About Sotheby's Year 2000 Disclosure Sotheby's Holdings Inc., Year 2000 Readiness Disclosure Statement Please note: This statement is a Year 2000 Readiness Disclosure under the Year 2000 Information and Readiness Disclosures Act of 1998 Introduction The Year 2000 issue is a result of date sensitive devices, systems and computer programs that were deployed using two digits rather than four to define the applicable year. Any such technologies may recognize a year containing "00" as the year 1900 rather than the year 2000, causing a malfunction. The Directors and Management of Sotheby's Holdings, Inc. and its subsidiaries and affiliated companies have recognized the potential seriousness of the Year 2000 issue and the effects it might have on Sotheby's ability to do business and to provide a high standard of customer service. Action Plan In 1997 Sotheby's formulated its strategy for addressing the Year 2000 issue and for ensuring as smooth a transition as possible into the new Millennium. Internal Computer Systems A Project 2000 Team was established to review the steps to be taken so as to prepare Sotheby's computer hardware/software and applications. In 1997 an inventory was taken of all hardware, software and applications used by Sotheby's. From this, and with Group Board approval, the Project 2000 Team initiated a formal project to address the entire range of Year 2000 compliance issues. These included: Upgrading our mainframe and PC computer hardware and software Full replacement of major Financial Systems Fixing of all other applications worldwide, including sales systems, cataloguing systems, network infrastructure, etc. To date Sotheby's has made significant progress on all programming changes to all of our internal business-critical systems. The Company's modification and replacement of, and execution of contingency plans for, its worldwide financial and information systems is proceeding on schedule Internal and external systems and relationships:In addition a multi-disciplinary Year 2000 Task Force was also established to focus on non-information technology systems with particular emphasis on: Business Continuity Client Service Health and Safety Regulatory Compliance The Year 2000 Task Force was charged with ensuring that all of our vendors and business partners have addressed their own companies' Year 2000 issues and are in a strong position to continue servicing us next year and thereafter. Questionnaires were sent out to all such vendors, and responses are being tracked. We believe that our business-critical service providers are taking appropriate steps to ensure Year 2000 readiness. Contingency plans will be developed where necessary. Sotheby's has assessed its own material non-information technology systems and on the information available does not anticipate any material disruption to its operations due to Year 2000 issues as a result of malfunction of such systems. Conclusion It is generally recognized that there are inherent areas of uncertainty which may lead to systems failures or may otherwise affect Sotheby's business and operations and that these effects may not become apparent until after the New Year. Through its strategy of forward planning and effective action it is Sotheby's aim to minimize the risk of any Year 2000 problems in its systems and to minimize as far as possible any negative effects of any potential direct or indirect Year 2000 failures.