     carrying benefit
     (cost)            $11.1      $15.0   $(3.9)   $20.0     $26.3    $(6.3)


        Balance Sheet and Other Highlights

                                    June 30,      December 31,    June 30,
                                      2003            2002          2002

    Cash and cash equivalents        $235.4          $176.2        $100.2
    Inventory                      $2,809.3        $2,598.4      $2,507.3
    Floorplan notes payable        $2,603.2        $2,302.5      $2,142.3
    Non-vehicle debt                 $740.9          $651.3        $649.4
    Equity                         $3,885.5        $3,910.2      $3,958.9
    Days supply (industry
     standard of selling,
     days, including fleet):
        New                         65 days         63 days       56 days
    Days supply (trailing 30 days):
        New                         72 days         79 days       66 days
        Used                        34 days         40 days       38 days


    Comparable Basis Reconciliation

                                 Net Income       Diluted Earnings Per Share
                              Six Months Ended        Six Months Ended
                                  June 30,                   June 30,
                              2003         2002          2003          2002
    Net income, as
     reported               $291.3        $195.5        $1.01         $0.60

     Discontinued operations  12.3            --         0.04            --
     Cumulative effect of
      accounting change       14.6            --         0.05            --
    Net income from
     continuing operations,
     as reported             318.2         195.5         1.10          0.60
      Income tax benefit
       from IRS settlement  (127.5)           --        (0.44)           --
    Net income, excluding
     income tax benefit
     from IRS Settlement    $190.7        $195.5       $ 0.66         $0.60


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

                                              Three Months Ended June 30,
         Operating Highlights              2003    2002  $ Variance % Variance

    Revenue:
       New vehicle                       $3,038.1  $2,958.4   $79.7     2.7
       Used vehicle                         973.5     985.7   (12.2)   (1.2)
       Parts and service                    612.7     614.4    (1.7)   (0.3)
       Finance and insurance                138.7     131.8     6.9     5.2
       Other                                203.0     273.1   (70.1)  (25.7)
                                         $4,966.0  $4,963.4    $2.6     0.1
    Gross profit:
       New vehicle                         $220.4    $234.0  $(13.6)   (5.8)
       Used vehicle                         107.7     104.0     3.7     3.6
       Parts and service                    267.7     269.0    (1.3)   (0.5)
       Finance and insurance                138.7     131.8     6.9     5.2
       Other                                 22.2      19.4     2.8    14.4
                                           $756.7    $758.2   $(1.5)   (0.2)
    Store selling, general and
     administrative expenses,
     excluding depreciation and
     amortization                          $506.3    $510.3    $4.0     0.8


    Retail vehicle sales:
       New                                107,796   109,238  (1,442)   (1.3)
       Used                                64,737    63,702   1,035     1.6
                                          172,533   172,940    (407)   (0.2)

    Revenue per vehicle retailed:
       New                                $28,184   $27,082  $1,102     4.1
       Used                               $15,038   $15,474   $(436)   (2.8)

    Gross profit per vehicle retailed:
       New                                 $2,045    $2,142    $(97)   (4.5)
       Used                                $1,664    $1,633     $31     1.9
       Finance and insurance                 $804      $762     $42     5.5


                                            Six Months Ended June 30,
                                       2003      2002   $ Variance  % Variance
    Revenue:
       New vehicle                   $5,585.6  $5,749.7     $(164.1)    (2.9)
       Used vehicle                   1,858.7   1,922.5       (63.8)    (3.3)
       Parts and service              1,195.9   1,216.8       (20.9)    (1.7)
       Finance and insurance            258.3     251.4         6.9      2.7
       Other                            411.6     522.8      (111.2)   (21.3)
                                     $9,310.1  $9,663.2     $(353.1)    (3.7)

    Gross profit:
       New vehicle                     $412.9    $454.2      $(41.3)    (9.1)
       Used vehicle                     209.3     211.6        (2.3)    (1.1)
       Parts and service                520.8     529.6        (8.8)    (1.7)
       Finance and insurance            258.3     251.4         6.9      2.7
       Other                             42.0      40.5         1.5      3.7
                                     $1,443.3  $1,487.3      $(44.0)    (3.0)

    Store selling, general and
     administrative expenses,
     excluding depreciation and
     amortization                      $977.9  $1,013.7       $35.8      3.5


    Retail vehicle sales:
       New                            199,780   212,181     (12,401)    (5.8)
       Used                           123,293   125,683      (2,390)    (1.9)
                                      323,073   337,864     (14,791)    (4.4)

    Revenue per vehicle retailed:
       New                            $27,959   $27,098        $861      3.2
       Used                           $15,075   $15,296       $(221)    (1.4)

    Gross profit per vehicle retailed:
       New                             $2,067    $2,141        $(74)    (3.5)
       Used                            $1,698    $1,684         $14      0.8
       Finance and insurance             $800      $744         $56      7.5

                                    Three Months Ended    Six Months Ended
       Operating Percentages              June 30,             June 30,
                                      % 2003      % 2002    % 2003   % 2002
    Revenue mix percentages:
       New vehicle                      61.2       59.6     60.0      59.5
       Used vehicle                     19.6       19.9     20.0      19.9
       Parts and service                12.3       12.4     12.8      12.6
       Finance and insurance             2.8        2.7      2.8       2.6
       Other                             4.1        5.4      4.4       5.4
                                       100.0      100.0    100.0     100.0

    Operating items as a percentage of
     revenue:
      Gross Profit:
       New vehicle                       7.3        7.9      7.4       7.9
       Used vehicle                     11.1       10.6     11.3      11.0
       Parts and service                43.7       43.8     43.5      43.5
       Finance and insurance           100.0      100.0    100.0     100.0
       Other                            10.9        7.1     10.2       7.7
        Total                           15.2       15.3     15.5      15.4
      Store selling, general and
       administrative expenses,
       excluding depreciation
       and amortization                 10.2       10.3     10.5      10.5

    Operating items as a percentage of
     total gross profit:
       Store selling, general and
        administrative expenses,
        excluding depreciation and
        amortization                    66.9       67.3     67.8      68.2

SOURCE AutoNation, Inc.
-0- 07/24/2003
CONTACT: Marc Cannon of AutoNation, Inc., +1-954-769-3146, or cannonm@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/
Web site: http://corp.autonation.com /
(AN)

CO: AutoNation, Inc.
ST: Florida
IN: AUT REA
SU: ERN CCA

BK-KH
-- FLTH002 --
6062 07/24/2003 06:30 EDT http://www.prnewswire.com

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