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AutoNation Reports Record Third Quarter EPS Of $0.38, Exceeding Year-Ago Results By 15%

Oct. 30, 2003
* Third Quarter Revenue $5.3 Billion, Up 1.2% Driven By Higher New Vehicle, Parts, Service, Finance And Insurance Sales
* 110 Bp Reduction In SG&A As A Percent Of Gross Profit
* Seventh Consecutive Record Quarter Of EPS From Continuing Operations

FORT LAUDERDALE, Fla., Oct 30, 2003 /PRNewswire-FirstCall via Comtex/ -- AutoNation, Inc. (NYSE: AN), America's largest retailer of both new and used vehicles, today reported record third quarter earnings per share of $0.38, 15% above a year- earlier $0.33 per share, driven by the continued repurchase of outstanding shares and initiatives aimed at maximizing operating efficiencies that allowed the Company to further leverage its cost structure. The Company reported net income of $109 million, an increase of 2% over a year ago.

Total revenue for the third quarter ended September 30, 2003 increased to $5.3 billion compared to $5.2 billion a year ago, driven by revenue growth of 3% for new vehicles, 2% for parts and service, and 7% for finance and insurance. Third quarter vehicle sales were positively impacted due to the accelerated demand in California in anticipation of a substantial increase in the California vehicle license fee on October 1. Selling, general and administrative expense (SG&A) was $566 million or 71.6% of total gross profit, a 110 basis point improvement compared to a year ago. Operating income was $206 million, an increase of 3.5% over a year ago, and as a percent of gross profit improved 60 basis points to 26.1%.

Commenting on the third quarter results AutoNation Chairman and Chief Executive Officer Mike Jackson said, "Once again, AutoNation delivered solid performance in the quarter as we continued our operational improvements and cost containment. We were pleased to achieve a record for F&I profit per vehicle retailed, gains in our parts and service business and a positive trend in our used vehicle business. Our strategy remains the same. We will continue to focus on the fundamentals, leveraging our cost structure and allocating our capital appropriately among stock repurchase, acquisitions and capital investments."

For the nine-month period ended September 30, 2003, the Company reported net income from continuing operations of $427 million or $1.48 per share. Excluding the $0.44 per share benefit of the first quarter 2003 IRS tax settlement, earnings per share from continuing operations was $1.04, a 12% increase versus the prior year. The Company's revenue for the nine-month period totaled $14.8 billion, down 1% versus the prior year.

Looking ahead, Mr. Jackson said, "Auto manufacturers have effectively kept consumers in the marketplace with innovative product and strong incentives. AutoNation's fourth quarter earnings per share guidance is $0.27 to $0.29 from our core business. We are maintaining full year earnings per share guidance at $1.31 to $1.33, the upper end of our previous range. This excludes the benefits of the Company's first quarter tax settlement and fourth quarter items related to favorable state income tax settlements and the gain on the sale of a non-core equity investment."

The Company's earnings outlook on a GAAP basis for the fourth quarter is $0.32 to $0.34 per share and for the full year 2003 is $1.80 to $1.82 per share from continuing operations. The reconciliation of the Company's earnings estimate is set forth in the table below:

                                                     Q4 2003    Full Year 2003

    2003 Q4 and full-year guidance             $0.27 - $0.29     $1.31 - $1.33
    Q1 2003 income tax benefit from IRS
     settlement                                           --              0.44
    Q4 2003 benefits from state income
     tax settlements and gain on sale
     of non-core equity investment                      0.05              0.05
    Expected 2003 Q4 and full-year GAAP
     EPS from continuing operations            $0.32 - $0.34     $1.80 - $1.82

Commenting on the Company's outlook for 2004, Mr. Jackson said, "We anticipate that the 2004 new vehicle market will remain intensely competitive in a stable volume environment. Our full year 2004 EPS outlook is $1.40 - $1.45."

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 (888) 428-4480 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 November 7, 2003 by calling (800) 475-6701 (access code #701295) 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 and certain fourth quarter items. 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  Nine Months Ended
                                         September 30,       September 30,
                                         2003      2002      2003      2002

        Revenue:
           New vehicle                 $3,266.2  $3,174.6  $8,967.1  $8,967.9
           Used vehicle                   964.9     980.2   2,859.7   2,925.9
           Parts and service              637.0     626.5   1,857.7   1,861.0
           Finance and insurance          148.2     138.9     411.5     393.4
           Other                          241.1     273.5     689.3     811.8
        Total revenue                   5,257.4   5,193.7  14,785.3  14,960.0

        Cost of sales:
           New vehicle                  3,035.6   2,937.4   8,316.0   8,273.1
           Used vehicle                   860.0     878.3   2,542.3   2,610.3
           Parts and service              358.8     353.3   1,047.2   1,050.3
           Other                          213.5     242.0     610.1     734.6
        Total cost of sales             4,467.9   4,411.0  12,515.6  12,668.3

        Gross profit                      789.5     782.7   2,269.7   2,291.7

        Selling, general and
         administrative expenses          565.5     568.7   1,637.4   1,672.4
        Depreciation                       17.6      18.0      51.4      50.6
        Amortization                        0.3       0.5       1.3       1.9
        Loan and lease underwriting
         income, net                      (0.1)     (6.0)     (6.1)     (8.9)
        Other (gains) losses              (0.1)       2.2       2.3       4.5

        Operating income                  206.3     199.3     583.4     571.2

        Floorplan interest expense       (15.5)    (18.6)    (54.5)    (55.3)
        Interest expense - IRS
         settlement                       (3.1)       --     (10.9)        --
        Other interest expense           (15.4)    (13.0)    (43.8)    (36.7)
        Interest income                     0.8       2.6       2.8       8.6
        Other income (expense)            (1.4)      2.5       4.9       1.6

        Income from continuing
         operations before income
         taxes                            171.7     172.8     481.9     489.4

        Provision for income taxes         62.9      66.1     182.4     187.2
        Income tax benefit from IRS
         settlement                          --        --   (127.5)        --

        Net tax provision - continuing
         operations                        62.9      66.1      54.9     187.2

        Net income from continuing
         operations                       108.8     106.7     427.0     302.2

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

        Net income before cumulative
         effect of accounting change      108.8     106.7     414.7     302.2

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

        Net income                       $108.8    $106.7    $400.1    $302.2


        Diluted earnings per share:
           Continuing operations          $0.38     $0.33     $1.48     $0.93
           Discontinued operations           --        --   $(0.04)        --
           Cumulative effect of
            accounting change                --        --   $(0.05)        --
           Net income                     $0.38     $0.33     $1.39     $0.93

        Weighted average common and
         common
             equivalent shares
              outstanding                 286.6     321.9     288.6     325.5

        Common shares outstanding         274.6     314.6     274.6     314.6



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



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


    Revenue:
      New vehicle         $3,266.2      $3,174.6        $91.6           2.9
      Used vehicle           964.9         980.2       (15.3)         (1.6)
      Parts and service      637.0         626.5         10.5           1.7
      Finance and
       insurance             148.2         138.9          9.3           6.7
      Other                  241.1         273.5       (32.4)        (11.8)
                          $5,257.4      $5,193.7        $63.7           1.2


    Gross profit:
      New vehicle           $230.6        $237.2       $(6.6)         (2.8)
      Used vehicle           104.9         101.9          3.0           2.9
      Parts and service      278.2         273.2          5.0           1.8
      Finance and
       insurance             148.2         138.9          9.3           6.7
      Other                   27.6          31.5        (3.9)        (12.4)
                             789.5         782.7          6.8           0.9

    Selling, general and
     administrative
     expenses                565.5         568.7          3.2           0.6


    Depreciation              17.6          18.0          0.4
    Amortization               0.3           0.5          0.2
    Loan and lease
     underwriting income,
     net                     (0.1)         (6.0)        (5.9)
    Other (gains) losses     (0.1)           2.2          2.3
     Operating income        206.3         199.3          7.0           3.5

    Floorplan interest
     expense                (15.5)        (18.6)          3.1          16.7
    Interest expense -
     IRS settlement          (3.1)            --        (3.1)
    Other interest expense  (15.4)        (13.0)        (2.4)        (18.5)
    Interest income            0.8           2.6        (1.8)        (69.2)
    Other income (expense)   (1.4)           2.5        (3.9)
     Income from continuing
      operations before
      income taxes          $171.7        $172.8       $(1.1)         (0.6)

    Retail vehicle sales:
       New                 116,413       117,533      (1,120)         (1.0)
       Used                 64,735        64,420          315           0.5
                           181,148       181,953        (805)         (0.4)

    Revenue per vehicle
     retailed:
       New                 $28,057       $27,010       $1,047           3.9
       Used                $14,905       $15,216       $(311)         (2.0)

    Gross profit per
     vehicle retailed:
       New                  $1,981        $2,018        $(37)         (1.8)
       Used                 $1,620        $1,582          $38           2.4
       Finance and
        insurance             $818          $763          $55           7.2



     Operating Highlights           Nine Months Ended September 30,
                              2003          2002    $Variance     %Variance


    Revenue:
      New vehicle         $8,967.1      $8,967.9       $(0.8)         (0.0)
      Used vehicle         2,859.7       2,925.9       (66.2)         (2.3)
      Parts and service    1,857.7       1,861.0        (3.3)         (0.2)
      Finance and
       insurance             411.5         393.4         18.1           4.6
      Other                  689.3         811.8      (122.5)        (15.1)
                         $14,785.3     $14,960.0     $(174.7)         (1.2)


    Gross profit:
      New vehicle           $651.1        $694.8      $(43.7)         (6.3)
      Used vehicle           317.4         315.6          1.8           0.6
      Parts and service      810.5         810.7        (0.2)         (0.0)
      Finance and
       insurance             411.5         393.4         18.1           4.6
      Other                   79.2          77.2          2.0           2.6
                           2,269.7       2,291.7       (22.0)         (1.0)

    Selling, general and
     administrative
     expenses              1,637.4       1,672.4         35.0           2.1

    Depreciation              51.4          50.6        (0.8)
    Amortization               1.3           1.9          0.6
    Loan and lease
     underwriting income,
     net                     (6.1)         (8.9)        (2.8)
    Other (gains) losses       2.3           4.5          2.2
     Operating income        583.4         571.2         12.2           2.1

    Floorplan interest
     expense                (54.5)        (55.3)          0.8           1.4
    Interest expense -
     IRS settlement         (10.9)            --       (10.9)
    Other interest expense  (43.8)        (36.7)        (7.1)        (19.3)
    Interest income            2.8           8.6        (5.8)        (67.4)
    Other income (expense)     4.9           1.6          3.3
     Income from continuing
      operations before
      income taxes          $481.9        $489.4       $(7.5)         (1.5)

    Retail vehicle sales:
       New                 319,879       331,478     (11,599)         (3.5)
       Used                190,308       191,990      (1,682)         (0.9)
                           510,187       523,468     (13,281)         (2.5)

    Revenue per vehicle
     retailed:
       New                 $28,033       $27,054         $979           3.6
       Used                $15,027       $15,240       $(213)         (1.4)

    Gross profit per
     vehicle retailed:
       New                  $2,035        $2,096        $(61)         (2.9)
       Used                 $1,668        $1,644          $24           1.5
       Finance and
        insurance             $807          $752          $55           7.3



     Operating Percentages    Three Months Ended          Nine Months Ended
                                  September 30,              September 30,
                             %2003         %2002        %2003         %2002

    Revenue mix percentages:
      New vehicle             62.1          61.1         60.6          59.9
      Used vehicle            18.4          18.9         19.3          19.6
      Parts and service       12.1          12.1         12.6          12.4
      Finance and insurance    2.8           2.7          2.8           2.6
      Other                    4.6           5.2          4.7           5.5
                             100.0         100.0        100.0         100.0


    Operating items as a
     percentage of revenue:
      Gross profit:
      New vehicle              7.1           7.5          7.3           7.7
      Used vehicle            10.9          10.4         11.1          10.8
      Parts and service       43.7          43.6         43.6          43.6
      Finance and insurance  100.0         100.0        100.0         100.0
      Other                   11.4          11.5         11.5           9.5
       Total                  15.0          15.1         15.4          15.3
      Selling, general
       and administrative
       expenses               10.8          10.9         11.1          11.2
      Operating income         3.9           3.8          3.9           3.8


    Operating items as a
     percentage of total
     gross profit:
      Selling, general and
       administrative
       expenses               71.6          72.7         72.1          73.0
      Operating income        26.1          25.5         25.7          24.9


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


        Cash Flow             Three Months Ended          Nine Months Ended
       Information                September 30,              September 30,
                              2003          2002         2003          2002

    Capital expenditures,
     excluding property
     operating lease
     buy-outs                $30.1         $39.9        $79.4         $99.9
    Property operating
     lease buy-outs            $--          $5.6         $9.8         $11.0
    Stock repurchases       $111.8         $47.9       $465.2       $ 199.0
    Acquisitions              $3.0         $32.6        $48.1       $ 164.2
    Proceeds from
     exercises of stock
     options                 $63.2          $0.9       $101.9         $75.6


       Floorplan Assistance   Three Months Ended        Nine Months Ended
         and Expense             September 30,             September 30,
                        2003       2002  Variance   2003      2002  Variance

    Floorplan
     assistance
     (included in cost
     of operations)    $29.7      $33.1  $(3.4)    $88.7     $96.1   $(7.4)
    Floorplan
     interest
     expense          (15.5)     (18.6)     3.1   (54.5)    (55.3)      0.8

      Net inventory
       carrying
       benefit         $14.2      $14.5  $(0.3)    $34.2     $40.8   $(6.6)



         Balance Sheet and      September 30,    December 31,September 30,
          Other Highlights             2003            2002          2002

    Cash and cash equivalents         $33.7          $176.2       $ 169.7
    Inventory                      $2,373.9        $2,598.4      $2,251.7
    Floorplan notes payable        $2,234.6        $2,302.5      $1,818.0
    Non-vehicle debt                 $738.5          $651.3       $ 647.0
    Equity                         $3,958.7        $3,910.2      $4,020.1

    New days supply (industry
     standard of selling,
     days, including fleet)         53 days         63 days       48 days

    Used days supply (trailing
     30 days)                       38 days         40 days       37 days



         Comparable Basis         Net Income        Diluted Earnings Per Share
          Reconciliation      Nine Months Ended          Nine Months Ended
                                 September 30,              September 30,

                              2003          2002         2003          2002

    Net income, as
     reported               $400.1        $302.2        $1.39         $0.93

      Discontinued
       operations             12.3            --         0.04            --
      Cumulative effect
       of accounting change   14.6            --         0.05            --

    Net income from
     continuing operations,
     as reported             427.0         302.2         1.48          0.93
      Income tax benefit
       from IRS settlement (127.5)            --       (0.44)            --

    Net income, excluding
     income tax benefit
     from IRS Settlement    $299.5        $302.2        $1.04         $0.93



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


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


     Revenue:
         New vehicle                 $3,220.1  $3,139.6   $80.5    2.6
         Used vehicle                   953.2     966.9   (13.7)  (1.4)
         Parts and service              629.4     617.5    11.9    1.9
         Finance and insurance          145.9     136.9     9.0    6.6
         Other                          223.8     255.1   (31.3) (12.3)
                                     $5,172.4  $5,116.0   $56.4    1.1


     Gross profit:
         New vehicle                   $227.9    $234.9   $(7.0)  (3.0)
         Used vehicle                   103.8     100.7     3.1    3.1
         Parts and service              274.8     269.4     5.4    2.0
         Finance and insurance          145.9     136.9     9.0    6.6
         Other                           22.6      20.6     2.0    9.7
                                       $775.0    $762.5   $12.5    1.6

      Store selling, general and
        administrative expenses,
        excluding depreciation and
        amortization                   $526.3    $524.8   $(1.5)  (0.3)



     Retail vehicle sales:
            New                       114,606   116,090  (1,484)  (1.3)
            Used                       63,853    63,278     575    0.9
                                      178,459   179,368    (909)  (0.5)

     Revenue per vehicle retailed:
            New                       $28,097   $27,045  $1,052    3.9
            Used                      $14,928   $15,280   $(352)  (2.3)

     Gross profit per vehicle
       retailed:
            New                        $1,989    $2,023    $(34)  (1.7)
            Used                       $1,626    $1,591     $35    2.2
            Finance and insurance        $818      $763     $55    7.2






          Operating Percentages      Three Months Ended  Nine Months Ended
                                         September 30,    September 30,
                                      %  2003   %  2002  %  2003 %  2002

      Revenue mix percentages:
            New vehicle                  62.3      61.4    60.8   60.2
            Used vehicle                 18.4      18.9    19.4   19.5
            Parts and service            12.2      12.1    12.6   12.4
            Finance and insurance         2.8       2.7     2.8    2.6
            Other                         4.3       4.9     4.4    5.3
                                        100.0     100.0   100.0  100.0


      Operating items as a percentage
        of revenue:
          Gross Profit:
            New vehicle                   7.1       7.5     7.3    7.8
            Used vehicle                 10.9      10.4    11.1   10.8
            Parts and service            43.7      43.6    43.6   43.6
            Finance and insurance       100.0     100.0   100.0  100.0
            Other                        10.1       8.1    10.2    7.9
              Total                      15.0      14.9    15.3   15.2
          Store selling, general and
           administrative expenses,
           excluding depreciation
           and amortization              10.2      10.3    10.4   10.4

      Operating items as a percentage
        of total gross profit:
          Store selling, general and
           administrative expenses,
           excluding depreciation and
           amortization                  67.9      68.8    67.8   68.3


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


              Operating Highlights          Nine Month Ended September 30,
                                                                 $       %
                                          2003      2002   Variance  Variance
      Revenue:
            New vehicle                 $8,789.7   $8,867.8   $(78.1)  (0.9)
            Used vehicle                 2,802.2    2,881.3    (79.1)  (2.7)
            Parts and service            1,821.6    1,829.9     (8.3)  (0.5)
            Finance and insurance          403.0      387.2     15.8    4.1
            Other                          632.8      775.7   (142.9) (18.4)
                                       $14,449.3  $14,741.9  $(292.6)  (2.0)

      Gross profit:
            New vehicle                   $639.9     $687.7   $(47.8)  (7.0)
            Used vehicle                   311.9      311.4      0.5    0.2
            Parts and service              794.0      797.4     (3.4)  (0.4)
            Finance and insurance          403.0      387.2     15.8    4.1
            Other                           64.5       61.1      3.4    5.6
                                        $2,213.3   $2,244.8   $(31.5)  (1.4)

      Store selling, general and
       administrative expenses,
       excluding depreciation and
       amortization                     $1,500.0   $1,534.3    $34.3    2.2


      Retail vehicle sales:
               New                       313,700    327,383  (13,683)  (4.2)
               Used                      186,382    188,321   (1,939)  (1.0)
                                         500,082    515,704  (15,622)  (3.0)

      Revenue per vehicle retailed:
               New                       $28,019    $27,087     $932    3.4
               Used                      $15,035    $15,300    $(265)  (1.7)

      Gross profit per vehicle
           retailed:
               New                        $2,040     $2,101     $(61)  (2.9)
               Used                       $1,673     $1,654      $19    1.1
               Finance and insurance        $806       $751      $55    7.3

SOURCE AutoNation, Inc.

Photo : http://www.newscom.com/cgi-bin/prnh/20001017/AUTONATIONLOG

Marc Cannon, AutoNation, Inc., +1-954-769-3146, or cannonm@autonation.com
Company News On-Call: http://www.prnewswire.com/comp/750525.htm

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