Restructuring Charges, Net

6 Months Ended

Jun. 30, 2011

Restructuring Charges, Net

Restructuring Charges, Net

8. Restructuring Charges, Net

On June 27, 2011, the Executive Committee of Sotheby's Board of Directors approved a restructuring plan (the "Restructuring Plan") impacting Sotheby's operations in Italy and the Netherlands. The Restructuring Plan will streamline Sotheby's European selling operations, with a renewed emphasis on relationships with key clients and the sourcing of important collections. The Restructuring Plan will also allow Sotheby's global management to focus resources on growing markets, especially China, and other strategic priorities. In the Netherlands, the Restructuring Plan will result in the cessation of all local auction sales. In Italy, Sotheby's will significantly reduce its auction sales calendar, but plans to continue to conduct auctions of Contemporary and Modern Art. Sotheby's streamlined European operations will continue to source property to its other selling locations throughout the world, as well as pursue private sale opportunities.

The Restructuring Plan will reduce staff by 23, which represents approximately 45% of Sotheby's current headcount in Italy and the Netherlands and 2% of its global headcount. The Restructuring Plan will also allow Sotheby's to completely exit its leased Amsterdam salesroom facility, replacing it with a smaller local office, and significantly reduce the cost associated with its Milan premises.

The Restructuring Plan is expected to result in total Restructuring Charges of approximately $4.1 million in 2011, consisting of $1.7 million in employee termination benefits recognized in the second quarter of 2011 and $2.4 million in lease exit costs, of which $0.5 million was recognized in the second quarter of 2011. The remaining $1.9 million in lease exit costs are expected to be recognized in the second half of 2011 upon the completion of negotiations with the lessor. Accrued restructuring costs of $2.2 million are recorded within Accounts Payable and Accrued Liabilities in the June 30, 2011 Condensed Consolidated Balance Sheet. Total cash expenditures related to the Restructuring Plan are expected to be approximately $4.6 million and are expected to be made in the second half of 2011.