Sotheby\'s Is One the World\'s Two Largest

Sotheby's is one the world's two largest auctioneers of authenticated fine and decorative art, jewelry and collectibles. The company was founded on 11 March 1744 by bookseller Samuel Baker in London. Sotheby's is the world's fourth oldest auction house in continuous operation. It is the oldest company on the New York Stock Exchange. It has 90 locations in 40 countries. Sotheby's does 250 auctions each year in over 70 categories. The Companies 2010 revenue was $774.3m.

Sotheby's has four Corporate Headquarters: Sotheby's London, Sotheby's New York, Sotheby's Hong Kong and Sotheby's Moscow. The addresses are: Sotheby's London: 34-35 New Bond Street, London W1A 2AA, UK. Sotheby's New York: 1334 York Avenue, New York 10021, USA. Sotheby's Hong Kong: 1 Pacific Place, 88 Queens Way, China. Sotheby's Moscow: 4 Romanov Pereulok, Moscow 125009, Russia. Sotheby's operations are organized under three segments: Auction, Finance and Dealer. The function of Auction segment principally is to serve as an agent by offering authenticated works of art for sale and by brokering private sales of artwork. Sotheby's also operates as a dealer of in works of art through its Dealer segment, conducts art-related financing activities through its Finance segment and is engaged, to a lesser extent, in brand licensing activities.

Sotheby's auctions a wide variety of property, including fine art, antiques and decorative art, jewelry and collectibles. The objects auctioned by the Company are unique, and their value can only be estimated prior to sale. Sotheby's principal role as an auctioneer is to identify, evaluate and appraise works of art through its international staff of specialists; to stimulate purchaser interest through professional marketing techniques; and to match sellers and buyers through the auction process. In its role as auctioneer, the company principally functions as an agent accepting property on consignment from its selling clients. Sotheby's sells property as agent of the consignor, billing the buyer for property purchased, receiving payment from the buyer and remitting to the consignor the consignor's portion of the buyer's payment after deducting the Company's commissions, expenses and applicable taxes and royalties (Sotheby's Form 10-K Annual Report, filed: February 28, 2011, p. 4). The Company's Finance segment provides certain collectors and dealers with financing, generally secured by works of art that the Company either has in its possession or permits the borrower to possess. Clients who borrow from the Finance segment are often unable to borrow on conventional terms from traditional lenders and are typically not highly interest rate sensitive (Sotheby's Form 10-K Annual Report, filed: February 28, 2011, p. 6).

The Dealer segment operates in the same markets as Sotheby's Auction segment and is impacted to varying degrees by many of the same competitive factors .

The most prominent competitive factors impacting the Dealer segment, which are not ranked in any particular order, include: (i) relationships and personal interaction between the buyer or seller and the art dealer; (ii) access to, and participation in, art fairs; (iii) the level of specialized expertise of the art dealer; (iv) the ability of the art dealer to locate and purchase quality works of art for resale; and (v) the ability of the art dealer to finance purchases of art (Sotheby's Form 10-K Annual Report, filed: February 28, 2011, p. 7).