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AutoNation Reports Fourth-Quarter Earnings

Feb. 09, 2006

FORT LAUDERDALE, Fla., Feb. 9 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2005 fourth- quarter net income from continuing operations of $80 million or $0.30 per share, on revenue of $4.5 billion. The results compare to 2004 fourth-quarter net income from continuing operations of $116 million or $0.43 per share on revenue of $4.8 billion. Excluding certain items disclosed in the attached financial tables, the Company's fourth-quarter EPS from continuing operations was $0.31 versus $0.34 in the prior year, a decline of 9%.

"Two factors directly impacted our fourth-quarter earnings," said Mike Jackson, chairman and chief executive officer of AutoNation. "We suffered an estimated $0.04 per share impact from Hurricane Wilma, which caused substantial property damage and disruption to our business in Florida. In addition, the auto retail sales environment was challenging in the fourth quarter."

For full-year 2005, the Company reported net income from continuing operations of $396 million or $1.48 per share, compared to $397 million or $1.46 per share in 2004. Excluding certain items disclosed in the attached financial tables, the Company's full-year EPS from continuing operations was $1.45, up 7% from $1.36 in the prior year. The Company's revenue for the full year totaled $19.3 billion, an increase of 1% versus the prior year. Operating income for full-year 2005 was $807 million, an increase of over 5%.

Commenting on the year ahead, Jackson said, "Looking ahead, we believe that in 2006 U.S. industry sales of new vehicles will be nearly 17 million units for the eighth year in a row."

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer and a component of the Standard and Poor's 500 Index. For the 4th year in a row, AutoNation was named America's Most Admired Automotive Retailer. AutoNation has approximately 27,000 full-time employees and owns and operates 345 new vehicle franchises in 17 states. For additional information, please visit http://corp.AutoNation.com or http://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 long-term growth targets.

NON-GAAP FINANCIAL MEASURES

This release and the attached financial tables contain certain non-GAAP financial measures as defined under SEC rules, such as net income and diluted earnings per share from continuing operations for the three and twelve-month periods ended December 31, 2005 and 2004, adjusted in each case to exclude certain items disclosed in the attached financial tables. As required by SEC rules, the Company has provided reconciliations of these measures to the most directly comparable GAAP measures, which are set forth in the attachments to this release. The Company believes that each of the foregoing non-GAAP financial measures improves the transparency of the Company's disclosure, provides 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 improves the period-to-period comparability of the Company's results from its core business operations.

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



                                     Three Months Ended       Year Ended
                                        December 31,          December 31,
                                       2005      2004       2005       2004

        Revenue:
          New vehicle                $2,661.5  $2,925.0  $11,532.2  $11,664.9
          Used vehicle                1,043.3   1,039.4    4,430.6    4,236.4
          Parts and service             620.8     616.8    2,593.6    2,451.9
          Finance and insurance         141.2     150.1      615.6      608.7
          Other                          18.5      19.8       81.4       82.7
        Total revenue                 4,485.3   4,751.1   19,253.4   19,044.6

        Cost of sales:
          New vehicle                 2,466.8   2,710.6   10,697.6   10,831.6
          Used vehicle                  945.3     944.4    4,002.6    3,841.1
          Parts and service             341.7     346.5    1,456.3    1,377.5
          Other                           4.8       8.3       33.2       35.4
        Total cost of sales           3,758.6   4,009.8   16,189.7   16,085.6

        Gross profit                    726.7     741.3    3,063.7    2,959.0

        Selling, general and
         administrative expenses        528.3     521.8    2,175.5    2,108.1
        Depreciation and
         amortization                    20.4      23.8       80.7       81.5
        Other expenses (income)          (0.1)      2.7        0.5        4.0

        Operating income                178.1     193.0      807.0      765.4

        Floorplan interest expense      (31.8)    (22.0)    (110.7)     (79.1)
        Other interest expense          (14.4)    (19.0)     (63.3)     (76.3)
        Other interest expense -
         senior note repurchases         (2.3)     (0.6)     (17.4)      (0.6)
        Interest income                   3.1       1.2        7.5        3.5
        Other losses                       --      (1.7)      (0.2)      (5.1)

        Income from continuing
         operations before income
         taxes                          132.7     150.9      622.9      607.8

        Provision for income taxes       52.3      34.5      227.4      210.7

        Net income from continuing
         operations                      80.4     116.4      395.5      397.1

        Income (loss) from
         discontinued operations,
         net of income taxes             (5.1)     45.4      101.0       36.5


        Net income                      $75.3    $161.8     $496.5     $433.6


        Diluted earnings per share:
          Continuing operations         $0.30     $0.43      $1.48      $1.46
          Discontinued operations      $(0.02)    $0.17      $0.38      $0.13

          Net income                    $0.28     $0.60      $1.85      $1.59

        Weighted average common and
         common equivalent shares
         outstanding                    266.8     270.3      268.0      272.5

        Common shares outstanding       262.2     264.3      262.2      264.3




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




              Operating Highlights          Three Months Ended December 31,
                                                                $        %
                                           2005      2004   Variance Variance


         Revenue:
           New vehicle                   $2,661.5  $2,925.0  $(263.5)    (9.0)
             Retail used vehicle            842.1     846.7     (4.6)    (0.5)
             Wholesale                      201.2     192.7      8.5      4.4
           Used vehicle                   1,043.3   1,039.4      3.9      0.4
           Parts and service                620.8     616.8      4.0      0.6
           Finance and insurance            141.2     150.1     (8.9)    (5.9)
           Other                             18.5      19.8     (1.3)
         Total revenue                   $4,485.3  $4,751.1  $(265.8)    (5.6)


         Gross profit:
           New vehicle                     $194.7    $214.4   $(19.7)    (9.2)
             Retail used vehicle             97.7      95.3      2.4      2.5
             Wholesale                        0.3      (0.3)     0.6
           Used vehicle                      98.0      95.0      3.0      3.2
           Parts and service                279.1     270.3      8.8      3.3
           Finance and insurance            141.2     150.1     (8.9)    (5.9)
           Other                             13.7      11.5      2.2
         Total gross profit                 726.7     741.3    (14.6)    (2.0)

         Selling, general and
          administrative expenses           528.3     521.8     (6.5)    (1.2)

         Depreciation and amortization       20.4      23.8      3.4
         Other expenses (income)             (0.1)      2.7      2.8
          Operating income                  178.1     193.0    (14.9)    (7.7)

         Floorplan interest expense         (31.8)    (22.0)    (9.8)
         Other interest expense             (14.4)    (19.0)     4.6
         Other interest expense - senior
          note repurchases                   (2.3)     (0.6)    (1.7)
         Interest income                      3.1       1.2      1.9
         Other losses                          --      (1.7)     1.7
           Income from continuing
            operations before income
            taxes                          $132.7    $150.9   $(18.2)   (12.1)

         Retail vehicle unit sales:
              New                          86,721    97,098  (10,377)   (10.7)
              Used                         53,386    55,378   (1,992)    (3.6)
                                          140,107   152,476  (12,369)    (8.1)

         Revenue per vehicle retailed:
              New                         $30,690   $30,124     $566      1.9
              Used                        $15,774   $15,289     $485      3.2

         Gross profit per vehicle
          retailed:
              New                          $2,245    $2,208      $37      1.7
              Used                         $1,830    $1,721     $109      6.3
              Finance and insurance        $1,008      $984      $24      2.4



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



             Operating Highlights               Year Ended December 31,
                                                                $        %
                                         2005       2004    Variance Variance


         Revenue:
           New vehicle                 $11,532.2  $11,664.9  $(132.7)    (1.1)
             Retail used vehicle         3,582.6    3,452.1    130.5      3.8
             Wholesale                     848.0      784.3     63.7      8.1
           Used vehicle                  4,430.6    4,236.4    194.2      4.6
           Parts and service             2,593.6    2,451.9    141.7      5.8
           Finance and insurance           615.6      608.7      6.9      1.1
           Other                            81.4       82.7     (1.3)
         Total revenue                 $19,253.4  $19,044.6   $208.8      1.1


         Gross profit:
           New vehicle                    $834.6     $833.3     $1.3      0.2
             Retail used vehicle           425.6      393.8     31.8      8.1
             Wholesale                       2.4        1.5      0.9
           Used vehicle                    428.0      395.3     32.7      8.3
           Parts and service             1,137.3    1,074.4     62.9      5.9
           Finance and insurance           615.6      608.7      6.9      1.1
           Other                            48.2       47.3      0.9
         Total gross profit              3,063.7    2,959.0    104.7      3.5

         Selling, general and
          administrative expenses        2,175.5    2,108.1    (67.4)    (3.2)

         Depreciation and amortization      80.7       81.5      0.8
         Other expenses (income)             0.5        4.0      3.5
          Operating income                 807.0      765.4     41.6      5.4

         Floorplan interest expense       (110.7)     (79.1)   (31.6)
         Other interest expense            (63.3)     (76.3)    13.0
         Other interest expense -
          senior note repurchases          (17.4)      (0.6)   (16.8)
         Interest income                     7.5        3.5      4.0
         Other losses                       (0.2)      (5.1)     4.9
           Income from continuing
            operations before income
            taxes                         $622.9     $607.8    $15.1      2.5

         Retail vehicle unit sales:
              New                        391,698    402,303  (10,605)    (2.6)
              Used                       235,313    234,598      715      0.3
                                         627,011    636,901   (9,890)    (1.6)

         Revenue per vehicle retailed:
              New                        $29,442    $28,995     $447      1.5
              Used                       $15,225    $14,715     $510      3.5

         Gross profit per vehicle
          retailed:
              New                         $2,131     $2,071      $60      2.9
              Used                        $1,809     $1,679     $130      7.7
              Finance and insurance         $982       $956      $26      2.7



                                          Three Months Ended    Year Ended
               Operating Percentages          December 31,      December 31,
                                           % 2005   % 2004   % 2005   % 2004

          Revenue mix percentages:
            New vehicle                      59.3     61.6     59.9     61.3
            Used vehicle                     23.3     21.9     23.0     22.2
            Parts and service                13.8     13.0     13.5     12.9
            Finance and insurance             3.1      3.2      3.2      3.2
            Other                             0.5      0.3      0.4      0.4
                                            100.0    100.0    100.0    100.0

          Gross profit mix percentages:
            New vehicle                      26.8     28.9     27.2     28.2
            Used vehicle                     13.5     12.8     14.0     13.4
            Parts and service                38.4     36.5     37.1     36.3
            Finance and insurance            19.4     20.2     20.1     20.6
            Other                             1.9      1.6      1.6      1.5
                                            100.0    100.0    100.0    100.0

          Operating items as a percentage
           of revenue:
            Gross profit:
               New vehicle                    7.3      7.3      7.2      7.1
               Used vehicle - retail         11.6     11.3     11.9     11.4
               Parts and service             45.0     43.8     43.9     43.8
               Total                         16.2     15.6     15.9     15.5
            Selling, general and
             administrative expenses         11.8     11.0     11.3     11.1
            Operating income                  4.0      4.1      4.2      4.0

          Operating items as a percentage
           of total gross profit:
            Selling, general and
             administrative expenses         72.7     70.4     71.0     71.2
            Operating income                 24.5     26.0     26.3     25.9




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



                                           Three Months
                                              Ended         Year Ended
              Cash Flow Information         December 31,    December 31,
                                           2005    2004    2005     2004
          Capital expenditures, excluding
           property operating lease
           buy-outs                        $39.6   $51.6   $131.5   $133.2
          Property operating lease
           buy-outs                          $--     $--    $10.3    $77.7
          Stock repurchases                $49.9   $46.0   $237.1   $236.8
          Acquisitions                      $2.5   $43.6    $15.9   $197.9
          Proceeds from exercises of
           stock options                   $36.1   $26.1   $112.8    $94.2
          Senior note repurchases          $23.6    $3.9   $136.0     $3.9



        Floorplan Assistance       Three Months Ended         Year Ended
          and Expense                 December 31,            December 31,
                                  2005   2004  Variance  2005   2004  Variance


        Floorplan assistance
         (included in cost of
         sales)                  $25.6  $26.7   $(1.1) $114.4  $114.0    $0.4
        Floorplan interest
         expense                 (31.8) (22.0)   (9.8) (110.7)  (79.1)  (31.6)

         Net floorplan benefit   $(6.2)  $4.7  $(10.9)   $3.7   $34.9  $(31.2)



        Balance Sheet and Other Highlights

                                      December 31, 2005      December 31, 2004

           Cash and cash equivalents            $243.8                 $108.2
           Inventory                          $2,682.7               $2,576.0
           Floorplan notes payable            $2,540.0               $2,458.0
           Non-vehicle debt                     $525.0                 $812.6
           Equity                             $4,669.6               $4,263.1
           New days supply (industry
            standard of selling days,
            including fleet)                   56 days                53 days
           Used days supply (trailing
            30 days)                           43 days                37 days



        Brand Mix - New Vehicle Revenue %
                                            Three Months Ended   Year Ended
                                               December 31,      December 31,
                                              2005     2004     2005     2004

    Detroit 3:
       Ford (Ford, Lincoln-Mercury)           16.6     18.0     18.5     20.5
       General Motors (Chevrolet, Pontiac,
        Buick, Cadillac, GMC)                 13.2     17.1     15.9     19.0
       Chrysler (Chrysler, Jeep, Dodge)        8.1      8.7      8.9      9.2
         Detroit 3 total                      37.9     43.8     43.3     48.7

    Premium Luxury:
       Mercedes                               11.2     10.6      9.3      8.9
       BMW                                     5.7      3.8      4.9      4.4
       Lexus                                   4.0      3.6      3.3      3.1
       Other premium luxury (Jaguar,
        Rolls Royce)                           1.4      0.9      1.1      1.1
         Premium Luxury total                 22.3     18.9     18.6     17.5

    Imports:
       Honda                                   8.3      7.0      7.9      7.1
       Toyota                                 12.3     11.1     12.3     11.3
       Nissan                                  9.7      9.1      9.8      8.7
       Other imports                           9.5     10.1      8.1      6.7
         Import total                         39.8     37.3     38.1     33.8



                                             100.0    100.0    100.0    100.0




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




         Comparable Basis Reconciliations*
                                           Three Months Ended December 31,

                                                            Diluted Earnings
                                             Net Income        Per Share

                                            2005     2004    2005     2004

         As reported                       $75.3   $161.8   $0.28    $0.60

          Discontinued operations - store
           divestitures, net of income
           taxes                             5.1      6.8   $0.02    $0.03
          Discontinued operations - tax
           adjustments                              (52.2)    $--   $(0.19)

         From continuing operations, as
          reported                         $80.4   $116.4   $0.30    $0.43
          Income tax adjustments                    (24.6)     --   $(0.09)
          Senior note repurchases            1.5       .5   $0.01      $--


         Adjusted                          $81.9    $92.3   $0.31    $0.34



                                               Year Ended December 31,

                                                             Diluted Earnings
                                              Net Income        Per Share

                                             2005     2004     2005     2004

         As reported                       $496.5   $433.6    $1.85    $1.59

          Discontinued operations - store
           divestitures, net of income
           taxes                              9.4     15.7    $0.04    $0.06
          Discontinued operations - tax
           adjustments                     (110.4)   (52.2)  $(0.41)  $(0.19)

         From continuing operations, as
          reported                          395.5    397.1    $1.48    $1.46
          Senior note repurchases            10.6       .5    $0.04      $--
          Income tax adjustments            (16.2)   (25.8)  $(0.06)  $(0.09)


         Adjusted                          $389.9   $371.8    $1.45    $1.36

         * Please refer to the "Non-GAAP Financial Measures" section of the
         Press Release.




         Business Assumptions Impacting Long-term Average EPS Growth Target
         of 10% to 12% Per Year:

         U.S. light vehicle annual unit        intensely competitive, nearly
          sales                                 17 million units

         SGA % reduction (over 2006,
         2007 and 2008)                        approximately 100 bp
          (SGA % of gross profit less
           floorplan interest expense)

         Continued opportunistic               share repurchase, capital
          redeployment of cash flow             expenditures and acquisitions

         Targeted return on incremental
          invested capital                     approximately 15% after-tax





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



                 Operating Highlights       Three Months Ended December 31,

                                                                 $        %
                                             2005      2004  Variance Variance
           Revenue:
               New vehicle                $2,653.6  $2,924.9  $(271.3)  (9.3)
                 Retail used vehicle         840.3     846.8     (6.5)  (0.8)
                 Wholesale                   199.6     192.0      7.6    4.0
               Used vehicle                1,039.9   1,038.8      1.1    0.1
               Parts and service             619.6     616.8      2.8    0.5
               Finance and insurance         141.0     149.8     (8.8)  (5.9)
               Other                           7.1       7.3     (0.2)  (2.7)
           Total revenue                  $4,461.2  $4,737.6  $(276.4)  (5.8)


           Gross profit:
               New vehicle                  $193.9    $214.3   $(20.4)  (9.5)
                 Retail used vehicle          97.6      95.1      2.5    2.6
                 Wholesale                    (0.2)     (0.9)     0.7
               Used vehicle                   97.4      94.2      3.2    3.4
               Parts and service             278.5     270.2      8.3    3.1
               Finance and insurance         141.0     149.8     (8.8)  (5.9)
               Other                           8.1       6.8      1.3   19.1
           Total gross profit               $718.9    $735.3   $(16.4)  (2.2)




           Retail vehicle unit sales:
                  New                       86,554    97,098  (10,544) (10.9)
                  Used                      53,312    55,382   (2,070)  (3.7)
                                           139,866   152,480  (12,614)  (8.3)

           Revenue per vehicle retailed:
                  New                      $30,658   $30,123     $535    1.8
                  Used                     $15,762   $15,290     $472    3.1

           Gross profit per vehicle
            retailed:
                  New                       $2,240    $2,207      $33    1.5
                  Used                      $1,831    $1,717     $114    6.6
                  Finance and insurance     $1,008      $982      $26    2.6



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



                 Operating Highlights           Year Ended December 31,

                                                                 $        %
                                           2005       2004   Variance Variance
           Revenue:
               New vehicle               $11,417.1  $11,660.9  $(243.8) (2.1)
                 Retail used vehicle       3,551.1    3,450.9    100.2   2.9
                 Wholesale                   831.9      780.8     51.1   6.5
               Used vehicle                4,383.0    4,231.7    151.3   3.6
               Parts and service           2,571.1    2,450.7    120.4   4.9
               Finance and insurance         611.9      608.7      3.2   0.5
               Other                          28.2       28.9     (0.7) (2.4)
           Total revenue                 $19,011.3  $18,980.9    $30.4   0.2


           Gross profit:
               New vehicle                  $825.3     $833.2    $(7.9) (0.9)
                 Retail used vehicle         422.7      393.4     29.3   7.4
                 Wholesale                    (0.1)      (1.2)     1.1
               Used vehicle                  422.6      392.2     30.4   7.8
               Parts and service           1,126.2    1,073.8     52.4   4.9
               Finance and insurance         611.9      608.7      3.2   0.5
               Other                          27.4       26.7      0.7   2.6
           Total gross profit             $3,013.4   $2,934.6    $78.8   2.7




           Retail vehicle unit sales:
                  New                      388,748    402,137  (13,389) (3.3)
                  Used                     233,887    234,486     (599) (0.3)
                                           622,635    636,623  (13,988) (2.2)

           Revenue per vehicle retailed:
                  New                      $29,369    $28,997     $372   1.3
                  Used                     $15,183    $14,717     $466   3.2

           Gross profit per vehicle
            retailed:
                  New                       $2,123     $2,072      $51   2.5
                  Used                      $1,807     $1,678     $129   7.7
                  Finance and insurance       $983       $956      $27   2.8



                                       Three Months
                                          Ended           Year Ended
              Operating Percentages     December 31,      December 31,
                                      % 2005 % 2004      % 2005 % 2004

          Revenue mix percentages:
              New vehicle               59.5   61.7       60.1   61.4
              Used vehicle              23.3   21.9       23.1   22.3
              Parts and service         13.9   13.0       13.5   12.9
              Finance and insurance      3.2    3.2        3.2    3.2
              Other                      0.1    0.2        0.1    0.2
                                       100.0  100.0      100.0  100.0


          Gross profit mix
           percentages:
              New vehicle               27.0   29.1       27.4   28.4
              Used vehicle              13.5   12.8       14.0   13.4
              Parts and service         38.7   36.7       37.4   36.6
              Finance and insurance     19.6   20.4       20.3   20.7
              Other                      1.2    1.0        0.9    0.9
                                       100.0  100.0      100.0  100.0



          Operating items as a
           percentage of revenue:
              Gross Profit:
                 New vehicle             7.3    7.3        7.2    7.1
                 Used vehicle - retail  11.6   11.2       11.9   11.4
                 Parts and service      44.9   43.8       43.8   43.8
                 Total                  16.1   15.5       15.9   15.5



SOURCE  AutoNation, Inc.
    -0-                             02/09/2006
    /CONTACT:  Marc Cannon, 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, photodesk@prnewswire.com/
    /Company News On-Call:  http://www.prnewswire.com/comp/750525.html /
    /Web site:  http://corp.autonation.com
                http://www.AutoNation.com /
    (AN)

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


AC-DS
-- FLTH001A --
5851 02/09/2006 06:58 EST http://www.prnewswire.com
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