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NEW YORK, Aug. 08, 2016 (GLOBE NEWSWIRE) -- Sotheby's (NYSE:BID) today reported its financial results for the second quarter and six months ended 30 June 2016.

For the three months ended 30 June 2016, Sotheby's reported net income of $89.0 million and diluted earnings per share of $1.52 which compares to $67.6 million and $0.96, respectively, a year ago. Sotheby's reported Adjusted Net Income* of $88.6 million and Adjusted Diluted Earnings Per Share* of $1.51 which compares to $73.1 million and $1.04, respectively, in the prior period. This represents a 21% increase in Adjusted Net Income*, but a 45% improvement in Adjusted Diluted Earnings Per Share* due to the common stock repurchases over the past year. Adjustments between GAAP and non-GAAP figures are largely the result of $5.8 million of after-tax leadership transition severance costs in the prior period.

The comparison to second quarter results of 2015 is impacted by a 16% decrease in Net Auction Sales reflecting a comparable decline in the global art market. The effect of lower sales levels is somewhat mitigated by improved auction commission margin, from 15.5% in the second quarter of 2015 to 16.4% in the current quarter. The comparison of the current and prior year periods is also significantly influenced by a change in the timing of the summer Contemporary Art sales in London, which were held in the second quarter of 2016 after occurring in the third quarter in 2015. Also favorably impacting the comparison of second quarter results is lower variable compensation costs ($16.8 million, or 51%, decrease in incentive compensation expense and a $7.3 million, or 76%, decline in share-based payment expense), a decrease in inventory losses and a lower effective income tax rate.

"While we would certainly prefer to see a stronger art market, we are pleased with the progress we have been making on our strategic initiatives and the beneficial changes to our team and organization," said Tad Smith, Sotheby's President and Chief Executive Officer. "When the art market improves — and it certainly will — our company is poised to do very well for shareholders. Until then, we continue burnishing Sotheby's for even more success and being very careful on capital allocation."

For the six months ended 30 June 2016, Sotheby's reported net income of $63.1 million and diluted earnings per share of $1.03 which compares to $72.8 million and $1.04, respectively, in the prior year first half. This decrease is largely due to the same factors as affected the second quarter — lower sales volumes associated with the decline in the art market, partially offset by increased auction commission margin, lower variable compensation expenses, a favorable effective income tax rate, and the benefit of share repurchases on diluted earnings per share.

Chief Financial Officer Mike Goss said, "Given the pronounced seasonality of the art auction market, we believe investors should focus on six month results versus prior periods, rather than merely a single quarter. The comparison of quarterly results can be skewed by changes in the timing of when auctions occur, such as the summer Contemporary sales in London. Looking at the first six months of this year, investors will have a realistic view of the current market, but they will also see our improved auction commission margins, meaningful cost control, and the impact of our ongoing share repurchase program." Goss also noted that the Company had 55.1 million common shares outstanding at 30 June 2016, a 21% reduction in the past twelve months.


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