AutoNation 2003 Annual Report Download - page 80

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Table of Contents
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company purchases substantially all of its new vehicles from various manufacturers or distributors at the prevailing prices to all
franchised dealers. The Company’s sales volume could be adversely impacted by the manufacturers’ or distributors’ inability to supply the
stores with an adequate supply of vehicles.
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, 2003, the Company does not consider itself to have any significant non-manufacturer concentrations of
credit risk.
23. QUARTERLY INFORMATION (UNAUDITED)
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 to be generally 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 other
factors unrelated to season, such as automotive manufacturer incentive programs.
The following is an analysis of certain items in the Consolidated Income Statements by quarter for 2003 and 2002:
First Second Third Fourth
Quarter Quarter Quarter Quarter
Revenue 2003 $4,459.3 $5,068.6 $5,257.4 $4,595.8
2002 $4,750.7 $5,015.6 $5,193.7 $4,518.5
Operating income(2) 2003 $170.2 $206.9 $206.3 $130.7
2002 $175.3 $196.6 $199.3 $155.2
Income from continuing operations(3) 2003 $211.9 $106.3 $108.8 $79.1
2002 $91.7 $103.8 $106.7 $79.4
Net income(3) 2003 $185.0 $106.3 $108.8 $79.1
2002 $91.7 $103.8 $106.7 $79.4
Basic earnings per share from continuing operations(1) 2003 $.73 $.38 $.40 $.29
2002 $.29 $.32 $.34 $.26
Diluted earnings per share from continuing operations(1) 2003 $.72 $.37 $.38 $.28
2002 $.28 $.32 $.33 $.26
(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) Fourth quarter 2003 operating income was impacted by a $27.5 million real estate impairment charge related to three underperforming
new vehicle stores.
(3) Fourth quarter 2003 income from continuing operations and net income were impacted by an after-tax $16.9 million real estate
impairment charge related to three underperforming new vehicle stores, a $10.3 million benefit from income tax adjustments, and an
after-tax $6.2 million gain on the sale of the Company’s remaining investment in LKQ Corporation.
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