SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1997
Commission File Number 1-9750
Sotheby's Holdings, Inc.
(Exact name of registrant as specified in its charter)
Michigan 38-2478409
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
500 North Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48304
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (248) 646-2400
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X .
No .
As of October 31, 1997, there were outstanding 39,047,726 shares of Class
A Limited Voting Common Stock, par value $0.10 per share, and 17,090,900
shares of Class B Common Stock, par value $0.10 per share, of the
Registrant. Each share of Class B Common Stock is freely convertible
into one share of Class A Limited Voting Common Stock.
<PAGE>
INDEX
PART I: FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements:
Consolidated Statements of Income for the Three
and Nine Months Ended September 30, 1997 and 1996 3
Consolidated Balance Sheets at September 30, 1997
and December 31, 1996 4
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1997 and 1996 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 16
EXHIBIT INDEX 17
SIGNATURE 18
<PAGE>
PART 1: FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
Consolidated Statements of Income
Sotheby's Holdings, Inc. and Subsidiaries
(Thousands of dollars, except per share data)
(UNAUDITED)
<CAPTION>
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Auction and related $38,929 $30,335 $199,807 $179,881
Other 12,385 7,884 36,591 23,732
Total revenues 51,314 38,219 236,398 203,613
Expenses:
Direct costs of services (9,321) (7,201) (41,265) (40,149)
Salaries and related costs (29,376) (25,605) (92,326) (80,547)
General and administrative (23,151) (18,938) (65,714) (58,020)
Depreciation and amortization (3,231) (2,389) (8,415) (6,916)
Non-recurring charges (3,500) 0 (9,000) 0
Total expenses (68,579) (54,133) (216,720) (185,632)
Operating income (loss) (17,265) (15,914) 19,678 17,981
Interest income 650 1,163 2,058 3,127
Interest expense (1,880) (1,121) (3,679) (2,707)
Other expense (54) (54) (224) (305)
Income (loss) before taxes (18,549) (15,926) 17,833 18,096
Income taxes 7,227 6,371 (6,598) (7,238)
Net Income (Loss) ($11,322) ($9,555) $11,235 $10,858
Earnings (Loss) Per Share ($0.20) ($0.17) $0.20 $0.19
Weighted Average Shares Outstanding (in millions) 56.0 55.4 56.4 56.1
Dividends Per Share $0.10 $0.08 $0.30 $0.24
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheets
Sotheby's Holdings, Inc. and Subsidiaries
(UNAUDITED)
(Thousands of dollars)
<CAPTION>
September 30, December 31,
1997 1996
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $13,829 $66,886
Accounts and notes receivable, net of allowance
for doubtful accounts of $10,332 and $10,156
Accounts receivable 107,779 250,780
Notes receivable 157,670 81,218
Other 36,653 13,353
Total Accounts and Notes Receivable, Net 302,102 345,351
Inventory, net 18,849 14,801
Deferred income taxes 7,016 4,655
Prepaid expenses and other current assets 20,137 14,689
Total Current Assets 361,933 446,382
Notes receivable 105,005 69,418
Properties, less allowance for depreciation
and amortization of $68,982 and $63,983 73,684 70,576
Intangible assets, less allowance for
amortization of $16,167 and $15,607 31,819 27,199
Investment in partnership 35,779 35,834
Other assets 6,106 6,689
Total Assets $614,326 $656,098
Liabilities And Shareholders' Equity
Current Liabilities
Due to consignors $83,101 $277,751
Short-term borrowings 14,080 3,211
Accounts payable and accrued liabilities 68,734 75,023
Deferred revenue 7,905 7,166
Accrued income taxes 10,509 25,765
Total Current Liabilities 184,329 388,916
Long-Term Liabilities
Commercial Paper 176,000 0
Deferred income taxes 12,264 12,493
Other long-term obligations 911 1,217
Total Liabilities 373,504 402,626
Shareholders' Equity
Common Stock, $0.10 par value:
Authorized shares - 125,000,000 of Class A and 75,000,000 of Class B
Issued and outstanding shares - 38,958,933 and 38,669,411 of Class A, and
17,111,900 and 17,214,987 of Class B, at September 30, 1997 and
December 31, 1996, respectively 5,607 5,589
Additional paid-in capital 76,764 78,382
Retained earnings 173,257 178,805
Foreign currency translation adjustments (14,806) (9,304)
Total Shareholders' Equity 240,822 253,472
Total Liabilities And Shareholders' Equity $614,326 $656,098
Prior period amounts have been restated to conform to current year presentation
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
<TABLE>
Consolidated Statements of Cash Flows
Sotheby's Holdings, Inc. and Subsidiaries
(UNAUDITED)
(Thousands of dollars)
<CAPTION>
Nine Months Ended September 30, 1997 1996
<S> <C> <C>
Operating Activities:
Net income $11,235 $10,858
Adjustments to reconcile net income to net cash
provided (used) in operating activities:
Depreciation and amortization 8,415 6,916
Deferred income taxes (2,590) (74)
Tax benefit of stock option exercises 1,656 1,533
Asset provisions 5,530 3,139
Other 250 232
Changes in assets and liabilities:
Decrease in accounts receivable 111,588 130,634
Decrease (increase) in inventory (5,635) 7,049
Increase in prepaid expenses and other current assets (5,456) (1,834)
Decrease (increase) in other assets 523 (1,798)
Decrease in due to consignors (195,024) (147,433)
Increase (decrease) in accrued income taxes (15,256) 1,244
Decrease in other liabilities (9,903) (9,690)
Net cash provided (used) by operating activities (94,667) 776
Investing Activities:
Increase in notes receivable (182,179) (88,500)
Collections of notes receivable 67,706 54,201
Capital expenditures (11,430) (5,077)
Decrease in investment in partnership 55 2,856
Acquisitions (6,190) 0
Net cash used by investing activities (132,038) (36,520)
Financing Activities:
Increase in commercial paper 176,000 56,000
Increase (decrease) in short term borrowings 9,653 (2,104)
Proceeds from exercise of stock options 7,119 3,547
Repurchase of common stock (10,127) (12,024)
Dividends (16,782) (13,365)
Net cash provided by financing activities 165,863 32,054
Effect of exchange rate changes on cash 7,785 842
Decrease in cash and cash equivalents (53,057) (2,848)
Cash and cash equivalents at beginning of period 66,886 40,713
Cash and cash equivalents at end of period $13,829 $37,865
Income taxes paid $19,240 $17,720
Interest paid $4,189 $2,877
See accompanying Notes to the Consolidated Financial Statements
</TABLE>
<PAGE>
SOTHEBY'S HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated financial statements included herein have been
prepared by Sotheby's Holdings, Inc. (together with its
subsidiaries, the "Company") pursuant to the rules and regulations
of the Securities and Exchange Commission. These consolidated
financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto
incorporated by reference in the Company's Annual Report on Form 10-
K for the year ended December 31, 1996 (the "Annual Report").
In the opinion of the management of the Company, all adjustments,
consisting of normal recurring adjustments, necessary for a fair
presentation of the results of operations for the three and nine
month periods ended September 30, 1997 and 1996 have been included.
Certain prior period amounts have been restated to conform to the
current year's presentation.
2. Notes Receivable
As of September 30, 1997, an amount equal to approximately 51% of
the Company's notes receivable (current and non-current) was
extended to two borrowers. No other individual loans amounted to
more than 5% of total assets at September 30, 1997. Although the
Company's general policy is to make secured loans at loan to value
ratios (principal loan amount divided by the low auction estimate
of the collateral) of 50% or lower, on certain occasions the
Company will lend, on a secured basis, at loan to value ratios
higher than 50%. The loan to value ratios on the loans noted above
exceed 50%, however, neither loan has a loan to value ratio greater
than 70%. In addition, on certain occasions, the Company will also
lend amounts at loan to value ratios higher than 50% where the
Company participates in a share of the sale proceeds if the
property sells for more than an agreed target amount and the
Company shares in a portion of the loss if the property does not
sell at or above the target amount.
<PAGE>
Interest income on impaired loans is recognized to the extent cash
is received. Where there is doubt regarding the ultimate
collectibility of principal for impaired loans, cash receipts,
whether designated as principal or interest, are thereafter applied
to reduce the recorded investment in the loan. Following are the
changes in the allowance for credit losses relating to notes
receivable for the nine months ended September 30, 1997 and 1996
(in thousands):
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Allowance for credit losses
at December 31, 1996 and 1995 $2,501 $3,052
Provisions 1,188 468
Write-offs (3) (786)
Other 98 (3)
Allowance for credit losses
at September 30, 1997 and 1996 $3,784 $2,731
</TABLE>
3. Credit Arrangements
At September 30, 1997, pursuant to the Company's $200 million U.S.
commercial paper program, there were $176.0 million of outstanding
commercial paper notes at weighted average discount rates of 5.6%
with average maturities of 29.8 days. These notes have been
classified on the consolidated balance sheet as long-term
liabilities based on the Company's ability to maintain or refinance
these obligations on a long-term basis. At September 30, 1997, the
Company also had $14.1 million outstanding under domestic and
foreign bank lines of credit at weighted average interest rates of
4.6%.
4. Commitments and Contingencies
The Company, in the normal course of business, is a defendant in
various legal actions.
In conjunction with the client loan program, the Company enters
into legally binding arrangements to lend, generally on a
collateralized basis, to potential consignors and other individuals
who have collections of fine art and other objects. Unfunded
commitments to extend additional credit were approximately $43
million at September 30, 1997.
<PAGE>
On certain occasions, the Company will guarantee to the consignor a
minimum price in connection with the sale of property at auction.
The Company must perform under its guarantee only in the event that
the property sells for less than the minimum price and the Company
must pay the difference between the sale price at auction and the
amount of the guarantee. At November 7, 1997, the Company had
outstanding guarantees totaling approximately $110 million which
cover auction property having a mid-estimate sale price of
approximately $141 million. Under certain guarantees, the Company
participates in a share of the proceeds if the property under
guarantee sells above a minimum price. In addition, the Company is
obligated under the terms of certain guarantees to fund a portion
of the guarantee prior to the auction. The Company has funded
approximately $11 million related to the above guarantees.
In early 1997, a television program aired in the U.K. and a related
book was published, both of which contain certain allegations of
improper or illegal conduct by current and former employees of the
Company. In response to these allegations, the Board of Directors,
in February 1997, established a committee of independent directors
to review the issues raised by the book and related matters. The
Independent Review Committee has retained outside independent
counsel in the U.S. and the U.K. to assist and advise the Committee
in its review. The Company's management is conducting its own
review. Management expects these reviews to be concluded before
year end. During the first nine months of 1997, the Company
recorded $9.0 million in non-recurring charges which consist largely
of legal and other professional fees associated with the Independent
Review Committee. The Company does not expect to incur additional
material costs relating to this review.
In the opinion of management, the commitments and contingencies
described above currently are not expected to have a material
adverse effect on the Company's consolidated financial statements.
5. Future Impact of Recently Issued Accounting Standards
The Financial Accounting Standards Board ("FASB") recently issued
Statement of Financial Accounting Standards ("SFAS") No. 128
"Earnings Per Share", which is effective for financial statements
for both interim and annual periods ending after December 15, 1997.
Early adoption of this statement is not permitted. The Company has
applied this statement to results for both the three and nine month
periods ended September 30, 1997 and 1996 as well as the annual
results for 1996 and determined that the adoption of this standard
<PAGE>
would not have a material impact on the earnings per share
calculations for these periods.
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income", which is effective for fiscal years beginning after
December 15, 1997 with earlier application permitted. The Company
will adopt this standard in the first quarter of 1998. This
statement requires certain transactions to be included as
adjustments to net income in order to report comprehensive income.
These transactions represent items that, under previous accounting
standards, bypassed the statement of income and were reported
directly as adjustments to the equity section of the balance sheet.
Adoption of this standard will require the Company to report these
transactions, which may be material, on the statement of
comprehensive income.
The FASB also issued SFAS No. 131 "Disclosures about Segments of an
Enterprise and Related Information" in June of 1997, which is
effective for fiscal years beginning after December 15, 1997 with
earlier application permitted. The Company will adopt this standard
in the first quarter of 1998. This statement requires additional
disclosure of financial and descriptive information on operating
segments. Adoption of this standard may require the Company to
report information about certain operating segments that was not
previously disclosed.
6. Seasonality of Business
The worldwide art auction market has two principal selling seasons,
spring and fall. During the summer and winter, sales are
considerably lower. The table below demonstrates that at least 80%
of the Company's auction sales are derived from the second and
fourth quarters of the year.
<TABLE>
<CAPTION>
Percentage of Annual
Auction Sales
<S> <C> <C> <C>
1996 1995 1994
January - March 10% 11% 12%
April - June 39% 39% 40%
July - September 9% 7% 8%
October - December 42% 43% 40%
100% 100% 100%
</TABLE>
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The worldwide auction business is highly seasonal in nature, with
two principal selling seasons, spring and fall. Accordingly, first
and third quarter results reflect lower auction sales and lower
operating margins than the second and fourth quarters due to the
fixed nature of many of the operating expenses. (See Note 6 in the
Notes to the Consolidated Financial Statements for additional
information).
Following is a geographical breakdown of the Company's auction
sales for the three and nine month periods ended September 30, 1997
and 1996 (in thousands):
<TABLE>
<CAPTION>
For the Third Quarter For the Nine Months
Ended September 30, Ended September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
North America $ 32,087 $ 31,376 $463,439 $436,806
Europe 98,536 103,242 471,828 455,467
Asia 7,155 13,988 60,380 42,349
Total $137,778 $148,606 $995,647 $934,622
</TABLE>
For the quarter ended September 30, 1997, worldwide auction sales
of $137.8 million decreased $10.8 million, or 7%, compared to the
third quarter of 1996. The decrease in worldwide sales in the
third quarter of 1997 was largely due to the 1996 sale of European
Works of Art from the collection formed by the British Rail Pension
Fund ($21.3 million), for which there was no comparable sale in the
current year, as well as Hong Kong's Western Jewelry sale ($4.9
million) which occurred in September of 1996 and was scheduled for
November of this year. For the nine months ended September 30,
1997, worldwide auction sales increased $61.0 million, or 7%,
compared to the same period of 1996. Worldwide sales for the first
nine months of the year increased due largely to sales of
Impressionist and Modern art, Old Master paintings and Chinese
works of art. Auction sales recorded by the Company's foreign
operations were not materially impacted by translation into U.S.
Dollars.
<PAGE>
For the third quarter of 1997, worldwide auction and related
revenue increased $8.6 million, or 28%, compared to 1996, primarily
resulting from an increase in commissions from private treaty sales
(sales of property not offered through the auction process).
Auction and related revenues as a percentage of sales for the three
months ended September 30, 1997 increased to 28.3% from 20.4% in
1996. For the nine months ended September 30, 1997, auction and
related revenue increased $19.9 million, or 11%, compared to 1996.
This increase was principally due to an increase in commissions
from private treaty sales and higher auction sales volume offset,
in part, by the recovery of expenses recorded in 1996 related to
the sale of property from the Estate of Jacqueline Kennedy Onassis.
Auction and related revenue as a percentage of sales for the nine
months ended September 30, 1997, excluding expense recoveries from
the Onassis sale, increased to 20.1% in 1997 from 18.8% in 1996.
Foreign currency movements did not materially impact revenue for
the third quarter or first nine months of 1997.
Other revenue, which primarily includes revenues from art-related
financing activities and real estate operations, increased $4.5
million, or 57%, in the third quarter of 1997 when compared to the
same quarter of 1996. For the nine months ended September 30,
1997, other revenue increased $12.9 million, or 54%, compared to
1996. These increases were due largely to revenues from real
estate operations resulting from stronger real estate sales in the
U.S., financing activities due to an increase in the average loan
portfolio balance (which totaled $234.6 million at September 30,
1997, an increase of 47% compared to September 30, 1996) and an
increase in principal activities.
Total expenses, excluding non-recurring charges of $3.5 million,
increased $10.9 million, or 20%, in the third quarter of 1997
compared to 1996. For the nine months ended September 30, 1997,
total expenses, excluding non-recurring charges of $9.0 million,
increased $22.1 million, or 12%, in comparison to 1996. Foreign
currency exchange rate movements did not materially impact total
expenses for the third quarter or first nine months of 1997.
Direct costs of services (which consist largely of catalogue
production and distribution costs as well as corporate marketing
and sale marketing expenses) increased $2.1 million, or 29%, during
the third quarter of 1997 compared to the same period of 1996. The
increase for the quarter reflects corporate marketing expenditures
as well as costs associated with single-owner and offsite sales in
Europe. For the nine months ended September 30, 1997, direct costs
<PAGE>
totaled $41.3 million compared to $40.1 million in 1996, an
increase of $1.2 million, or 3%. The increase for the year-to-date
period largely reflects the impact of costs associated with the
Onassis sale in 1996 which are partly offset by increased costs
associated with the increased sales volume in the current year as
well as increased spending on marketing.
Excluding non-recurring charges, all other operating expenses
(which include salaries and related costs, general and
administrative expenses as well as depreciation and amortization)
totaled $55.8 million for the third quarter of 1997, an increase of
19% compared to the third quarter of 1996. This increase was
principally due to an increase in general and administrative
expenses and salaries and related costs. The increase in general
and administrative expenses is primarily due to provisions for
reserves and business development expenses. For the nine months
ended September 30, 1997, all other operating expenses totaled
$166.5 million, an increase of $21.0 million, or 14%. This
increase was principally due to an increase in salaries and related
costs and, to a lesser extent, higher business development
expenses, provisions for reserves and professional fees.
The Company recorded non-recurring charges of $3.5 million and $9.0
million in the third quarter and first nine months of 1997,
respectively, which consist largely of legal and other professional
fees associated with the Independent Review Committee (See Note 4
in the Notes to the Consolidated Financial Statements for
additional information).
Interest income decreased $0.5 million and $1.1 million for the
three and nine month periods ended September 30, 1997,
respectively, due largely to lower cash balances in Europe.
Interest expense increased $0.8 million and $1.0 million for the
three and nine month periods ended September 30, 1997,
respectively, due to higher average borrowings largely in support
of a higher average loan portfolio.
The consolidated effective tax rate was 37% for the nine months
ended September 30, 1997 compared to 40% for nine months ended
September 30, 1996.
The net loss for the third quarter of 1997 increased to $11.3
million from $9.6 million in the third quarter of 1996. For the
third quarter of 1997, the net loss per share increased to $0.20
from $0.17 in the third quarter of 1996. For the nine months ended
<PAGE>
September 30, 1997, net income increased 3% to $11.2 million from
net income of $10.9 million in 1996. Earnings per share for the
first nine months of 1997 increased 5% to $0.20 from $0.19 in 1996.
Foreign currency movements did not have a material impact on net
income or earnings per share for the quarter or nine months ended
September 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's net debt position (total debt, which includes short-
term borrowings and commercial paper, less cash and cash
equivalents) totaled $176.3 million at September 30, 1997 compared
to a net cash position of $63.7 million at December 31, 1996,
reflecting the funding of the loan portfolio and a net decrease in
cash from operations. Working capital (current assets less current
liabilities) at September 30, 1997 was $177.6 million compared to
$57.5 million at December 31, 1996.
The Company's client loan portfolio increased to $266.5 million at
September 30, 1997 from $153.1 million at December 31, 1996. These
amounts include $105.0 million and $69.4 million of loans which
have a maturity of more than one year at September 30, 1997 and
December 31, 1996, respectively.
The Company relies on internally generated funds and borrowings to
meet its financing requirements. The Company may issue up to $200
million of short-term notes pursuant to its U.S. commercial paper
program. The Company supports any short-term notes issued under
its U.S. commercial paper program with committed credit facilities.
The Company maintains $300 million of committed and available
financing to July 11, 2001 pursuant to a bank credit agreement.
For the nine months ended September 30, 1997, the Company's primary
sources of liquidity were derived from available cash balances
supplemented by commercial paper and short term borrowings. The
most significant cash uses during the first nine months of 1997
were the net funding of the client loan portfolio, operations, and
payment of shareholder dividends.
Capital expenditures, consisting primarily of office and auction
facility refurbishment and the acquisition of computer equipment,
totaled $11.4 million and $5.1 million for the first nine months of
1997 and 1996, respectively.
<PAGE>
In certain instances, consignor advances are made with recourse
limited only to the works of art consigned for sale and pledged as
security for the loan. As of September 30, 1997, no such advances
were outstanding. Although the Company's general policy has been
to make secured loans at loan to value ratios of 50% or lower, on
certain occasions the Company will lend, on a secured basis, at
loan to value ratios higher than 50%. In addition, on certain
occasions the Company will lend amounts at loan to value ratios
higher than 50% where the Company participates in a share of the
sale proceeds if the property sells for more than an agreed target
amount and the Company shares in a portion of the loss if the
property does not sell at or above the target amount. From time to
time, the Company has off-balance sheet commitments in the form of
guarantees to consignors that property will sell at a minimum
price. The Company also has legally binding lending commitments in
conjunction with the client loan program. See Note 4 in the Notes
to the Consolidated Financial Statements for additional information
related to these commitments. The Company does not believe that
material liquidity risk exists relating to these commitments.
The Company believes that operating cash flows will be adequate to
meet normal working capital requirements and that the commercial
paper program and credit facilities will continue to be adequate to
fund the client loan program, peak working capital requirements and
short-term commitments to consignors.
The Company evaluates, on an ongoing basis, the adequacy of its
principal auction premises for the requirements of the present and
future conduct of its business. An application to re-zone the site
of the Company's New York auction facility and global headquarters
was filed with New York City in October of 1997. The filing
outlined the Company's intent to construct a six story addition to
its current facility on York Avenue. The City of New York has
decided to permit the Company to proceed on a "short" zoning
application process with the target of June 1998 for the issuance
of a building permit and initiation of construction.
This planned construction will expand auction, warehouse and office
space in New York City and will enable the Company to consolidate
its auction operations in New York into one facility. If the
project is approved by the City of New York, the capital
expenditures relating to the new building construction will be a
material amount. The Company is currently discussing financing
options with various financial institutions but believes that
adequate capital and debt financing will be available to complete
this proposed project.
<PAGE>
FORWARD-LOOKING STATEMENTS
This form 10-Q contains certain forward-looking statements, as such
term is defined in Section 21E of the Securities Act of 1934, as
amended, relating to future events and the financial performance of
the Company, particularly with respect to the adequacy of working
capital as well as additional capital necessary for the planned
expansion of the Company's auction facility. Such statements are
only predictions and involve risks and uncertainties, resulting in
the possibility that the actual events or performance 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 following, which are not listed in any
particular rank order:
(1) The Company's business is seasonal, with peak revenues and
operating income occurring in the second and fourth quarters of each
year as a result of the traditional spring and fall art auction
season.
(2) The overall strength of the international economy and financial
markets and, in particular, the economies of the United States, the
United Kingdom, and the major countries of Continental Europe and
Asia (principally Japan and Hong Kong).
(3) Competition with other auctioneers and art dealers.
(4) The volume of consigned property (including related guarantees)
and the marketability at auction of such property.
(5) The planned construction of a New York auction facility and
global headquarters.
See Note 4 in the Notes to the Consolidated Financial Statements for
additional information.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)Exhibits
27. Financial Data Schedule
(b)Reports on Form 8-K
None.
<PAGE>
Exhibit Index
Exhibit No. Description
27. Financial Data Schedule
<PAGE>
SOTHEBY'S HOLDINGS, INC.
AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed this
the 10th day of November, 1997, on its behalf by the undersigned,
thereunto duly authorized and in the capacity indicated.
SOTHEBY'S HOLDINGS, INC.
By: Patricia A. Carberry
Patricia A. Carberry
Vice President, Controller
and Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 13,829
<SECURITIES> 0
<RECEIVABLES> 302,102
<ALLOWANCES> 10,332
<INVENTORY> 18,849
<CURRENT-ASSETS> 361,933
<PP&E> 73,684
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<COMMON> 5,607
0
0
<OTHER-SE> 235,215
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<SALES> 0
<TOTAL-REVENUES> 236,398
<CGS> 0
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<LOSS-PROVISION> 852
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<INCOME-TAX> 6,598
<INCOME-CONTINUING> 11,235
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<CHANGES> 0
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<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
