AutoNation 2006 Annual Report Download - page 68
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Table of Contents
Concentrations of credit risk with respect to non-manufacturer trade receivables are limited due to the wide variety of customers and
markets in which the Company’s products are sold as well as their dispersion across many different geographic areas in the United
States. Consequently, at December 31, 2006, the Company does not consider itself to have any significant non-manufacturer
concentrations of credit risk.
The Company’s operations generally experience higher volumes of vehicle sales and service in the second and third quarters of each
year in part due to consumer buying trends and the introduction of new vehicle models. Also, demand for cars and light trucks is
generally lower during the winter months than in other seasons, particularly in regions of the United States where stores may be subject to
adverse winter weather conditions. Accordingly, the Company expects revenue and operating results generally to be lower in the first and
fourth quarters as compared to the second and third quarters. However, revenue may be impacted significantly from quarter to quarter by
actual or threatened severe weather events, and by other factors unrelated to weather conditions, such as changing economic conditions
and automotive manufacturer incentive programs.
The following is an analysis of certain items in the Consolidated Income Statements by quarter for 2006 and 2005:
Revenue 2006 $4,611.9 $4,959.1 $ 4,944.5 $ 4,473.1
2005 $ 4,430.6 $ 4,878.6 $5,041.9 $ 4,378.4
Gross profit 2006 $ 761.1 $ 792.3 $ 780.3 $ 710.7
2005 $ 726.5 $ 762.5 $ 785.2 $ 709.9
Operating income 2006 $ 202.5 $ 212.5 $ 204.2 $ 177.4
2005 $ 197.7 $ 209.3 $ 218.3 $ 178.7
Income from continuing operations 2006 $ 162.4 $ 119.7 $ 141.5 $ 118.5
2005 $ 142.2 $ 168.0 $ 180.0 $ 135.0
Net income(2) 2006 $ 87.2 $ 72.7 $ 81.8 $ 75.2
2005 $ 97.0 $ 194.8 $ 129.4 $ 75.3
Basic earnings per share from continuing operations(1)(3) 2006 $ .37 $ .33 $ .41 $ .36
2005 $ .33 $ .41 $ .46 $ .31
Diluted earnings per share from continuing operations(1)(3) 2006 $ .37 $ .33 $ .40 $ .35
2005 $ .33 $ .40 $ .45 $ .31
(1) Quarterly basic and diluted earnings per share from continuing operations may not equal total earnings per share for the year as
reported in the Consolidated Income Statements due to the effect of the calculation of weighted average common stock equivalents
on a quarterly basis.
(2) Second quarter 2005 net income was impacted by a $95.7 million gain included in discontinued operations related to the
resolution of various income tax matters.
(3) Second, third and fourth quarter 2006 basic and diluted earnings per share from continuing operations were impacted by lower
weighted average common shares outstanding resulting from the Company’s repurchase of common shares of stock. See Note 9 to
Notes to Consolidated Financial Statements for additional information.
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