NEW YORK CITY – Sotheby’s Holdings, Inc., the parent company of Sotheby’s live and online auction businesses, art-related financial services and real-estate activities, today announced results for the second quarter and first half ended June 30, 2001.
For the second quarter ended June 30, the company reported total revenues of $129.4 million, compared to total revenues of $157.4 million for the corresponding period of 2000. Net income for the second quarter of 2001 was $14.3 million, or $0.23 per share, compared to net income for the second quarter of 2000 of $30.0 million, or $0.51 per share. Excluding employee retention costs and other charges principally related to the resolution of antitrust related matters, the company’s net income for the second quarter of 2001 was $17.7 million, or $0.29 per share. Results for the second quarter of 2000 include antitrust related special charges of $2.0 million, or ($0.02) per share. Excluding such charges, net income for the second quarter of 2000 was $31.3 million, or $0.53 per share.
For the first half of 2001, the company reported total revenues of $186.9 million, compared to total revenues of $212.1 million for the corresponding period of 2000. Net loss for the first half of 2001 was ($8.3) million, or ($0.14) per share, compared to net income for the first half of 2000 of $0.9 million, or $0.02 per share.
During the first six months of 2001, the company recorded employee retention costs of approximately $8.7 million, or ($0.09) per share, as well as other charges of $1.2 million, or ($0.01) per share, principally related to the resolution of antitrust related matters. Excluding these charges, the company’s net loss for the first half of 2001 was ($1.9) million, or ($0.03) per share. Results for the first half of 2000 include antitrust related special charges of $3.8 million, or ($0.04) per share. Excluding such charges, net income for the first half of 2000 was $3.4 million, or $0.06 per share.
“Two thousand and one stands as a time of transition for Sotheby’s,” said William F. Ruprecht, President and Chief Executive Officer of Sotheby’s Holdings, Inc. “In light of last year’s Department of Justice investigation, Sotheby’s [has] largely satisfied its settlement liabilities in the first half of the year. The implementation of our Restructuring Plan has yielded positive results, chief among them the reduction of operating expenses, primarily in the Internet.
“Our earnings reflect the current competitive environment in the art market, as well as more selective buying in our live auction business. Additionally, our results reflect the costs associated with our employee retention programs, as well as legal and other professional fees associated with the resolution of antitrust related matters.”
Total revenues of $186.9 million decreased 12 percent as compared with the first half of 2000. This was primarily due to reduced contributions from Auction and Real Estate operating segments. Including employee retention costs and other charges principally related to the resolution of antitrust related matters, total operating expenses for the first half of the year decreased $16.8 million to $188.9 million.
In view of the highly competitive auction environment Sotheby’s is facing, along with the charges associated with the company’s employee retention program, and the continued investment in Sothebys.com, management expects a loss for the full year 2001. As a result of the above, as well as management’s continued focus on controlling costs, the company is currently assessing all aspects of its business with the goal of improving profitability through economies and further restructuring.
Spring Results
“Auction sales for the first six months of the year totaled $942.9 million, a 9 percent decrease compared to the same period a year ago. However, significantly increased sales of single-owner collections partially offset the decline,” said Mr. Ruprecht. “Sotheby’s New York salesroom led the May auctions of Impressionist & Modern Art and Contemporary Art with $222.3 million in sales, surpassing the results of our competitors. One highlight of the Impressionist sale was Max Beckmann’s Self-Portrait with Horn, which commanded $22.6 million and established a record for the artist at auction and for any German work of art at auction. In London, Monet’s Meules, Les Derniers Rayon de Soleil, sold for $14.3 million in last month’s Impressionist and Modern Art sale, an auction record for any haystack painting by the artist.”
The July series of Old Master Drawings and Paintings sales in London was highlighted by Michelangelo’s “Study of a Mourning Woman,” which brought $8.4 million. The Old Master Paintings sale boasted a total of $34.0 million and saw several new world auction records established, including Pieter Brueghel the Younger’s A Village Kermesse, which sold for $5.4 million.
Single-Owner Collections
Sotheby’s offered several single-owner collections this spring. Chief among them was the Stanley J. Seeger Collection of Twentieth Century Works of Art, which was sold in our New York and London salesrooms and brought a total of $63.3 million. The highlight of the New York sale was Francis Bacon’s triptych Study of the Human Body, 1979, which fetched $8.6 million, a new world record for the artist at auction. The Collection of Marshall B. Coyne, including books, furniture and decorative arts, was sold over 3 days and brought $11.8 million, well above its pre-sale low estimate of $7.4 million. The Leverhulme Collection of Eighteenth and Nineteenth Century furniture, porcelain, and British furniture and paintings brought an astounding $13.8 million, a record for any United Kingdom country house sale.
Internet
Internet-related expenses of $6.4 million for the second quarter of 2001 compared to second quarter 2000 expenses of $13.9 million. Internet-related operating loss for the second quarter ended June 30, 2001 was ($0.05) per share, as compared to ($0.12) for the same period in 2000. Internet-related expenses for the first half of 2001 were $14.2 million, as compared to $33.2 million for the same period a year ago. The Internet-related operating loss for the first half of 2001 was ($0.11) per share, as compared to a ($0.30) per share for the same period a year ago. Reducing Internet expenditure remains a key focus for Sotheby’s. The 18 percent decrease in Internet expenses from the first quarter of 2001 to the second quarter shows the further progress made in this area.
Internet sales for the first half of 2001 were $23.8 million, as compared to sales of $31.0 million for the same period in 2000. Included within first half 2000 Internet sales was the Declaration of Independence, which brought $8.14 million, becoming the most expensive rdf_Description ever auctioned online. Dealer sales on Sothebys.com grew by 65 percent in the first half of 2001 compared to the same period in 2000. The Dealer Associates network currently stands at 5,200 worldwide members.
Credit Facility
On July 11, the company amended and restated its Bank Credit Agreement, which provides for two separate credit facilities consisting of a senior secured term facility of $130 million with repayment due on August 10, 2002 and a senior secured revolving credit facility of up to $120 million available through July 10, 2002.
