Mercadolibre, Inc.
MERCADOLIBRE INC (Form: 10-Q, Received: 05/05/2017 16:22:12)

Table of Contents

 







 



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





 

 



 

 



FORM 10-Q



 

 



 

 



(Mark One)



 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2017

-OR-





 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                      to                     

Commission file number 001-33647





 

 



 

 

MercadoLibre, Inc.

(Exact name of Registrant as specified in its Charter)





 

 



 

 







 

 



 

 

Delaware

 

98-0212790

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification Number)

Arias 3751, 7th Floor

Buenos Aires, C1430CRG, Argentina

(Address of registrant’s principal executive offices)

(+5411) 4640-8000

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)





 

 



 

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes       No  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.    Yes       No  

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company , or an emerging growth company . See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:





 

 

 

 

 

 



 

 

 

 

 

 



 

 

 

 

 

 

Large accelerated filer

 

 

Accelerated filer

 

Non-accelerated filer

 

  (Do not check if a smaller reporting company)

 

Smaller reporting company

 



 

 

 

Emerging growth company

 



Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes       No  

APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

44,157,3 64 shares of the issuer’s common stock, $0.001 par value, outstanding as of May 2, 2017 .







 



 

 


 

Table of Contents

 



MERCADOLIBRE, INC.

IN DEX TO FORM 10-Q

 



 

PART I. FINANCIAL INFORMATION

 

Item 1 — Unaudited Interim Condensed Consolidated Financial Statements

 

 Interim Condensed Consolidated Balance Sheets as of March 31, 2017 and December 31, 2016

 Interim Condensed Consolidated Statements of Income for the three-month periods ended March 31, 2017 and 2016

 Interim Condensed Consolidated Statements of Comprehensive Income for the three-month periods ended March 31, 2017 and 2016

 Interim Condensed Consolidated Statements of Cash Flows for the three-month periods ended March 31, 2017 and 2016

 Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations

21 

 Item 3 — Qualitative and Quantitative Disclosures About Market Risk

44 

 Item 4 — Controls and Procedures

49 

 PART II. OTHER INFORMATION

49 

 Item 1 — Legal Proceedings

49 

 Item 1A — Risk Factors

49 

 Item 6 — Exhibits

49 

 INDEX TO EXHIBITS

51 



 

 


 

Table of Contents

 

M ercadoLibre, Inc.

Interim Condensed Consolidated Financial Statements

as of March 31, 2017 and December 31, 201 6

and for the three -month periods

ended March 31 , 201 7 and 201 6

 



 

 


 

Table of Contents

 



M ercadoLibre, Inc.

Interim Condensed Consolidated Balance Sheets

As of March 31 , 201 7 and December 31, 2016

(In thousands of U.S. dollars, except par value)

(Unaudited)





 

 

 



March 31,

 

December 31,



2017

 

2016

Assets

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$                       301,388

 

$                       234,140

Short-term investments

265,165 

 

253,321 

Accounts receivable, net

24,097 

 

25,435 

Credit cards receivables, net

300,612 

 

307,904 

Loans receivable, net

11,380 

 

6,283 

Prepaid expenses

14,846 

 

15,060 

Inventory

432 

 

1,103 

Other assets

28,472 

 

26,215 

Total current assets

946,392 

 

869,461 

Non-current assets:

 

 

 

Long-term investments

170,352 

 

153,803 

Property and equipment, net

131,968 

 

124,261 

Goodwill

95,849 

 

91,797 

Intangible assets, net

26,227 

 

26,277 

Deferred tax assets

51,441 

 

45,017 

Other assets

61,417 

 

56,819 

Total non-current assets

537,254 

 

497,974 

Total assets

$                    1,483,646

 

$                    1,367,435

Liabilities and Equity

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued expenses

$                       108,507

 

$                       105,106

Funds payable to customers

396,487 

 

370,693 

Salaries and social security payable

73,342 

 

48,898 

Taxes payable

30,668 

 

27,338 

Loans payable and other financial liabilities

16,430 

 

11,583 

Other liabilities

5,606 

 

6,359 

Dividends payable

6,624 

 

6,624 

Total current liabilities

637,664 

 

576,601 

Non-current liabilities:

 

 

 

Salaries and social security payable

12,498 

 

16,173 

Loans payable and other financial liabilities

304,534 

 

301,940 

Deferred tax liabilities

36,830 

 

34,059 

Other liabilities

9,876 

 

9,808 

Total non-current liabilities

363,738 

 

361,980 

Total liabilities

$                    1,001,402

 

$                       938,581



 

 

 

Equity:

 

 

 



 

 

 

Common stock, $0.001 par value, 110,000,000 shares authorized,

 

 

 

 44,157,364 shares issued and outstanding at March 31,

 

 

 

2017 and December 31, 2016, respectively

$                                44

 

$                                44

Additional paid-in capital

137,982 

 

137,982 

Retained earnings

592,535 

 

550,641 

Accumulated other comprehensive loss

(248,317)

 

(259,813)

Total Equity

482,244 

 

428,854 

Total Liabilities and Equity

$                    1,483,646

 

$                    1,367,435













The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

1


 

Table of Contents

 

M ercadoLibre, Inc.

Interim Condensed Consolidated Statements of Income

For the three -month periods ended March 31 , 201 7 and 201 6

(In thousands of U.S. dollars, except for share data)

(Unaudited)





 

 

 

 

 



 

Three Months Ended March 31,

 



 

2017

 

2016

 

Net revenues

 

$                  273,926

 

$                    157,630

 

Cost of net revenues

 

(105,070)

 

(55,448)

 

Gross profit

 

168,856 

 

102,182 

 

Operating expenses:

 

 

 

 

 

Product and technology development

 

(30,302)

 

(21,941)

 

Sales and marketing

 

(46,931)

 

(32,683)

 

General and administrative

 

(28,309)

 

(17,069)

 

Total operating expenses

 

(105,542)

 

(71,693)

 

Income from operations

 

63,314 

 

30,489 

 



 

 

 

 

 

Other income (expenses):

 

 

 

 

 

Interest income and other financial gains

 

12,157 

 

7,251 

 

Interest expense and other financial losses

 

(6,471)

 

(5,684)

 

Foreign currency gains

 

663 

 

5,147 

 

Net income before income tax expense

 

69,663 

 

37,203 

 



 

 

 

 

 

Income tax expense

 

(21,145)

 

(6,956)

 

Net income

 

$                    48,518

 

$                      30,247

 









 

 

 

 

 



 

Three Months Ended March 31,



 

2017

 

2016

 

Basic EPS

 

 

 

 

 

Basic net income

 

 

 

 

 

Available to shareholders per common share

 

$                     1.10

 

$                     0.68

 

Weighted average of outstanding common shares

 

44,157,364 

 

44,156,961 

 

Diluted EPS

 

 

 

 

 

Diluted net income

 

 

 

 

 

Available to shareholders per common share

 

$                     1.10

 

$                     0.68

 

Weighted average of outstanding common shares

 

44,157,364 

 

44,156,961 

 



 

 

 

 

 

Cash Dividends declared (per share)

 

0.150 

 

0.150 

 











The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

2


 

Table of Contents

 

M ercadoLibre, Inc.

Interim Condensed Consolidated Statements of Comprehensive Income

For the three -month periods ended March 31 , 201 7 and 201 6

(In thousands of U.S. dollars)



 

 

 



Three Months Ended March 31,



2017

 

2016

Net income

$         48,518

 

$         30,247

Other comprehensive (loss) income, net of income tax:

 

 

 

Currency translation adjustment

9,665 

 

(11,191)

Unrealized net gains on available for sale investments

1,244 

 

448 

Less: Reclassification adjustment for losses on available for sale investments

(587)

 

(672)

Net change in accumulated other comprehensive loss, net of income tax

11,496 

 

(10,071)

Total Comprehensive Income

$         60,014

 

$         20,176





The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 

 

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Table of Contents

 



Me rcadoLibre, Inc.

Interim Condensed Consolidated Statement s of Cash Flow

For the three -month periods ended March 31, 2017 and 2016

(In thousands of U.S. dollars)

(Unaudited)







 

 

 

 



 

Three Months Ended March 31,



 

2017

 

2016



 

 

Cash flows from operations:

 

 

 

 

Net income

 

$            48,518

 

$            30,247

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

 

 

 

 

Depreciation and amortization

 

9,003 

 

6,252 

Accrued interest

 

(5,679)

 

(3,877)

Non cash interest and convertible bonds amortization of debt discount and amortization of debt issuance costs

 

4,226 

 

4,431 

LTRP accrued compensation

 

9,176 

 

3,190 

Deferred income taxes

 

(2,798)

 

(1,896)

Changes in assets and liabilities:

 

 

 

 

Accounts receivable 

 

(1,305)

 

(22,920)

Credit Card Receivables

 

15,583 

 

(62,544)

Prepaid expenses

 

347 

 

(1,387)

Inventory

 

727 

 

(158)

Other assets

 

(4,472)

 

(6,738)

Accounts payable and accrued expenses

 

13,364 

 

14,376 

Funds payable to customers

 

13,929 

 

23,684 

Other liabilities

 

123 

 

1,152 

Interest received from investments

 

4,015 

 

4,386 

Net cash provided by (used in) operating activities

 

104,757 

 

(11,802)

Cash flows from investing activities:

 

 

 

 

Purchase of investments

 

(897,589)

 

(641,259)

Proceeds from sale and maturity of investments

 

876,040 

 

659,309 

Payment for acquired businesses, net of cash acquired

 

 -

 

(1,838)

Purchases of intangible assets

 

(17)

 

(11)

Advance for property and equipment

 

(2,505)

 

(872)

Changes in principal of loans receivable, net

 

(4,808)

 

 —

Purchases of property and equipment

 

(10,268)

 

(14,552)

Net cash (used in) provided by investing activities

 

(39,147)

 

777 

Cash flows from financing activities:

 

 

 

 

Proceeds from loans payable and other financial liabilities

 

4,290 

 

 —

Payments on loans payable and other financing liabilities

 

(2,875)

 

(661)

Dividends paid

 

(6,624)

 

(4,548)

Net cash used in financing activities

 

(5,209)

 

(5,209)

Effect of exchange rate changes on cash and cash equivalents

 

6,847 

 

(5,762)

Net increase (decrease) in cash and cash equivalents

 

67,248 

 

(21,996)

Cash and cash equivalents, beginning of the period

 

234,140 

 

166,881 

Cash and cash equivalents, end of the period

 

$          301,388

 

$          144,885







The accompanying notes are an integral part of these interim condensed consolidated financial statements.

 



 

 

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Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 



1.   Nature of Business

MercadoLibre, Inc. (“MercadoLibre” or the “Company”) was incorporated in the state of Delaware, in the United States of America in October 1999. MercadoLibre is the leading ecommerce company in Latin America, serving as an integrated regional platform and as an enabler of the necessary online and technology tools to allow businesses and individuals to trade products and services in the region. The Company enables commerce through its marketplace platform (including online classifieds for motor vehicles, vessels, aircraft, services and real estate), which allows users to buy and sell in most of Latin America. 

Through MercadoPago,   MercadoLibre enables individuals and businesses to send and receive online payments; through MercadoEnvios, MercadoLibre facilitates the shipping of goods from sellers to buyers; through our Advertising products, MercadoLibre facilitates advertising services to large retailers and brands to promote their product and services on the web; and through MercadoShops, MercadoLibre facilitates users to set-up, manage, and promote their own on-line web-stores under a subscription-based business model and through MercadoCredits extends loans to specific merchants. In addition, MercadoLibre develops and sells software enterprise solutions to e-commerce business clients in Brazil.

As of March 31, 201 7 , MercadoLibre, through its wholly-owned subsidiaries, operated online ecommerce platforms directed towards Argentina, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Peru, Mexico, Panama, Honduras, Nicaragua, Salvador, Portugal, Uruguay, Bolivia, Guatemala, Paraguay and Venezuela. Additionally, MercadoLibre operates an online payments solution directed towards Argentina, Brazil, Mexico, Venezuela, Colombia, Chile, Peru and Uruguay. It also offers a shipping solution directed towards Argentina, Brazil, Mexico, Colombia and Chile. In addition, the Company operates a real estate classified platform that covers some areas of State of Florida, in the United States of America.

 

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 interim condensed consolidated financial statements are stated in U.S. dollars , except for amounts otherwise indicated . Intercompany transactions and balances with subsidiaries have been eliminated for consolidation purposes.

Substantially all net revenues, cost of net revenues and operating expenses, are generated in the Company’s foreign operations, amounting to 98.8% and 99.8% of the con solidated amounts during the three -month periods ended March 31, 201 7 and 2016. Long-lived assets, Intangible assets and G oodwill located in the foreign jurisdictions totaled $244,075   thousands and $ 232,314   thousands as of March 31, 2017 and December 31, 2016 , respectively.

These interim condensed consolidated financial statements reflect the Company’s consolidated financial position as of March 31, 2017 and December 31, 201 6 . These financial statements also show the Company’s consolidated statements of income and comprehensive income for the   three-month periods ended March 31 , 201 7 and 201 6; and statement of cash flows for the three-month periods ended March 31, 2017 and 2016 . These interim condensed consolidated financial 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 U.S. GAAP for annual consolidated financial statements are not included herein, these unaudited interim condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto for the year ended December 31, 201 6 , contained in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated statements of income, of comprehensive income and of cash flows for the periods presented herein are not necessarily indicative of results expected for any future period. For a more detailed discussion of the Company’s significant accounting policies, see note 2 to the financial statements in the Form 10-K. During the three-month period ended March 31, 2017, there were no material updates made to the Company’s significant accounting policies.

 

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Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

Foreign currency translation

All of the Company’s foreign operations have determined the local currency to be their functional currency, except for Venezuela since January 1, 2010, as described below. Accordingly, these foreign operating subsidiaries translate assets and liabilities from their local currencies into U.S. dollars by using period -end exchange rates while income and expense accounts are translated at the average rates in effect during the period , unless exchange rates fluctuate significantly during the period, in which case the exchange rates at the date of the transaction are used. The resulting translat ion adjustment is recorded as a component of other comprehensive   (loss) income.

Venezuelan currency status

Pursuant to U.S. GAAP, the Company has transitioned its Venezuelan operations to highly inflationary status as from January 1, 2010, which requires that transactions and balances are re-measured as if the U.S. dollar was the functional currency for such operation. The cumulative three year inflation rate as of December 31, 2010 exceeded 100%. As of the date of these interim condensed consolidated financial statements, the cumulative three -year inflation rate exceeds   100% . Thus , the Company continues to treat the economy of Venezuela as highly-inflationary.

On March 9, 2016 the Central Bank of Venezuela (“ BCV ”) issued the Exchange Agreement No.35, which is effective since March 10, 2016. The agreement established a “protected” exchange rate (“DIPRO”) for certain transactions, such as but not limited to: imports of goods of the food and health sectors, as well as supplies associated with the production of said sectors; expenses relating to health treatments, sports, culture, scientific research, and other urgent matters defined by the exchange regulations. All foreign currency transactions not expressly provided in Exchange Agreement No.35 will be processed on the alternate foreign currency markets governed by the exchange regulations, at the floating supplementary market exchange rate (“DICOM”).

Additionally, the agreement established that the alternate foreign currency markets referred to in Exchange Agreement No.33 of February 10, 2015 ( SIMADI ) will continue to operate until replaced by others. As of the date of issuance of these interim condensed consolidated financial statements, the SIMADI has not been replaced and for th at reason, the Company is still using SIMADI.

As of March 31, 2017 , the SIMADI exchange rate was 709.7 BsF per U.S. dollar.

Until 2010 the Company was able to obtain U.S. dollars for any purpose, including dividends distribution, using alternative mechanisms other than through the Commission for the Administration of Foreign Exchange Control (CADIVI). Those U.S. dollars, obtained at a higher exchange rate than the one offered by CADIVI, and held at U.S. bank accounts of its Venezuelan subsidiaries, were used until 2011 for dividend distributions from its Venezuelan subsidiaries. The Company has not distributed dividends from the Venezuelan subsidiaries since 2011.

The following table sets forth the assets, liabilities and net assets of the Company’s Venezuelan subsidiaries, before intercompany eliminations of a net liability of $20,177   thousands and $ 15,843 thousands , as of March 31, 2017 and December 31, 201 6 and net revenues for the three -month periods ended March 31, 2017 and 2016 :







 

 

 

 

 

 

 

 



 

 

 

March 31,



 

 

2017

 

2016

 



 

 

(In thousands)

Venezuelan operations

 

 

 

 

 

 



Net Revenues

 

$

14,397 

 

$

12,105 

 



 

 

 

 

 

 

 

 



 

 

March 31,

 

December 31,

 



 

 

2017

 

2016

 



 

 

(In thousands)

 



Assets

 

 

75,109 

 

 

66,165 

 



Liabilities

 

 

(30,223)

 

 

(22,950)

 



Net Assets

 

$

44,886 

 

$

43,215 

 



As of March 31, 2017 , net assets (before intercompany eliminations) of the Venezuelan subsidiaries amounted to 9.3%  o f consolidated net assets, and cash and investments of the Venezuelan subsidiaries held in local currency in Venezuela amounted to 2.9% of our consolidated cash and investments.

 

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MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

The Company’s ability to obtain U.S. dollars in Venezuela is negatively affected by the exchange regulations in Venezuela that are described above and elsewhere in these interim condensed consolidated financial statements. In addition, its business and ability to obtain U.S. dollars in Venezuela would be negatively affected by additional material devaluations or the imposition of significant additional and more stringent controls on foreign currency exchange by the Venezuelan government.

Despite the current difficult macroeconomic environment in Venezuela, the Company continues to actively manage, through its Venezuelan subsidiaries, its investment in Venezuela.

Income and asset taxes

The Company is subject to U.S. and foreign income taxes. The Company accounts for income taxes following the liability method of accounting which requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. Deferred tax assets are also recognized for tax loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is recorded when, based on the available evidence, it is more likely than not that all or a portion of the Company’s deferred tax assets will not be realized. The Company’s income tax expense consists of taxes currently payable, if any, plus the change during the period in the Company’s deferred tax assets and liabilities.

On August 17, 2011, the Argentine government issued a new software development law and on September 9, 2013 the regulatory decree was issued, which established the new requirement to become beneficiary of the new software development law. The decree establishes compliance requirements with annual incremental ratios related to exports of services and research and development expenses that must be achieved to remain within the tax holiday. The Company’s Argentine subsidiary   has to achieve certain required ratios annually under the software developm ent law in order to be eligible for the benefits mentioned below.

On September 17, 2015, the Argentine Industry Secretary issued Resolution 1041/2015 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiary, Mercadolibre S.R.L. Furthermore, on September 18, 2016, the Argentine Industry Secretary issued Resolutions 93/2016 and 97/2016 approving the Company’s application for eligibility under the new software development law for the Company’s Argentinean subsidiaries, Neosur S.RL. and Business Vision S.A. As a result, the Company’s Argentinean subsidiaries have been granted a tax holiday retroactive from September 18, 2014. A portion of the benefits obtained as beneficiaries of the new law is a relief of  60%  of total income tax related to software development activities and a  70%  relief in payroll taxes related to software development activities.

The benefits to the Company under the software development law will expire on December 31, 2019. As a result of the Company’s eligibility under the new law, it recorded an income tax benefit of $5,097 thousands and $ 4,342 thousands during the three-month periods ended March 31, 2017 and 2016 , respectively. Furthermore, the Company recorded a labor cost benefit of $1,991 thousands and $957 thousands during the three-month periods ended March 31, 2017 and 2016, respectively . Additionally, $496  t housands and  $372 thousands were accrued to pay software development law audit fees during the first quarter of 2017 and 2016 , respectively. Aggregate per share effect of the Argentine tax holiday amounted to $0.12   and   $0.12 for the three-month periods ended March 31, 2017 and 2016, respectively.

As of March 31, 2017 and December 31, 2016 , the Company had included under non-current deferred tax assets the foreign tax credit s related to the dividend distributions received from its subsidiaries for a total amount of $13,512 thousands and $13,515 thousands, respectively. Those foreign tax credits will be used to offset the future domestic income tax payable.

Accumulated other comprehensive loss

The following table sets forth the Co mpany’s accumulated other comprehensive loss as of March 31, 2017 and the year ended December 31, 201 6 :







 

 

 

 



 

March 31,

 

December 31,



 

2017

 

2016



 

(In thousands)

Accumulated other comprehensive loss:

 

 

 

 

Foreign currency translation

 

$                    (249,561)

 

$             (259,226)

Unrealized gains (losses) on investments

 

1,857 

 

(909)

Estimated tax (loss) gain on unrealized gains (losses) on investments

 

(613)

 

322 



 

$                    (248,317)

 

$             (259,813)

 

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Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 



The following tables summarize the changes in accumulated balances of other comprehensive loss for the three -month period ended March 31, 2017 :







 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 



 

Unrealized

 

Foreign

 

Estimated tax

 

 

 



 

(Losses) Gains on

 

Currency

 

(expense)

 

 

 



 

Investments

 

Translation

 

benefit

 

Total

 



 

(In thousands)

Balances as of December 31, 2016

 

$                          (909)

 

$             (259,226)

 

$                    322

 

$           (259,813)

 

Other comprehensive loss before reclassifications adjustments for gains (losses) on available for sale investments

 

1,857 

 

9,665 

 

(613)

 

10,909 

 

Amount of gain (loss) reclassified from accumulated other comprehensive loss

 

909 

 

 —

 

(322)

 

587 

 

Net current period other comprehensive income gain (loss)

 

2,766 

 

9,665 

 

(935)

 

11,496 

 

Ending balance

 

$                         1,857

 

$             (249,561)

 

$                  (613)

 

$           (248,317)

 



 





 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 



 

Amount of (Loss) Gain

 

 

 

 

 

 



 

Reclassified from

 

 

 

 

 

 

Details about Accumulated

 

Accumulated Other

 

 

 

 

 

 

Other Comprehensive Loss

 

Comprehensive

 

Affected Line Item

Components

 

Loss

 

in the Statement of Income



 

(In thousands)

 

 

 

 

 

 

Unrealized losses on investments

 

$                          (909)

 

Interest expense and other financial losses

Estimated tax gain on unrealized losses on investments

 

322 

 

Income tax gain

Total reclassifications for the year

 

$                          (587)

 

Total, net of income taxes



Use of estimates

The preparation of interim condensed consolidated financial statements in conformity with U.S. GAAP 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 and chargeback provisions, recoverability of goodwill and intangible assets with indefinite useful life, useful life of long-lived assets and intangible assets, impairment of short-term and long-term investments, impairment of long-lived assets, compensation costs relating to the Company’s long term retention plan, fair value of convertible debt note, recognition of income taxes and contingencies. Actual results could differ from those estimates.

Recently issued accounting pronouncements

In 2014, the Financial Accounting Standards Board (“FASB”) issued new accounting guidance related to revenue recognition. This new standard will replace all current GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition guidance provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. In 2016, the FASB issued several amendments to the standard, including principal versus agent considerations when another party is involved in providing goods or services to a customer and the application of identifying performance obligations. As the Company evaluates the expected impact of this ASU, the more significant changes that the Company identified in the new standard as compared with the prior standard relates to the timing and the amount of revenue to be recognized. The Company continues assessing all potential impacts that this standard, and related amendments and interpretive guidance, will have on its consolidated financial statements. The standard is required to be applied either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying it recognized at the date of initial application. The Company has not yet selected its transition method. The Company will adopt the new revenue standard in its first quarter of 2018.

 

8


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

On   February   25, 2016 the FASB issued ASU 2016-02.   The   amendments in this update   create Topic 842, Leases, which supersedes Topic 840, Leases. The core principle of Topic 842 is that a lessee should recognize the assets and liabilities that arise from leases. Previous GAAP did not require lease assets and lease liabilities to be recognized for most leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. Topic 842 retains a distinction between finance leases and operating leases. The classification criteria for distinguishing between finance leases and operating leases are substantially similar to the classification criteria for distinguishing between capital leases and operating leases in the previous leases guidance. The result of retaining a distinction between finance leases and operating leases is that under the lessee accounting model in Topic 842, the effect of leases in the statement of comprehensive income and the statement of cash flows is largely unchanged from previous GAAP. Based on existing leases currently classified as operating leases, the Company expects to recognize on the statements of financial position right-of-use assets and lease liabi lities. The amendments in this u pdate are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. The Company is assessing the effects that the adoption of this accounting pronouncement may have on the Company’s financial statements.

On June 16, 2016 the FASB issued ASU 2016-13 “Financial Instruments-Credit Losses (Topic 326): Measurement of credit losses on financial instruments”. This update amends guidance on reporting credit losses for assets held at amortized cost basis and available for sale debt securities. For assets held at amortized cost basis, this update eliminates the probable initial recognition threshold in current GAAP and, instead, requires an entity to reflect its current estimate of all expected credit losses. For available for sale debt securities, credit losses should be measured in a manner similar to current GAAP, however this topic will require that credit losses be presented as an allowance rather than as a write-down. The new standard is effective for fiscal years beginning after December 15, 2019. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. 

On October 24, 2016 the FASB issued “ASU 2016-16—Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update eliminates the prohibition on recognizing current and deferred income tax consequences for an intra-entity asset transfer until the asset or assets have been sold to an outside party. Consequently, this update requires recognition of the current and deferred income tax consequences of an intra-entity asset transfer when the transfer occurs. The new standard is effective for fiscal years beginning after December 15, 2017. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements.

On January 5, 2017 the FASB issued “ASU 2017-01—Business combinations (Topic 805): Clarifying the definition of a business”. The amendments in this update clarify the definition of a business with the objective of adding guidance to the evaluation of whether transactions should be accounted for as acquisitions (or disposals) of businesses. The amendments in this update provide a criteria to determine when a set of assets and activities is a business. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The adoption of this standard is not expected to have a material impact on the Company´s financial statements.

On February 22, 2017 the FASB issued “ASU 2017-05—Other Income— Gains and losses from the derecognition of nonfinancial assets (Subtopic 610-20): Clarifying the scope of asset derecognition guidance and accounting for partial sales of nonfinancial assets ”. The amendments in this update clarify that a financial asset is within the scope of Subtopic 610-20 if it meets the definition of an “in substance nonfinancial asset” which can include financial assets. Also, t his update eliminates several accounting differences between transactions involving assets and transactions involving businesses. The new standard is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is assessing the effects that the adoption of this accounting pronouncement may have on its financial statements. 

 

 

9


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 



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.

On June 30, 2014, the Company issued 2.25% Convertible Senior Notes due 2019 ( see Note 9 of these interim condensed consolidated financial statements for discussion regarding these debt notes). The conversion of these debt notes are included in the calculation for diluted earnings per share utilizing the “if converted” method . T he effect of that conversion is not assumed for purposes of computing diluted earnings per share if the effect is antidilutive.

The denominator for diluted net income per share for the three-month periods ended   March 31, 2017 and 2016 does not include any effect from the capped call   issued in connection with the notes because it would be antidilutive. In the event of conversion of any or all of the Notes, the shares that would be delivered to the Company under the   Note hedges are designed to partially neutralize the dilutive effect of the shares that the Company would issue under the Notes.

For the period ended March 31, 2017 and 2016, the effects on diluted earnings per share were antidilutive and, as a consequence, they were not computed for diluted earnings per share.

Net income per share of common stock is as follows for the three-month periods ended March 31, 2017 and 2016:







 

 

 

 

 

 

 

 



 

Three Months Ended March 31,



 

2017

 

2016



 

(In thousands)



 

Basic

 

Diluted

 

Basic

 

Diluted

Net income per common share

 

$                       1.10

 

$                         1.10

 

$                        0.68

 

$                         0.68



 

 

 

 

 

 

 

 

Numerator:

 

 

 

 

 

 

 

 

Net income

 

$                   48,518

 

$                     48,518

 

$                    30,247

 

$                     30,247



 

 

 

 

 

 

 

 

Denominator:

 

 

 

 

 

 

 

 

Weighted average of common stock outstanding for Basic  earnings per share

 

44,157,364 

 

 

 

44,156,961 

 

 

Adjusted weighted average of common stock outstanding  for Diluted earnings per share

 

 

 

44,157,364 

 

 

 

44,156,961 



For the three-month periods ended March 31, 2017 and 2016 there was no impact on the calculation of diluted earnings per share as a consequence of the consideration of the Convertible Notes referred to above calculated using the “if converted” method.

 

4. G oodwill and intangible assets

Goodwill and intangible assets

The composition of goodwill and intangible assets is as follows:







 

 

 

 



 

March 31,

 

December 31,



 

2017

 

2016



 

(In thousands)

Goodwill

 

$                  95,849

 

$                  91,797

Intangible assets with indefinite lives

 

 

 

 

- Trademarks

 

13,170 

 

12,490 

Amortizable intangible assets

 

 

 

 

- Licenses and others

 

7,334 

 

8,738 

- Non-compete agreement

 

1,800 

 

1,787 

- Customer list

 

14,845 

 

14,580 

- Trademarks

 

1,051 

 

993 

Total intangible assets

 

$                  38,200

 

$                  38,588

Accumulated amortization

 

(11,973)

 

(12,311)

Total intangible assets, net

 

$                  26,227

 

$                  26,277

 

10


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 



Goodwill

The changes in the carrying amount of goodwill for the three -month period s ended March 31, 2017 and the year ended December 31, 2016 are as follows:







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Period ended March 31, 2017



 

Brazil

 

Argentina

 

Chile

 

Mexico

 

Venezuela

 

Colombia

 

Other Countries

 

Total



 

(In thousands)

Balance, beginning of the period

 

 

$           27,660 

 

 

$                6,587 

 

 

$              17,388 

 

 

$                  29,342 

 

 

$                5,989 

 

 

$                3,643 

 

 

$                1,188 

 

 

$                91,797 

- Effect of exchange rates changes

 

749 

 

311 

 

137 

 

2,485 

 

 —

 

148 

 

222 

 

4,052 

Balance, end of the period

 

 

$           28,409 

 

 

$                6,898 

 

 

$              17,525 

 

 

$                  31,827 

 

 

$                5,989 

 

 

$                3,791 

 

 

$                1,410 

 

 

$                95,849 







 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Year ended December 31, 2016



 

Brazil

 

Argentina

 

Chile

 

Mexico

 

Venezuela

 

Colombia

 

Other Countries

 

Total



 

(In thousands)

Balance, beginning of year

 

$             18,526 

 

$               7,430 

 

$             16,438 

 

$             33,834 

 

$                  5,729 

 

$                   3,437 

 

$               1,151 

 

$             86,545 

- Business acquisition

 

5,635 

 

700 

 

 —

 

190 

 

260 

 

57 

 

32 

 

6,874 

- Effect of exchange rates changes

 

3,499 

 

(1,543)

 

950 

 

(4,682)

 

 —

 

149 

 

 

(1,622)

Balance, end of the year

 

$             27,660 

 

$               6,587 

 

$             17,388 

 

$             29,342 

 

$                  5,989 

 

$                   3,643 

 

$               1,188 

 

$             91,797 



Intangible assets with definite useful life

Intangible assets with definite useful life are comprised of customer lists , non-compete and non- solicitation agreements , acquired software licenses, other acquired intangible assets including developed technologies and trademarks . Aggregate amortization expense for intangible assets totaled   $1,341   thousands and   $814   thousands for the three-month periods ended March 31, 2017 and 2016, respectively.

The following table summarizes the remaining amortization of intangible assets (in thousands of U.S. dollars) with definite useful life as of March 31, 2017 :







 

 

 

 

 

 

For year ended 12/31/2017

 

 

 

 

 

$              2,982

For year ended 12/31/2018

 

 

 

 

 

3,263 

For year ended 12/31/2019

 

 

 

 

 

2,474 

For year ended 12/31/2020

 

 

 

 

 

1,315 

Thereafter

 

 

 

 

 

3,023 



 

 

 

 

 

$            13,057



 

5. Segment reporting

Reporting segments are based upon the Company’s internal organizational structure, the manner in which the Company’s operations are managed and resources are assigned , the criteria used by management to evaluate the Company’s performance, the availability of separate financial information, and overall materiality considerations.

Segment reporting is based on geography as the main basis of segment breakdown to reflect the evaluation of the Company’s performance defined by the management. The Company’s segments include Brazil, Argentina, Mexico, Venezuela and other countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Honduras, Nicaragua, Salvador, Bolivia, Guatemala, Paraguay, Peru, Portugal, Uruguay and USA).

 

11


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

Direct contribution consists of net revenues from external cus tomers less direct costs . Direct costs include costs of net revenues, p roduct and technology development expenses ,   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, payroll and third party fees. All corporate related costs 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 March 31, 2017



 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other Countries

 

Total



 

(In thousands)

Net revenues

 

$                    159,781 

 

$                      71,392 

 

$                   15,536 

 

$                   14,397 

 

$                   12,820 

 

$                        273,926 

Direct costs

 

(87,037)

 

(45,066)

 

(16,841)

 

(6,551)

 

(9,739)

 

(165,234)

Direct contribution

 

72,744 

 

26,326 

 

(1,305)

 

7,846 

 

3,081 

 

108,692 



 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

(45,378)

Income from operations

 

 

 

 

 

 

 

 

 

 

 

63,314 



 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

  Interest income and other financial gains

 

 

 

 

 

 

 

 

 

12,157 

  Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

(6,471)

Foreign currency gains

 

 

 

 

 

 

 

 

 

 

 

663 

Net income before income tax expense

 

 

 

 

 

 

 

 

 

$                          69,663 

 





 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 



 

Three Months Ended March 31, 2016



 

Brazil

 

Argentina

 

Mexico

 

Venezuela

 

Other Countries

 

Total



 

(In thousands)

Net revenues

 

$77,535 

 

$48,201 

 

$11,116 

 

$12,105 

 

$8,673 

 

$157,630 

Direct costs

 

(50,287)

 

(27,757)

 

(9,438)

 

(5,134)

 

(6,201)

 

(98,817)

Direct contribution

 

27,248 

 

20,444 

 

1,678 

 

6,971 

 

2,472 

 

58,813 



 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses and indirect costs of net revenues

 

 

 

 

 

 

 

 

 

(28,324)

Income from operations

 

 

 

 

 

 

 

 

 

 

 

30,489 



 

 

 

 

 

 

 

 

 

 

 

 

Other income (expenses):

 

 

 

 

 

 

 

 

 

 

 

 

  Interest income and other financial gains

 

 

 

 

 

 

 

 

 

7,251 

  Interest expense and other financial losses

 

 

 

 

 

 

 

 

 

(5,684)

Foreign currency gains

 

 

 

 

 

 

 

 

 

 

 

5,147 

Net income before income tax expense

 

 

 

 

 

 

 

 

 

$37,203 











The following table summarizes the allocation of property and equipment, net based on geography:









 

 

 

 



 

March 31,

 

December 31,



 

2017

 

2016



 

(In thousands)

US property and equipment, net

 

$                    9,764

 

$                    9,771

Other countries

 

 

 

 

Argentina

 

27,237 

 

25,071 

Brazil

 

60,536 

 

55,706 

Mexico

 

2,873 

 

2,307 

Venezuela

 

21,813 

 

21,615 

Other countries

 

9,745 

 

9,791 



 

$                122,204

 

$                114,490

Total property and equipment, net

 

$                131,968

 

$                124,261

 

12


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

 

The following table summarizes the allocation of the goodwill and intangible assets based on geography:











 

 

 

 



 

March 31,

 

December 31,



 

2017

 

2016



 

(In thousands)

US intangible assets

 

$                      205

 

$                      250

Other countries goodwill and intangible assets

 

 

 

 

Argentina

 

7,864 

 

7,717 

Brazil

 

31,761 

 

31,170 

Mexico

 

41,871 

 

38,860 

Venezuela

 

7,332 

 

7,366 

Other countries

 

33,043 

 

32,711 



 

$               121,871

 

$               117,824

Total goodwill and intangible assets

 

$               122,076

 

$               118,074



Consolidated net revenues by similar prod ucts and services for the three-month periods ended   March 31, 2017 and 2016   were as follows:







 

 

 

 

 

 



 

Three-months Ended March 31,

 



 

 

 

 

 

 

Consolidated Net Revenues

 

2017

 

 

2016

 



 

(In thousands)

 

Marketplace

 

$                158,466

 

 

$                  94,098

 

Non-marketplace (*)

 

115,460 

 

 

63,532 

 

Total

 

$                273,926

 

 

$                157,630

 



(*)  Includes, among other things, Ad Sales, Real Estate, Motors, Financing Fees, Off-platform Payment Fees, Shipping and other ancillary services.



 



 

13


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

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 March 31, 2017 and December 31, 201 6 :









 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

Quoted Prices in

 

 

 

 

 

 

 

Quoted Prices in

 

 

 

 



 

Balances as of

 

active markets for

 

Significant other

 

Unobservable

 

Balances as of

 

active markets for

 

Significant other

 

Unobservable



 

March 31,

 

identical Assets

 

observable inputs

 

inputs

 

December 31,

 

identical Assets

 

observable inputs

 

inputs

Description

 

2017

 

(Level 1)

 

(Level 2)

 

(Level 3)

 

2016

 

(Level 1)

 

(Level 2)

 

(Level 3)



 

(In thousands)

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and Cash Equivalents:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Money Market Funds

 

$            140,641 

 

$                  140,641 

 

$                       — 

 

$                    — 

 

$         111,198 

 

$              111,198 

 

$                 — 

 

$               — 

Corporate Debt Securities

 

7,289 

 

 —

 

7,289 

 

 —

 

 —

 

 —

 

 —

 

 —

Investments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sovereign Debt Securities

 

$              47,030 

 

$                    47,030 

 

$                       — 

 

$                    — 

 

$           50,703 

 

$                50,703 

 

$                 — 

 

$               — 

Corporate Debt Securities

 

210,708 

 

118,148 

 

92,560 

 

 —

 

207,633 

 

61,986 

 

145,647 

 

 —

Certificates of deposit

 

33,376 

 

 —

 

33,376 

 

 —

 

35,374 

 

 —

 

35,374 

 

 —

Total Financial Assets

 

$            439,044 

 

$                  305,819 

 

$              133,225 

 

$                    — 

 

$         404,908 

 

$              223,887 

 

$        181,021 

 

$               — 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contingent considerations

 

$                3,156 

 

$                           — 

 

$                       — 

 

$               3,156 

 

$             4,213 

 

$                       — 

 

$                 — 

 

$          4,213 

Long-term retention plan

 

34,368 

 

 —

 

34,368 

 

 —

 

27,135 

 

 —

 

27,135 

 

 —

Total Financial Liabilities

 

$              37,524 

 

$                           — 

 

$                34,368 

 

$               3,156 

 

$           31,348 

 

$                       — 

 

$          27,135 

 

$          4,213 



As of March 31, 2017 and December 31, 2016, the Company’s financial assets valued at fair value consisted of assets valued using i) Level 1 inputs: unadjusted quoted prices in active markets (Level 1 instrument valuations are obtained from observable inputs that reflect quoted prices (unadjusted) for identical assets in active markets) and; ii) Level 2 inputs: obtained from readily-available pricing sources for comparable instruments as well as instruments with inactive markets at the measurement date.

As of March 31, 2017 and December 31, 2016 , the Company´s liabilities were valued at fair value using level 2 inputs and level 3 inputs (valuations based on unobservable inputs reflecting Company assumptions). Fair value of contingent considerations are determined based on the probability of achievement of the performance targets arising from each acquisition, as well as the Company’s historical experience with similar arrangements. For the three-month period ended March 31, 2017, the Company recognized in earnings a loss of $73 thousands and a gains of $85 thousands within other comprehensive   income, in relation with contingent considerations. In addition, during the three-month period ended March 31, 2017, the Company settled contingent considerations for an amount of $1,215 thousands.

The unrealized net gains or loss on short term and long term investments are reported as a component of 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 March 31, 2017 and December 31, 2016, the carrying value of the Company’s financial assets and liabilities measured at amortized cost approximated their fair value mainly because of its short term maturity. These assets and liabilities included cash, cash equivalents and short-term investments (excluding money markets funds and corporate debt security), accounts receivable, credit cards receivable, loans receivable, funds payable to customers, other assets, accounts payable, salaries and social security payable (excluding variable LTRP), taxes payable, provisions and other liabilities (excluding contingent consideration). The convertible senior notes (liability component), the rest of the loans payable and other financial liabilities approximate their fair value because the interest rates are not materially different from market interest rates .  

 

14


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

The following table summarizes the fair value level for those financial assets and liabilities of the Company measured at amortized cost as of March 31, 2017 and December 31, 2016 :







 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 



 

Balances as of

 

Significant other

 

Balances as of

 

Significant other

 

 



 

March 31,

 

observable inputs

 

December 31,

 

observable inputs

 

 



 

2017

 

(Level 2)

 

2016

 

(Level 2)

 

 



 

(In thousands)

 

 

Assets

 

 

 

 

 

 

 

 

 

 

Time Deposits

 

$        144,082

 

$144,082 

 

$          113,414

 

$        113,414

 

 

Accounts receivable

 

24,097 

 

24,097 

 

25,435 

 

25,435 

 

 

Credit Cards receivable

 

300,612 

 

300,612 

 

307,904 

 

307,904 

 

 

Loans receivable, net

 

11,380 

 

11,380 

 

6,283 

 

6,283 

 

 

Other assets

 

66,035 

 

66,035 

 

58,900 

 

58,900 

 

 

Total Assets

 

$        546,206

 

$                546,206

 

$          511,936

 

$        511,936

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

 

$        108,507

 

$                108,507

 

$          105,106

 

$        105,106

 

 

Funds payable to customers

 

396,487 

 

396,487 

 

370,693 

 

370,693 

 

 

Salaries and social security payable

 

51,472 

 

51,472 

 

37,936 

 

37,936 

 

 

Taxes payable

 

30,668 

 

30,668 

 

27,338 

 

27,338 

 

 

Dividends payable

 

6,624 

 

6,624 

 

6,624 

 

6,624 

 

 

Loans payable and other financial liabilities (*)

 

320,964 

 

320,964 

 

313,523 

 

313,523 

 

 

Other liabilities

 

12,326 

 

12,326 

 

11,954 

 

11,954 

 

 

Total Liabilities

 

$        927,048

 

$                927,048

 

$          873,174

 

$        873,174

 

 





(*) The fair value of the convertible senior notes (including the equity component) is disclosed in Note 9.



As of March 31, 2017 and December 31, 2016 , the Company held no direct investments in auction rate securities, collateralized debt obligations or structured investment vehicles , and does not have any non-financial assets or liabilities measured at fair value .

 

15


 

Table of Contents

 

MercadoLibre, Inc.

Notes to Interim Condensed Consolidated Financial Statements (unaudited)

 

As of March 31, 2017 and December 31, 2016 , the fair value of money market funds, short and long-term investments classified as available for sale securities are as follows: