AutoNation 2005 Annual Report Download - page 70

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Table of Contents
AUTONATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
distributors of $177.7 million and $174.4 million, respectively. Additionally, a large portion of the Company’s Contracts-in-Transit included in
Accounts Receivable are due from automotive manufacturers’ captive finance subsidiaries which provide financing directly to the Company’s
new and used vehicle customers.
The Company purchases substantially all of its new vehicles from various manufacturers or distributors at the prevailing prices available
to all franchised dealers. Additionally, the Company finances its new vehicle inventory primarily with automotive manufacturers’ captive
finance subsidiaries. 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 and related financing.
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, 2005, the Company does not consider itself to have any significant non-manufacturer concentrations of
credit risk.
20. 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 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 2005 and 2004:
First Second Third Fourth
Quarter Quarter Quarter Quarter
Revenue 2005 $4,561.2 $5,018.9 $5,188.0 $4,485.3
2004 $4,536.8 $4,816.0 $4,940.7 $4,751.1
Operating income 2005 $199.6 $209.7 $219.6 $178.1
2004 $182.0 $195.2 $195.2 $193.0
Income from continuing operations(2) 2005 $88.9 $106.0 $120.2 $80.4
2004 $88.6 $96.4 $95.7 $116.4
Net income(2)(3) 2005 $97.0 $194.8 $129.4 $75.3
2004 $87.3 $92.1 $92.4 $161.8
Basic earnings per share from continuing
operations(1) 2005 $.34 $.40 $.46 $.31
2004 $.33 $.36 $.36 $.44
Diluted earnings per share from continuing
operations(1) 2005 $.33 $.40 $.45 $.30
2004 $.32 $.35 $.35 $.43
(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.
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