UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
September 22, 2004
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Date of report (Date of earliest event reported)
Sotheby's Holdings, Inc.
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(Exact name of registrant as specified in its charter)
Michigan 1-9750 38-2478409
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(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
38500 Woodward Avenue, Suite 100
Bloomfield Hills, Michigan 48303
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(Address of principal executive offices) (Zip Code)
(248) 646-2400
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(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of
the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant
From time to time in the ordinary course of business, Sotheby's Holdings, Inc.
(the "Company") or one of its subsidiaries 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, therefore, the Company must pay the difference
between the sale price at auction and the amount of the guarantee. If the
property does not sell, the amount of the guarantee must be paid, but the
Company has the right to recover such amount through the future sale of the
property. Generally, the Company is entitled to a share of the excess proceeds
if the property under guarantee sells above a minimum price. In addition, the
Company is obligated under the terms of certain guarantees to advance a portion
of the guaranteed amount prior to the auction. Furthermore, in certain
situations, the Company reduces its financial exposure under the auction
guarantee through sharing arrangements with partners.
As of September 24, 2004, the Company had outstanding auction guarantees
totaling $164.8 million, the property relating to which had a current
mid-estimate sales price(1) of $192.8 million. The Company's financial exposure
under its outstanding auction guarantees is reduced by $41.2 million as a result
of sharing arrangements with partners, $32.5 million of which relates to an
auction guarantee described in a Form 8-K filed by the Company with the
Securities and Exchange Commission on September 2, 2004. The property relating
to this auction guarantee will be offered at auction in the fourth quarter of
2004.
Included in the total amount of outstanding auction guarantees as of September
24, 2004 are:
o An auction guarantee entered into on September 22, 2004 for which the
maximum potential amount of future payments that the Company may be
required to make is $35.0 million. On September 24, 2004, $10.0 million of
the guaranteed amount was advanced by the Company to the consignor. The
property relating to this auction guarantee has a current mid-
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(1) The mid-estimate sales price is calculated as the average of the high and
low pre-sale auction estimates for the property under the auction
guarantee. Pre-sale estimates are not predictions of auction sale results.
estimate sales price of $40.3 million and will be offered at auctions in
the fourth quarter of 2004.
o An auction guarantee entered into on September 22, 2004 for which the
maximum potential amount of future payments that the Company may be
required to make is $26.5 million. The property relating to this auction
guarantee has a current mid-estimate sales price of $33.1 million and will
be offered at auctions in the fourth quarter of 2004 and first half of
2005.
o An auction guarantee entered into on September 23, 2004 for which the
maximum potential amount of future payments that the Company may be
required to make is $10.0 million. The Company's financial exposure under
this auction guarantee is reduced by $5.0 million as a result of a sharing
arrangement with a partner. The property relating to this auction guarantee
has a current mid-estimate sales price of $10.5 million and will be offered
at auction in the fourth quarter of 2004.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
SOTHEBY'S HOLDINGS, INC.
By: /s/ Michael L. Gillis
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Michael L. Gillis
Senior Vice President,
Controller and Chief
Accounting Officer
Date: September 24, 2004
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