Price Graph
Price
Yield
These terms and conditions govern your use of the website alphaminr.com and its related services.
These Terms and Conditions (“Terms”) are a binding contract between you and Alphaminr, (“Alphaminr”, “we”, “us” and “service”). You must agree to and accept the Terms. These Terms include the provisions in this document as well as those in the Privacy Policy. These terms may be modified at any time.
Your subscription will be on a month to month basis and automatically renew every month. You may terminate your subscription at any time through your account.
We will provide you with advance notice of any change in fees.
You represent that you are of legal age to form a binding contract. You are responsible for any
activity associated with your account. The account can be logged in at only one computer at a
time.
The Services are intended for your own individual use. You shall only use the Services in a
manner that complies with all laws. You may not use any automated software, spider or system to
scrape data from Alphaminr.
Alphaminr is not a financial advisor and does not provide financial advice of any kind. The service is provided “As is”. The materials and information accessible through the Service are solely for informational purposes. While we strive to provide good information and data, we make no guarantee or warranty as to its accuracy.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, UNDER NO CIRCUMSTANCES SHALL ALPHAMINR BE LIABLE TO YOU FOR DAMAGES OF ANY KIND, INCLUDING DAMAGES FOR INVESTMENT LOSSES, LOSS OF DATA, OR ACCURACY OF DATA, OR FOR ANY AMOUNT, IN THE AGGREGATE, IN EXCESS OF THE GREATER OF (1) FIFTY DOLLARS OR (2) THE AMOUNTS PAID BY YOU TO ALPHAMINR IN THE SIX MONTH PERIOD PRECEDING THIS APPLICABLE CLAIM. SOME STATES DO NOT ALLOW THE EXCLUSION OR LIMITATION OF INCIDENTAL OR CONSEQUENTIAL OR CERTAIN OTHER DAMAGES, SO THE ABOVE LIMITATION AND EXCLUSIONS MAY NOT APPLY TO YOU.
If any provision of these Terms is found to be invalid under any applicable law, such provision shall not affect the validity or enforceability of the remaining provisions herein.
This privacy policy describes how we (“Alphaminr”) collect, use, share and protect your personal information when we provide our service (“Service”). This Privacy Policy explains how information is collected about you either directly or indirectly. By using our service, you acknowledge the terms of this Privacy Notice. If you do not agree to the terms of this Privacy Policy, please do not use our Service. You should contact us if you have questions about it. We may modify this Privacy Policy periodically.
When you register for our Service, we collect information from you such as your name, email address and credit card information.
Like many other websites we use “cookies”, which are small text files that are stored on your computer or other device that record your preferences and actions, including how you use the website. You can set your browser or device to refuse all cookies or to alert you when a cookie is being sent. If you delete your cookies, if you opt-out from cookies, some Services may not function properly. We collect information when you use our Service. This includes which pages you visit.
We use Google Analytics and we use Stripe for payment processing. We will not share the information we collect with third parties for promotional purposes. We may share personal information with law enforcement as required or permitted by law.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| þ |
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| For the quarterly period ended June 30, 2010 |
| -OR- |
| o |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
| For the transition period from to |
|
Delaware
(State or other jurisdiction of incorporation or organization) |
98-0212790
(I.R.S. Employer Identification Number) |
| Large accelerated filer þ | Accelerated filer o | Non-accelerated filer o | Smaller reporting company o | |||
| (Do not check if a smaller reporting company) |
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
| (Unaudited) | (Audited) | |||||||
|
Assets
|
||||||||
|
Current assets:
|
||||||||
|
Cash and cash equivalents
|
$ | 31,568,720 | $ | 49,803,402 | ||||
|
Short-term investments
|
11,279,620 | 14,580,185 | ||||||
|
Accounts receivable, net
|
8,996,944 | 4,868,377 | ||||||
|
Funds receivable from customers
|
3,406,625 | 3,785,802 | ||||||
|
Prepaid expenses
|
506,921 | 547,138 | ||||||
|
Deferred tax assets
|
6,606,413 | 5,481,182 | ||||||
|
Other assets
|
4,919,156 | 3,068,930 | ||||||
|
|
||||||||
|
Total current assets
|
67,284,399 | 82,135,016 | ||||||
|
Non-current assets:
|
||||||||
|
Long-term investments
|
66,112,729 | 26,627,357 | ||||||
|
Property and equipment, net
|
7,689,100 | 5,948,276 | ||||||
|
Goodwill and intangible assets, net
|
62,932,379 | 64,338,564 | ||||||
|
Deferred tax assets
|
4,053,741 | 2,897,492 | ||||||
|
Other assets
|
569,382 | 667,944 | ||||||
|
|
||||||||
|
Total non-current assets
|
141,357,331 | 100,479,633 | ||||||
|
|
||||||||
|
Total assets
|
$ | 208,641,730 | $ | 182,614,649 | ||||
|
|
||||||||
|
|
||||||||
|
Liabilities and Shareholders’ Equity
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable and accrued expenses
|
$ | 13,779,597 | $ | 11,599,634 | ||||
|
Funds payable to customers
|
36,017,695 | 31,453,410 | ||||||
|
Payroll and social security payable
|
7,110,417 | 7,428,340 | ||||||
|
Taxes payable
|
8,560,306 | 6,797,516 | ||||||
|
Loans payable and other financial liabilities
|
56,121 | 3,213,992 | ||||||
|
|
||||||||
|
Total current liabilities
|
65,524,136 | 60,492,892 | ||||||
|
Non-current liabilities:
|
||||||||
|
Payroll and social security payable
|
1,730,748 | 1,355,006 | ||||||
|
Loans payable and other financial liabilities
|
161,008 | — | ||||||
|
Deferred tax liabilities
|
6,413,934 | 5,170,799 | ||||||
|
Other liabilities
|
1,090,392 | 1,402,715 | ||||||
|
|
||||||||
|
Total non-current liabilities
|
9,396,082 | 7,928,520 | ||||||
|
Total liabilities
|
$ | 74,920,218 | $ | 68,421,412 | ||||
|
|
||||||||
|
|
||||||||
|
Commitments and contingencies (Note 8)
|
||||||||
|
Shareholders’ equity:
|
||||||||
|
Common stock, $0.001 par value, 110,000,000 shares authorized,
44,128,876 and 44,120,269 shares issued and outstanding at June 30,
2010 and December 31, 2009, respectively
|
$ | 44,129 | $ | 44,120 | ||||
|
Additional paid-in capital
|
120,375,178 | 120,257,998 | ||||||
|
Retained earnings
|
38,951,100 | 17,656,537 | ||||||
|
Accumulated other comprehensive loss
|
(25,648,895 | ) | (23,765,418 | ) | ||||
|
|
||||||||
|
Total shareholders’ equity
|
133,721,512 | 114,193,237 | ||||||
|
|
||||||||
|
|
||||||||
|
Total liabilities and shareholders’ equity
|
$ | 208,641,730 | $ | 182,614,649 | ||||
|
|
||||||||
2
| Six Months Ended June 30, 2010 | Three Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
|
Net revenues
|
$ | 98,448,105 | $ | 73,224,300 | $ | 52,510,331 | $ | 40,901,799 | ||||||||
|
Cost of net revenues
|
(21,304,611 | ) | (15,229,463 | ) | (11,411,561 | ) | (8,595,477 | ) | ||||||||
|
|
||||||||||||||||
|
Gross profit
|
77,143,494 | 57,994,837 | 41,098,770 | 32,306,322 | ||||||||||||
|
|
||||||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
Product and technology development
|
(7,201,240 | ) | (5,720,625 | ) | (3,976,466 | ) | (3,087,206 | ) | ||||||||
|
Sales and marketing
|
(22,581,944 | ) | (20,293,461 | ) | (11,473,145 | ) | (10,077,284 | ) | ||||||||
|
General and administrative
|
(13,041,477 | ) | (12,800,984 | ) | (6,834,592 | ) | (6,729,609 | ) | ||||||||
|
|
||||||||||||||||
|
Total operating expenses
|
(42,824,661 | ) | (38,815,070 | ) | (22,284,203 | ) | (19,894,099 | ) | ||||||||
|
|
||||||||||||||||
|
Income from operations
|
34,318,833 | 19,179,767 | 18,814,567 | 12,412,223 | ||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||
|
Interest income and other financial gains
|
1,711,529 | 1,531,837 | 917,388 | 602,174 | ||||||||||||
|
Interest expense and other financial charges
|
(6,351,339 | ) | (5,844,773 | ) | (3,355,921 | ) | (3,334,589 | ) | ||||||||
|
Foreign currency gains / (loss)
|
361,494 | 529,213 | (35,478 | ) | (1,346,273 | ) | ||||||||||
|
|
||||||||||||||||
|
Net income before income / asset tax expense
|
30,040,517 | 15,396,044 | 16,340,556 | 8,333,535 | ||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Income / asset tax expense
|
(8,745,954 | ) | (3,325,089 | ) | (4,666,593 | ) | (1,653,756 | ) | ||||||||
|
|
||||||||||||||||
|
Net income
|
$ | 21,294,563 | $ | 12,070,955 | $ | 11,673,963 | $ | 6,679,779 | ||||||||
|
|
||||||||||||||||
| Six Months Ended June 30, 2010 | Three Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
|
Basic EPS
|
||||||||||||||||
|
Basic net income per common share
|
$ | 0.48 | $ | 0.27 | $ | 0.26 | $ | 0.15 | ||||||||
|
|
||||||||||||||||
|
Weighted average shares
|
44,117,364 | 44,074,462 | 44,121,087 | 44,078,235 | ||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Diluted EPS
|
||||||||||||||||
|
Diluted net income per common share
|
$ | 0.48 | $ | 0.27 | $ | 0.26 | $ | 0.15 | ||||||||
|
|
||||||||||||||||
|
Weighted average shares
|
44,142,829 | 44,127,208 | 44,145,255 | 44,132,204 | ||||||||||||
|
|
||||||||||||||||
3
| Accumulated | ||||||||||||||||||||||||||||
| Additional | (Accumulated | other | ||||||||||||||||||||||||||
| Comprehensive | Common stock | paid-in | deficit) / Retained | comprehensive | ||||||||||||||||||||||||
| income | Shares | Amount | capital | Earnings | income / (loss) | Total | ||||||||||||||||||||||
|
Balance as of December 31, 2008
|
44,070,367 | $ | 44,071 | $ | 119,807,007 | $ | (15,552,256 | ) | $ | (10,874,841 | ) | $ | 93,423,981 | |||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Stock options exercised
|
4,495 | 4 | 4,000 | — | — | 4,004 | ||||||||||||||||||||||
|
Stock-based compensation — stock options
|
— | — | 871 | — | — | 871 | ||||||||||||||||||||||
|
Stock-based compensation — restricted shares
|
— | — | 31,033 | — | — | 31,033 | ||||||||||||||||||||||
|
Stock-based compensation LTRP
|
— | — | 90,603 | — | — | 90,603 | ||||||||||||||||||||||
|
Restricted shares issued
|
10,655 | 10 | 171,089 | — | — | 171,099 | ||||||||||||||||||||||
|
LTRP shares issued
|
3,600 | 3 | (3 | ) | — | — | — | |||||||||||||||||||||
|
Net income
|
$ | 12,070,955 | — | — | — | 12,070,955 | — | 12,070,955 | ||||||||||||||||||||
|
Currency translation adjustment
|
627,929 | — | — | — | — | 627,929 | 627,929 | |||||||||||||||||||||
|
Unrealized net gains on investments
|
11,145 | — | — | — | — | 11,145 | 11,145 | |||||||||||||||||||||
|
Realized net gains on investments
|
(3,643 | ) | — | — | — | — | (3,643 | ) | (3,643 | ) | ||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Comprehensive income
|
$ | 12,706,386 | ||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance as of June 30, 2009
|
44,089,117 | $ | 44,088 | $ | 120,104,600 | $ | (3,481,301 | ) | $ | (10,239,410 | ) | $ | 106,427,977 | |||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Stock options exercised
|
30,536 | 31 | 24,319 | — | — | 24,350 | ||||||||||||||||||||||
|
Stock-based compensation — stock options
|
— | — | 881 | — | — | 881 | ||||||||||||||||||||||
|
Stock-based compensation — restricted shares
|
— | — | 43,349 | — | — | 43,349 | ||||||||||||||||||||||
|
Stock -based compensation — LTRP
|
— | — | 84,850 | — | — | 84,850 | ||||||||||||||||||||||
|
Shares issued
|
616 | 1 | (1 | ) | — | — | — | |||||||||||||||||||||
|
Net income
|
$ | 21,137,838 | — | — | — | 21,137,838 | — | 21,137,838 | ||||||||||||||||||||
|
Currency translation adjustment
|
(13,542,494 | ) | — | — | — | — | (13,542,494 | ) | (13,542,494 | ) | ||||||||||||||||||
|
Unrealized net gains on investments
|
16,485 | — | — | — | — | 16,485 | 16,485 | |||||||||||||||||||||
|
Realized net loss on investments
|
1 | — | — | — | — | 1 | 1 | |||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Comprehensive income
|
$ | 20,318,216 | ||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance as of December 31, 2009
|
44,120,269 | $ | 44,120 | $ | 120,257,998 | $ | 17,656,537 | $ | (23,765,418 | ) | $ | 114,193,237 | ||||||||||||||||
|
|
||||||||||||||||||||||||||||
4
| (Accumulated | Accumulated | |||||||||||||||||||||||||||
| Additional | deficit) / | other | ||||||||||||||||||||||||||
| Comprehensive | Common stock | paid-in | Retained | comprehensive | ||||||||||||||||||||||||
| income | Shares | Amount | capital | Earnings | income / (loss) | Total | ||||||||||||||||||||||
|
Balance as of December 31, 2009
|
44,120,269 | $ | 44,120 | $ | 120,257,998 | $ | 17,656,537 | $ | (23,765,418 | ) | $ | 114,193,237 | ||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Stock options exercised
|
4,626 | 5 | 5,444 | — | — | 5,449 | ||||||||||||||||||||||
|
Stock-based compensation — stock options
|
— | — | 121 | — | — | 121 | ||||||||||||||||||||||
|
Stock-based compensation — restricted
shares
|
— | — | 37,696 | — | — | 37,696 | ||||||||||||||||||||||
|
Stock-based compensation LTRP
|
— | — | 73,923 | — | — | 73,923 | ||||||||||||||||||||||
|
LTRP shares issued
|
3,981 | 4 | (4 | ) | — | — | — | |||||||||||||||||||||
|
Net income
|
$ | 21,294,563 | — | — | — | 21,294,563 | — | 21,294,563 | ||||||||||||||||||||
|
Currency translation adjustment
|
(1,468,912 | ) | — | — | — | — | (1,468,912 | ) | (1,468,912 | ) | ||||||||||||||||||
|
Unrealized net loss on investments
|
(386,935 | ) | — | — | — | — | (386,935 | ) | (386,935 | ) | ||||||||||||||||||
|
Realized net gains on investments
|
(27,630 | ) | — | — | — | — | (27,630 | ) | (27,630 | ) | ||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Comprehensive income
|
$ | 19,411,086 | ||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||
|
Balance as of June 30, 2010
|
44,128,876 | $ | 44,129 | $ | 120,375,178 | $ | 38,951,100 | $ | (25,648,895 | ) | $ | 133,721,512 | ||||||||||||||||
|
|
||||||||||||||||||||||||||||
5
| Six Months Ended June 30, | ||||||||
| 2010 | 2009 | |||||||
| (Unaudited) | ||||||||
|
Cash flows from operations:
|
||||||||
|
Net income
|
$ | 21,294,563 | $ | 12,070,955 | ||||
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
||||||||
|
Depreciation and amortization
|
2,187,353 | 1,945,382 | ||||||
|
Interest expense
|
— | 345,224 | ||||||
|
Accrued interest
|
(37,763 | ) | (141,103 | ) | ||||
|
Stock-based compensation expense — stock options
|
121 | 871 | ||||||
|
Stock-based compensation expense — restricted shares
|
37,696 | 31,043 | ||||||
|
LTRP accrued compensation
|
1,515,662 | 1,443,580 | ||||||
|
Deferred income taxes
|
(1,099,249 | ) | 194,139 | |||||
|
Changes in assets and liabilities, excluding the effect of acquisitions:
|
||||||||
|
Accounts receivable
|
(4,578,556 | ) | (1,275,237 | ) | ||||
|
Funds receivable from customers
|
247,441 | 627,999 | ||||||
|
Prepaid expenses
|
51,734 | (102,699 | ) | |||||
|
Other assets
|
(1,735,721 | ) | (3,740,274 | ) | ||||
|
Accounts payable and accrued expenses
|
5,249,442 | (2,685,895 | ) | |||||
|
Funds payable to customers
|
4,738,946 | 4,905,107 | ||||||
|
Other liabilities
|
(1,779,899 | ) | (592,641 | ) | ||||
|
|
||||||||
|
Net cash provided by operating activities
|
26,091,770 | 13,026,451 | ||||||
|
|
||||||||
|
Cash flows from investing activities:
|
||||||||
|
Purchase of investments
|
(64,252,379 | ) | (37,897,661 | ) | ||||
|
Proceeds from sale and maturity of investments
|
26,860,341 | 31,886,495 | ||||||
|
Purchases of intangible assets
|
(12,733 | ) | (953,164 | ) | ||||
|
Purchases of property and equipment
|
(3,906,287 | ) | (2,182,358 | ) | ||||
|
|
||||||||
|
Net cash used in investing activities
|
(41,311,058 | ) | (9,146,688 | ) | ||||
|
|
||||||||
|
Cash flows from financing activities:
|
||||||||
|
Decrease in short term debt
|
(2,993,985 | ) | (3,193,705 | ) | ||||
|
Stock options exercised
|
5,449 | 4,004 | ||||||
|
|
||||||||
|
Net cash used in financing activities
|
(2,988,536 | ) | (3,189,701 | ) | ||||
|
|
||||||||
|
Effect of exchange rate changes on cash and cash equivalents
|
(26,858 | ) | 1,210,727 | |||||
|
|
||||||||
|
Net decrease in cash and cash equivalents
|
(18,234,682 | ) | 1,900,789 | |||||
|
Cash and cash equivalents, beginning of the period
|
49,803,402 | 17,474,112 | ||||||
|
|
||||||||
|
|
||||||||
|
Cash and cash equivalents, end of the period
|
$ | 31,568,720 | $ | 19,374,901 | ||||
|
|
||||||||
|
|
||||||||
|
Supplemental cash flow information:
|
||||||||
|
Cash paid for interest
|
$ | 5,753,706 | $ | 5,005,815 | ||||
|
Cash paid for income taxes
|
$ | 10,377,362 | $ | 3,453,738 | ||||
6
| 1. |
Nature of Business
|
|
MercadoLibre Inc. (the “Company”) is an e-commerce enabler whose mission is to build the
necessary online and technology tools to allow practically anyone to trade almost anything,
helping to make inefficient markets more efficient in Latin America.
|
|
The Company operates in several reporting segments. The MercadoLibre online marketplace
segments include Brazil, Argentina, Mexico, Venezuela and other countries (Chile, Colombia,
Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay). The MercadoPago
segment includes the Company’s regional online payments platform consisting of its MercadoPago
business available in Brazil, Argentina, Mexico and other countries (Chile, Colombia, and
Venezuela).
|
|
Traditional offline marketplaces can be inefficient because they (i) are fragmented and
regional, (ii) offer a limited variety and breadth of goods, (iii) have high transaction costs,
and (iv) provide buyers with less information upon which they can make decisions. The Company
makes these inefficient marketplaces more efficient because (i) its community of users can
easily and inexpensively communicate and complete transactions, (ii) its marketplace includes a
very wide variety and selection of goods, and (iii) it brings buyers and sellers together for
much lower fees than traditional intermediaries. The Company attracts buyers by offering
selection, value, convenience and entertainment, and sellers by offering access to broad
markets, efficient marketing and distribution costs, ability to maximize prices and opportunity
to increase sales.
|
|
The Company pioneered online commerce in the region by developing a Web-based marketplace in
which buyers and sellers are brought together to browse, buy and sell items such as computers,
electronics, collectibles, automobiles, clothing and a host of practical and miscellaneous
items. The Company’s trading platform is a fully automated, topically arranged, intuitive, and
easy-to-use online service that is available 24 hours-a-day, seven days-a-week. The Company’s
platform supports a fixed price format in which sellers and buyers trade items at a fixed price
established by sellers, and an auction format in which sellers list items for sale and buyers
bid on items of interest.
|
|
Providing more efficient and effective payment methods from buyers to sellers is essential to
creating a faster, easier and safer online commerce experience. Traditional payment methods
such as bank deposits and cash on delivery present various obstacles to the online commerce
experience, including lengthy processing time, inconvenience and high costs. The Company
addressed this opportunity through the introduction in 2004 of MercadoPago, an integrated
online payments solution. MercadoPago was designed to facilitate transactions on the
MercadoLibre Marketplace by providing an escrow mechanism that enables users to securely,
easily and promptly send and receive payments online, and has experienced consistent growth
since its launch.
|
7
| 1. |
Nature of Business (Continued)
|
|
In 2004, the Company introduced an online classifieds platform for motor vehicles, vessels and
aircrafts. Buyers usually require a physical inspection of these items or specific types of
interactions with the sellers before completing a transaction, and therefore an online
classified advertisements service is better suited for purchase and
sale of these types of items than the traditional online purchase and sale format. For these items, buyers can
search by make, model, year and price, and sellers can list their phone numbers and receive
prospective buyers’ e-mail addresses, in order to allow for instant and direct communication
between sellers and potential buyers.
|
|
In November 2005, the Company acquired certain operations of DeRemate.com Inc., a regional
competing online marketplace, including all of its operations in Brazil, Colombia, Ecuador,
Mexico, Peru, Uruguay and Venezuela and the majority of the shares of the capital stock of its
subsidiaries (except for its Argentine and Chilean subsidiaries, which were operated under the
control of one of previous stockholders of DeRemate), for an aggregate purchase price of
$12.1 million, net of cash and cash equivalents acquired.
|
|
During 2006, the online classifieds platform was expanded to include the real estate category.
Much in the same way as with motor vehicles, vessels and aircrafts, purchases of real estate,
require physical inspection of the property and is therefore a business more suited to a
classifieds model. For real estate listings, in addition to posting their contact information,
individual owners or real estate agents can also upload pictures and videos of the property for
sale and include maps of the property’s location and layout.
|
|
During 2006, the Company launched several initiatives to improve its platform and expand its
reach. Particularly relevant were the launch of eShops, a new platform tailored to attract
lower rotation items and increase the breadth of products offered, the introduction of user
generated information guides for buyers that improve the shopping experience, and the expansion
of the online classifieds model by adding the services category. In terms of geographic
expansion, the Company launched sites in Costa Rica, the Dominican Republic, and Panama.
|
|
In August 2007, the Company successfully completed its initial public offering pursuant to
which the Company sold 3,000,000 shares of common stock and certain selling shareholders sold
15,488,762 shares of common stock, resulting in net proceeds for the Company of approximately
$49,573,239.
|
|
During 2007 the Company also launched a new and improved version of its MercadoPago payments
platform in Chile and Colombia as well as in Argentina during 2008. The new MercadoPago,
in addition to improving the ease of use and efficiency of payments for marketplace
purchases, also allows for payments outside of the Company’s marketplaces. Users are able
to transfer money to other users with MercadoPago accounts and to incorporate MercadoPago
as a means of payments in their independent commerce websites. In this way MercadoPago
3.0 as it has been called is designed to meet the growing demand for Internet based
payments systems in Latin America. In addition, in December 2009, the Company started
processing off-MercadoLibre transactions with selected sites in Brazil as a
Beta test using its new direct payments product, while maintaining the escrow product for
on-MercadoLibre transactions. On March 30, 2010, the Company started processing
off-MercadoLibre transactions through its new direct payments product to any site in Brazil
which wants to adopt it. On July 16, 2010, the Company launched MercadoPago 3.0 in Brazil for
all its marketplace transactions.
|
8
| 1. |
Nature of Business (Continued)
|
|
In January 2008, the Company acquired 100% of the issued and outstanding shares of capital
stock of Classified Media Group, Inc., or CMG, and its subsidiaries. CMG and its subsidiaries
operated an online classifieds platform primarily dedicated to the sale of automobiles at
www.tucarro.com in Venezuela, Colombia and Puerto Rico and real estate at www.tuinmueble.com in
Venezuela, Colombia, Panama, the United States, Costa Rica and the Canary Islands. The Company
paid for the shares of CMG and its subsidiaries $19 million, subject to certain escrows and
working capital adjustment clauses.
|
|
In September 2008, the Company completed the acquisition of DeRemate.com de Argentina S.A.,
DeRemate.com Chile S.A., Interactivos y Digitales México S.A. de C.V. and Compañía de Negocios
Interactiva de Colombia E.U. for an aggregate purchase price of $37.6 million. The Company also
purchased certain URLs, domains, trademarks, databases and intellectual property rights related
to those businesses for $2.4 million. The total purchase price was subject to certain set off
rights and working capital adjustment clauses.
|
|
As of June 30, 2010, the Company, through its wholly-owned subsidiaries, operated online
commerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican
Republic, Ecuador, Mexico, Panama, Peru, Portugal, Uruguay and Venezuela, and online payments
solutions directed towards Argentina, Brazil, Mexico, Venezuela, Chile and Colombia. In
addition, the Company operates a real estate classified platform that covers some areas of
Florida, U.S.A.
|
| 2. |
Summary of Significant Accounting Policies
|
|
Basis of presentation
|
||
|
The accompanying unaudited interim condensed consolidated financial statements are prepared in
conformity with accounting principles generally accepted in the United States of America (U.S.
GAAP) and include the accounts of the Company and its wholly-owned subsidiaries. These
financial statements are stated in US dollars. All significant intercompany transactions and
balances have been eliminated. Certain reclassifications have been made to prior year
information to conform to current year presentation.
|
|
Substantially all revenues and operating costs are generated in the Company’s foreign
operations, amounting to approximately 99.4% and 99.1% of the consolidated totals during the
six-month periods ended June 30, 2010 and 2009, respectively. Long-lived assets located in the
foreign operations totaled $66,547,693 and $67,523,246 as of June 30, 2010 and December 31,
2009, respectively. Cash and cash equivalents as well as short and long-term investments,
totaling $108,961,069 and $91,010,944 at June 30, 2010 and December 31, 2009, respectively, are
mainly located in the United States of America.
|
9
| 2. |
Summary of Significant Accounting Policies (Continued)
|
|
Basis of presentation (Continued)
|
|
These unaudited interim condensed financial statements reflect the Company’s consolidated
financial position as of June 30, 2010 and December 31, 2009. These statements also show the
Company’s consolidated statement of income for the three- and
six-month period ended June 30, 2010 and 2009, its consolidated statement of shareholders’ equity and its consolidated
statement of cash flows for the six-month period ended June 30, 2010 and 2009. These statements
include all normal recurring adjustments that management believes are necessary to fairly state
the Company’s financial position, operating results and cash flows.
|
|
Because all of the disclosures required by generally accepted accounting principles in the
United States of America for annual consolidated financial statements are not included herein,
these interim financial statements should be read in conjunction with the audited financial
statements and the notes thereto for the year ended December 31, 2009, contained in the
Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”)
on February 26, 2010. The condensed consolidated statements of income, shareholders’ equity and
cash flows for the periods presented are not necessarily indicative of results expected for any
future period.
|
|
Management has evaluated subsequent events through August 6, 2010 which is the date the
financial statements were issued.
|
|
Foreign Currency Translation
|
|
All of the Company’s foreign operations have determined the local currency to be their
functional currency, except for Venezuela for the three- and six-month periods ended June 30,
2010, as described below. Accordingly, these foreign subsidiaries translate assets and
liabilities from their local currencies to U.S. dollars using year end exchange rates while
income and expense accounts are translated at the average rates in effect during the year. The
resulting translation adjustment is recorded as part of other comprehensive income (loss), a
component of shareholders’ equity (deficit). Gains and losses resulting from transactions
denominated in non-functional currencies are recognized in earnings. Net foreign currency
transaction losses are included in the consolidated statements of income under the caption
“Foreign currency gain / (loss)” and amounted to $(35,478) and $(1,346,273) for the three-month
periods ended June 30, 2010 and 2009, respectively. For the six-month periods ended June 30,
2010 and 2009, “Foreign currency gain / (loss)” amounted to $361,494 and $529,213,
respectively.
|
|
Until September 30, 2009, the Company translated its Venezuelan subsidiaries assets,
liabilities, income and expense accounts at the official rate of 2.15 “Bolivares Fuertes”
per US dollar.
|
|
Starting in the fourth quarter of 2009, as a result of the changes in facts and
circumstances that affected the Company’s ability to convert currency for dividends remittances
using the official exchange rate in Venezuela, the Venezuelan subsidiaries assets, liabilities,
income and expense accounts were translated using the parallel exchange rate resulting in the
recognition in that quarter of a currency translation adjustment of $16,977,276 recorded in
other comprehensive income. The average exchange rate used for translating the fourth quarter
results was 5.67 “Bolivares Fuertes” per US dollar and the year-end exchange rate used for
translating assets and liabilities was 6.05 “Bolivares Fuertes” per US dollar.
|
10
| 2. |
Summary of Significant Accounting Policies (Continued)
|
|
Foreign Currency Translation (Continued)
|
|
As of the date of these interim condensed consolidated financial statements the Company did not
buy US dollars at the official rate.
|
|
According to US GAAP, we have transitioned our Venezuelan operations to highly inflationary
status as of January 1, 2010 considering the US dollar as the functional currency. See “Highly
inflationary status in Venezuela” below.
|
|
Therefore, no translation effect was accounted for in other comprehensive income during the
three- and six-month period ended June 30, 2010 related to our Venezuelan operations.
|
|
Until May 13, 2010, the only way by which US dollars could be purchased outside the official
currency market was using an indirect mechanism consisting in the purchase and sale of
securities, including national public debt bonds (DPNs) denominated in Bolivares Fuertes and
bonds issued by the government that were denominated in U.S. dollars. This mechanism for
transactions in certain securities created an indirect “parallel” foreign currency exchange
market in Venezuela that enabled entities to obtain foreign currency through financial brokers
without going through Commission for the Administration of Foreign Exchange
(“CADIVI”). Although the parallel exchange rate was higher, and accordingly less
beneficial, than the official exchange rate, some entities have used the “parallel” market to
exchange currency because, as it was already mentioned, CADIVI used not to approve in a timely
manner the exchange of currency requested by such entities. Until May 13, 2010, our Venezuelan
subsidiaries used this mechanism to buy US dollars and accordingly we used the parallel average
exchange rate to re-measure those foreign currency transactions.
|
|
However, on May 14th, 2010, the Venezuelan government enacted reforms to its exchange
regulations and close-down such parallel market by declaring that foreign-currency-denominated
securities issued by Venezuelan entities were included in the definition of foreign currency,
thus making the Venezuelan Central Bank (BCV) the only institution that could legally authorize
the purchase or sale of foreign currency bonds, thereby excluding non-authorized brokers from
the foreign exchange market.
|
|
Trading of foreign currencies was re-opened as a regulated market on June 9, 2010 with the
Venezuelan Central Bank as the only institution through which foreign currency-denominated
transactions can be brokered. Under the new system, known as the Foreign Currency Securities
Transactions System (SITME), entities domiciled in Venezuela can buy U.S. dollar–denominated
securities only through banks authorized by the BCV to import goods, services or capital
inputs. Additionally, the SITME imposes volume restrictions on an entity’s trading activity,
limiting such activity to a maximum equivalent of $50,000 per day, not to
exceed $350,000 in a calendar month. This limitation is non-cumulative, meaning that an entity
cannot carry over unused volume from one month to the next.
|
11
| 2. |
Summary of Significant Accounting Policies (Continued)
|
|
Foreign Currency Translation (Continued)
|
|
As a consequence of this new system, commencing on June 9, 2010, we have transitioned from the
parallel exchange rate to the SITME rate and started re-measuring foreign currency transactions
using the SITME rate published by BCV, which was 5.27 “Bolivares Fuertes” per U.S. dollar as
of June 9, 2010.
|
|
For the period beginning on May 14, 2010 and ending on June 8, 2010 (during which there was no
open foreign currency markets) we applied US GAAP guidelines, which state that if
exchangeability between two currencies is temporarily lacking at the transaction date or
balance sheet date, the first subsequent rate at which exchanges could be made shall be used.
|
|
Accordingly, the June 9, 2010 exchange rate published by the Venezuelan Central Bank has been
used to re-measure transactions during the abovementioned period.
|
|
The net investment in the Venezuelan subsidiaries amounts to $6,275,306 as of June 30, 2010.
|
|
The Company has assessed the new regulations and has concluded that, as currently formulated,
there has not been a material impact on the normal running of its business in Venezuela.
|
|
Highly inflationary status in Venezuela
|
|
During May 2009, the International Practices Task Force discussed the highly inflationary
status of the Venezuelan economy. Historically, the Task Force has used the Consumer Price
Index (CPI) when considering the inflationary status of the Venezuelan economy.
|
|
The CPI has existed since 1984. However, the CPI covers only the cities of Caracas and
Maracaibo. Commencing on January 1, 2008, the National Consumer Price Index (NCPI) has been
developed to cover the entire country of Venezuela. Since inflation data is not available to
compute a cumulative three year inflation rate for the entire country solely based on the NCPI,
the Company uses a blended rate using the NCPI and CPI to calculate Venezuelan inflation rate.
|
|
The cumulative three year inflation rate as of December 31, 2009 was calculated using the CPI
information for periods before January 1, 2008 and NCPI information for the periods after
January 1, 2008. The blended CPI/NCPI three-year inflation index (23 months of NCPI and 13
months of CPI) as of November 30, 2009 exceeded 100%. According to US GAAP, calendar year-end
companies should apply highly inflationary accounting as from January 1,
2010. Therefore, the Company has transitioned its Venezuelan operations to highly inflationary
status as of January 1, 2010 considering the US dollar as the functional currency.
|
12
| 2. |
Summary of Significant Accounting Policies (Continued)
|
|
Taxes on revenues
|
|
The Company’s subsidiaries in Brazil, Argentina, Venezuela and Colombia are subject to certain
taxes on revenues which are classified as cost of revenues. Taxes on revenues totaled
$3,616,846 and $2,514,040 for the three-month periods ended June 30, 2010 and 2009,
respectively. Taxes on revenues totaled $6,624,934 and $4,241,442 for the six-month periods
ended June 30, 2010 and 2009, respectively.
|
|
Income Tax
|
|
From fiscal year 2008 to fiscal year 2018, the Company’s Argentine subsidiary is a beneficiary
of a software development law. Part of the benefits obtained from being a beneficiary of the
aforementioned law is a relief of 60% of total income tax determined in each year, during these
10 years. Aggregate tax benefit totaled $1,180,802 and $686,585 for the three-month periods
ended June 30, 2010 and 2009, respectively. Aggregate tax benefit totaled $1,970,487 and
$1,389,791 for the six-month periods ended June 30, 2010 and 2009, respectively. Aggregate per
share effect of the Argentine tax holiday amounts to $0.03 and $0.02 for the three-month
periods ended June 30, 2010 and 2009, respectively. Aggregate per share effect of the Argentine
tax holiday amounts to $0.04 and $0.03 for the six-month periods ended June 30, 2010 and 2009,
respectively. If the Company had not been granted the Argentine tax holiday, the Company would
have pursued an alternative tax planning strategy and, therefore, the impact of not having this
particular benefit would not necessarily be the abovementioned dollar and per share effect.
|
|
As of June 30, 2010 and December 31, 2009, MercadoLibre, Inc has included in the non-current
deferred tax assets line the foreign tax credits related to the dividend distributions received
from its subsidiaries for a total amount of $3,698,485 and $2,879,999, respectively. Those
foreign tax credits will be used to offset the future domestic income tax payable.
|
|
Use of estimates
|
|
The preparation of condensed consolidated financial statements in conformity with generally
accepted accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Estimates are used for, but not limited to accounting for
allowance for doubtful accounts, depreciation, amortization, impairment and
useful lives of long-lived assets, compensation cost related to cash and share-based
compensation and restricted shares, recognition of current and deferred income taxes and
contingencies. Actual results could differ from those estimates.
|
13
| 2. |
Summary of Significant Accounting Policies (Continued)
|
|
Comprehensive Income
|
|
Comprehensive income is comprised of two components, net income and other comprehensive income
(loss), and defined as all other changes in equity of the Company that result from transactions
other than with shareholders. Other comprehensive income (loss) includes the cumulative
translation adjustment relating to the translation of the financial statements of the Company’s
foreign subsidiaries and unrealized gains on investments classified as available-for-sale
securities. Total comprehensive income for the three-month periods ended June 30, 2010 and 2009
amounted to $10,420,151 and $10,701,396, respectively and for the six month periods ended June
30, 2010 and 2009 amounted to $19,411,086 and $12,706,386 respectively.
|
|
Recent Accounting Pronouncements
|
||
|
Accounting for stock-based compensation
|
|
On April 16, 2010, the FASB issued an amendment to the accounting of stock-based compensation
related to the effect of Denominating the Exercise Price of a Share-Based Payment Award in the
Currency of the Market in Which the Underlying Equity Security Primarily Trades. The amendment
clarifies that a share-based payment award with an exercise price denominated in the currency
of a market in which a substantial portion of the entity’s equity securities trades must not be
considered to contain a market, performance, or service condition. Therefore, an entity should
not classify such an award as a liability if it otherwise qualifies for classification in
equity. The new accounting guidance is effective for interim and annual periods beginning on or
after December 15, 2010, and will be applied prospectively. Management estimates that the
implementation of the new accounting guidance will not have significant effect on the company’s
financial statements.
|
14
| 3. |
Net income per share
|
|
Basic earnings per share for the Company’s common stock is computed by
dividing net income available to common shareholders attributable to
common stock for the period by the weighted average number of common shares outstanding during the period.
|
|
The Company’s restricted shares granted to its outside directors were participating securities.
Accordingly, net income available to common stockholders for the three- and six month periods
ended June 30, 2010 and 2009, was allocated between unvested restricted shares and common stock
under the “two class method” for purposes of computing basic and diluted earnings per share.
|
|
Diluted earnings per share for the Company’s common stock assume the exercise of outstanding
stock options and vesting restricted shares, additional shares and shares granted under the
2008 Long Term Retention Plan under the Company’s stock based employee compensation plans.
|
|
The following table shows how net income available to common shareholders is allocated using
the two-class method, for the three-month periods ended June 30, 2010 and 2009:
|
| Three Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||||
|
|
||||||||||||||||
|
Net income
|
$ | 11,673,963 | $ | 11,673,963 | $ | 6,679,779 | $ | 6,679,779 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Net income available to common
shareholders attributable to unvested restricted shares
|
1,724 | 1,724 | $ | 973 | $ | 973 | ||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Net income available to common
shareholders attributable to common stock
|
$ | 11,672,239 | $ | 11,672,239 | $ | 6,678,806 | $ | 6,678,806 | ||||||||
|
|
||||||||||||||||
|
The following table shows how net income available to common shareholders is
allocated using the two-class method, for the six-month periods ended June 30, 2010 and 2009:
|
| Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||||
|
|
||||||||||||||||
|
Net income
|
$ | 21,294,563 | $ | 21,294,563 | $ | 12,070,955 | $ | 12,070,955 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Net income available to common
shareholders attributable to unvested
restricted shares
|
3,583 | 3,583 | $ | 2,021 | $ | 2,021 | ||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Net income available to common
shareholders attributable to common stock
|
$ | 21,290,980 | $ | 21,290,980 | $ | 12,068,934 | $ | 12,068,934 | ||||||||
|
|
||||||||||||||||
|
Net income per share of common stock is as follows for the three-month periods ended June
30, 2010 and 2009:
|
15
| 3. |
Net income per share (Continued)
|
| Three Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||||
|
|
||||||||||||||||
|
Net income available to common shareholders per common share
|
$ | 0.26 | $ | 0.26 | $ | 0.15 | $ | 0.15 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Numerator:
|
||||||||||||||||
|
Net income available to common shareholders
|
$ | 11,672,239 | $ | 11,672,239 | $ | 6,678,806 | $ | 6,678,806 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Denominator:
|
||||||||||||||||
|
Weighted average of common stock outstanding for Basic
earnings per share
|
44,121,087 | 44,121,087 | 44,078,235 | 44,078,235 | ||||||||||||
|
Adjustment for stock options
|
— | 14,811 | — | 49,147 | ||||||||||||
|
Adjustment for shares granted under LTRP
|
— | 9,357 | — | — | ||||||||||||
|
Adjustment for Additional Shares
|
— | — | — | 2,967 | ||||||||||||
|
Adjustment for Put Options
|
— | — | — | 1,855 | ||||||||||||
|
|
||||||||||||||||
|
Adjusted weighted average of common stock outstanding
for Diluted earnings per share
|
44,121,087 | 44,145,255 | 44,078,235 | 44,132,204 | ||||||||||||
|
|
||||||||||||||||
|
Net income per share of common stock is as follows for the six-month periods ended
June 30, 2010 and 2009:
|
| Six Months Ended June 30, | ||||||||||||||||
| 2010 | 2009 | |||||||||||||||
| Basic | Diluted | Basic | Diluted | |||||||||||||
|
|
||||||||||||||||
|
Net income available to common shareholders
per common share
|
$ | 0.48 | $ | 0.48 | $ | 0.27 | $ | 0.27 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Numerator:
|
||||||||||||||||
|
Net income available to common shareholders
|
$ | 21,290,980 | $ | 21,290,980 | $ | 12,068,934 | $ | 12,068,934 | ||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Denominator:
|
||||||||||||||||
|
Weighted average of common stock outstanding for Basic
earnings per share
|
44,117,364 | 44,117,364 | 44,074,462 | 44,074,462 | ||||||||||||
|
Adjustment for stock options
|
— | 16,454 | — | 49,514 | ||||||||||||
|
Adjustment for shares granted under LTRP
|
— | 9,011 | — | — | ||||||||||||
|
Adjustment for Additional Shares
|
— | — | — | 3,232 | ||||||||||||
|
|
||||||||||||||||
|
Adjusted weighted average of common stock outstanding
for Diluted earnings per share
|
44,117,364 | 44,142,829 | 44,074,462 | 44,127,208 | ||||||||||||
|
|
||||||||||||||||
16
| 3. |
Net income per share (Continued)
|
|
The calculation of diluted net income per share excludes all anti-dilutive shares. For the
three- and six-month periods ended June 30, 2010 and 2009, the numbers of anti-dilutive shares
are as follows:
|
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Anti-dilutive shares
|
||||||||||||||||
|
2008 Shares granted under LTRP
|
— | 18,690 | — | — | ||||||||||||
|
|
||||||||||||||||
|
|
— | 18,690 | — | — | ||||||||||||
|
|
||||||||||||||||
| 4. |
Business Combinations, Goodwill and Intangible Assets
|
|
Business
Combinations
On September 5, 2008, the Company completed, through one of its subsidiaries, Hammer.com, LLC, the acquisition of all of the issued and outstanding shares of capital stock of DeRemate.com de Argentina S.A., a company organized under the laws of Argentina (“DR Argentina”), DeRemate.com Chile S.A., a company organized under the laws of Chile (“DR Chile”), Interactivos y Digitales México S.A. de C.V., a company organized under the laws of Mexico (“ID Mexico”) and Compañía de Negocios Interactiva de Colombia E.U., a company organized under the laws of Colombia (“CNI Colombia” and together with DR Argentina, DR Chile, and ID Mexico, the “Acquired Entities”). Also, on September 5, 2008, the Company entered into an asset purchase agreement to acquire certain URLs, domain names, trademarks, databases and intellectual property rights that are used or useful in connection with the online platforms of the Acquired Entities. The Acquired Entities operate online trading platforms in Argentina (www.deremate.com.ar), Chile (www.deremate.cl), Mexico (www.dereto.com.mx) and Colombia (www.dereto.com.co). |
|
The aggregate purchase price paid by the Company to the Sellers for the shares of capital stock
of the Acquired Entities and the related assets was $40,000,000. The Company paid the Sellers
$22,000,000 in cash. In addition, on September 5, 2008, the Company issued to the Sellers ten
(10) unsecured promissory notes having an aggregate principal amount of $18,000,000, $8,000,000
of which are subject to set-off rights in favor of the Company for working capital adjustments
and liabilities relating to the assumption of certain contracts by the Company, $4,000,000 of
which are subject to set-off rights in favor of the Company for indemnification obligations of
the Sellers and the remaining $6,000,000 are not subject to set-off rights. Each of the
promissory notes have a one-year term, bear interest at 3.17875% plus 1.5% for the first four
months, 2.0% for the second four months and 2.5% for the third four months and can be prepaid
by the Company without penalty. Pursuant to the terms of each promissory note, until the
principal amount plus interest is repaid, the Company may not incur indebtedness in excess of
$55,000,000 in the aggregate.
|
|
On February 12, 2009, the Company agreed to modify the maturity conditions of the promissory
note as follows: (i) $3,000,000 on June 5, 2009 (ii) $9,000,000 on September 5, 2009 (iii)
$3,000,000 on December 5, 2009 and (iv) $3,000,000 on March 5, 2010. The promissory notes bear
interest at 3.17875% plus 1.5% for the first four months, 2.0% for the second four months and
2.5% for the remaining period up to its maturity. In addition, on that
date the Company finished the purchase price allocation period and the Company agreed with the
Sellers a working capital adjustment for $480,912 to be paid by the Sellers to the Company.
|
17
| 4. |
Business Combinations, Goodwill and Intangible Assets (Continued)
|
|
Business Combinations (Continued)
|
|
On June 3, 2009, the Company paid to the Sellers $3,113,203 including principal plus accrued
interest.
|
|
On August 31, 2009, the Company paid to the Sellers $9,470,222 including principal plus accrued
interest.
|
|
On December 4, 2009, the Company paid to the Sellers $3,018,893 including principal plus
accrued interest, net of certain working capital adjustments.
|
|
On March 4, 2010, the Company paid the final amount to the Sellers $3,242,395 including
principal plus accrued interest.
|
|
As of June 30, 2010, the Company has paid all the promissory notes related to DeRemate
acquisition.
|
|
Goodwill and Intangible Assets
|
|
The composition of goodwill and intangible assets is as follows:
|
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
|
Indefinite lived assets
|
||||||||
|
- Goodwill
|
$ | 58,515,626 | $ | 59,822,746 | ||||
|
- Trademarks
|
2,460,037 | 2,415,874 | ||||||
|
Amortizable intangible assets
|
||||||||
|
- Licenses and others
|
2,498,926 | 2,227,315 | ||||||
|
- Non-compete agreement
|
1,174,400 | 1,218,393 | ||||||
|
- Customer list
|
1,545,150 | 1,593,861 | ||||||
|
|
||||||||
|
Total intangible assets
|
$ | 66,194,139 | $ | 67,278,189 | ||||
|
Accumulated amortization
|
(3,261,760 | ) | (2,939,625 | ) | ||||
|
|
||||||||
|
|
$ | 62,932,379 | $ | 64,338,564 | ||||
|
|
||||||||
18
| 4. |
Business Combinations, Goodwill and Intangible Assets (Continued)
|
|
Goodwill
|
|
The changes in the carrying amount of goodwill for the six-month period ended June 30, 2010 and
the year ended December 31, 2009, are as follows:
|
| Six Months Ended June 30, 2010 | ||||||||||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||||||||||
| Brazil | Argentina | Chile | Mexico | Venezuela | Colombia | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||||||||
|
Balance, beginning of year
|
$ | 12,565,062 | $ | 23,175,174 | $ | 6,592,024 | $ | 4,770,560 | $ | 4,846,030 | $ | 5,100,939 | $ | 1,359,287 | $ | 58,409,076 | $ | 1,413,670 | $ | 59,822,746 | ||||||||||||||||||||
|
- Effect of exchange rates changes
|
(420,580 | ) | (773,941 | ) | (483,530 | ) | 75,908 | — | 340,079 | 5,544 | (1,256,520 | ) | (50,600 | ) | (1,307,120 | ) | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Balance, end of the period
|
$ | 12,144,482 | $ | 22,401,233 | $ | 6,108,494 | $ | 4,846,468 | $ | 4,846,030 | $ | 5,441,018 | $ | 1,364,831 | $ | 57,152,556 | $ | 1,363,070 | $ | 58,515,626 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
| Year Ended December 31, 2009 | ||||||||||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||||||||||
| Brazil | Argentina | Chile | Mexico | Venezuela | Colombia | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||||||||
|
Balance, beginning of year
|
$ | 9,361,697 | $ | 25,504,101 | $ | 5,252,283 | $ | 4,517,690 | $ | 13,636,502 | $ | 4,647,681 | $ | 1,220,332 | $ | 64,140,286 | $ | 1,512,488 | $ | 65,652,774 | ||||||||||||||||||||
|
- Effect of exchange rates changes
|
3,203,365 | (2,328,927 | ) | 1,339,741 | 252,870 | (8,790,472 | ) | 453,258 | 138,955 | (5,731,210 | ) | (98,818 | ) | (5,830,028 | ) | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Balance, end of the year
|
$ | 12,565,062 | $ | 23,175,174 | $ | 6,592,024 | $ | 4,770,560 | $ | 4,846,030 | $ | 5,100,939 | $ | 1,359,287 | $ | 58,409,076 | $ | 1,413,670 | $ | 59,822,746 | ||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||
|
Amortizable intangible assets
|
|
Amortizable intangible assets are comprised of customer lists and user base, trademarks and
trade names, non-compete agreements, acquired software licenses and other acquired intangible
assets including developed technologies. Aggregate amortization expense for intangible assets
totaled $207,486 and $140,076 for the three-month periods ended June 30, 2010 and 2009,
respectively. Aggregate amortization expense for intangible assets totaled $380,347 and
$279,477 for the six-month periods ended June 30, 2010 and 2009, respectively.
|
|
Expected future intangible asset amortization from acquisitions completed as of June 30, 2010
is as follows:
|
|
For year ended 12/31/2010 (remaining six months)
|
$ | 481,562 | ||
|
For year ended 12/31/2011
|
710,539 | |||
|
For year ended 12/31/2012
|
645,178 | |||
|
For year ended 12/31/2013
|
119,437 | |||
|
|
||||
|
|
$ | 1,956,716 | ||
|
|
||||
19
| 5. |
Segments
|
|
Reporting segments are based upon the Company’s internal organizational structure, the manner
in which the Company’s operations are managed, the criteria used by management to evaluate the
Company’s performance, the availability of separate financial information, and overall
materiality considerations.
|
|
The Marketplace segments include Brazil, Argentina, Venezuela, Mexico and other countries
(Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay)
on line market places commerce platforms. The Payments segment is the Company’s regional
payments platform consisting of its MercadoPago business in Brazil, Argentina, Mexico, Chile,
Colombia, and Venezuela.
|
|
Direct contribution consists of net revenues from external customers less direct costs. Direct
costs include specific costs of net revenues, sales and marketing expenses, and general and
administrative expenses over which segment managers have direct discretionary control, such as
advertising and marketing programs, customer support expenses, allowances for doubtful
accounts, headcount compensation, third party fees. All corporate related cost have been
excluded from the Company’s direct contribution.
|
|
Expenses over which segment managers do not currently have discretionary control, such as
certain technology and general and administrative costs, are monitored by management
through shared cost centers and are not evaluated in the measurement of segment performance.
|
|
The following tables summarize the financial performance of the Company’s reporting segments:
|
| Three Months Ended June 30, 2010 | ||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||
| Brazil | Argentina | Mexico | Venezuela | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||
|
Net revenues
|
$ | 18,491,273 | $ | 7,085,111 | $ | 4,222,333 | $ | 4,296,698 | $ | 3,090,698 | $ | 37,186,113 | $ | 15,324,218 | $ | 52,510,331 | ||||||||||||||||
|
Direct costs
|
(9,998,604 | ) | (2,721,948 | ) | (2,275,528 | ) | (1,958,045 | ) | (1,672,057 | ) | (18,626,182 | ) | (8,816,732 | ) | (27,442,914 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Direct contribution
|
8,492,669 | 4,363,163 | 1,946,805 | 2,338,653 | 1,418,641 | 18,559,931 | 6,507,486 | 25,067,417 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating expenses and indirect costs
of net revenues
|
(6,252,850 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income from operations
|
18,814,567 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||||||||||||||||||
|
Interest income and other financial gains
|
917,388 | |||||||||||||||||||||||||||||||
|
Interest expense and other financial results
|
(3,355,921 | ) | ||||||||||||||||||||||||||||||
|
Foreign currency losses
|
(35,478 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net income before income / asset tax expense
|
$ | 16,340,556 | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
20
| 5. |
Segments (Continued)
|
| Three Months Ended June 30, 2009 | ||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||
| Brazil | Argentina | Mexico | Venezuela | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net revenues
|
$ | 12,603,535 | $ | 5,549,031 | $ | 3,307,428 | $ | 7,301,806 | $ | 2,248,761 | $ | 31,010,561 | $ | 9,891,238 | $ | 40,901,799 | ||||||||||||||||
|
Direct costs
|
(7,627,345 | ) | (2,262,079 | ) | (1,867,422 | ) | (3,443,905 | ) | (1,326,640 | ) | (16,527,391 | ) | (5,431,797 | ) | (21,959,188 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Direct contribution
|
4,976,190 | 3,286,952 | 1,440,006 | 3,857,901 | 922,121 | 14,483,170 | 4,459,441 | 18,942,611 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating expenses and indirect costs
of net revenues
|
(6,530,388 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income from operations
|
12,412,223 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||||||||||||||||||
|
Interest income and other financial gains
|
602,174 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Interest expense and other financial results
|
(3,334,589 | ) | ||||||||||||||||||||||||||||||
|
Foreign currency losses
|
(1,346,273 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net income before income / asset tax expense
|
$ | 8,333,535 | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2010 | ||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||
| Brazil | Argentina | Mexico | Venezuela | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||
|
Net revenues
|
$ | 34,178,717 | $ | 13,807,332 | $ | 8,238,513 | $ | 7,623,631 | $ | 6,332,924 | $ | 70,181,117 | $ | 28,266,988 | $ | 98,448,105 | ||||||||||||||||
|
Direct costs
|
(19,190,574 | ) | (5,319,510 | ) | (4,544,501 | ) | (3,689,720 | ) | (3,340,795 | ) | (36,085,100 | ) | (16,603,996 | ) | (52,689,096 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Direct contribution
|
14,988,143 | 8,487,822 | 3,694,012 | 3,933,911 | 2,992,129 | 34,096,017 | 11,662,992 | 45,759,009 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating expenses and indirect
costs of net revenues
|
(11,440,176 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income from operations
|
34,318,833 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||||||||||||||||||
|
Interest income and other financial gains
|
1,711,529 | |||||||||||||||||||||||||||||||
|
Interest expense and other financial results
|
(6,351,339 | ) | ||||||||||||||||||||||||||||||
|
Foreign currency gains
|
361,494 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net income before income / asset tax expense
|
$ | 30,040,517 | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| Six Months Ended June 30, 2009 | ||||||||||||||||||||||||||||||||
| Marketplaces | ||||||||||||||||||||||||||||||||
| Brazil | Argentina | Mexico | Venezuela | Other Countries | Total | Payments | Consolidated | |||||||||||||||||||||||||
|
Net revenues
|
$ | 22,481,733 | $ | 10,514,908 | $ | 6,176,350 | $ | 13,667,627 | $ | 4,123,864 | $ | 56,964,482 | $ | 16,259,818 | $ | 73,224,300 | ||||||||||||||||
|
Direct costs
|
(14,233,003 | ) | (4,438,834 | ) | (3,664,417 | ) | (7,099,420 | ) | (2,529,674 | ) | (31,965,348 | ) | (9,513,003 | ) | (41,478,351 | ) | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Direct contribution
|
8,248,730 | 6,076,074 | 2,511,933 | 6,568,207 | 1,594,190 | 24,999,134 | 6,746,815 | 31,745,949 | ||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Operating expenses and indirect
costs of net revenues
|
(12,566,182 | ) | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income from operations
|
19,179,767 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||||||||||||||||||
|
Interest income and other financial gains
|
1,531,837 | |||||||||||||||||||||||||||||||
|
Interest expense and other financial results
|
(5,844,773 | ) | ||||||||||||||||||||||||||||||
|
Foreign currency gains
|
529,213 | |||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net income before income / asset tax expense
|
$ | 15,396,044 | ||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
21
| 5. |
Segments (Continued)
|
|
The following table summarizes the allocation of the long-lived tangible assets based on geography:
|
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
|
US long-lived tangible assets
|
$ | 4,063,266 | $ | 2,746,059 | ||||
|
|
||||||||
|
Other countries long-lived tangible assets
|
||||||||
|
Argentina
|
2,512,428 | 1,978,652 | ||||||
|
Brazil
|
759,445 | 883,712 | ||||||
|
Mexico
|
75,246 | 71,064 | ||||||
|
Venezuela
|
185,595 | 196,846 | ||||||
|
Other countries
|
93,120 | 71,943 | ||||||
|
|
||||||||
|
|
$ | 3,625,834 | $ | 3,202,217 | ||||
|
|
||||||||
|
Total long-lived tangible assets
|
$ | 7,689,100 | $ | 5,948,276 | ||||
|
|
||||||||
|
The following table summarizes the allocation of the goodwill and intangible assets based on
geography:
|
| June 30, | December 31, | |||||||
| 2010 | 2009 | |||||||
|
US intangible assets
|
$ | 10,521 | $ | 17,535 | ||||
|
|
||||||||
|
Other countries goodwill and intangible assets
|
||||||||
|
Argentina
|
25,322,185 | 26,188,435 | ||||||
|
Brazil
|
12,161,138 | 12,597,173 | ||||||
|
Mexico
|
4,880,226 | 4,818,438 | ||||||
|
Venezuela
|
6,598,702 | 6,602,677 | ||||||
|
Other countries
|
13,959,607 | 14,114,306 | ||||||
|
|
||||||||
|
|
$ | 62,921,858 | $ | 64,321,029 | ||||
|
|
||||||||
|
Total goodwill and intangible assets
|
$ | 62,932,379 | $ | 64,338,564 | ||||
|
|
||||||||
|
The following table summarizes the allocation of net revenues based on geography:
|
| Six Months Ended June 30, | Three Months Ended June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
Brazil
|
$ | 57,132,882 | $ | 36,438,805 | $ | 30,781,411 | $ | 21,226,127 | ||||||||
|
Argentina
|
17,806,508 | 11,510,888 | 9,452,261 | 6,113,280 | ||||||||||||
|
Mexico
|
9,139,286 | 6,881,232 | 4,669,349 | 3,706,350 | ||||||||||||
|
Venezuela
|
7,943,636 | 14,215,958 | 4,468,146 | 7,576,529 | ||||||||||||
|
Other countries
|
6,425,793 | 4,177,417 | 3,139,164 | 2,279,513 | ||||||||||||
|
|
||||||||||||||||
|
Total net revenues
|
$ | 98,448,105 | $ | 73,224,300 | $ | 52,510,331 | $ | 40,901,799 | ||||||||
|
|
||||||||||||||||
22
| 6. |
Fair Value Measurement of Assets and Liabilities
|
|
The following table summarizes the Company’s financial assets and liabilities measured at fair
value on a recurring basis as of June 30, 2010 and December 31, 2009:
|
| Quoted Prices in | Quoted Prices in | |||||||||||||||
| Balances as of | active markets for | Balances as of | active markets for | |||||||||||||
| June 30, | identical Assets | December 31, | identical Assets | |||||||||||||
| Description | 2010 | (Level 1) | 2009 | (Level 1) | ||||||||||||
|
Assets
|
||||||||||||||||
|
Cash and Cash Equivalents:
|
||||||||||||||||
|
Money Market Funds
|
$ | 4,856,219 | $ | 4,856,219 | $ | 26,298,189 | $ | 26,298,189 | ||||||||
|
Investments:
|
||||||||||||||||
|
Asset backed securities
|
12,411,281 | 12,411,281 | — | — | ||||||||||||
|
Sovereign Debt Securities
|
10,705,713 | 10,705,713 | — | — | ||||||||||||
|
Corporate Debt Securities
|
11,132,703 | 11,132,703 | 8,045,048 | 8,045,048 | ||||||||||||
|
|
||||||||||||||||
|
Total financial Assets
|
$ | 39,105,916 | $ | 39,105,916 | $ | 34,343,237 | $ | 34,343,237 | ||||||||
|
|
||||||||||||||||
|
The Company’s financial assets are valued using market prices on active markets (level 1).
Level 1 instrument valuations are obtained from real-time quotes for transactions in active
exchange markets involving identical assets. As of June 30, 2010 and December 31, 2009, the
Company did not have any assets obtained from readily-available pricing sources for comparable
instruments (level 2) or without observable market values that would require a high level of
judgment to determine fair value (level 3).
|
|
The unrealized net gains on
short-term and long-term investments are reported as a component of accumulated
other comprehensive income. The Company does not anticipate any significant realized losses
associated with those investments in excess of the Company’s historical cost.
|
|
As of June 30, 2010 and December 31, 2009, the Company has financial assets measured at fair
value on a recurring basis for $39,105,916 and $34,343,237, respectively.
|
|
In addition, as of June 30, 2010, the Company had $34,030,307 of short-term and long-term
investments, which consisted of time deposits considered held to maturity investments. As of
December 31, 2009, the Company had $25,993,069 of short-term and long-term investments, which
consisted of time deposits and corporate debt securities considered held to maturity
securities. Those investments are accounted for at amortized cost which, as of June 30, 2010
and December 31, 2009, approximates their fair values.
|
23
| 6. |
Fair Value Measurement of Assets and Liabilities (Continued)
|
| 7. |
Compensation Plan for Outside Directors
|
24
| 7. |
Compensation Plan for Outside Directors (Continued)
|
| 8. |
Commitments and Contingencies
|
25
| 8. |
Commitments and Contingencies (Continued)
|
26
| 8. |
Commitments and Contingencies (Continued)
|
27
| 8. |
Commitments and Contingencies (Continued)
|
| 9. |
Long Term Retention Plan
|
| • |
Year 1 (2008): 17%
|
||
| • |
Year 2 (2009): 22%
|
||
| • |
Year 3 (2010): 27%
|
||
| • |
Year 4 (2011): 34%
|
28
| 9. |
Long Term Retention Plan (Continued)
|
| June 30, | December 31, | |||||||
| Number of Shares | 2010 | 2009 | ||||||
|
|
||||||||
|
Granted
|
21,591 | 21,591 | ||||||
|
Non-vested at the beginning of the period / year
|
15,015 | 21,591 | ||||||
|
Non-vested at the end of the period / year
|
10,599 | 15,015 | ||||||
|
Forfeited
|
3,411 | 2,976 | ||||||
|
Vested and paid to the employees
|
7,581 | 3,600 | ||||||
|
Outstanding
|
10,599 | 15,015 | ||||||
| June 30, 2010 | ||||||||
| Weighted-average | ||||||||
| Aggregate | remaining | |||||||
| Intrinsic | contractual | |||||||
| value | life (years) | |||||||
|
|
||||||||
|
Shares outstanding
|
556,984 | 1.31 | ||||||
|
Shares paid
|
191,920 | — | ||||||
29
| 9. |
Long Term Retention Plan (Continued)
|
| • |
6.25% of the amount will be calculated in nominal terms (“the nominal basis share”),
|
||
| • |
6.25% will be adjusted by multiplying the nominal amount by the average closing stock
price for the last 60 trading days of the year previous to the payment date and divided
by the average closing stock price for the last 60 trading days of 2008 which is $13.81
(“the variable share”).
|
| June 30, 2010 | ||||||||
| Weighted-average | ||||||||
| Aggregate | remaining | |||||||
| Intrinsic | contractual | |||||||
| value | life (years) | |||||||
|
|
||||||||
|
Outstanding
|
4,202,306 | 3.75 | ||||||
30
| 9. |
Long Term Retention Plan (Continued)
|
| • |
6.25% of the amount will be calculated in nominal terms (“the nominal basis
share”),
|
| • |
6.25% will be adjusted by multiplying the nominal amount by the average closing
stock price for the last 60 trading days of the year previous to the payment date and
divided by the average closing stock price for the last 60 trading days of 2009 which
is $45.75 (“the variable share”).
|
p
31
| 9. |
Long Term Retention Plan (Continued)
|
| June 30, 2010 | ||||||||
| Weighted-average | ||||||||
| Aggregate | remaining | |||||||
| Intrinsic | contractual | |||||||
| value | life (years) | |||||||
|
|
||||||||
|
Outstanding
|
3,254,564 | 4.25 | ||||||
| 10. |
Share Repurchase Plan
|
| Total | ||||
|
|
||||
|
Number of Shares
|
226,000 | |||
|
Premium
|
302,997 | |||
|
Average Price
|
1.34 | |||
|
Commissions and other fees
|
(6,782 | ) | ||
|
Cash received
|
296,215 | |||
32
| • |
our expectations regarding the continued growth of online commerce and Internet usage in Latin America;
|
||
| • |
our ability to expand our operations and adapt to rapidly changing technologies;
|
||
| • |
government regulation;
|
||
| • |
litigation and legal liability;
|
||
| • |
systems interruptions or failures;
|
||
| • |
our ability to attract and retain qualified personnel;
|
||
| • |
consumer trends;
|
||
| • |
security breaches and illegal uses of our services;
|
||
| • |
competition;
|
||
| • |
reliance on third-party service providers;
|
||
| • |
enforcement of intellectual property rights;
|
||
| • |
our ability to attract new customers, retain existing customers and increase revenues;
|
||
| • |
seasonal fluctuations; and
|
||
| • |
political, social and economic conditions in Latin America in general, and Venezuela and Argentina in
particular, including Venezuela’s status as a highly inflationary economy and new exchange rate
system.
|
33
| • |
a brief overview of our company;
|
||
| • |
a discussion of our principal trends and results of operations for the quarters and six-month periods ended June
30, 2010 and 2009;
|
||
| • |
a review of our financial presentation and accounting policies, including our critical accounting policies;
|
||
| • |
a discussion of the principal factors that influence our results of operations, financial condition and liquidity;
|
||
| • |
a discussion of our liquidity and capital resources, capital expenditures and contractual obligations; and
|
||
| • |
a discussion of the market risks that we face.
|
| • |
The MercadoLibre Marketplace
: The MercadoLibre Marketplace, which we
sometimes refer to as our Marketplace business, is a fully-automated,
topically-arranged and user-friendly online commerce service. This
service permits both businesses and individuals to list items and
conduct their sales and purchases online in either a fixed-price or
auction-based format. Additionally, through online classified
listings, our registered users can list and purchase motor vehicles,
vessels, aircraft, real estate and services. Users and advertisers are
also able to place display and/or text advertisements on our web pages
in order to promote their brands and offerings. Any Internet user can
browse through the various products and services that are listed on
our web site and register with MercadoLibre to list, bid for and
purchase items and services. As a further enhancement to the
MercadoLibre Marketplace, in 2009 we launched our MercadoClics program
to allow businesses to promote their products and services on the web.
MercadoClics offers advertisers a cost efficient and automated
platform with which to acquire traffic from us. Advertisers purchase,
on a cost per clicks basis, advertising space that appear alongside
product search results for specific categories and other pages. These
advertising placements are clearly differentiated from product search
results and direct traffic both to and off platform to the advertisers
destination of choice.
|
||
| • |
The MercadoPago online Payments solution
: To complement the
MercadoLibre Marketplace, we developed MercadoPago, an integrated
online payments solution, which we sometimes refer to as our payments
business. MercadoPago is designed to facilitate transactions both on
and off the MercadoLibre Marketplace by providing a mechanism that
allows our users to securely, easily and promptly send and receive
Payments online.
|
34
| • |
the eligible employee will receive a fixed cash payment equal to 6.25%
of his or her 2010 LTRP bonus once a year for a period of eight years
starting in 2011 (the “Annual Fixed Payment”); and
|
||
| • |
on each date we pay the Annual Fixed Payment to an eligible employee,
he or she will also receive a cash payment (the “Variable Payment”)
equal to the product of (i) 6.25% of the applicable 2010 LTRP bonus
and (ii) the quotient of (a) divided by (b), where (a), the numerator,
equals the Applicable Year Stock Price (as defined below) and (b), the
denominator, equals the 2009 Stock Price, defined as $45.75, which was
the average closing price of our common stock on the NASDAQ Global
Market during the final 60 trading days of 2009. The “Applicable Year
Stock Price” shall equal the average closing price of our common stock
on the NASDAQ Global Market during the final 60 trading days of the
year preceding the applicable payment date.
|
35
36
| • |
listing fees;
|
||
| • |
optional feature fees;
|
||
| • |
final value fees; and
|
||
| • |
online advertising fees.
|
| • |
up front fees;
|
||
| • |
final value fees; and
|
||
| • |
online advertising fees.
|
37
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (in millions, except percentages) | (in millions, except percentages) | |||||||||||||||
|
|
||||||||||||||||
|
Percentage of total MercadoLibre
|
||||||||||||||||
|
Marketplace net revenues
|
||||||||||||||||
|
Brazil
|
48.7 | % | 39.5 | % | 49.7 | % | 39.5 | % | ||||||||
|
Argentina
|
19.7 | % | 18.5 | % | 19.1 | % | 18.5 | % | ||||||||
|
México
|
11.7 | % | 10.8 | % | 11.4 | % | 10.8 | % | ||||||||
|
Venezuela
|
10.9 | % | 24.0 | % | 11.6 | % | 24.0 | % | ||||||||
|
Other Countries
|
9.0 | % | 7.2 | % | 8.2 | % | 7.2 | % | ||||||||
|
|
||||||||||||||||
|
Total Net Revenues
|
100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||
|
|
||||||||||||||||
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
|
||||||||||||||||
|
Net Revenues breakdown
by businesses
|
||||||||||||||||
|
As a percentage of
total net revenues:
|
||||||||||||||||
|
Marketplaces
|
71.3 | % | 77.8 | % | 70.8 | % | 75.8 | % | ||||||||
|
Payments
|
28.7 | % | 22.2 | % | 29.2 | % | 24.2 | % | ||||||||
38
39
| • |
At the date we changed the translation exchange rate (and as of the date of this report), we have not
obtained dividends remittances at the official exchange rate (and we have not at the date of this
report),
|
||
| • |
The industry in which we operate may not influence our ability to access to the official exchange rate,
|
||
| • |
The Commission for the Administration of Foreign Exchange (“CADIVI”) volume of approvals of the use of
the Official Rate was down 50% on a year-to-year basis as of July 2009.
|
||
| • |
CADIVI has not only delayed approvals but also removed many items from priority lists (current
priorities appear to be food and medicine) causing delays in the repatriation of dividends for many
companies.
|
40
41
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, (*) | June 30, (*) | |||||||||||||||
| (In millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
| (Unaudited) | (Unaudited) | |||||||||||||||
|
Net revenues
|
$ | 98.4 | $ | 73.2 | $ | 52.5 | $ | 40.9 | ||||||||
|
Cost of net revenues
|
(21.3 | ) | (15.2 | ) | (11.4 | ) | (8.6 | ) | ||||||||
|
|
||||||||||||||||
|
Gross profit
|
77.1 | 58.0 | 41.1 | 32.3 | ||||||||||||
|
|
||||||||||||||||
|
Operating expenses:
|
||||||||||||||||
|
|
||||||||||||||||
|
Product and technology development
|
(7.2 | ) | (5.7 | ) | (4.0 | ) | (3.1 | ) | ||||||||
|
Sales and marketing
|
(22.6 | ) | (20.3 | ) | (11.5 | ) | (10.1 | ) | ||||||||
|
General and administrative
|
(13.0 | ) | (12.8 | ) | (6.8 | ) | (6.7 | ) | ||||||||
|
|
||||||||||||||||
|
Total operating expenses
|
(42.8 | ) | (38.8 | ) | (22.3 | ) | (19.9 | ) | ||||||||
|
|
||||||||||||||||
|
Income from operations
|
34.3 | 19.2 | 18.8 | 12.4 | ||||||||||||
|
|
||||||||||||||||
|
|
||||||||||||||||
|
Other income (expenses):
|
||||||||||||||||
|
Interest income and other financial gains
|
1.7 | 1.5 | 0.9 | 0.6 | ||||||||||||
|
Interest expense and other financial charges
|
(6.4 | ) | (5.8 | ) | (3.4 | ) | (3.3 | ) | ||||||||
|
Foreign currency gains / losses
|
0.4 | 0.5 | (.0 | ) | (1.3 | ) | ||||||||||
|
|
||||||||||||||||
|
Net income before income / asset tax expense
|
30.0 | 15.4 | 16.3 | 8.3 | ||||||||||||
|
|
||||||||||||||||
|
Income / asset tax expense
|
(8.7 | ) | (3.3 | ) | (4.7 | ) | (1.7 | ) | ||||||||
|
|
||||||||||||||||
|
Net income
|
$ | 21.3 | $ | 12.1 | $ | 11.7 | $ | 6.7 | ||||||||
|
|
||||||||||||||||
| (*) |
Totals may not add due to rounding
|
42
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| (In millions) | 2010 | 2009 | 2010 | 2009 | ||||||||||||
|
Number of confirmed registered users at end of the period
1
|
47.4 | 37.8 | 47.4 | 37.8 | ||||||||||||
|
Number of confirmed new registered users during the period
2
|
4.9 | 4.1 | 2.5 | 2.1 | ||||||||||||
|
Gross merchandise volume
3
|
1,529.7 | 1,172.8 | 798.1 | 651.9 | ||||||||||||
|
Number of items sold
4
|
17.6 | 12.9 | 9.2 | 6.9 | ||||||||||||
|
Total payment volume
5
|
271.6 | 132.8 | 147.8 | 79.6 | ||||||||||||
|
Total payment transacctions
6
|
2.3 | 1.2 | 1.3 | 0.7 | ||||||||||||
|
Capital expenditures
|
3.9 | 3.1 | 1.8 | 0.5 | ||||||||||||
|
Depreciation and Amortization
|
2.2 | 1.9 | 1.2 | 1.0 | ||||||||||||
| 1- |
Measure of the cumulative number of users who have registered on the MercadoLibre marketplace and confirmed their registration.
|
|
| 2- |
Measure of the number of new users who have registered on the MercadoLibre marketplace and confirmed their registration.
|
|
| 3- |
Measure of the total U.S. dollar sum of all transactions completed through the MercadoLibre marketplace, excluding motor vehicles,
vessels, aircraft and real estate.
|
|
| 4- |
Measure of the number of items that were sold/purchased through the MercadoLibre marketplace.
|
|
| 5- |
Measure of the total U.S. dollar sum of all transactions paid for using MercadoPago.
|
|
| 6- |
Measure of the number of all transactions paid for using MercadoPago.
|
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, (**) | 2009 to 2010 (*) | June 30, (**) | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
Net Revenues by Business:
|
||||||||||||||||||||||||||||||||
|
Marketplaces
|
$ | 70.2 | $ | 57.0 | $ | 13.2 | 23.2 | % | $ | 37.2 | $ | 31.0 | $ | 6.2 | 19.9 | % | ||||||||||||||||
|
Payments
|
28.3 | 16.3 | 12.0 | 73.8 | % | 15.3 | 9.9 | 5.4 | 54.9 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total Net Revenues
|
$ | 98.4 | $ | 73.2 | $ | 25.2 | 34.4 | % | $ | 52.5 | $ | 40.9 | $ | 11.6 | 28.4 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
|
| (**) |
Totals may not add due to rounding.
|
43
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
Net Revenues by Segment:
|
||||||||||||||||||||||||||||||||
|
Brazil Marketplace
|
34.2 | 22.5 | $ | 11.7 | 52.0 | % | $ | 18.5 | $ | 12.6 | $ | 5.9 | 46.7 | % | ||||||||||||||||||
|
Argentina
Marketplace
|
13.8 | 10.5 | 3.3 | 31.3 | % | 7.1 | 5.5 | 1.6 | 27.7 | % | ||||||||||||||||||||||
|
Mexico Marketplace
|
8.2 | 6.2 | 2.0 | 33.4 | % | 4.2 | 3.3 | 0.9 | 27.7 | % | ||||||||||||||||||||||
|
Venezuela
Marketplace
|
7.6 | 13.6 | (6.0 | ) | -44.2 | % | 4.3 | 7.3 | (3.0 | ) | -41.2 | % | ||||||||||||||||||||
|
Others Marketplace
|
6.3 | 4.1 | 2.2 | 53.6 | % | 3.1 | 2.3 | 0.8 | 37.4 | % | ||||||||||||||||||||||
|
Payments
|
28.3 | 16.3 | 12.0 | 73.8 | % | 15.3 | 9.9 | 5.4 | 54.9 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total Net Revenues
|
98.4 | 73.2 | $ | 25.2 | 34.4 | % | $ | 52.5 | $ | 40.9 | $ | 11.6 | 28.4 | % | ||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
44
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
Net Revenues by Geography:
|
||||||||||||||||||||||||||||||||
|
Brazil
|
$ | 57.1 | $ | 36.4 | $ | 20.7 | 56.8 | % | $ | 30.8 | $ | 21.2 | $ | 9.6 | 45.0 | % | ||||||||||||||||
|
Argentina
|
$ | 17.8 | $ | 11.5 | 6.3 | 54.7 | % | $ | 9.4 | $ | 6.1 | 3.3 | 54.6 | % | ||||||||||||||||||
|
México
|
$ | 9.2 | $ | 6.9 | 2.3 | 32.8 | % | $ | 4.7 | $ | 3.7 | 1.0 | 26.0 | % | ||||||||||||||||||
|
Venezuela
|
$ | 7.9 | $ | 14.2 | (6.3 | ) | -44.1 | % | $ | 4.5 | $ | 7.6 | (3.1 | ) | -41.0 | % | ||||||||||||||||
|
Other Countries
|
$ | 6.4 | $ | 4.2 | 2.2 | 53.8 | % | $ | 3.1 | $ | 2.3 | 0.8 | 37.7 | % | ||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total Net Revenues
|
$ | 98.4 | $ | 73.2 | $ | 25.2 | 34.4 | % | $ | 52.5 | $ | 40.9 | $ | 11.6 | 28.4 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Quarter Ended | ||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | |||||||||||||
| (in millions, except percentages) | ||||||||||||||||
| (*) | ||||||||||||||||
|
2010
|
||||||||||||||||
|
Net Revenues
|
$ | 45.9 | $ | 52.5 | n/a | n/a | ||||||||||
|
Percent change from prior quarter
|
-6 | % | 14 | % | n/a | n/a | ||||||||||
|
2009
|
||||||||||||||||
|
Net Revenues
|
$ | 32.3 | $ | 40.9 | $ | 50.6 | $ | 49.0 | ||||||||
|
Percent change from prior quarter
|
-3 | % | 27 | % | 24 | % | -3 | % | ||||||||
|
2008
|
||||||||||||||||
|
Net Revenues
|
$ | 28.8 | $ | 34.5 | $ | 40.3 | $ | 33.4 | ||||||||
|
Percent change from prior quarter
|
7 | % | 20 | % | 17 | % | -17 | % | ||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total cost of net
revenues
|
$ | 21.3 | $ | 15.2 | $ | 6.1 | 39.9 | % | $ | 11.4 | $ | 8.6 | $ | 2.8 | 32.8 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage
of net revenues
(*)
|
21.6 | % | 20.8 | % | 21.7 | % | 21.0 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
45
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Product and
technology
development
|
$ | 7.2 | $ | 5.7 | $ | 1.5 | 25.9 | % | $ | 4.0 | $ | 3.1 | $ | 0.9 | 28.8 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage of
net revenues (*)
|
7.3 | % | 7.8 | % | 7.6 | % | 7.5 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Sales and marketing
|
$ | 22.6 | $ | 20.3 | $ | 2.3 | 11.3 | % | $ | 11.5 | $ | 10.1 | $ | 1.4 | 13.9 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage of net revenues (*)
|
22.9 | % | 27.7 | % | 21.8 | % | 24.6 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
46
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
General and administrative
|
$ | 13.0 | $ | 12.8 | $ | 0.2 | 1.9 | % | $ | 6.8 | $ | 6.7 | $ | 0.1 | 1.6 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage of net
revenues (*)
|
13.2 | % | 17.5 | % | 13.0 | % | 16.5 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Other (expenses) income
|
$ | (4.28 | ) | $ | (3.78 | ) | $ | (0.50 | ) | 13.1 | % | $ | (2.47 | ) | $ | (4.08 | ) | $ | 1.60 | -39.3 | % | |||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage of net
revenues
|
-4.3 | % | -5.2 | % | -4.7 | % | -10.0 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
47
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Income and asset tax
|
8.7 | 3.3 | 5.4 | 163.0 | % | 4.7 | 1.7 | 3.0 | 182.2 | % | ||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
As a percentage of net revenues (*)
|
8.9 | % | 4.5 | % | 8.9 | % | 4.0 | % | ||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Six Months Ended | Three Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
|
|
||||||||||||||||
|
Blended tax rate
|
29.1 | % | 21.6 | % | 28.6 | % | 19.8 | % | ||||||||
|
Effective tax rate
|
34.3 | % | 19.1 | % | 28.4 | % | 20.0 | % | ||||||||
48
| Six Months Ended June 30, | ||||||||
| (In millions) | 2010 | 2009 | ||||||
| (in millions) | ||||||||
|
Net Cash provided by (used in):
|
||||||||
|
|
||||||||
|
Operating activities
|
$ | 26.1 | $ | 13.0 | ||||
|
Investment activities
|
(41.3 | ) | (9.1 | ) | ||||
|
Financing activities
|
(3.0 | ) | (3.2 | ) | ||||
|
Effect of exchange rate changes on cash and cash
equivalents
|
$ | — | $ | 1.2 | ||||
|
|
||||||||
|
Net (decrease) increase in cash and cash equivalents
|
$ | (18.2 | ) | $ | 1.9 | |||
|
|
||||||||
| Six Months Ended | Change from | |||||||||||||||
| June 30, | 2009 to 2010 | |||||||||||||||
| 2010 | 2009 | in Dollars | in % | |||||||||||||
| (in millions, except percentages) | ||||||||||||||||
| (*) | ||||||||||||||||
|
|
||||||||||||||||
|
Net Cash provided by:
|
||||||||||||||||
|
Operating activities
|
$ | 26.1 | $ | 13.0 | $ | 13.1 | 100.3 | % | ||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| Six Months Ended | Change from | |||||||||||||||
| June 30, | 2009 to 2010 | |||||||||||||||
| 2010 | 2009 | in Dollars | in % | |||||||||||||
| (in millions, except percentages) | ||||||||||||||||
| (*) | ||||||||||||||||
|
|
||||||||||||||||
|
Net Cash used in:
|
||||||||||||||||
|
Investing activities
|
$ | (41.3 | ) | $ | (9.1 | ) | $ | (32.2 | ) | 351.7 | % | |||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
49
| Six Months Ended | Change from | |||||||||||||||
| June 30, | 2009 to 2010 | |||||||||||||||
| 2010 | 2009 | in Dollars | in % | |||||||||||||
| (in millions, except percentages) | ||||||||||||||||
| (*) | ||||||||||||||||
|
|
||||||||||||||||
|
Net Cash (used in) provided by:
|
||||||||||||||||
|
Financing activities
|
$ | (3.0 | ) | $ | (3.2 | ) | $ | 0.2 | -6.3 | % | ||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
50
| Payment due by period | ||||||||||||||||||||
| Less than | 1 to 3 | 3 to 5 | More than | |||||||||||||||||
| (in millions) | Total | 1 year | years | years | 5 years | |||||||||||||||
|
Capital lease
obligations (2)
|
$ | 0.4 | 0.2 | 0.2 | — | — | ||||||||||||||
|
Operating lease
obligations (1)
|
2.4 | 1.6 | 0.7 | 0.1 | — | |||||||||||||||
|
Purchase obligations
|
2.8 | 2.2 | 0.6 | — | — | |||||||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
|
Total
|
$ | 5.6 | $ | 4.0 | $ | 1.5 | $ | 0.1 | $ | — | ||||||||||
|
|
||||||||||||||||||||
|
|
||||||||||||||||||||
| (1) |
Includes leases of office space.
|
|
| (2) |
On February 22, 2010, our Argentina subsidiary signed a Company car lease
contract to buy 12 cars for certain employees of the Company. The total lease
contract amounts to $0.4 million and matures in January 2013.
|
51
52
| Six Months Ended | Change from | Three Months Ended | Change from | |||||||||||||||||||||||||||||
| June 30, | 2009 to 2010 (*) | June 30, | 2009 to 2010 (*) | |||||||||||||||||||||||||||||
| 2010 | 2009 | in Dollars | in % | 2010 | 2009 | in Dollars | in % | |||||||||||||||||||||||||
| (in millions, except percentages) | ||||||||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Net Revenues by Geography:
|
||||||||||||||||||||||||||||||||
|
Brazil
|
$ | 57.1 | $ | 36.4 | $ | 20.7 | 56.8 | % | $ | 30.8 | $ | 21.2 | $ | 9.6 | 45.0 | % | ||||||||||||||||
|
Argentina
|
$ | 17.8 | $ | 11.5 | 6.3 | 54.7 | % | $ | 9.4 | $ | 6.1 | 3.3 | 54.6 | % | ||||||||||||||||||
|
México
|
$ | 9.2 | $ | 6.9 | 2.3 | 32.8 | % | $ | 4.7 | $ | 3.7 | 1.0 | 26.0 | % | ||||||||||||||||||
|
Venezuela
|
$ | 7.9 | $ | 14.2 | (6.3 | ) | -44.1 | % | $ | 4.5 | $ | 7.6 | (3.1 | ) | -41.0 | % | ||||||||||||||||
|
Other Countries
|
$ | 6.4 | $ | 4.2 | 2.2 | 53.8 | % | $ | 3.1 | $ | 2.3 | 0.8 | 37.7 | % | ||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
|
Total Net Revenues
|
$ | 98.4 | $ | 73.2 | $ | 25.2 | 34.4 | % | $ | 52.5 | $ | 40.9 | $ | 11.6 | 28.4 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||||||||||
| (*) |
Percentages have been calculated using whole-dollar amounts rather than rounded
amounts that appear in the table.
|
| (In millions) | -10% | Actual | +10% | |||||||||
| (1) | (2) | |||||||||||
|
Net revenues
|
109.3 | 98.4 | 89.5 | |||||||||
|
Expenses
|
(71.1 | ) | (64.1 | ) | (58.3 | ) | ||||||
|
|
||||||||||||
|
Income from operations
|
38.2 | 34.3 | 31.2 | |||||||||
|
|
||||||||||||
|
Other income (expenses) and income tax
related to P&L items
|
(14.5 | ) | (13.4 | ) | (11.9 | ) | ||||||
|
Foreign Currency impact related to the remeasument
of our Net Asset position
|
(3.8 | ) | 0.4 | 3.1 | ||||||||
|
|
||||||||||||
|
Net income
|
19.9 | 21.3 | 22.4 | |||||||||
|
|
||||||||||||
|
|
||||||||||||
|
Total Shareholders’ Equity
|
135.9 | 133.7 | 131.9 | |||||||||
|
|
||||||||||||
| (1) |
Appreciation of the subsidiaries local currency against U.S. Dollar
|
|
| (2) |
Depreciation of the subsidiaries local currency against U.S. Dollar
|
52
| • |
the eligible employee will receive a fixed cash payment equal to 6.25%
of his or her 2009 LTRP bonus once a year for a period of eight years
starting in 2010 (the “2009 Annual Fixed Payment”); and
|
||
| • |
on each date we pay the Annual Fixed Payment to an eligible employee,
he or she will also receive a cash payment (the “2009 Variable
Payment”) equal to the product of (i) 6.25% of the applicable 2009
LTRP bonus and (ii) the quotient of (a) divided by (b), where (a), the
numerator, equals the Applicable Year Stock Price (as defined below)
and (b), the denominator, equals the 2008 Stock Price, defined as
$13.81, which was the average closing price of the Company’s common
stock on the NASDAQ Global Market during the final 60 trading days of
2008. The “Applicable Year Stock Price” shall equal the average
closing price of the Company’s common stock on the NASDAQ Global
Market during the final 60 trading days of the year preceding the
applicable payment date.
|
| • |
the eligible employee will receive a fixed cash payment equal to 6.25%
of his or her 2010 LTRP bonus once a year for a period of eight years
starting in 2011 (the “2010 Annual Fixed Payment”); and
|
||
| • |
on each date the Company pays the Annual Fixed Payment to an eligible
employee, he or she will also receive a cash payment (the “2010
Variable Payment”) equal to the product of (i) 6.25% of the applicable
2010 LTRP bonus and (ii) the quotient of (a) divided by (b), where
(a), the numerator, equals the Applicable Year Stock Price and (b),
the denominator, equals the 2009 Stock Price, defined as $45.75, which
was the average closing price of the Company’s common stock on the
NASDAQ Global Market during the final 60 trading days of 2009. The
“Applicable Year Stock Price” shall equal the average closing price of
the Company’s common stock on the NASDAQ Global Market during the
final 60 trading days of the year preceding the applicable payment
date.
|
53
| As of June 30, 2010 | ||||||||||||
| MercadoLibre, Inc | 2009 and 2010 variable | |||||||||||
| (In US dollars) | Equity Price | LTRP liability | ||||||||||
|
Change in equity price in percentage
|
||||||||||||
|
|
||||||||||||
|
|
40 | % | 73.29 | 10,439,619 | ||||||||
|
|
30 | % | 68.06 | 9,693,932 | ||||||||
|
|
20 | % | 62.82 | 8,948,245 | ||||||||
|
|
10 | % | 57.59 | 8,202,557 | ||||||||
|
|
Static (*) | 52.35 | 7,456,870 | |||||||||
|
|
-10 | % | 47.12 | 6,711,183 | ||||||||
|
|
-20 | % | 41.88 | 5,965,496 | ||||||||
|
|
-30 | % | 36.65 | 5,219,809 | ||||||||
|
|
-40 | % | 31.41 | 4,474,122 | ||||||||
| (*) |
Average closing stock price for the last 60 trading days of the closing date
|
54
55
56
|
10.1
|
Amendment No. 1 to the MercadoLibre, Inc. 2008 Long Term Retention Program * | |
|
|
||
|
10.2
|
Amendment no. 1 to the MercadoLibre, Inc. 2008 Long Term Retention Program * | |
|
|
||
|
10.3
|
2010 Long Term Retention Plan (1) | |
|
|
||
|
10.4
|
MercadoLibre, Inc — 2010 Director Compensation Program * | |
|
|
||
|
31.1
|
Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
|
|
||
|
31.2
|
Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* | |
|
|
||
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
|
|
||
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** | |
|
|
||
|
101.INS
|
XBRL Instance Document*** | |
|
|
||
|
101.SCH
|
XBRL Taxonomy Extension Schema Document*** | |
|
|
||
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document*** | |
|
|
||
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document*** | |
|
|
||
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document*** |
| * |
Filed herewith
|
|
| ** |
Furnished herewith
|
|
| *** |
XBRL information is furnished and not filed or a part of a registration statement or
prospectus for purposes of sections 11 or 12 of the Securities and Exchange Act of 1933,
is deemed not filed for purposes of section 18 of the Securities and Exchange Act of
1934, and otherwise is not subject to liability under these sections.
|
|
| (1) |
Incorporated by reference to the Company’s Current Report on Form 8-K filed on June
29, 2010.
|
|
MERCADOLIBRE, INC.
|
||||
| Date: August 6, 2010 | By: | /s/ Marcos Galperín | ||
| Marcos Galperín | ||||
| President and Chief Executive Officer | ||||
| By: | /s/ Hernán Kazah | |||
| Hernán Kazah | ||||
|
Executive Vice President and
Chief Financial Officer |
||||
57
| 10.1 |
Amendment no. 1 to the MercadoLibre, Inc. 2008 Long Term Retention Program *
|
|||
|
|
||||
| 10.2 |
Amendment no. 1 to the MercadoLibre, Inc. 2008 Long Term Retention Program *
|
|||
|
|
||||
| 10.4 |
MercadoLibre, Inc — 2010 Director Compensation Program *
|
|||
|
|
||||
| 31.1 |
Certification of Chief Executive Officer pursuant to Securities Exchange
Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
|
|||
|
|
||||
| 31.2 |
Certification of Chief Financial Officer pursuant to Securities Exchange
Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.*
|
|||
|
|
||||
| 32.1 |
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.**
|
|||
|
|
||||
| 32.2 |
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section
1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.**
|
| * |
Filed herewith
|
|
| ** |
Furnished herewith
|
58
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|