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AutoNation Reports 2007 Fourth Quarter and Full Year Results of Operations

Feb. 07, 2008

FORT LAUDERDALE, Fla., Feb. 7 /PRNewswire-FirstCall/ -- AutoNation, Inc. (NYSE: AN), America's largest automotive retailer, today reported 2007 fourth quarter net income from continuing operations of $50 million or $0.27 per share on revenue of $4.2 billion, compared to year-ago fourth quarter net income from continuing operations of $74 million or $0.35 per share on revenue of $4.4 billion. Results for the fourth quarter of 2007 reflected a decline in vehicle sales especially in California and Florida, partially offset by continued share repurchases. Together, California and Florida represent approximately 50% of the Company's new vehicle business, in contrast to 20% of industry retail new vehicles sold in the U.S.

For full year 2007, the Company reported net income from continuing operations of $288 million or $1.44 per share, compared to $331 million or $1.44 per share in 2006. After adjusting for certain items as disclosed in the attached financial tables, the Company's full-year EPS from continuing operations for 2007 was $1.38 compared to $1.53 in 2006. The Company's revenue for 2007 totaled $17.7 billion, a decrease of 5% versus the prior year.

Commenting on the year ahead, Mike Jackson, chairman and chief executive officer said, "We expect to continue to see a challenging new vehicle retail market, especially in California and Florida. AutoNation continues to have confidence in California and Florida and views them as healthy markets over the long term." Jackson also added, "We believe that in 2008, U.S. new vehicle industry sales will decline to the mid-15 million unit level from 16.1 million units in 2007. However, the recent action by the Federal Reserve to reduce interest rates could improve the automotive retail outlook in the second half of 2008."

The fourth quarter conference call may be accessed at 11:00 am Eastern Time by phone at 888-769-8515 (passcode: AutoNation) or via the Internet (audio webcast) at http://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 2:30 p.m. Eastern Time on February 7, 2008 through February 14, 2008 by calling 800-759-3449.

About AutoNation, Inc.

AutoNation, Inc., headquartered in Fort Lauderdale, Fla., is America's largest automotive retailer. A component of the Standard and Poor's 500 Index, AutoNation has approximately 25,000 full-time employees and owns and operates 322 new vehicle franchises in 15 states. For additional information, please visit http://corp.AutoNation.com or www.AutoNation.com, where more than 90,000 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

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 years ended December 31, 2007 and 2006, 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 CONDENSED CONSOLIDATED INCOME STATEMENTS
                      ($ in millions, except per share data)

                                     Three Months Ended  Twelve Months Ended
                                        December 31,         December 31,
                                       2007      2006      2007       2006

        Revenue:
          New vehicle                $2,446.7  $2,614.6  $10,195.6  $10,985.0
          Used vehicle                  972.6   1,001.5    4,241.2    4,413.3
          Parts and service             635.9     615.4    2,592.7    2,532.6
          Finance and insurance, net    141.5     146.6      593.7      623.1
          Other                          17.1      16.5       68.3       72.5
        Total revenue                 4,213.8   4,394.6   17,691.5   18,626.5

        Cost of sales:
          New vehicle                 2,274.6   2,425.8    9,475.6   10,179.8
          Used vehicle                  899.6     916.0    3,882.3    4,012.9
          Parts and service             360.4     348.7    1,460.5    1,419.6
          Other                           7.6       6.6       28.7       31.4
        Total cost of sales           3,542.2   3,697.1   14,847.1   15,643.7

        Gross profit                    671.6     697.5    2,844.4    2,982.8

        Selling, general and
         administrative expenses        496.9     499.8    2,046.2    2,109.9
        Depreciation and
         amortization                    26.8      20.8       91.7       81.4
        Other expenses (income), net      0.1       -          1.7       (0.2)

        Operating income                147.8     176.9      704.8      791.7

        Floorplan interest expense      (33.7)    (35.6)    (133.1)    (138.2)
        Other interest expense          (31.7)    (26.5)    (114.3)     (90.9)
        Other interest expense -
         senior note repurchases          -         -          -        (34.5)
        Interest income                   0.8       0.8        3.4        8.3
        Other gains (losses), net        (1.6)      3.2       (1.5)       4.8

        Income from continuing
         operations before income
         taxes                           81.6     118.8      459.3      541.2

        Provision for income taxes       31.9      44.6      171.3      210.4

        Net income from continuing
         operations                      49.7      74.2      288.0      330.8

        Income (loss) from
         discontinued operations,
         net of income taxes              2.0       1.0       (9.3)     (13.9)


        Net income                      $51.7     $75.2     $278.7     $316.9


        Diluted earnings (loss) per
         share:
          Continuing operations         $0.27     $0.35      $1.44      $1.44
          Discontinued operations       $0.01     $0.00     $(0.05)    $(0.06)

          Net income                    $0.28     $0.36      $1.39      $1.38


        Weighted average common
         shares outstanding             183.5     211.5      200.0      229.3

        Common shares outstanding,
         net of treasury stock          180.4     206.8      180.4      206.8



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

                Operating Highlights          Three Months Ended December 31,
                                                                  $       %
                                             2007      2006  Variance Variance
          Revenue:
            New vehicle                    $2,446.7  $2,614.6  $(167.9)  (6.4)
              Retail used vehicle             776.7     792.3    (15.6)  (2.0)
              Wholesale                       195.9     209.2    (13.3)  (6.4)
            Used vehicle                      972.6   1,001.5    (28.9)  (2.9)
            Parts and service                 635.9     615.4     20.5    3.3
            Finance and insurance, net        141.5     146.6     (5.1)  (3.5)
            Other                              17.1      16.5      0.6
          Total revenue                    $4,213.8  $4,394.6  $(180.8)  (4.1)


          Gross profit:
            New vehicle                      $172.1    $188.8   $(16.7)  (8.8)
              Retail used vehicle              75.3      86.5    (11.2) (12.9)
              Wholesale                        (2.3)     (1.0)    (1.3)
            Used vehicle                       73.0      85.5    (12.5) (14.6)
            Parts and service                 275.5     266.7      8.8    3.3
            Finance and insurance             141.5     146.6     (5.1)  (3.5)
            Other                               9.5       9.9     (0.4)
          Total gross profit                  671.6     697.5    (25.9)  (3.7)

          Selling, general and
           administrative expenses            496.9     499.8      2.9    0.6

          Depreciation and amortization        26.8      20.8     (6.0)
          Other expenses (income), net          0.1       -       (0.1)
           Operating income                   147.8     176.9    (29.1) (16.4)

          Floorplan interest expense          (33.7)    (35.6)     1.9
          Other interest expense              (31.7)    (26.5)    (5.2)
          Other interest expense - senior
           note repurchases                     -         -        -
          Interest income                       0.8       0.8      -
          Other gains (losses), net            (1.6)      3.2     (4.8)
            Income from continuing
             operations before income
             taxes                            $81.6    $118.8   $(37.2) (31.3)

          Retail vehicle unit sales:
               New                           76,865    82,672   (5,807)  (7.0)
               Used                          46,782    48,526   (1,744)  (3.6)
                                            123,647   131,198   (7,551)  (5.8)

          Revenue per vehicle retailed:
               New                          $31,831   $31,626     $205    0.6
               Used                         $16,603   $16,327     $276    1.7

          Gross profit per vehicle
           retailed:
               New                           $2,239    $2,284     $(45)  (2.0)
               Used                          $1,610    $1,783    $(173)  (9.7)
               Finance and insurance         $1,144    $1,117      $27    2.4



              Operating Highlights          Twelve Months Ended December 31,
                                                                  $       %
                                           2007       2006   Variance Variance
         Revenue:
           New vehicle                   $10,195.6  $10,985.0  $(789.4)  (7.2)
             Retail used vehicle           3,389.0    3,531.7   (142.7)  (4.0)
             Wholesale                       852.2      881.6    (29.4)  (3.3)
           Used vehicle                    4,241.2    4,413.3   (172.1)  (3.9)
           Parts and service               2,592.7    2,532.6     60.1    2.4
           Finance and insurance, net        593.7      623.1    (29.4)  (4.7)
           Other                              68.3       72.5     (4.2)
         Total revenue                   $17,691.5  $18,626.5  $(935.0)  (5.0)


         Gross profit:
           New vehicle                      $720.0     $805.2   $(85.2) (10.6)
             Retail used vehicle             358.8      400.4    (41.6) (10.4)
             Wholesale                         0.1        -        0.1
           Used vehicle                      358.9      400.4    (41.5) (10.4)
           Parts and service               1,132.2    1,113.0     19.2    1.7
           Finance and insurance             593.7      623.1    (29.4)  (4.7)
           Other                              39.6       41.1     (1.5)
         Total gross profit                2,844.4    2,982.8   (138.4)  (4.6)

         Selling, general and
          administrative expenses          2,046.2    2,109.9     63.7    3.0

         Depreciation and amortization        91.7       81.4    (10.3)
         Other expenses (income), net          1.7       (0.2)    (1.9)
          Operating income                   704.8      791.7    (86.9) (11.0)

         Floorplan interest expense         (133.1)    (138.2)     5.1
         Other interest expense             (114.3)     (90.9)   (23.4)
         Other interest expense - senior
          note repurchases                     -        (34.5)    34.5
         Interest income                       3.4        8.3     (4.9)
         Other gains (losses), net            (1.5)       4.8     (6.3)
           Income from continuing
            operations before income
            taxes                           $459.3     $541.2   $(81.9) (15.1)

         Retail vehicle unit sales:
              New                          328,963    362,895  (33,932)  (9.4)
              Used                         206,140    219,271  (13,131)  (6.0)
                                           535,103    582,166  (47,063)  (8.1)

         Revenue per vehicle retailed:
              New                          $30,993    $30,270     $723    2.4
              Used                         $16,440    $16,107     $333    2.1

         Gross profit per vehicle
          retailed:
              New                           $2,189     $2,219     $(30)  (1.4)
              Used                          $1,741     $1,826     $(85)  (4.7)
              Finance and insurance         $1,110     $1,070      $40    3.7



                                       Three Months Ended  Twelve Months Ended
               Operating Percentages       December 31,        December 31,
                                         % 2007   % 2006     % 2007   % 2006

          Revenue mix percentages:
            New vehicle                    58.1     59.5       57.6     59.0
            Used vehicle                   23.1     22.8       24.0     23.7
            Parts and service              15.1     14.0       14.7     13.6
            Finance and insurance, net      3.4      3.3        3.4      3.3
            Other                           0.3      0.4        0.3      0.4
                                          100.0    100.0      100.0    100.0

          Gross profit mix percentages:
            New vehicle                    25.6     27.1       25.3     27.0
            Used vehicle                   10.9     12.3       12.6     13.4
            Parts and service              41.0     38.2       39.8     37.3
            Finance and insurance          21.1     21.0       20.9     20.9
            Other                           1.4      1.4        1.4      1.4
                                          100.0    100.0      100.0    100.0

          Operating items as a percentage
           of revenue:
            Gross profit:
               New vehicle                  7.0      7.2        7.1      7.3
               Used vehicle - retail        9.7     10.9       10.6     11.3
               Parts and service           43.3     43.3       43.7     43.9
               Total                       15.9     15.9       16.1     16.0
            Selling, general and
             administrative expenses       11.8     11.4       11.6     11.3
            Operating income                3.5      4.0        4.0      4.3

          Operating items as a percentage
           of total gross profit:
            Selling, general and
             administrative expenses       74.0     71.7       71.9     70.7
            Operating income               22.0     25.4       24.8     26.5



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


          Capital Expenditures / Stock     Three Months       Twelve Months
                  Repurchases           Ended December 31,  Ended December 31,
                                           2007    2006      2007      2006

          Capital expenditures             $31.2   $39.1   $160.2     $175.6
          Acquisitions                      $2.5   $78.2     $6.7     $166.7
          Proceeds from exercises of
           stock options                    $4.7   $13.6    $96.6      $75.7
          Stock repurchases:
            Aggregate purchase price       $64.9   $43.3   $645.7   $1,380.6
            Shares repurchased (in
             millions)                       4.0     2.1     33.2       61.2



       Floorplan Assistance and   Three Months Ended     Twelve Months Ended
        Expense                      December 31,           December 31,

                                  2007   2006  Variance   2007  2006  Variance

        Floorplan assistance
         earned (included in
         cost of sales)           $22.9   $24.8  $(1.9) $100.0  $108.8  $(8.8)
        Floorplan interest
         expense                  (33.7)  (35.6)   1.9  (133.1) (138.2)   5.1

         Net inventory carrying
          cost                   $(10.8) $(10.8)  $-    $(33.1) $(29.4) $(3.7)



          Balance Sheet and Other Highlights

                                            December 31,          December 31,
                                                2007                  2006

           Cash and cash equivalents             $32.8                  $52.8
           Inventory                          $2,325.7               $2,305.0
           Total floorplan notes payable      $2,181.8               $2,213.6
           Non-vehicle debt                   $1,775.8               $1,571.5
           Equity                             $3,473.5               $3,712.7
           New days supply (industry
            standard of selling
            days, including fleet)             53 days                51 days

           Used days supply (trailing 30
           days)                               44 days                42 days



    Brand Mix - New Vehicle Revenue %

                                Three Months Ended      Twelve Months Ended
                                   December 31,              December 31,
                                % 2007     % 2006        % 2007       % 2006

    Detroit 3:
      Ford, Lincoln-Mercury     12.9         13.8         14.2         16.4
      Chevrolet, Pontiac,
       Buick, Cadillac, GMC     13.8         13.8         13.6         14.0
      Chrysler, Jeep, Dodge      6.6          7.0          7.0          7.4
        Detroit 3 total         33.3         34.6         34.8         37.8

    Import Premium Luxury:
      Mercedes                  14.1         14.3         12.2         12.0
      BMW                        6.8          6.0          6.4          5.1
      Lexus                      4.5          4.1          4.0          3.5
      Other premium luxury
       (Land Rover, Porsche)     3.1          3.3          3.0          2.7
        Premium Luxury total    28.5         27.7         25.6         23.3

    Volume Imports:
      Honda                      8.9          8.2          9.2          8.6
      Toyota                    14.6         14.4         15.2         14.5
      Nissan                     8.8          8.5          9.2          9.5
      Other imports              5.9          6.6          6.0          6.3
        Import total            38.2         37.7         39.6         38.9

                               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
                                             2007     2006     2007     2006

         As reported                        $51.7    $75.2    $0.28    $0.36

          Discontinued operations, net of
           income taxes                      (2.0)    (1.0)  $(0.01)  $(0.00)


         From continuing operations, as
          reported                           49.7     74.2    $0.27    $0.35


                                            Twelve Months Ended December 31,
                                             Net Income     Diluted Earnings
                                                               Per Share
                                             2007     2006     2007     2006

         As reported                       $278.7   $316.9    $1.39    $1.38

          Discontinued operations, net of
           income taxes                       9.3     13.9    $0.05    $0.06
         From continuing operations, as
          reported                          288.0    330.8    $1.44    $1.44


          Income tax adjustments            (12.0)     -     $(0.06)    $-
          Senior note repurchases             -       21.1    $ -      $0.09

         Adjusted                          $276.0   $351.9    $1.38    $1.53


         * 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 sales     assumes recovery in key markets

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

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



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

                 Operating Highlights         Three Months Ended December 31,
                                                                  $       %
                                             2007      2006  Variance Variance
           Revenue:
               New vehicle                 $2,438.5  $2,614.6  $(176.1)  (6.7)
                 Retail used vehicle          773.8     792.3    (18.5)  (2.3)
                 Wholesale                    194.5     208.6    (14.1)  (6.8)
               Used vehicle                   968.3   1,000.9    (32.6)  (3.3)
               Parts and service              631.2     615.4     15.8    2.6
               Finance and insurance, net     143.4     147.1     (3.7)  (2.5)
               Other                            6.0       5.9      0.1    1.7
           Total revenue                   $4,187.4  $4,383.9  $(196.5)  (4.5)


           Gross profit:
               New vehicle                   $171.7    $188.8   $(17.1)  (9.1)
                 Retail used vehicle           75.2      86.6    (11.4) (13.2)
                 Wholesale                     (2.7)     (1.5)    (1.2)
               Used vehicle                    72.5      85.1    (12.6) (14.8)
               Parts and service              273.1     267.1      6.0    2.2
               Finance and insurance          143.4     147.1     (3.7)  (2.5)
               Other                            6.2       6.0      0.2
           Total gross profit                $666.9    $694.1   $(27.2)  (3.9)


           Retail vehicle unit sales:
                  New                        76,687    82,672   (5,985)  (7.2)
                  Used                       46,674    48,526   (1,852)  (3.8)
                                            123,361   131,198   (7,837)  (6.0)

           Revenue per vehicle retailed:
                  New                       $31,798   $31,626     $172    0.5
                  Used                      $16,579   $16,327     $252    1.5

           Gross profit per vehicle
            retailed:
                  New                        $2,239    $2,284     $(45)  (2.0)
                  Used                       $1,611    $1,785    $(174)  (9.7)
                  Finance and insurance      $1,162    $1,121      $41    3.7



               Operating Highlights         Twelve Months Ended December 31,
                                                                  $       %
                                           2007      2006    Variance Variance
          Revenue:
              New vehicle              $10,107.7  $10,985.0    $(877.3)  (8.0)
                Retail used vehicle      3,367.4    3,531.7     (164.3)  (4.7)
                Wholesale                  838.3      879.2      (40.9)  (4.7)
              Used vehicle               4,205.7    4,410.9     (205.2)  (4.7)
              Parts and service          2,563.9    2,532.5       31.4    1.2
              Finance and insurance,
               net                         596.5      624.6      (28.1)  (4.5)
              Other                         25.1       27.8       (2.7)  (9.7)
          Total revenue                $17,498.9  $18,580.8  $(1,081.9)  (5.8)


          Gross profit:
              New vehicle                 $712.6     $805.2     $(92.6) (11.5)
                Retail used vehicle        357.3      400.5      (43.2) (10.8)
                Wholesale                   (2.1)      (2.3)       0.2
              Used vehicle                 355.2      398.2      (43.0) (10.8)
              Parts and service          1,116.4    1,111.7        4.7    0.4
              Finance and insurance        596.5      624.6      (28.1)  (4.5)
              Other                         25.7       24.5        1.2
          Total gross profit            $2,806.4   $2,964.2    $(157.8)  (5.3)


          Retail vehicle unit sales:
                 New                     327,372    362,895    (35,523)  (9.8)
                 Used                    205,490    219,271    (13,781)  (6.3)
                                         532,862    582,166    (49,304)  (8.5)

          Revenue per vehicle
           retailed:
                 New                     $30,875    $30,270       $605    2.0
                 Used                    $16,387    $16,107       $280    1.7

          Gross profit per vehicle
           retailed:
                 New                      $2,177     $2,219       $(42)  (1.9)
                 Used                     $1,739     $1,827       $(88)  (4.8)
                 Finance and insurance    $1,119     $1,073        $46    4.3



                                         Three Months Ended   Twelve Months
                 Operating Percentages      December 31,    Ended December 31,
                                           % 2007   % 2006   % 2007   % 2006

            Revenue mix percentages:
                New vehicle                  58.2     59.6     57.8     59.1
                Used vehicle                 23.1     22.8     24.0     23.7
                Parts and service            15.1     14.0     14.7     13.6
                Finance and insurance,
                 net                          3.4      3.4      3.4      3.4
                Other                         0.2      0.2      0.1      0.2
                                            100.0    100.0    100.0    100.0


            Gross profit mix percentages:
                New vehicle                  25.7     27.2     25.4     27.2
                Used vehicle                 10.9     12.3     12.7     13.4
                Parts and service            41.0     38.5     39.8     37.5
                Finance and insurance        21.5     21.2     21.3     21.1
                Other                         0.9      0.8      0.8      0.8
                                            100.0    100.0    100.0    100.0



            Operating items as a
             percentage of revenue:
                Gross Profit:
                   New vehicle                7.0      7.2      7.1      7.3
                   Used vehicle - retail      9.7     10.9     10.6     11.3
                   Parts and service         43.3     43.4     43.5     43.9
                   Total                     15.9     15.8     16.0     16.0

SOURCE AutoNation, Inc.

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

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