NEW YORK.- Sotheby’s Holdings, Inc., the parent company of Sotheby’s worldwide auction business, art-related financial services and real estate brokerage activities, today announced results for the full year and fourth quarter ended December 31, 2002.  For the year ended December 31, 2002 the Company reported total revenues of $345.1 million, compared to $336.2 million for the previous year.  Net loss for the full year 2002 was ($54.7) million, or ($0.89) per diluted share, compared to a net loss of ($41.7) million, or ($0.69) per diluted share for 2001.  This includes pre-tax charges in 2002 of $65.6 million, or ($0.83) per share, which are related to antitrust-related matters ($41.0 million), employee retention costs ($22.6 million) and the Company’s restructuring plans of ($2.0 million). 
The antitrust-related charges principally consist of the $20.1 million European Commission fine, which was determined by the European Commission in October, and the $20 million settlement related to the International Antitrust Litigation, which was agreed to, subject to court approval, on March 10, 2003.  Excluding all of the pre-tax items discussed above, the Company would have recorded a net loss of ($3.8)* million, or ($0.06)* per share in 2002.  During full year 2001, the Company recorded pre-tax charges of $38.8 million, or ($0.41) per share, related to employee retention costs ($19.8 million), the Company’s restructuring plans ($16.5 million) and antitrust related matters ($2.5 million).  Excluding these items, the Company would have recorded a net loss of  ($16.9)* million, or ($0.28)* per share.
For the quarter ended December 31, 2002, the Company reported total revenues of $124.3 million, compared to $110.9 million in the corresponding period in 2001 for an increase of 12%.  The Company’s net loss for the fourth quarter of 2002 was ($6.5) million, or ($0.11) per share, compared to a net loss for the fourth quarter of 2001 of ($0.4) million, or ($0.01) per share.  During the fourth quarter of 2002, the Company recorded pre-tax charges of $29.6 million, or ($0.34) per share, related to antitrust-related matters ($21.9 million), employee retention costs ($4.3 million) and the Company’s restructuring plans ($3.5 million).  The antitrust-related charges principally consist of the $20 million settlement of the International Antitrust Litigation, which is subject to court approval.  During the fourth quarter of 2001, the Company recorded pre-tax net restructuring charges of $8.8 million, or ($0.09) per share and pre-tax employee retention costs of $6.1 million, or ($0.06) per share.  Excluding these items, the Company would have recorded adjusted net income of $14.2* million, or $0.23* per share, in the fourth quarter of 2002, as compared to adjusted net income of $9.1 million, or $0.15* per share, in the same period in 2001.  Adjusted operating income, excluding the above items, also rose in the fourth quarter of 2002, increasing 80% to $26.9* million, as compared to $15.0* million in 2001. 
"We are very pleased with our fourth quarter results, which showed revenues up 12%, representing a significant improvement over the prior year," said William F. Ruprecht, President and Chief Executive Officer of Sotheby’s Holdings, Inc. "Our financial position is stronger today than at any time over the past three years," Mr. Ruprecht continued. "We exceeded our goal of $60 million in annual savings versus our 2000 cost base (excluding charges related to antitrust-related matters, the Company’s restructuring plans and employee retention costs).  In fact we achieved over $70 million in annual cost savings and we expect to achieve further savings in 2003 as management continues its focus on reducing the Company’s cost structure.  In 2002 we made considerable progress towards a return to profitability as evidenced by our fourth quarter results."
Mr. Ruprecht added, "As a result of the sale-leaseback transaction involving our York Avenue headquarters, completed on February 7, 2003, Sotheby’s long-term financial situation has greatly strengthened.  The $167 million in net cash proceeds allow us to refinance $100 million in borrowings under our credit facility, fund the $20.1 million European Union antitrust fine and will also provide funding for the $20.0 million settlement of the International Antitrust Litigation." 
Total Auction Sales (hammer price plus buyer’s premium) increased 10% to $1.8 billion for the year ended December 31, 2002.  Auction Sales in North America increased 7% to $866.1 million.  In Europe, Auction Sales increased 13% to $814.2 million, principally due to the July sale of Sir Peter Paul Rubens’ Massacre of the Innocents for $76.7 million, as well as the favorable impact of foreign currency translations.
"Despite an unstable economy and considerable worldwide uncertainty, buyers continue to demonstrate a strong demand for works of art of superb quality and rare provenance," commented Mr. Ruprecht.  "Auction Sales increased 10% over 2001, and we achieved some record individual results, including Sir Peter Paul Rubens’ masterpiece Massacre of the Innocents, which at $76.7 million (£49.5 million) was a sterling world record price for any work at auction.  We continue to see growth in the Contemporary art market.  Our November Contemporary sales in New York brought $94.4 million - the highest total in over 10 years, and our strong Contemporary sales in London this February continued this trend.  Also adding to our improved results was our luxury real estate brokerage business, which benefited from a strong real estate market and saw sales volume increase by 13% over 2001. "
Internet
In February, Sotheby’s and eBay announced that separate online auctions on Sothebys.com will be discontinued in early May.  The sothebys.com website will continue, but will focus on promoting Sotheby’s live auctions through eBay’s Live AuctionsTM technology and on supporting Sotheby’s live auction business.
"Due to the lack of profitability, Sotheby’s and eBay are discontinuing separate online auctions," said Bill Ruprecht.  "This action is regrettably resulting in  redundancies, as well as a one-time restructuring charge in the range of $2.0 million, which will be recorded in the first quarter of 2003.  However, we do anticipate that this restructuring of the Company’s Internet activities will result in an estimated net annual cost savings of approximately $8 million."
Real Estate
For the year ended December 31, 2002 real estate revenues were $36.4 million, an increase of $3.5 million, or 10%, as compared to 2001.  Operating income for the real estate business for 2002 was $6.3 million, an increase of $2.6 million, or 72%, as compared to 2001.  This increase is attributable to a recovery in the real estate market in 2002 after a decrease in sales in 2001.
Winter 2003 Sales Summary
"We are pleased with our results for this year so far," said Mr. Ruprecht.  "Sotheby’s led the Americana Week sales in New York with a total of $15.9 million.  The Appell Family Collection, which brought $3.7 million doubled its high estimate and Property from a Private Collection brought $4.2 million, just below its pre-sale high estimate.  Our Old Master Paintings sale in New York featured one of the greatest paintings remaining in private hands, Andrea Mantegna’s Descent into Limbo, which sold for $28.6 million, a record for the artist at auction.  In total, the sale brought $47.9 million, far exceeding the competition.
"Our February London sales also contained positive news.  We were particularly pleased with the results of our Contemporary Evening Sale, which brought approximately $18.0 million and was 88% sold.  The Impressionist, Modern and Surrealist Art sale in London achieved approximately $27.0 million and was highlighted by the sale of Pierre Bonnard’s La Porte fenêtre for $7.0 million, a world auction record for the artist in pounds."
2003 Sales
"Though it is still early, several excellent collections and individual works of art have already been consigned to Sotheby’s for our spring auction season," said Mr. Ruprecht.  "Our May sales in New York will feature the Collection of Meyer and Vivian Potamkin - one the finest collections of American Art in private hands.  The collection represents a broad range of the Potamkins’ taste from furniture and decorative arts to prints and American paintings and is estimated to sell in excess of $10 million.
On May 15th Sotheby’s Paris will offer Karl Lagerfeld’s collection of Modernist 1920’s and 30’s furniture, ceramics and metalwork from his apartment in Monaco and house in Biarritz, estimated to sell for $3 million.  The Lagerfeld collection was assembled according to the highest standards of both quality and provenance and comprises works by the key artists of the Modernist movement, including Jean-Michel Frank, Pierre Legrain, Marcel Coard and Alberto Giacometti.
A newly discovered Rembrandt self-portrait is to be offered in our sale of Old Master Paintings on July 10, 2003.  The self-portrait had been concealed for over 300 years beneath layers of over-paint, and only after cleaning was it revealed to be a Rembrandt.  It is one of only three Rembrandt self-portraits left in private hands and the first to be offered at auction in the last 30 years.  The painting is expected to sell for in excess of $8.0 million.
Termination of Sale Process
On February 21, 2003, Sotheby’s announced that the Company and the Taubman family, agreed to terminate the formal process commenced on June 3, 2002, regarding a possible sale or merger of the Company or sale of the Taubman stake in the Company.  
International Antitrust Litigation
On March 11th , Sotheby’s announced that, together with Christie’s, it had entered into an agreement, subject to court approval, to settle the Kruman case, an antitrust class action which sought damages through the United States Courts for auctions that took place between 1993 and 2000 outside the United States.  Under the terms of the agreement, Sotheby’s and Christie’s will each pay $20 million to the class of plaintiffs.  As a result, the Company recorded this amount in special charges during the fourth quarter of 2002.  The settlement also provides that a threatened claim in the United Kingdom will not be pursued and that a purported class action commenced in Canada will be dismissed.  Moreover, buyers and sellers who participate in the International Antitrust Settlement must agree not to pursue similar claims against Sotheby’s and Christie’s in jurisdictions outside the United States.
The EU antitrust investigation was also completed in October 2002, resulting in a fine of $20.1 million.
2003 Outlook
"While we are very pleased with our fourth quarter performance, as well as our cost cutting efforts and the major progress we have made on resolving antitrust litigation, we remain guarded about second quarter sales due to global economic uncertainties and the potential conflict with Iraq," said Mr. Ruprecht.  "As we have stated before, high end works of art have sold extremely well over the last few years.  Nevertheless, this worldwide situation may impact auction consignments and transactions in an already softening real estate market, and therefore may impact second quarter results."