Friday, February 27, 2009
Sotheby's 2008 Financial Highlights ~ Sales of $5.3 Billion in a Down Year
New York, NY - “The global economic crisis which erupted in the autumn of 2008 had a major impact on our business in the fourth quarter,” said Bill Ruprecht, President and Chief Executive Officer of Sotheby’s. “For the first nine months of 2008, our aggregate auction sales were at record levels. But from October onwards, virtually every auction around the world experienced declines. As a result, we immediately took steps to strengthen our business. We began a worldwide restructuring, initiated global cost-cutting measures and dramatically curtailed the use of guarantees. And to date in 2009, auction commission margins are 17.3%, up 27% from the 13.6% in the first quarter of 2008.”
“As we begin 2009 our financial condition remains healthy. We are well-positioned to operate in this very challenging economic environment. And, very importantly, as we saw in our recent London sales, demand remains positive for great works which are well estimated and fresh to the market. In a turbulent world, art continues to represent both value and relevance.”
Consolidated * sales of $5.3 billion
Sotheby’s sold the top lot of the year, Francis Bacon’s Triptych 1976 ($86.3 million).
The world record price for Contemporary Art, Francis Bacon’s Triptych 1976, was set at Sotheby’s in 2008
Sotheby’s sold the top lot of the autumn season, Kazimir Malevich’s Suprematist Composition ($60 million)
Sotheby’s sold the top Contemporary lot of the autumn season, Yves Klein’s Archisponge ($21.4 million)
Sotheby’s sold six out of the top ten lots in 2008.
Sotheby’s sold 726 lots for over $1 million
Sotheby’s sold 114 lots for over $5 million
Sotheby’s sold 41 lots for over $10 million
Sotheby’s sold 14 lots for over $20 million.
*Consolidated sales include auction sales, private sales and dealer revenue.
SOTHEBY’S ANNOUNCES 2008 FOURTH / QUARTER AND FULL YEAR RESULTS
• Full Year Revenues of $691.6 million and Net Income of $28.3 million February 26, 2009, New York -- Sotheby’s (NYSE: BID) today announced results for the fourth quarter and twelve months ended December 31, 2008.
For the quarter ended December 31, 2008, the Company reported operating revenues of $166.2 million, a $179.6 million, or 52%, decrease from the fourth quarter of 2007. This deterioration is primarily due to a 46% decline in net auction sales from $1.9 billion to $1.0 billion, significant auction guarantee losses and inventory writedowns, all attributable to a downturn in the international art market that began in September 2008, and which resulted from a weakening global economy, as well as turbulence in the global financial and credit markets. For the fourth quarter ended December 31, 2008, the Company reported an operating loss of ($0.7) million and a net loss of ($8.5) million, or ($0.13) per share compared to operating income of $141.6 million and net income of $102.4 million, or $1.55 per diluted share for the fourth quarter of 2007.
This decline is largely due to the aforementioned revenue decreases as well as a $13.2 million impairment loss in the Company’s Dealer segment related to goodwill and intangible assets and $4.3 million in restructuring charges. Partially offsetting the impact of these factors is a $44.4 million, or 45%, decrease in salaries and related costs over the period primarily due to a $26.7 million, or 75% decline in accrued incentive bonus costs as a result of the much lower profitability of the quarter as compared to the prior period. Fourth quarter adjusted operating income*, which excludes the $13.2 million impairment loss as well as the $4.3 million in restructuring charges, is $16.8 million*.
For the full year 2008, consolidated sales (aggregate auction sales, private sales and dealer revenues) were $5.3 billion and operating revenues were $691.6 million, representing decreases from the prior year of 14% and 25%, respectively, primarily due to the previously mentioned sales decline, auction guarantee losses and inventory write-downs experienced in the fourth quarter of 2008. Net income for the full year 2008 was $28.3 million, a $184.9 million, or 87%, decrease from the prior year largely due to the fourth quarter revenue shortfalls. Also contributing to the decreased profitability is a lower level of private sale commissions, higher borrowing costs and a higher effective tax rate, partially offset by lower salaries and related costs.
Sotheby’s sold the top lot of the year, Francis Bacon’s Triptych, 1976, ($86.3 million), the top lot of the autumn auction season, Kazimir Malevich’s Suprematist Composition ($60.0 million) and the top Contemporary lot of the autumn season, Yves Klein’s Archisponge ($21.4 million) while continuing to reduce lot volume in 2008.