Car Dealer Auto Nation Reports Record Third Quarter

FORT LAUDERDALE, Fla., Oct. 24, 2002; AutoNation, Inc., America's largest retailer of both new and used vehicles, today reported third-quarter earnings per share of $0.33 that set a record for the period and exceeded by 38% a year-earlier $0.24 per share. Net income rose 35% to $106.7 million from last year's third-quarter result of $79.2 million and operating income rose 29% to $180.7 million from $140.2 million a year earlier as higher revenue and gross margin, as well as lower inventory-carrying costs drove improved performance. The Company's remaining consumer loan portfolio contributed $0.01 per share of after-tax income. On a comparable basis -- after excluding $0.04 per share of after-tax goodwill amortization from last year's results -- the Company's third-quarter performance improved 18% to $0.33 per share versus $0.28 per share a year ago.

Total revenue for the third quarter ended September 30, 2002 increased 4% to $5.2 billion from $5.0 billion reported a year earlier as total revenue rose 6% for new vehicles, 7% for finance and insurance and 2% for parts and service. Total gross margin increased 4% to $764.1 million from $731.8 million a year ago.

Commenting on the 2002 third-quarter performance, Mike Jackson, AutoNation's Chief Executive Officer, said, "American vehicle buyers continue to respond to a powerful combination of great products and great values. That, combined with the resiliency of our diversified business model, led to another record quarter of results. So far this year we've delivered a 34% increase in net income, demonstrating again our ability to deliver strong results in this current business environment."

Other Company highlights in the third quarter included:

An agreement to acquire six new vehicle franchises from the Vista Automotive Group in Corpus Christi, Texas. The acquisition, which is expected to close later this year, includes Toyota, Chevrolet, Cadillac, Oldsmobile, Mitsubishi and Isuzu franchises. Last year, these franchises generated approximately $151 million of revenue. Also the Company recently agreed to acquire Jim McNatt Honda of Dallas with approximately $48 million in revenue. Closing the acquisition of Claridge's BMW in Fremont, Calif. In 2001, Claridge's BMW had revenue of approximately $63 million. Through the third quarter, AutoNation has closed acquisitions representing approximately $500 million in annual revenue. Record earnings before interest, taxes, depreciation and amortization of $201.7 million, up 14% from $177 million in the year-ago period. The repurchase of 4 million of the Company's shares at a cost of $47.9 million. Separately, the Company also announced today that its Board of Directors has authorized an additional $500 million for the repurchase of its common stock. The Board's decision extends the Company's previously authorized $2 billion of share repurchase programs. Since August 1998, the Company has repurchased $1.9 billion worth of its common stock pursuant to these programs. In addition, and in connection with the share repurchase program, the Board has authorized the Company to conduct a consent solicitation to amend the terms of its 9% senior notes due in 2008 to provide an additional $400 million of share repurchase capacity.

Looking ahead, Mr. Jackson said, "We expect 2002 fourth-quarter earnings per share to be in the range of $0.25 to $0.27 and 2002 full-year earnings per share to be in the range of $1.18 to $1.20. Our full-year 2003 EPS outlook is $1.25 to $1.30 as we anticipate delivering earnings growth in a market where we expect U.S. sales of new vehicles to decline 3-to-5% from 2002."

For the nine-month period ended September 30, 2002, the Company earned net income of $302.2 million, or $0.93 per share, up 34% from prior-year net income of $225.4 million, or $0.67 per share. The Company's revenue during the nine-month period totaled $15.0 billion, up from prior-year revenue of $14.8 billion.