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Letter to the Editor

UnitedAuto Net Income Up 38% in Q2

The company's record results were highlighted by a 3.2 percent increase in same-store retail revenues, which includes a 4.0 percent increase in new vehicle retail revenue, driven by the continued strong performance of its premium and luxury franchises, and a 9.5 increase increase in service and parts revenues. Net income for the quarter increased 38.3% to $33.0 million, or $0.71 per share, from $23.9 million, or $0.58 per share, in the prior year. Second quarter 2004 results include a $6.6 million ($4.0 million after tax), or $0.09 per share, gain resulting from the sale of an investment.

For the six months ended June 30, 2004, revenues increased 17.8 percent to $4.8 billion. Net income for the year increased 41.5 percent to $53.2 million, or $1.19 per share, from $37.6 million, or $0.92 per share, in the prior year. Prior year results include the effect of $5.0 million after tax (including $3.1 million in the first quarter and $1.9 million in the second quarter), or $0.12 per share, of nonrecurring charges.

Chairman Roger Penske commented, "I'm pleased with our performance, despite a challenging retail vehicle market in the United States during the quarter. In particular, the 9.5 percent same-store growth in our service and parts business demonstrates the benefit of our capital investment program and the resiliency of our business model. We will continue to make the necessary investment, both domestically and internationally, to foster future growth."

Including the completion of three Honda and two Acura acquisitions from the Stevens Group in the San Francisco Bay Area (expected to close in August), UnitedAuto will have acquired $600 million in net annualized revenue in 2004, meeting the company's acquisition target. Considering completed acquisitions, the expected performance of the business and the anticipation of higher interest rates, the Company currently estimates earnings per share in the range of $2.30 - $2.39 per share for the full year, which includes the effect of the $0.09 per share nonrecurring gain from the second quarter and is based on an estimated average of 45.6 million shares outstanding. Earnings per share in the third quarter are expected to be in the range of $0.61 - $0.63 per share, based on an estimated average of 46.6 million shares outstanding.

UnitedAuto currently operates 139 franchises in the United States and 103 franchises internationally, primarily in the United Kingdom.

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