Good morning and thank you for joining us today. With me here is Bill Ruprecht, Sotheby's Chairman, President and Chief Executive Officer and Patrick McClymont, Chief Financial Officer.

GAAP refers to generally accepted accounting principles in the United States of America. In this earnings call financial measures are presented in accordance with GAAP and also on a non-GAAP basis.

An explanation of the non-GAAP financial measures used in this earnings call, as well as reconciliation to the comparable GAAP amounts is provided as an appendix to the outline of this call, which can be found on the Investor Relations section of the Company’s website. Also, during the course of this call, the Company may make projections or other forward-looking statements regarding future events or the future financial performance of the Company.

We wish to caution you that such projections and statements are only predictions and involve risks and uncertainties, resulting in the possibility that the actual events or performance will differ materially from such predictions. We refer you to the documents the Company files periodically with the Securities and Exchange Commission, specifically the Company’s most recently filed Form 10-Q and 10-K.

These documents identify important factors that could cause the actual results to differ materially from those contained in the projections or forward-looking statements. Also please see our investor webpage for a slide presentation which outlines Sotheby’s third quarter and nine month financial results.

Now I will turn the call over to Patrick.

Thanks, Jenny. Good morning.

Thank you for joining us, and for your interest in Sotheby’s. I want to begin by thanking my colleagues here at Sotheby’s for a job well done in the third quarter and now during the heart of our busy season.

We have the best team in the business, and I think that is evident in the strength of our sales and our financial results. As Jenny noted, we included a slide deck this quarter.

We hope it is helpful and would appreciate any feedback from our investors and analysts. Starting on Page 2.

With a strong global art market and increased sales worldwide, we achieved a 120% improvement in adjusted pre-tax income in the first nine months of 2014. This substantial improvement is principally due to a 26% increase in net auction sales - to a nine month total of $3 billion - which generated a 20% increase in auction commission revenues.

Importantly, in a growing market, costs were very well controlled and are coming in better than prior guidance. Adjusted expenses decreased 5% in the quarter and increased just 1% in the nine month period, when compared to a year ago.

If we also exclude SFS cost of revenues, which are new this year due to the decision to debt fund the loan portfolio, Q3 expenses decreased 7% and nine month expenses are flat. Moving to the detailed financial information, and beginning with our overall results, adjusted net income for the nine months is $64.3 million and adjusted diluted EPS is $0.91, in comparison to $39.3 million, or $0.57 per diluted share, a year ago.

For the third quarter, adjusted net loss is $20.6 million and adjusted loss per share is $0.30. The adjusted net income numbers exclude restructuring and special charges.

Now let’s look at each of our main operating segments. Starting on Page 4 with the Agency segment, we continue to see growing revenues on strong auction sales, partially offset by the impact of tighter auction commission margins and a decrease in private sale commission revenues.

In the third quarter, agency gross profit increased $900,000 million, or 1%, to $68.1 million. A $15.7 million, or 32% increase in auction commission revenues resulted from a 41% increase in net auction sales over the period.

In the first nine months, agency gross profit increased $48.9 million, or 12%, to $460.8 million, with a $77.3 million, or 20% increase in auction commission revenues the result of a 26% increase in net auction sales from the prior year. Auction commission margin decreased in the quarter from 21.3% to 19.9% and from 16.2% to 15.5% in the year-to-date period due to competitive conditions for high-value consignments and sales mix, as there was a shift in the proportion of property sold in the various price bands of our buyer’s premium rate structure.

Offsetting the gains in auction commission revenues, private sale commissions decreased $13.6 million, or 52%, for the quarter and $23.3 million, or 35%, in the nine months period when compared to the prior year. This decrease in sales and revenues happened despite a 69% increase in the number of private sale transactions year-to-date.

This year we are not seeing the significant level of high-value transactions we completed in 2013. Also favorably affecting Agency gross profit is a significant reduction in auction direct costs as a percentage of net auction sales, from 2.18% to 1.25% during the third quarter and from 1.76% to 1.42% during the nine month period.

Early this year, we established a goal to reduce auction direct costs as a percentage of net auction sales by 10 basis points for the full year 2014, when compared to 2013. As a result of increased efficiencies and spending controls that we have implemented this year, management expects to exceed this goal.

Turning to the Principal Segment on Page 5. Principal segment activities include the sale of artworks that have been purchased opportunistically by Sotheby’s and our retail wine business.

Principal gross profit for the year-to-date period totaled $1 million, an improvement of $1.4 million over the prior year. This improvement is due to a lower level of inventory writedowns versus the prior year.

Moving to the Finance Segment on Page 6. We continue to be pleased with the growth of Sotheby’s Financial Services and our ongoing process of debt funding the business.

The Finance Segment average loan portfolio balance for the third quarter was $614.8 million, a 42% increase from the prior year. Year to date, the client loan portfolio balance averaged $553 million, 31% higher than the equivalent period a year ago.

Finance segment revenues increased $3.4 million, or 44%, in the third quarter, and increased $6.7 million, or 29%, for the nine months period, reflecting the growth of the portfolio. As previously announced we have established a separate capital structure for the Finance segment that provides for the debt funding of loans through a dedicated revolving credit facility.

Debt funding the loan portfolio reduces the Finance segment’s cost of capital and enhances returns. Finance segment gross profit, which is net of borrowing costs, increased $1 million, or 14%, in the quarter and $2 million, or 9%, in the year-to-date period.

Moving to Page 7. In early 2014, we identified opportunities for savings of $22 million in professional fees, other general and administrative costs, direct costs of auction services and marketing expenses.

We are pleased to say we are on track to exceed the $22 million of cost savings targets identified at the beginning of this year. In the first three categories we now see incremental savings of $6 million.

We are also performing better than expected in the variable cost areas. The dollar benefit of that will depend on our sales level.

Moving to Page 8, salaries and related costs improved $3.1 million, or 5%, in the third quarter of 2014 and increased $18.6 million, or 9%, in the nine months period. For the quarter, the improvement in salaries and related costs is largely due to decreased employee benefits expense of $2 million, share-based payment expense $1.8 million and incentive compensation expense $1.2 million.

Offsetting this is a $2 million increase in full-time salaries due in part to the impact of mid-year strategic headcount and salary increases in 2013, as well as salary increases in 2014. For the nine months period, the increase in salaries and related costs is primarily related to the aforementioned increase in full-time salaries $7.7 million and an increase in incentive compensation expense $7.5 million which is a function of the improvement in earnings over the period.

For the full year 2014, we expect that full-time salaries will increase by approximately 4%, excluding the impact of changes in foreign currency exchange rates. Looking at Page 9, we have been asked to provide more clarity on the incentive compensation accrual process.

Management determines incentive compensation accruals seasonally, at the end of the second and fourth quarters. This year the increase in accrual is attributable to the improvement in earnings in the first half of the year.

As you can see on slide 9, it has been a very consistent proportion of our earnings over time. The actual incentive compensation award at the end of the year is at the discretion of the Board of Directors.

Few other items to discuss. First, special charges.

Sotheby’s incurred $20.1 million in the nine months period of third party advisory, legal, and other professional service fees directly associated with issues related to shareholder activism and the resulting proxy contest with Third Point, and the associated litigation. This amount is net of a $4.6 million insurance recovery recognized in the third quarter of 2014 pertaining to certain professional services fees incurred in defense of the litigation related to the shareholder activism.

Net interest expense. For the nine months ended September 30, 2014, net interest expense decreased $6.4 million 21% as a result of the repayment of Sotheby's 3.125% convertible notes due on their maturity in June 2013.

Income tax expense. Sotheby’s effective tax rate for the first nine months of 2014 is 40% as compared to 20% in 2013, due to the accrual of U.S.

taxes on the earnings of foreign subsidiaries in 2014 and the impact of a $6.8 million tax benefit that was recorded discretely in the second quarter of 2013 related to a loss on the tax basis in a foreign subsidiary, for which there is no corresponding benefit in the current year. Management estimates that Sotheby’s annual effective income tax rate for 2014, excluding discrete items, will be approximately 38%.

In 2013, Sotheby’s annual effective income tax rate, excluding discrete items, was approximately 30%. At this time, I would like to hand the call over to Bill Ruprecht for his remarks.

Thank you, Patrick. As we look out we have exception auctions, continued strong global demand and quite high prices for great works of art.

Competition for the best works remains robust in this strong market - we are certainly winning our share of these - and of course this keeps commission margins under pressure. This season, our use of auction guarantees has increased in order to secure some unique high-value consignments.

Overall, through the first nine months of this year, as well as in our October sales and last week’s Impressionist sales, auction guarantees have been meaningfully profitable to the company. We expect auction guarantees to remain a consignment-getting tool - when we prudently feel it is the right decision for the business.

Going forward, as Patrick mentioned, the size of our guarantee book can vary significantly from season to season, depending upon the specific opportunities in the marketplace. Couple of comments on fourth quarter sales to date.

In Hong Kong, we had a net total of $327 million, well within the pre-sale estimate range. Our position as a market leader in Hong Kong was re-affirmed, with participants from a record 60 countries participating this season, including increased interest from clients from Greater China.

We saw double-digit percentage increases in two key metrics – the number of buyers from across the region and the buyer hammer price. Year-to-date, more broadly in our business, the value of art bought by clients from Greater China is up 48%.

Our auctions and activities in Beijing – as well as our continued engagement with clients through our gallery shows, mid-season auctions and retail offerings in Hong Kong – all are contributing to Sotheby’s success and engagement with clients across Asia. Our Impressionist & Modern sales last week brought $470 million, with the evening sale last Tuesday establishing the highest total for Sotheby’s in any auction demonstrating our ongoing preeminence in this category for the fourth consecutive year.

The result of the evening sale bookends a very strong year for Impressionist & Modern Art at Sotheby’s, which I remind you opened in February with an evening sale that totaled almost $267 million – the highest for Sotheby’s in any London auction. This evening, we begin to offer property from the Collection of Mrs.

Paul Mellon, one of the series of sales here in New York. More than 2,000 individual items have an estimated value of more than $100 million and include exceptional fine art, jewelry, furniture and decorative arts that will be on sale and on view over much of the next 10 days.

This week in New York, we are also presenting Contemporary Art. The pre-sale estimate is $382 million to $535 million.

We really look forward to these events and speaking to you in the New Year about the culmination of this robust year in the business. That concludes our remarks, Amanda.

We will be happy to take any questions.

Good morning. It’s Jason on for George.

Wondering if you can just talk a little bit about the updates to the cost structure that you’ve provided in the slide deck. I was wondering if those include the benefits from the headcount reductions that you have done earlier this year, or is that has been separated from those numbers.

Yes, the numbers on Page 7, these tie back to what we announced in late January of this year. So they are distinct from what we did over the summer in terms of restructuring.

So none of the headcount moves are included in the numbers on Page 7.

So they are not included in the updated guidance numbers.

Correct.

And then if you can give any updates or thoughts on the private sales market, if you are seeing anything different. It seems like the transaction flow has been pretty strong.

But we’re not seeing these high value transactions and I wondering if you can talk to that and then maybe if you can define what you view as a high value transaction?

This is Bill. I think we tend to focus on the flow and indeed the number of transactions is as I recall up 60 plus percent in that part of the business.

So we think of it as a growing and reaffirming point of relevance in the business. When you uncouple the very high value transactions and these are really things over $10 million.

It’s a small number of trades which have informed over the last couple of years numbers and I think we’re really confident in this branch of the business as an avenue to continue to provide incremental opportunity for the company and the profitability and it comes with relatively low cost. It’s simply an impossible thing to predict how many very high value transactions you’re going to have, and all I can say in that regard is we continue to see opportunity and feel confident about the role of private sales of the business.

And more on that, I guess, as we try model out Q4, I am just – can you maybe provide some insight into last year’s Q4 if that had benefit from some of these high-value transactions as well?

Boy, I think after the call we can probably go back and look at the fourth quarter totals for you but they are not top of mind as to what a retro view of Q versus Q, and I don't believe we split out on any given quarter how many of those high value transactions there have been. Suffice it to say I am afraid this is an area that doesn’t have a lot of visibility for us and I know it doesn't for you.

Bill, you mentioned in your commentary that you were winning your share and that guarantees are meaningfully profitable. I think we understand and I am sure the market understands the reluctance to use too many of them for a long time following the crisis.

But any estimation or just characterization of how much share was out there, how much business is out there that you might have had to say essentially no to for the sake of limiting your guarantee use over the last 3, 4, 5 years?

I am trying not to give you an opaque answer but I have to say I think it's sort of an opaque question. How much business might we have gotten over the last 3, 4, 5 years if we’ve been willing to guarantee it is a question which I can't really give you anything like a precise answer on.

I think the way we look at guarantees in the past through today is when we’ve seen confidence in the marketplace and what we thought were trend of a reasonable state, reasonably stable to growing prices, we use our balance sheet. Clearly you understand what we did over the summer to increase our flexibility in that regard.

At the same time we’ve said repeatedly not to view that as a indication that we were going to try to max out our capacity on a regular basis. We really parse and underwrite these guarantees on an individual basis, when we see them as creating value for the company and I think all I really said here is that you’re going to see this move around and in some cycles be quite low and in some cases continue to be a robust multi-hundred million dollar book based upon what we see, what we’re offered and what we have confidence in.

And so I'm afraid I can't do better than that about what might have been retroactively.

A couple of questions. First, can you just talk about the global art market and are you seeing anything at this point that would concern you of possible slowdown?

I understand you’ve had some record auctions but just wondering on what you're seeing out there at this point?

Well, I think the global demand continues to appear from our perspective pretty robust. As I indicated, while our Hong Kong platform had a Q4 cycle that was smaller than the previous year, the demand coming out of Greater China for works of art in terms of value is up materially.

I think the statistic I indicated was up 48% for the nine months. So global wealth creation is a story that I think is pretty intact and people are finding great works of art relevant to their lives.

So what the global volume of conversations in business is very much in an ongoing way and always has been ready to supply that were able to generate as much as it is to the demand side. We’ve seen really robust demand and the supply-side is something rather which is frustratingly a challenging on occasion.

We continue to see however pretty good deal flow and opportunities as we move forward. So I think the story is intact as far as we are concerned.

And then can you give us an update on the eBay partnership and kind of the timing about when you expect to begin streaming auctions?

I think I would say Kristine is that we expect in the first quarter of 2015 that platform and the innovations associated with it to be hitting the marketplace.

And then lastly any update on your real estate review?

No, there is nothing new to report. We continue to go through the process.

A question on just the anti-corruption campaign out of China had an impact on many luxury goods companies as well as Macau. Curious to hear if you’ve seen any effect on your business or if you think it actually has an effect on the art industry as a whole?

I think that the price points in our business tend to make the issues of so-called gifting less relevant in our business than they are in so called luxury goods marketplaces where the price points tend to be in $1000 to $10,000 price range. People who buy works of art in my estimation in general [wear] on those works of art and value them as again part of their lives.

And at the same time I think there is a sobriety about China's growth and where it's headed. That's probably relatively healthy actually.

With all of that, I take you back to the statistic which says year to date greater China consumed 48% more value in our business than a year ago. So I think that’s a relatively telling narrative.

And then Patrick, a couple for you. So earlier this year you’d mentioned in annual review for cash balance and returning excess capital to shareholders.

Can you just tell us -- you provide some leverage metrics on a gross level across the business but can you tell us what type of cash balance the company needs entering the year? If you could just provide some context around what excess capital is?

Sure. The process that we go through and we did tit the first time last year and it starts kind of now.

As we head into year-end we think about how the business has performed and what our capital structure looks like, we look at what our capital requirements are in the agency business but to support the business and also to think about investing in the business based on all that we go to the board, we talk about our estimation of what excess capital is and talk to the board about what we got to do with that excess capital. So it will be very similar to what we did last year process wise and timing wise expect the same – I expect sometime early part of next year we reach out to investors and give them update on where we came out on those questions.

So give us a couple months here and we’ll have another conversation on it.

Two quick follow-ups. One is that the payroll restructuring that you announced now I guess last quarter, when should we expect an update or any kind of clarity around what kind of potential savings you can achieve from that.

As we communicated when we announced the restructuring and then on the second quarter call we’re going through the regular planning process. So right now we’re going through a planning process for 2015 and we need to make some decisions on what businesses we’re going to invest in, and which businesses we’re not.

And so we need to think about where the business is headed in 2015 and then I’d expect similar timing in terms of coming to back to folks on capital allocation and similar to what we did early this year where we talked about some cost savings targets for 2014. We will give people a sense of how these things came together the early part of next year.

An then last one we had was just trying to get a better sense of the timing of salary accruals. So we saw some moving parts in the first half between 1Q and 2Q.

Just curious to know as we look out to 4Q, is there anything unique that could drive salaries and related expenses to grow in excess of reported revenues in the fourth quarter?

We talked about incentive comp and try to give folks some clarity – we had some questions on that at the last call, so that’s we try to give some clarity on this call. That decision will be made by the board at year-end and that will show up in the fourth quarter numbers.

Is there anything else specifically that you are focused on?

No, I was just trying to better understand – I mean I guess it’s hard to really understand the timing of incentive comp but you're having a good year, your third quarter revenues were down and expenses were down and I am just trying to better understand if there were any timing issues between 3Q and 4Q to be aware of?

No, the incentive comp, as I said on the call, we do that at the end of the second quarter and then at the end of the year, the board makes the final determination because of the seasonality of the business, it only makes sense to look at that twice a year.

Thanks a lot. Thanks for the slide deck, I think it's very helpful.

Patrick, I had a question about the leverage relative to your long-term targets of 3.5 to 4 times. So where does that stand and what’s ahead in terms of how you’re thinking about that part of the equation?

We are – that’s the target on the agency side of the business that we talk about the early part of this year 3.5 to 4 times. We’re not at that level of leverage yet and so we continue to think about what's the right way to get to that level of leverage.

Some of it depends on how things shake out on the real estate review and so we’d expect to have an update on that when we talk about the capital allocation more broadly in the early part of next year.

And related to your early announced strategy as Sotheby's explores further leverage of the brand into potentially like non-cyclical areas of business within luxury goods, are there any initial thoughts there on the kind of work you're doing and evaluating the brand and what the potential might be there?

No, there is nothing to talk about at this time.

Okay and I wanted to ask you guys about on a bigger picture perspective, as we think about both private sales and e-commerce, do you have long-term parameters for how private sales could evolve as you grow share in that business, like as a percentage of your EBIT or more revenues? And then how should we – on a long-term basis think about e-commerce kind of materially contributing to auction sales growth?

I think Oliver, you’re looking for help in modelling and that's not something that we’re going to be helpful on. As Bill described earlier we think the private sales business is an attractive business.

We’re encouraged by the transaction volume, up 69% year-over-year. We’re missing a number of these high-value transactions but that business will always be difficult to predict.

There is just variability around winning those deals and getting those deals closed, but we do believe long-term our brand is super relevant in private sales and our expertise is super relevant. And so we think it will continue to grow.

Thank you all for your interest and your questions and we look forward to talking to you at the conclusion of the year sometime in February. Good bye and have a good autumn.