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Sotheby's CEO Discusses Q2 2012 Results - Earnings Call Transcript

Turning to total revenues for three and six months ended June 30, total revenues declined $65.8 million, or 18% and $80.5 million, or 16% respectively, when compared to the same periods in the prior year. As Bill commented on, this deterioration stems principally from single-owner sales and Bill quoted those amounts. Our Hong Kong sales were down about $131 million versus the prior year, again, principally, from single-owner sales in Hong Kong.

For the three and six months ended June 30, our auction commission margins, which are highlighted in our MD&A, declined from 16.4% to 15.3% and from 16.4% to 15.8% respectively. These declines were attributable to competitive pressures to win high-value consignments, which resulted in a lower level of shared auction commission, and also was a result of our sales mix.

Offsetting the revenue shortfall in the first half is a 9% increase in private sales commission stemming from the 15% growth in aggregate private sales volume over the period, which grew to $514 million.

Turning to the direct costs line, direct costs of services increased $1 million, or 4% in the second quarter and remains relatively unchanged for the first half of the year.

Moving to salaries and related costs, for the second quarter and first half, salaries and related costs declined $11.6 million or 12% and $7.4 million, or 5% respectively, primarily due to a decline in incentive compensation and share-based payment costs due to the lower level of Sotheby’s earnings relative to the prior year periods and reflecting the company’s ongoing commitment to a variability in our compensation structure.

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