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AutoNation Reports Record Fourth Quarter EPS Of $0.28, Full Year EPS Of $1.76 From Continuing Operations

Feb. 05, 2004

* Eighth consecutive record quarter of EPS from continuing operations
* Fourth-quarter record EPS of $0.28 per share exceeds year-ago EPS of $0.26 per share
* Excluding the benefit from the first quarter IRS settlement, full-year earnings per share from continuing operations of a record $1.32 compared to $1.19 in 2002
* Fourth-quarter reduction of 100 basis points in SG&A as a percent of gross profit; 90 basis point reduction for the full year
* Company issues 2004 first-quarter EPS guidance of $0.29 to $0.31 and confirms 2004 full-year EPS outlook of $1.40 to $1.45

FORT LAUDERDALE, Fla., Feb. 5 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2003 fourth- quarter net income of $79.0 million, or $0.28 per share, compared to year-ago net income of $79.4 million or $0.26 per share. The 8% increase in fourth- quarter earnings per share was driven by further leverage of its cost structure and the continued repurchase of outstanding shares.

Fourth-quarter 2003 revenue totaled $4.6 billion, an increase of $77 million compared to the year-ago period resulting from revenue growth in new vehicles of 4%, parts and service of 1% and finance and insurance of 8%. Selling, general and administrative expense (SG&A) in the quarter was $520.3 million or 75.1% of total gross profit, a 100 basis point improvement compared to a year ago. Operating income in the quarter was $130.7 million, a reduction of 16% compared to a year ago resulting from a real estate impairment charge of $27.5 million ($16.9 million after-tax or $0.06 per share) related to three franchised new vehicle stores that currently operate in converted used vehicle megastores. Excluding the effect of the impairment, operating income in the quarter was $158.2 million, an increase of $3 million or 2% compared to the period a year ago. The real estate impairment was offset by a gain of $10.2 million ($6.2 million after-tax or $0.02 per share) recognized by the Company on the sale of a non-core equity investment as well as a net income tax benefit of $10.3 million or $0.04 per share related primarily to favorable tax adjustments and settlements.

Commenting on fourth-quarter 2003 performance AutoNation Chairman and Chief Executive Officer Mike Jackson said, "AutoNation's performance in the fourth quarter was characterized by continued cost containment and revenue growth resulting from ongoing operational improvements. We were pleased to deliver our eighth consecutive quarter-over-quarter record EPS from continuing operations."

For the full year, the Company reported net income from continuing operations of $506.1 million or $1.76 per share. Excluding the $0.44 per share benefit from the first-quarter 2003 IRS tax settlement, earnings per share from continuing operations were $1.32, an 11% increase versus the prior year. The Company's revenue for the full year totaled $19.4 billion, down less than 1% versus the prior year.

The Company's 2003 accomplishments included:
* The addition of AutoNation to the S&P 500 index.
* The completion of acquisitions representing 13 franchises with an annual revenue run rate of approximately $300 million.
* A reduction, net of option exercises, of approximately 10% of the Company's outstanding common shares following the repurchase of 39.2 million shares at a cost of $575 million.
* The second quarter branding of 39 of the Company's franchises in Southern California that now operate under the Power brand and 34 of the Company's franchises in the Houston/Corpus Christi/Austin markets that now operate under the Champion brand.

Commenting on the Company's 2003 performance and the year ahead, Jackson said, "In a highly competitive environment where industry sales were down, we once again delivered double-digit EPS growth. Looking ahead, we maintain our outlook that the 2004 new vehicle market will remain intensely competitive in a stable volume environment. We confirm our full-year 2004 EPS guidance of $1.40 to $1.45 and expect first-quarter earnings per share in the range of $0.29 to $0.31."

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 February 12, 2004 by calling (800) 475-6701 (access code #716118) or via the Internet as outlined above.

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. Ranked No. 93 on the 2003 Fortune 500 and a component of the Standard and Poor's 500 Index, AutoNation employs approximately 28,000 people and owns and operates 372 new vehicle franchises in 18 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 earnings per share from continuing operations excluding the first-quarter tax benefit and fourth-quarter operating income excluding the real estate impairment charge. 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       Year Ended
                                        December 31,          December 31,
                                       2003      2002      2003       2002

        Revenue:
          New vehicle                $2,824.1  $2,726.9  $11,791.2  $11,694.8
          Used vehicle                1,025.2   1,059.2    4,492.3    4,709.8
          Parts and service             599.5     592.3    2,457.2    2,453.3
          Finance and insurance         138.7     128.6      601.1      563.7
          Other                           8.3      11.5       39.3       56.9
        Total revenue                 4,595.8   4,518.5   19,381.1   19,478.5

        Cost of sales:
          New vehicle                 2,622.9   2,511.8   10,938.9   10,784.9
          Used vehicle                  941.0     975.4    4,089.2    4,315.1
          Parts and service             337.8     334.7    1,385.0    1,385.0
          Other                           1.0       1.8        5.2        7.0
        Total cost of sales           3,902.7   3,823.7   16,418.3   16,492.0

        Gross profit                    693.1     694.8    2,962.8    2,986.5

        Selling, general and
         administrative expenses        520.3     528.5    2,157.7    2,200.9
        Depreciation                     18.0      16.7       69.4       67.3
        Amortization                      0.3       0.5        1.6        2.4
        Loan and lease underwriting
         income, net                    (0.2)     (5.0)      (6.3)     (13.9)
        Other losses (gains)             24.0     (1.1)       26.3        3.4

        Operating income                130.7     155.2      714.1      726.4

        Floorplan interest expense     (16.9)    (19.5)     (71.4)     (74.8)
        Interest expense - IRS
         settlement                     (1.2)        --     (12.1)         --
        Other interest expense         (15.9)    (13.7)     (59.7)     (50.4)
        Interest income                   0.5       1.8        3.3       10.4
        Other income                     11.9       4.8       16.8        6.4

        Income from continuing
         operations before income
         taxes                          109.1     128.6      591.0      618.0

        Provision for income taxes       30.1      49.2      212.4      236.4
        Income tax benefit from IRS
         settlement                        --        --    (127.5)         --

        Net tax provision -
         continuing operations           30.1      49.2       84.9      236.4

        Net income from continuing
         operations                      79.0      79.4      506.1      381.6

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

        Net income before cumulative
         effect of accounting change     79.0      79.4      493.8      381.6

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

        Net income                      $79.0     $79.4     $479.2     $381.6


        Diluted earnings per share:
          Continuing operations         $0.28     $0.26      $1.76      $1.19
          Discontinued operations          --        --     (0.04)         --
          Cumulative effect of
           accounting change               --        --     (0.05)         --
          Net income                    $0.28     $0.26      $1.67      $1.19

        Weighted average common and
         common
             equivalent shares
              outstanding               282.2     309.4      287.0      321.5

        Common shares outstanding       269.7     298.0      269.7      298.0



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


    Operating Highlights           Three Months Ended December 31,
                              2003         2002   $ Variance   % Variance


    Revenue:
      New vehicle         $2,824.1     $2,726.9        $97.2          3.6
      Used vehicle         1,025.2      1,059.2       (34.0)        (3.2)
      Parts and service      599.5        592.3          7.2          1.2
      Finance and insurance  138.7        128.6         10.1          7.9
      Other                    8.3         11.5        (3.2)
                          $4,595.8     $4,518.5        $77.3          1.7


    Gross profit:
      New vehicle           $201.2       $215.1      $(13.9)        (6.5)
      Used vehicle            83.7         87.4        (3.7)        (4.2)
      Wholesale                0.5        (3.6)          4.1      (113.9)
      Used vehicle            84.2         83.8          0.4          0.5
      Parts and service      261.7        257.6          4.1          1.6
      Finance and insurance  138.7        128.6         10.1          7.9
      Other                    7.3          9.7        (2.4)
                             693.1        694.8        (1.7)        (0.2)

    Selling, general and
     administrative
     expenses                520.3        528.5          8.2          1.6

    Depreciation              18.0         16.7        (1.3)
    Amortization               0.3          0.5          0.2
    Loan and lease
     underwriting income,
     net                     (0.2)        (5.0)        (4.8)
    Restructuring and
     related impairment
     charges, net               --           --           --
    Other losses (gains)      24.0        (1.1)       (25.1)

     Operating income        130.7        155.2       (24.5)       (15.8)

    Floorplan interest
     expense                (16.9)       (19.5)          2.6         13.3
    Interest expense -
     IRS settlement          (1.2)           --        (1.2)
    Other interest expense  (15.9)       (13.7)        (2.2)       (16.1)
    Interest income            0.5          1.8        (1.3)       (72.2)
    Other income              11.9          4.8          7.1
    Income from continuing
     operations before
     income taxes           $109.1       $128.6      $(19.5)       (15.2)

    Retail vehicle unit
     sales:
       New                  94,886       95,228        (342)        (0.4)
       Used                 54,618       55,375        (757)        (1.4)
                           149,504      150,603      (1,099)        (0.7)

    Revenue per vehicle
     retailed:
       New                $ 29,763     $ 28,635       $1,128          3.9
       Used               $ 15,495     $ 15,543       $ (48)        (0.3)

    Gross profit per
     vehicle retailed:
       New                  $2,120       $2,259       $(139)        (6.2)
       Used                 $1,532       $1,578       $ (46)        (2.9)
       Finance and
        insurance             $928         $854          $74          8.7




      Operating Highlights             Year Ended December 31,
                              2003         2002   $ Variance   % Variance



    Revenue:
      New vehicle       $ 11,791.2    $11,694.8        $96.4          0.8
      Used vehicle         4,492.3      4,709.8      (217.5)        (4.6)
      Parts and service    2,457.2      2,453.3          3.9          0.2
      Finance and
       insurance             601.1        563.7         37.4          6.6
      Other                   39.3         56.9       (17.6)
                        $ 19,381.1    $19,478.5      $(97.4)        (0.5)


    Gross profit:
      New vehicle           $852.3      $ 909.9      $(57.6)        (6.3)
      Used vehicle           403.1        394.7          8.4          2.1
      Parts and service    1,072.2      1,068.3          3.9          0.4
      Finance and
       insurance             601.1        563.7         37.4          6.6
      Other                   34.1         49.9       (15.8)           --
                           2,962.8      2,986.5       (23.7)        (0.8)


    Selling, general and
     administrative
     expenses              2,157.7      2,200.9         43.2          2.0

    Depreciation              69.4         67.3        (2.1)
    Amortization               1.6          2.4          0.8
    Loan and lease
     underwriting income,
     net                     (6.3)       (13.9)        (7.6)
    Restructuring and
     related impairment
     charges, net               --           --           --
    Other losses (gains)      26.3          3.4       (22.9)
     Operating income        714.1        726.4       (12.3)        (1.7)

    Floorplan interest
     expense                (71.4)       (74.8)          3.4          4.5
    Interest expense -
     IRS settlement         (12.1)            -       (12.1)
    Other interest expense  (59.7)       (50.4)        (9.3)       (18.5)
    Interest income            3.3         10.4        (7.1)       (68.3)
    Other income              16.8          6.4         10.4
    Income from continuing
     operations before
     income taxes           $591.0      $ 618.0      $(27.0)        (4.4)


    Retail vehicle unit
     sales:
       New                 414,765      426,706     (11,941)        (2.8)
       Used                244,926      247,365      (2,439)        (1.0)
                           659,691      674,071     (14,380)        (2.1)

    Revenue per vehicle
     retailed:
       New                 $28,429      $27,407       $1,022          3.7
       Used                $15,131      $15,308       $(177)        (1.2)

    Gross profit per
     vehicle retailed:
       New                  $2,055      $ 2,132        $(77)        (3.6)
       Used                 $1,638      $ 1,629           $9          0.6
       Finance and
        insurance            $ 911         $836          $75          9.0




      Operating Percentages   Three Months Ended           Year Ended
                                 December 31,              December 31,
                            % 2003       % 2002       % 2003       % 2002

    Revenue mix percentages:
      New vehicle             61.4         60.3         60.8         60.0
      Used vehicle            22.3         23.4         23.2         24.2
      Parts and service       13.0         13.1         12.7         12.6
      Finance and insurance    3.0          2.8          3.1          2.9
      Other                    0.3          0.4          0.2          0.3
                             100.0        100.0        100.0        100.0


    Operating items as a
     percentage of revenue:
      Gross profit:
       New vehicle             7.1          7.9          7.2          7.8
       Used vehicle - retail   9.9         10.2         10.8         10.6
       Parts and service      43.7         43.5         43.6         43.5
       Total                  15.1         15.4         15.3         15.3
    Selling, general and
     administrative
     expenses                 11.3         11.7         11.1         11.3
    Operating income           2.8          3.4          3.7          3.7

    Operating items as a
     percentage of total
     gross profit:
      Selling, general and
       administrative
       expenses               75.1         76.1         72.8         73.7
    Operating income          18.9         22.3         24.1         24.3




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



         Cash Flow     Three Months Ended   Year Ended
        Information       December 31,      December 31,
                        2003      2002    2003     2002


    Capital
     expenditures,
     excluding property
     operating lease
     buy-outs          $44.1     $63.5  $123.5   $163.4
    Property operating
     lease buy-outs      $--      $8.8    $9.8    $19.8
    Stock repurchases $110.0    $190.9  $575.2   $389.9
    Acquisitions        $1.0      $2.3   $49.1   $166.5
    Proceeds from
     exercises of
     stock options     $14.8      $3.1  $116.7    $78.7


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

    Floorplan
     assistance
     (included in
     cost of
     operations)       $27.8     $31.8  $(4.0)  $ 116.5   $ 127.9 $(11.4)
    Floorplan
     interest
     expense          (16.9)    (19.5)     2.6   (71.4)    (74.8)     3.4

      Net inventory
       carrying
       benefit         $10.9     $12.3  $(1.4)    $45.1     $53.1  $(8.0)


       Balance Sheet
        and Other
        Highlights

                 December 31, December 31,
                        2003      2002

    Cash and cash
     equivalents      $170.8    $176.2
    Inventory       $2,919.3  $2,598.4
    Floorplan notes
     payable        $2,809.8  $2,302.5
    Non-vehicle
     debt             $824.4    $651.3
    Equity          $3,949.8  $3,910.2
    New days supply
     (industry
      standard of
      selling days,
      including
      fleet)         71 days   63 days

    Used days supply
     (trailing 30
     days)           41 days   40 days




      Comparable Basis
       Reconciliations                       Diluted
                          Net Income    Earnings Per Share
                          Year Ended        Year Ended
                          December 31,      December 31,
                        2003      2002    2003     2002

    Net income, as
     reported         $479.2    $381.6   $1.67    $1.19

    Discontinued
     operations         12.3        --    0.04       --
    Cumulative effect
     of accounting
     change             14.6        --    0.05       --
    Net income from
     continuing
     operations, as
     reported          506.1     381.6    1.76     1.19
    Income tax benefit
     from IRS
     settlement      (127.5)        --  (0.44)       --
    Net income,
     excluding income
     tax benefit from
     IRS Settlement   $378.6    $381.6   $1.32    $1.19



                  Three Months Ended December 31, 2003
                                         Diluted
                     Operating    Net    Earnings
                      Income    Income   per Share

    Reported earnings
     from continuing
     operations       $130.7     $79.0   $0.28

    Gain from income
     tax adjustments      --    (10.3)  (0.04)
    Gain on sale of
     non-core equity
     investment           --     (6.2)  (0.02)
    Impairment loss on
     converted
     megastores         27.5      16.9    0.06

    Adjusted earnings
     from continuing
     operations       $158.2     $79.4   $0.28



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


      Operating Highlights         Three Months Ended December 31,
                              2003         2002   $ Variance   % Variance


    Revenue:
      New vehicle         $2,767.2     $2,696.5        $70.7          2.6
      Used vehicle           997.8      1,040.9       (43.1)        (4.1)
      Parts and service      591.9        583.4          8.5          1.5
      Finance and insurance  135.6        127.5          8.1          6.4
      Other                    5.7          8.9        (3.2)
                          $4,498.2     $4,457.2        $41.0          0.9


    Gross profit:
      New vehicle           $197.2       $213.1      $(15.9)        (7.5)
      Used vehicle            81.4         82.1        (0.7)        (0.9)
      Parts and service      258.3        253.9          4.4          1.7
      Finance and insurance  135.6        127.5          8.1          6.4
      Other                    5.4          7.5        (2.1)
                            $677.9       $684.1       $(6.2)        (0.9)

    Retail vehicle
     unit sales:
      New                   93,143       94,078        (935)        (1.0)
      Used                  53,679       54,470        (791)        (1.5)
                           146,822      148,548      (1,726)        (1.2)

    Revenue per vehicle
     retailed:
      New                  $29,709     $ 28,662       $1,047          3.7
      Used                 $15,500     $ 15,587       $ (87)        (0.6)

    Gross profit per
     vehicle retailed:
    New                     $2,117       $2,265       $(148)        (6.5)
    Used                    $1,535       $1,588       $ (53)        (3.3)
    Finance and insurance     $924         $858          $66          7.7



        Operating Highlights          Year Ended December 31,
                              2003         2002   $ Variance   % Variance


    Revenue
      New vehicle        $11,541.9    $11,552.7      $(10.8)        (0.1)
      Used vehicle         4,357.5      4,615.7      (258.2)        (5.6)
      Parts and service    2,411.4      2,408.1          3.3          0.1
      Finance and
       insurance             588.6        555.8         32.8          5.9
      Other                   24.0         37.4       (13.4)
                         $18,923.4    $19,169.7     $(246.3)        (1.3)


    Gross profit
      New vehicle           $835.9       $899.6     $ (63.7)        (7.1)
      Used vehicle           390.5        387.1          3.4          0.9
      Parts and service    1,051.3      1,048.7          2.6          0.2
      Finance and
       insurance             588.6        555.8         32.8          5.9
      Other                   21.6         33.4       (11.8)
                          $2,887.9     $2,924.6     $ (36.7)        (1.3)

    Retail vehicle
     unit sales:
      New                  406,467      421,151     (14,684)        (3.5)
      Used                 239,750      242,288      (2,538)        (1.0)
                           646,217      663,439     (17,222)        (2.6)

    Revenue per vehicle
     retailed:
      New                  $28,396      $27,431         $965          3.5
      Used                 $15,136      $15,361       $(225)        (1.5)

    Gross profit per
     vehicle retailed:
      New                   $2,057       $2,136        $(79)        (3.7)
      Used                  $1,643       $1,641           $2          0.1
      Finance and insurance  $ 911        $ 838          $73          8.7



      Operating Percentages   Three Months Ended           Year Ended
                                  December 31,             December 31,
                            % 2003       % 2002       % 2003       % 2002

    Revenue mix percentages:
      New vehicle             61.5         60.5         61.0         60.3
      Used vehicle            22.2         23.4         23.0         24.1
      Parts and service       13.2         13.1         12.7         12.6
      Finance and insurance    3.0          2.9          3.1          2.9
      Other                    0.1          0.1          0.2          0.1
                             100.0        100.0        100.0        100.0


    Operating items as a
     percentage of revenue:
      Gross Profit:
      New vehicle              7.1          7.9          7.2          7.8
      Used vehicle - retail    9.9         10.2         10.9         10.7
      Parts and service       43.6         43.5         43.6         43.5
      Total                   15.1         15.3         15.3         15.3

SOURCE AutoNation, Inc.

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

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