EXHIBIT 99.1
[SOTHEBY'S LOGO]
News Release
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Press Department:
Diana Phillips
Matthew Weigman
(212) 606-7176
Investor Relations:
Jennifer Park
(212) 894-1023
SOTHEBY'S HOLDINGS, INC. ANNOUNCES 2004 FOURTH
QUARTER AND FULL YEAR RESULTS
o Fourth quarter income from continuing operations increase 106% to
$36.1 million
o Full year Auction and Related Revenues increase 43% to $443.1 million
o Full year income from continuing operations of $62.4 million
o Dramatic return to profitability for Sotheby's
March 17, 2005, New York -- Sotheby's Holdings, Inc. (NYSE: BID), the parent
company of Sotheby's worldwide auction businesses, art-related financing and
private sales activities, today announced results for the fourth quarter and
full year ended December 31, 2004.
For the quarter ended December 31, 2004, the Company's Auction Sales (aggregate
hammer price of property sold at auction, including buyer's premium), were
$1,147.0 million, a 45% increase from $792.9 million in the prior period.
Contributing to these results were: the impressive fall New York Impressionist
and Modern Art sales which brought $232.0 million, a 59% increase from the prior
fall; the November New York Contemporary Art sales of $121.1 million, a 23%
increase from the prior year; the winter
New York American Paintings sales which totaled $107.9 million, an almost
four-fold increase from the prior year's sale of $31.2 million; and record
breaking Hong Kong sales in October of $75.8 million. For the fourth quarter of
2004, the Company reported auction and related revenues of $175.5 million, a 31%
or $41.3 million increase from the prior period, largely due to the significant
increase in auction sales. The Company's income from continuing operations was
$36.1 million or $0.57 per diluted share for the fourth quarter of 2004 compared
to income from continuing operations of $17.6 million, or $0.28 per diluted
share in the prior-year period, a 106% or $18.5 million improvement.
Auction Sales totaled $2,694.5 million for the full year of 2004, an increase of
59% from $1,690.7 million in the prior period. Auction and related revenues for
the full year 2004 totaled $443.1 million, an increase of $134.1 million, or
43%, from the prior year largely due to the significant increase in auction
sales. This increase was partially offset by lower auction commission margins as
a sizeable portion of the increase in auction sales came from high-end works of
art for which commission margins are traditionally lower due to the competition
for such objects. Income from continuing operations was $62.4 million, or $1.00
per diluted share for the full year 2004, compared to a loss from continuing
operations of ($26.0) million, or ($0.42) per diluted share in the prior period,
an improvement of $88.4 million. This upturn was primarily due to a significant
increase in auction commission revenues as well as the recognition of $45.0
million in license fee revenue related to a one-time non-refundable payment
received for entering into a license agreement with Cendant Corporation in
conjunction with the Company's sale of its domestic real estate brokerage
business in February 2004.
For the full year 2004, the Company recorded pre-tax charges of $2.4 million,
largely attributable to antitrust related special charges which are run-off
legal and administrative costs. For the prior period, pre-tax charges were $16.6
million, primarily due to the Company's employee retention programs and net
restructuring charges. Excluding these items and the Cendant license fee revenue
and associated expense, the Company would have recorded adjusted income from
continuing operations of $35.6* million, or $0.57*
2
per diluted share, for the full year 2004, as compared to an adjusted loss from
continuing operations of ($14.4)* million, or ($0.23)* per diluted share, in the
prior period, an improvement of $50.0 million.
The year 2004 saw a significant strengthening of Sotheby's financial position.
In addition to the outstanding operating results in 2004, Sotheby's realized
proceeds of over $100 million on the sale of its Realty operations in February
of 2004 and also signed a three-year credit facility for $200 million. As a
result, cash and short-term investments totaled $257 million at December 31,
2004. This dramatic improvement in earnings and significant strengthening of the
balance sheet also led to a credit rating upgrade from both Standard & Poor's
and Moody's in 2004 and a 33% increase in Sotheby's share price during 2004.
"Our focus and our energies have been on a return to profitability and in 2004
we successfully achieved that goal," said Bill Ruprecht, President and Chief
Executive Officer of Sotheby's Holdings, Inc. "2004 was a remarkable year for
Sotheby's and we are delighted with these results. The 45% increase in sales for
the fourth quarter translated to a doubling of net income, dramatically
reflecting the operating leverage in the business and we have seen even larger
gains in sales and net income for the full year. We will continue to challenge
the Company's cost structure and seek additional opportunities for revenue
growth.
"Sotheby's made history both in auction sales and in private sales last year,"
Mr. Ruprecht continued. "Sotheby's auctioned the world's most expensive painting
when Picasso's Garcon a la Pipe crossed the $100 million threshold for the first
time and sold for $104.2 million. And the sale of the fabled Faberge Collection
from the Forbes family became possibly the largest private sale ever when the
collection was acquired privately in its entirety and repatriated to Russia.
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"Sotheby's ability to attract extraordinary paintings and objects for sale last
year, coupled with a strong art market, resulted in broad-based strength across
a number of categories and geographic locations. That strength has continued
into 2005 and we are encouraged by the 41% increase in sales for the first two
months of 2005 compared to 2004 as well as the level of consignments for the
spring season."
Throughout the year, many extraordinary prices were achieved across a multitude
of collecting categories. Sotheby's sold eight of the top ten lots sold at
auction in 2004, which was a remarkable achievement. Along with Pablo Picasso's
Garcon a la Pipe that sold in May for a world record $104.2 million, Amedeo
Modigliani's Jeanne Hebuterne (Devant une Porte) sold for $31.4 million,
Johannes Vermeer's A Young Woman Seated at the Virginals sold for $30.0 million,
John Singer Sargent's Group with Parasols (a Siesta) sold for $23.5 million and
Paul Gauguin's Maternite (II) sold for $39.2 million.
Outstanding results were also posted in a number of single owner sales during
2004. The most notable examples were the Greentree Foundation sale of Property
from the Collection of Mr. and Mrs. John Hay Whitney, which brought $213.2
million and was our highest total ever for a single owner sale; Rita and Daniel
Fraad's record breaking Collection of American Paintings which brought $65.1
million, the highest auction total ever for a single owner sale of American
paintings; the contents of contemporary artist Damien Hirst's restaurant
Pharmacy which was 100% sold and totaled $20.1 million, more than double its
pre-sale estimate; the collection of extraordinary timepieces from the Time
Museum which sold for $18.2 million; and the Estate of Katharine Hepburn which
also was 100% sold and achieved $6.1 million. Sotheby's experienced a three-fold
increase in single owner sales volume from the prior year and our highest yearly
total of single owner sales in fourteen years.
Year to Date 2005 Sales
Worldwide sales have been strong to date, highlighted by the exceptional
Impressionist and Contemporary sales held last month in London. The London
Impressionist and
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Modern Art sales achieved $103.8 million, up 37% from the prior year with ten
works selling for more than (pound)1 million. The top lot of the sales was a
masterpiece by Fernand Leger entitled Nature Morte a la Lampe which achieved
$5.4 million. The Contemporary Art sales also fared exceptionally well, totaling
$42.0 million, an increase of 19% from the prior winter, with the evening sale
achieving the highest total ever for a European Contemporary sale at Sotheby's.
In January, Sotheby's New York held an extremely strong week of Americana sales.
The week total led the market with $25.3 million, a significant increase of 86%
from the prior year. This was largely due to the exceptional single owner sale
of property from the Goddard Family which included some of the finest examples
of American furniture and achieved a total of $13.1 million, well in excess of
its pre-sale estimate of $4.3/$8.7** million.
Also in New York, the Old Masters Paintings sales led the market with a total of
$44.2 million, soundly above its estimate of $28.8/$39.8** million. The
highlight of the series was An Important Lead Bust of the so-called
"Ill-Humored" Man by Franz Xaver Messerschmidt which sold for $4.8 million, more
than ten times the estimate of $300,000/$500,000**.
Upcoming Sales
Sotheby's May 3rd sale of Impressionist and Modern Art in New York will feature
Wassily Kandinsky's rediscovered masterpiece Zwei Reiter und liegende Gestalt
(Two Riders and a Reclining Figure) which has been unseen for nearly a century
and largely unknown to scholars. This brilliant abstract painting from the
artist's most important period is estimated to sell for $15/$25** million. Also
included in the sale are works from the Collection of Dr. and Mrs. John A. Cook
which is highlighted by Pablo Picasso's Les Femmes d'Algers, from the iconic
series of fifteen canvases he painted of North African women. The painting is
estimated to bring $10/$15** million. Another outstanding highlight of the sale
is a striking self-portrait by Max Beckmann, entitled Self
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Portrait with Crystal Ball. Beckmann painted this portrait of himself as a
prescient sooth-sayer, in 1936, just months before he fled Germany for Holland
and it is a powerful testament of the artist's determination to persevere during
those troubled times. The painting is in wonderful original condition and is
estimated at $10/$15** million.
Also in May in New York, Sotheby's is holding its sale of Contemporary Art which
will be highlighted by Andy Warhol's magnificent Liz. This work is one of a rare
series of thirteen paintings of Elizabeth Taylor and the only one to possess the
vibrant `naphthol red light' background that was reserved for Warhol's most
concentrated and important compositions. The painting is estimated to sell for
$9/$12** million. Other works in the Contemporary sale will come from the
Collection of Gianni Versace, some of which were commissioned directly from the
artists by Versace. Works by Roy Lichtenstein, Jean-Michel Basquiat and the
collaborative genius of Basquiat and Warhol, as well as Francesco Clemente will
also be auctioned.
Yesterday in Paris we held the first session of the sale of the estate of the
Baron de Rede from the Hotel Lambert. The sale at the Galerie Charpentier
includes exquisite works of art which illustrate Alexis de Rede's fine sense of
aesthetics and his modern, eclectic taste. The first session, estimated at
$3.5/$6.0** million surpassed the high estimate when it brought a very
successful $6.8 million. The entire sale estimated to achieve $4.4/$7.2**
million
Our spring Fine Chinese Ceramics and Works of Art sale in New York at the end of
the month will feature several exceptional examples of ceramics and a selection
of approximately 200 snuff bottles from the Collection of Ms. Avrina Pugh,
Racine, Wisconsin, which have been off the market for over sixty years. The sale
is expected to achieve $7/$9** million.
In May, Sotheby's will sell a large collection of selected paintings, furniture
and works of art from Easton Neston house in Northamptonshire on behalf of the
Lord and Lady
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Hesketh and the Trustees of Frederick, 2nd Baron Hesketh. Easton Neston is
widely considered to be one of the most beautiful country houses in England and
its contents are no less magnificent. Together, the pieces to be sold (some
1,500 items of fine English and French furniture, Old Master and British
Paintings, Tapestries, Silver, Books, Chinese cloisonne, Japanese lacquer work,
European Porcelain and Glass) represent centuries of patronage and collecting at
the highest level. Easton Neston is exceptionally rich in great works of art
from different fields, making it one of the most eclectic and exciting house
sales to have been organized by Sotheby's over the last 20 years. The three day
sale is expected to garner in excess of $9.0** million.
* Non-GAAP financial measure. See Appendix B.
** Estimates do not include buyer's premium.
About Sotheby's Holdings, Inc.
Sotheby's Holdings, Inc. is the parent company of Sotheby's worldwide auction
businesses, art-related financing and private sales activities. The Company
operates in 34 countries, with principal salesrooms located in New York and
London. The Company also regularly conducts auctions in 13 other salesrooms
around the world, including Australia, Hong Kong, France, Italy, the
Netherlands, Switzerland and Singapore. Sotheby's Holdings, Inc. is listed on
the New York Stock Exchange under the symbol BID.
Forward-looking Statements
This release contains certain "forward-looking statements" (as such term is
defined in the Securities and Exchange Act of 1934, as amended) relating to
future events and the financial performance of the Company. Such statements are
only predictions and involve risks and uncertainties, resulting in the
possibility that the actual events or performances will differ materially from
such predictions. Major factors, which the Company believes could cause the
actual results to differ materially from the predicted results in the
"forward-looking statements" include, but are not limited to, the overall
strength of the international economy and financial markets, political
conditions in various nations, competition with other auctioneers and art
dealers, the amount of quality property being consigned to art auction houses
and the marketability at auction of such property.
Financial Tables Follow
All Sotheby's Press Releases and SEC filings are available on our web site at
www.sothebys.com.
Sotheby's Holdings, Inc.'s earnings conference call will take place on Thursday,
March 17, 2005, at 9:00 AM EST. Domestic callers should dial: 800-240-4186 and
international callers should dial: 303-262-2137. The call reservation number is
11026173. Conference replay after the call is available from March 17th to March
31st at 800-405-2236 or 303-590-3000. Enter passcode 11026173#.
To listen to the conference call via web cast, please go to
www.actioncast.acttel.com and enter the passcode 27900 when prompted. You will
need Windows Media Player or Real Player to access the call. Please download
either of these programs before the call begins at 9:00 AM on March 17th. The
web cast will be available for replay for two weeks after the call.
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APPENDIX A
SOTHEBY'S HOLDINGS, INC.
CONSOLIDATED INCOME STATEMENTS
UNAUDITED
Three Months Ended Twelve Months Ended
------------------ -------------------
December 31, December 31, December 31, December 31,
2004 2003 2004 2003
---- ---- ---- ----
(Thousands of dollars, except per share data)
---------------------------------------------
Revenues:
Auction and related revenues $175,505 $134,235 $443,130 $308,990
License fee revenue - - 45,745 -
Other revenues 2,762 1,773 7,845 8,354
-------- -------- --------- ---------
Total revenues 178,267 136,008 496,720 317,344
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Expenses:
Direct costs of services 22,829 19,403 55,526 45,631
Salaries and related costs 51,962 43,680 177,583 143,540
General and administrative expenses 33,321 27,400 110,760 93,661
Depreciation and amortization expense 6,302 6,507 23,830 25,321
Retention costs - 318 285 8,466
Net restructuring charges - - 146 5,039
Special charges 276 542 1,928 3,112
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Total expenses 114,690 97,850 370,058 324,770
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Operating income (loss) 63,577 38,158 126,662 (7,426)
Interest income 1,626 512 3,281 2,498
Interest expense (8,252) (8,825) (33,551) (32,832)
Other (expense) income (79) 58 261 673
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Income (loss) from continuing operations before taxes 56,872 29,903 96,653 (37,087)
Equity in earnings of investees, net of taxes 297 55 740 31
Income tax expense (benefit) 21,081 12,399 35,000 (11,018)
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Income (loss) from continuing operations 36,088 17,559 62,393 (26,038)
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Discontinued operations:
Income from discontinued operations before taxes 252 4,312 38,802 9,431
Income tax expense 182 1,668 14,516 4,049
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Income from discontinued operations 70 2,644 24,286 5,382
-------- -------- --------- ---------
Net income (loss) $36,158 $20,203 $86,679 ($20,656)
======== ======== ========= =========
Basic earnings (loss) per share:
Earnings (loss) from continuing operations $0.58 $0.29 $1.01 ($0.42)
Earnings from discontinued operations 0.00 0.04 0.39 0.09
-------- -------- --------- ---------
Basic earnings (loss) per share $0.58 $0.33 $1.40 ($0.34)
======== ======== ========= =========
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations $0.57 $0.28 $1.00 ($0.42)
Earnings from discontinued operations 0.00 0.04 0.39 0.09
-------- -------- --------- ---------
Diluted earnings (loss) per share: $0.57 $0.33 $1.38 ($0.34)
======== ======== ========= =========
Weighted average shares outstanding (in thousands):
Basic 62,201 61,569 61,849 61,555
Diluted 63,410 61,874 62,676 61,555
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APPENDIX B
SOTHEBY'S HOLDINGS, INC.
GAAP TO NON-GAAP RECONCILIATIONS
GAAP and non-GAAP Financial Measures:
GAAP refers to generally accepted accounting principles in the United States of
America. In this release, financial measures are presented in accordance with
GAAP and also on a non-GAAP basis. All references in this release denoted by *
are to "adjusted" non-GAAP financial measures. Management believes that the use
of these non-GAAP financial measures enable management and investors to
evaluate, and compare from period to period, the Company's results from
operations in a more meaningful and consistent manner. A reconciliation of GAAP
to non-GAAP financial measures is included below:
Twelve Months Ended
December 31,
---------------------
2004 2003
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(Thousands of dollars,
except per share data)
- ---------------------------------------------------------------------------------------------------------------
GAAP Income (Loss) from Continuing Operations $62,393 ($26,038)
Adjustments, net of tax effects (a):
License fee revenue (e) (29,734) -
License fee expenses (e) 1,405 -
Retention costs (b) 182 5,951
Net restructuring charges (c) 93 3,542
Special charges (d) 1,230 2,187
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Adjusted Income (Loss) from Continuing Operations $35,569 ($14,358)
========= ==========
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GAAP Earnings (Loss) Per Diluted Share from Continuing Operations $1.00 ($0.42)
Adjustments, net of tax effects (a):
License fee revenue (e) (0.47) 0.00
License fee expenses (e) 0.02 0.00
Retention costs (b) 0.00 0.10
Net restructuring charges (c) 0.00 0.06
Special charges (d) 0.02 0.04
--------- ----------
Adjusted Earnings (Loss) Per Diluted Share from Continuing Operations $0.57 ($0.23)
========= ==========
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(a) The effective tax rate related to continuing operations for the twelve
months ended December 31, 2004 and 2003 was approximately 36% and 30%,
respectively.
(b) Consists of costs related to the Company's former employee retention
programs.
(c) Consists of net credits or charges related to the Company's restructuring
plans.
(d) Consists of net charges related to the investigation by the Antitrust
Division of the United States Department of Justice, other governmental
investigations and the related civil antitrust litigation.
(e) Represents the revenue and associated expenses relating to the license
agreement entered into in conjunction with the sale of the Company's real
estate brokerage business.
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