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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware (State of incorporation) | 98-0212790 (I.R.S. Employer Identification Number) |
Buenos Aires, C1430CRG, Argentina,
(Address of principal executive offices)
(Registrant’s telephone number, including area code)
Title of Class | Name of Exchange upon Which Registered | |
Common Stock, $0.001 par value per share | Nasdaq Global Market |
Large Accelerated Filerþ | Accelerated Filero | Non-Accelerated Filero | Smaller reporting companyo | |||
(Do not check if smaller reporting company) |
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2010
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Exhibit 10.16 | ||||||||
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Exhibit 21.01 | ||||||||
Exhibit 23.01 | ||||||||
Exhibit 23.02 | ||||||||
Exhibit 31.01 | ||||||||
Exhibit 31.02 | ||||||||
Exhibit 32.01 | ||||||||
Exhibit 32.02 | ||||||||
EX-101 INSTANCE DOCUMENT | ||||||||
EX-101 SCHEMA DOCUMENT | ||||||||
EX-101 CALCULATION LINKBASE DOCUMENT | ||||||||
EX-101 LABELS LINKBASE DOCUMENT | ||||||||
EX-101 PRESENTATION LINKBASE DOCUMENT | ||||||||
EX-101 DEFINITION LINKBASE DOCUMENT |
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• | 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. |
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ITEM 1. | BUSINESS |
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MercadoLibre | MercadoPago | |||||
Country | Launch date | Office opening | Launch date | |||
Argentina | August 1999 | July 1999 | November 2003 | |||
Brazil | October 1999 | September 1999 | January 2004 | |||
Mexico | November 1999 | October 1999 | January 2004 | |||
Uruguay | December 1999 | September 2004 | N/A | |||
Colombia | February 2000 | January 2000 | December 2007 | |||
Venezuela | March 2000 | March 2000 | April 2005 | |||
Chile | March 2000 | April 2000 (*) | September 2007 | |||
Ecuador | December 2000 | N/A | N/A | |||
Peru | December 2004 | N/A | N/A | |||
Costa Rica | November 2006 | N/A | N/A | |||
Dominican Republic | December 2006 | N/A | N/A | |||
Panama | December 2006 | N/A | N/A | |||
Portugal | January 2010 | N/A | N/A |
(*) | During 2009 the office was closed |
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• | Continue to grow our business and maintain market leadership. We have focused and intend to continue to focus on growing our business by strengthening our position as the preferred online marketplace in each of the countries in which we operate. We also intend to grow our business and maintain our leadership by taking advantage of the expanding potential client base that has resulted from the growth of Internet penetration rates in Latin America. We intend to achieve these goals through organic growth, by entering into new countries and category segments, by launching new transactional business endeavours, when possible and advantageous, through potential strategic acquisitions of key businesses and assets. |
• | Increase monetization of our transactions. We have focused and will continue to focus on improving the revenue generation capacity of our business by implementing initiatives designed to maximize the revenues we receive from transactions on our platform. Some of these initiatives include increasing our fee structure, selling advertising on our platform, offering other e-commerce services and expanding our paid-for features. |
• | Take advantage of the natural synergies that exist between our services.We strive to leverage our different businesses to promote greater cross-usage among the businesses, thereby creating a virtuous ecosystem of e-commerce offerings. We intend to promote the adoption of our MercadoPago payments solution on our marketplace as well as on our MercadoShops solution, to offer our MercadoClics advertising solutions to users of our marketplace, payments and shop solutions, and to encourage users of any of our services to experiment with the other solutions we offer. |
• | Expand into additional transactional service offerings.Our strategic focus is to enable on-line transactions of multiple types of goods and services throughout Latin America. Consequently, we strive, and will continue to strive, to launch on-line transactional offerings in new product and service categories where we consider business opportunities exist. These new transactional offerings include, but are not limited to, efforts involving: (a) the offer of additional product categories in our marketplace business, (b) the expansion of our presence in vehicle, real estate and services classifieds, (c) the penetration of our on platform payments services the expansion of our off platform payments services, (d) the increase of our Mercadoclics and on-line advertisement services and (e) the offer of on-line software as service e-commerce solutions. We believe that a significant portion of our future growth will be derived from these new or expanded product and service launches. |
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• | Enhance brand awareness. We believe that enhancing awareness of theMercadoLibrebrand is important to achieve our business objectives. We intend to continue to promote and increase recognition of our brand through a variety of marketing and promotional campaigns. These may include marketing agreements with companies with significant online presence and advertising through traditional media, such as cable television. We may also use leading web sites and other media such as affiliate programs, banner advertisements and keyword searches. In addition, we believe that by enhancing our e-commerce community experience, we promote greater brand awareness through word of mouth. |
• | Focus on user loyalty and web site enhancement. We will continue to focus on increasing purchase frequency and transaction volumes from our existing users. We intend to do so by maintaining an appealing and convenient platform for e-commerce, improving the functionality of our web site to deliver a more efficient user experience and providing our users with the help of a dedicated customer support department. We employ a number of programs aimed to foster customer loyalty and repeated purchases, such as our MercadoLider loyalty program for high-volume sellers, our targeted and segmented direct marketing program, and our MercadoPago special promotions. |
• | Increase operational efficiency. We believe our business model provides us with an opportunity to generate healthy profit margins. We plan to maximize this potential by achieving economics of scale, maintaining controls on overhead costs and reducing variable costs whenever possible. |
• | Continue to develop innovative and creative solutions. We intend to continually enhance our commerce platform in order to better serve both individuals and businesses that want to buy or sell goods and services online. We intend to continue investing to develop new tools and technologies that facilitate e-commerce on our platform and improve our users’ online experience on MercadoLibre, while addressing the distinctive cultural, geographical and other challenges of online commerce in Latin America. |
• | Serve our dynamic and active user community. We seek to operate MercadoLibre as an open and trusted Web-based marketplace where users can access a broad market of products. We believe in treating our users with respect by applying a consistent set of policies that reinforce good online and offline behavior within our user community. We also seek to offer superior customer care in order to maintain the loyalty and satisfaction of our active user base. |
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• | Entering into agreements with search platforms, portals, social networks and web sites that we believe can reach our target audience. These agreements allow us to purchase online advertising positions where we can market ourselves and show relevant promotions to potential and already registered users. |
• | Actively managing our “MercadoSocios” program, an affiliates program that financially rewards site owners for directing to our platform buyers, sellers and new users who ultimately register with, and conduct transactions on MercadoLibre. The MercadoSocios program is available in Argentina, Brazil, Chile, Colombia, Mexico and Venezuela. With our MercadoSocios program any site or online tool owner can place a link to our web site with a pre-approved creative design that we provide or XML data feeds. If an Internet user clicks on the link, arrives at our web site, registers as a user and completes transactions on our platform, we compensate the site or tool owner. For each new registered user that completes a transaction on our platform, we pay the site or tool owner that directed the user to us a fee per active registered user and a percentage of the commissions that that selling user pays us for transactions carried out in the first 30 days after that user registered. |
• | Investing in preferential placing on the most popular search engines in each country where we operate, such as Google and Yahoo Search. We purchase advertising space next to the results of certain keyword searches related to our activities. |
• | Structuring our web site so that it appears among the top natural results for certain keyword searches. |
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Number of | ||||
Country | employees | |||
Argentina | 873 | |||
Brazil | 470 | |||
Colombia | 47 | |||
Chile | 2 | |||
Mexico | 35 | |||
Uruguay | 4 | |||
Venezuela | 136 | |||
Total | 1,567 | |||
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ITEM 1A. | RISK FACTORS |
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• | Disruptions to the capital markets or the banking system may impair the value of investments or bank deposits we currently consider safe or liquid. We may be unable to find suitable alternative investments that are safe, liquid, and provide a reasonable return. This could result in lower interest income or longer investment horizons. |
• | We may be required to increase the installment and financing fees we charge to customers for purchases made in installments or cease offering installment purchases altogether, each of which may result in a lower volume of transactions completed. |
• | We may be unable to access financing in the credit and capital markets at reasonable rates in the event we find it desirable to do so. Due to the nature of our MercadoPago business we generate high account receivable balances that we typically sell to financial institutions, and accordingly, lack of access to credit, or banks liquidations could cause us to experience severe difficulties in paying our sellers. |
• | The failure of financial institution counterparties to honor their obligations to us under credit instruments could jeopardize our ability to rely on and benefit from those instruments. Our ability to replace those instruments on the same or similar terms may be limited under difficult market conditions. |
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• | advance notice requirements for stockholder proposals and director nominations; |
• | a staggered board of directors; |
• | limitations on the ability of stockholders to remove directors other than for cause; |
• | limitations on the ability of stockholders to own and/or exercise voting power over 20% of our common stock; |
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• | limitations on the ability of stockholders to amend, alter or repeal our by-laws; |
• | the inability of stockholders to act by written consent; |
• | the authority of the board of directors to adopt a stockholder rights plan; |
• | the authority of the board of directors to issue, without stockholder approval, preferred stock with any terms that the board of directors determines and additional shares of our common stock; and |
• | limitations on the ability of certain stockholders to enter into certain business combinations with us, as provided under Section 203 of the Delaware General Corporation Law. |
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ITEM 1B. | UNRESOLVED STAFF COMMENTS |
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ITEM 2. | PROPERTIES |
Approximate | ||||||||||
City and | Square | Lease | ||||||||
Country | Facility | Address | Meters | Expiration Date | ||||||
Bogotá, Colombia | Colombia operation | Calle 93 B # 17-25 Ofc.406, Bogotá, Colombia | 155 | 1 | April 2011 | |||||
Bogotá, Colombia | TuCarro Colombia operation | Calle 93 B # 17-25 Ofc.210 and 211, Bogotá, Colombia | 132 | April 2011 | ||||||
Bogotá, Colombia | Colombia operation | Transversal 23 Nº 97-73 Ofc. 405, piso 4 | 621.75 | 1 | January 2014 | |||||
Buenos Aires, Argentina | Corporate headquarters, Argentina operation & Customer service center | Tronador 4890—8th floor, Buenos Aires, 1430—Argentina | 910.78 | 1 | March 2011 | |||||
Buenos Aires, Argentina | Customer service center | Av. Costanera Rafael Obligado y Geronimo Salguero, Buenos Aires, Argentina | 1,842 | 1 | January 2012 | |||||
Caracas, Venezuela | Venezuela operation | Piso 7° Edificio Torre Country, Francisco de Miranda, Urbanización El Rosal, Municipio de Chacao, Estado de Miranda | 436 | 2 | April 2011 | |||||
Lithia Springs, Georgia, U.S.A. | SAVVIS Data Center | 375 Riverside Parkway Lithia Springs, Georgia 30122, | 3.0 | August 2011 | ||||||
Mexico City, Mexico | Mexico operation | Ibsen 43-101, 102, 301 and 304, Colonia Polanco, Miguel Hidalgo, Código Postal 11650, Mexico D.F. Mexico | 425 | 2 | March 2011 | |||||
Mexico City, Mexico | Mexico operation | Félix Cuevas No. 6 Int. 501 Col. Tlacoquemecatl del Valle, Delegación Benito Juarez, CP 03200 Mexico DF., Mexico | 562.02 | 1 | May 2016 | |||||
Sterling, Virginia, U.S.A. | SAVVIS Data Center | 45901 Nokes Blvd. Sterling, Virginia 20166 | 145.97 | August 2011 | ||||||
San Luis, Argentina | Technology Development center | Av. Universitaria s/n, Ciudad de la Punta, San Luis, Argentina | 207 | 2 | No End Date | |||||
Santana do Parnaíba, Brazil | Brazilian Subsidiary main office — Customer service center | Avenida Marte, 489 — Andar Térreo, 1°, 2° andar — Partes A e B Cep 06541-005 — Santana de Parnaíba, São Paulo, Brazil | 4090,18 | 1 | July 2014 | |||||
Zona America, Uruguay | Uruguay Staff | Ruta 8, km 17.5 Edificio 200, local 208-07 Zona America, Uruguay | 37 | 2 | December 2011 | |||||
Sterling, Virginia, U.S.A. | SAVVIS Data Center | 21110 Ridgetop Circle Sterling, Virginia | 26.75 | August 2011 |
1 | This surface includes the area of the office leased and parking spaces. | |
2 | This surface corresponds to the area of the office leased. It does not include any parking spaces. | |
3 | This surface corresponds to the area of the office leased. The lease agreement also grants lessee the right to use 21 parking spaces. |
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ITEM 3. | LEGAL PROCEEDINGS |
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ITEM 4. | (REMOVED AND RESERVED) |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Closing stock price | ||||||||
High | Low | |||||||
2009: | ||||||||
1st quarter | $ | 19.61 | $ | 12.47 | ||||
2nd quarter | $ | 28.94 | $ | 18.53 | ||||
3rd quarter | $ | 38.93 | $ | 23.22 | ||||
4th quarter | $ | 54.45 | $ | 35.60 | ||||
2010: | ||||||||
1st quarter | $ | 51.88 | $ | 36.37 | ||||
2nd quarter | $ | 60.75 | $ | 44.79 | ||||
3rd quarter | $ | 75.14 | $ | 52.13 | ||||
4th quarter | $ | 72.48 | $ | 58.00 |
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ITEM 6. | SELECTED FINANCIAL DATA |
Year ended December 31, | ||||||||||||||||||||
(in millions) | 2006 | 2007 | 2008 (3) | 2009 | 2010 | |||||||||||||||
Statement of income data: | ||||||||||||||||||||
Net revenues | $ | 52.1 | $ | 85.1 | $ | 137.0 | $ | 172.8 | $ | 216.7 | ||||||||||
Cost of net revenues | (12.1 | ) | (18.3 | ) | (27.5 | ) | (36.0 | ) | (46.5 | ) | ||||||||||
Gross profit | 40 | 66.9 | 109.5 | 136.9 | 170.2 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Product and technology development | (3.1 | ) | (4.4 | ) | (7.3 | ) | (12.1 | ) | (15.9 | ) | ||||||||||
Sales and marketing | (23.4 | ) | (27.6 | ) | (40.0 | ) | (42.9 | ) | (48.9 | ) | ||||||||||
General and administrative | (8.2 | ) | (13.2 | ) | (22.8 | ) | (25.8 | ) | (30.8 | ) | ||||||||||
Compensation cost related to acquisitions | — | — | (1.9 | ) | — | — | ||||||||||||||
Total operating expenses | (34.6 | ) | (45.2 | ) | (72.0 | ) | (80.9 | ) | (95.6 | ) | ||||||||||
Income from operations | 5.4 | 21.7 | 37.5 | 56.0 | 74.6 | |||||||||||||||
Other income (expenses): | ||||||||||||||||||||
Interest income and other financial gains | 0.5 | 1.6 | 1.8 | 2.7 | 4.9 | |||||||||||||||
Interest expense and other financial charges | (1.7 | ) | (2.7 | ) | (8.4 | ) | (13.4 | ) | (7.6 | ) | ||||||||||
Foreign currency loss | (0.4 | ) | (3.1 | ) | (1.5 | ) | (2.7 | ) | (0.1 | ) | ||||||||||
Other income (expenses), net | (1.5 | ) | (3.0 | ) | 0.1 | — | — | |||||||||||||
Net income before income and asset tax and cumulative effect of change in accounting principle | 2.3 | 14.4 | 29.4 | 42.7 | 71.9 | |||||||||||||||
Income and asset tax (expense) benefit | (1.2 | ) | (4.7 | ) | (10.6 | ) | (9.5 | ) | (15.8 | ) | ||||||||||
Net income before cumulative effect of change in accounting principle and gain from discontinued operations | 1.1 | 9.7 | 18.8 | 33.2 | 56.0 | |||||||||||||||
Cumulative effect of change in accounting principle | — | — | — | — | — | |||||||||||||||
Net income | 1.1 | 9.7 | 18.8 | 33.2 | 56.0 | |||||||||||||||
Accretion of preferred stock | (0.5 | ) | (0.3 | ) | — | — | — | |||||||||||||
Net income available to common stockholders | $ | 0.6 | $ | 9.4 | $ | 18.8 | $ | 33.2 | $ | 56.0 | ||||||||||
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At December 31, | ||||||||||||||||||||
(in millions) | 2006 | 2007 | 2008 (3) | 2009 | 2010 | |||||||||||||||
Balance sheet data: | ||||||||||||||||||||
Total assets | $ | 53.8 | $ | 134.5 | $ | 156.7 | $ | 182.6 | $ | 269.7 | ||||||||||
Long term debt | 9.0 | — | 3.1 | — | 0.2 | |||||||||||||||
Total liabilities | 30.5 | 42.8 | 63.3 | 68.4 | 98.0 | |||||||||||||||
Net assets | 23.3 | 91.7 | 93.4 | 114.2 | 171.7 | |||||||||||||||
Mandatorily redeemable convertible preferred stock | 64.1 | — | — | — | — | |||||||||||||||
Common stock | 0.1 | 0.1 | 0.1 | 0.1 | 0.1 | |||||||||||||||
Stockholders’ equity (deficit) | $ | (40.7 | ) | $ | 91.7 | 93.4 | 114.2 | 171.7 |
Year Ended December 31, | ||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | 2010 | ||||||||||||||||
Earnings per share data: | ||||||||||||||||||||
Basic net income available to common stockholders per common share | $ | 0.01 | $ | 0.22 | $ | 0.43 | $ | 0.75 | $ | 1.27 | ||||||||||
Diluted net income per common share | $ | — | $ | 0.22 | $ | 0.42 | $ | 0.75 | $ | 1.27 | ||||||||||
Weighted average shares (2): | ||||||||||||||||||||
Basic | 13,149,139 | 25,149,405 | (1) | 44,239,443 | 44,086,892 | 44,124,018 | ||||||||||||||
Diluted | — | 25,478,336 | 44,348,950 | 44,144,368 | 44,146,858 |
(1) | Includes the effect of the issuance of 3,000,000 shares of our common stock in connection with our initial public offering in August 2007. | |
(2) | Shares outstanding at December 31, 2010 were 44,131,376. | |
(3) | Includes the acquisition of DeRemate.com. See note 6 to our consolidated financial statements. |
Year ended December 31, | ||||||||||||||||||||
(in millions) | 2006 | 2007 | 2008 | 2009 | 2010 | |||||||||||||||
Other data: | ||||||||||||||||||||
Number of confirmed registered users at end of period (1) | 18.2 | 24.9 | 33.7 | 42.6 | 52.9 | |||||||||||||||
Number of confirmed new registered users during period (2) | 6.0 | 6.7 | 8.8 | 8.9 | 10.3 | |||||||||||||||
Gross merchandise volume (3) | $ | 1,075.1 | $ | 1,511.5 | $ | 2,078.9 | $ | 2,750.7 | $ | 3,405.9 | ||||||||||
Number of successful items sold (4) | 13.8 | 17.5 | 21.1 | 29.5 | 39.2 | |||||||||||||||
Total payment volume (5) | $ | 89.0 | $ | 158.0 | $ | 255.9 | $ | 382.5 | $ | 697.5 | ||||||||||
Total payment transactions (6) | — | 1.3 | 1.9 | 3.1 | 6.7 | |||||||||||||||
Capital expenditures | $ | 2.4 | $ | 3.1 | $ | 5.0 | $ | 4.8 | $ | 13.6 | ||||||||||
Depreciation and amortization | $ | 2.0 | $ | 2.3 | $ | 3.3 | $ | 3.9 | $ | 4.9 |
(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. As of December 31, 2008 the number of confirmed new registered users includes 2.2 million coming from the DeRemate integration. |
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(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 total U.S. dollar sum of all transactions paid for using MercadoPago. | |
(6) | Measure of the number of all transactions paid for using MercadoPago. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | a brief overview of our company; | ||
• | a review of our financial presentation and accounting policies, including our critical accounting policies; | ||
• | a discussion of our principal trends and results of operations for the years ended December 31, 2008, 2009, and 2010; | ||
• | a discussion of the principal factors that influence our results of operations, financial condition and liquidity; | ||
• | a discussion of our liquidity and capital resources, a discussion of our capital expenditures and a description of our contractual obligations; and | ||
• | a discussion of the market risks that we face. |
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• | listing fees; | ||
• | optional feature fees; | ||
• | final value fees; and | ||
• | online advertising fees. |
• | up front fees; | ||
• | final value fees; and | ||
• | online advertising fees. |
• | commissions charged to sellers for the use of the MercadoPago platform with respect to transactions that occur outside of our Marketplace platform; | ||
• | revenues from a financial charge when a buyer elects to pay in installments through our MercadoPago platform, both on transaction occurs on or off our Marketplace platform. |
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Year ended December 31, | ||||||||||||
(% of total consolidated net revenues) | 2008 | 2009 | 2010 | |||||||||
Brazil | 53.8 | % | 53.9 | % | 56.7 | % | ||||||
Argentina | 14.5 | 15.5 | 18.4 | |||||||||
Venezuela | 16.9 | 15.8 | 9.6 | |||||||||
Mexico | 10.1 | 8.9 | 8.8 | |||||||||
Other countries | 4.7 | 6.0 | 6.5 |
Year Ended | Change from 2009 | Year Ended | Change from 2008 to | |||||||||||||||||||||||||||||
December 31, | to 2010 (*) | December 31, | 2009 (*) | |||||||||||||||||||||||||||||
2010 | 2009 | in Dollars | in % | 2009 | 2008 | in Dollars | in % | |||||||||||||||||||||||||
(in millions, except percentages) | ||||||||||||||||||||||||||||||||
Net Revenues: | ||||||||||||||||||||||||||||||||
Brazil | $ | 122.8 | $ | 93.1 | $ | 29.7 | 31.9 | % | $ | 93.1 | $ | 73.7 | $ | 19.4 | 26.3 | % | ||||||||||||||||
Argentina | 39.9 | 26.7 | 13.2 | 49.2 | % | $ | 26.7 | $ | 19.9 | 6.8 | 34.6 | % | ||||||||||||||||||||
Venezuela | 20.9 | 27.3 | (6.4 | ) | -23.6 | % | $ | 27.3 | $ | 23.1 | 4.2 | 18.2 | % | |||||||||||||||||||
Mexico | 19.0 | 15.3 | 3.6 | 23.7 | % | $ | 15.3 | $ | 13.9 | 1.4 | 10.2 | % | ||||||||||||||||||||
Other Countries | 14.2 | 10.4 | 3.8 | 36.5 | % | $ | 10.4 | $ | 6.4 | 4.0 | 60.8 | % | ||||||||||||||||||||
Total Net Revenues | $ | 216.7 | $ | 172.8 | $ | 43.9 | 25.4 | % | $ | 172.8 | $ | 137.0 | $ | 35.8 | 26.1 | % | ||||||||||||||||
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year ended December 31, | ||||||||||||
(in millions) | 2008 | 2009 | 2010 | |||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
Foreign | 8.1 | 11.5 | 22.2 | |||||||||
8.1 | 11.5 | 22.2 | ||||||||||
Deferred: | ||||||||||||
Federal | — | — | 0.4 | |||||||||
Foreign | 1.6 | (2.5 | ) | (6.8 | ) | |||||||
1.6 | (2.5 | ) | (6.4 | ) | ||||||||
9.8 | 9.0 | 15.8 | ||||||||||
Asset Tax: | ||||||||||||
Federal | — | — | — | |||||||||
Foreign | 0.8 | 0.5 | 0.1 | |||||||||
0.8 | 0.5 | 0.1 | ||||||||||
Income / asset tax expense | $ | 10.6 | $ | 9.5 | $ | 15.8 | ||||||
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Quarter Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2010 | ||||||||||||||||
Net Revenues | $ | 45,937,774 | $ | 52,510,331 | $ | 55,951,378 | $ | 62,316,230 | ||||||||
Gross profit | 36,044,723 | 41,098,770 | 44,500,459 | 48,521,916 | ||||||||||||
Net Income | 9,620,601 | 11,673,962 | 18,790,963 | 15,939,493 | ||||||||||||
Net Income per share-basic | 0.22 | 0.26 | 0.43 | 0.36 | ||||||||||||
Net Income per share-diluted | 0.22 | 0.26 | 0.43 | 0.36 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,113,595 | 44,121,087 | 44,129,762 | 44,131,376 | ||||||||||||
Diluted | 44,149,700 | 44,145,255 | 44,151,367 | 44,151,762 | ||||||||||||
2009 | ||||||||||||||||
Net Revenues | $ | 32,322,501 | $ | 40,901,799 | $ | 50,599,276 | $ | 49,020,045 | ||||||||
Gross profit | 25,688,515 | 32,306,322 | 40,208,605 | 38,682,129 | ||||||||||||
Net Income | 5,391,176 | 6,679,779 | 9,852,268 | 11,285,570 | ||||||||||||
Net Income per share-basic | 0.12 | 0.15 | 0.22 | 0.26 | ||||||||||||
Net Income per share-diluted | 0.12 | 0.15 | 0.22 | 0.26 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,069,134 | 44,074,462 | 44,088,936 | 44,108,207 | ||||||||||||
Diluted | 44,130,866 | 44,127,208 | 44,138,031 | 44,143,281 | ||||||||||||
2008 | ||||||||||||||||
Net Revenues | $ | 28,840,730 | $ | 34,471,508 | $ | 40,260,643 | $ | 33,449,739 | ||||||||
Gross profit | 22,822,449 | 27,570,005 | 32,106,781 | 26,986,812 | ||||||||||||
Net Income | 2,067,677 | 2,947,095 | 5,875,792 | 7,921,097 | ||||||||||||
Net Income per share-basic | 0.05 | 0.07 | 0.13 | 0.18 | ||||||||||||
Net Income per share-diluted | 0.05 | 0.07 | 0.13 | 0.17 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,227,460 | 44,238,166 | 44,290,540 | 44,264,906 | ||||||||||||
Diluted | 44,368,011 | 44,369,317 | 44,379,682 | 44,369,635 |
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• | 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. |
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Year ended December 31, | ||||||||||||
(in millions, except percentages) | 2008 | 2009 | 2010 | |||||||||
Net revenues | $ | 137.0 | $ | 172.8 | $ | 216.7 | ||||||
Bad debt charges | 8.7 | 10.0 | 14.9 | |||||||||
Bad debt charges as a percentage of net revenues | 6.3 | % | 5.8 | % | 6.9 | % |
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Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Deferred tax assets | 2010 | in % (*) | 2009 | in % (*) | ||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||||
2005 DeRemate.com acquisition | 5.9 | 28.6 | % | 5.5 | 28.4 | % | ||||||||||
Brazilian operations | 5.3 | 25.6 | % | 4.7 | 24.5 | % | ||||||||||
Foreign tax credits & others domestic deferred tax assets | 2.8 | 13.3 | % | 3.1 | 16.0 | % | ||||||||||
Operations in others countries | 1.2 | 6.0 | % | 1.1 | 6.0 | % | ||||||||||
2008 DeRemate.com acquisition | 0.6 | 2.9 | % | 1.0 | 5.5 | % | ||||||||||
Mexican operations | 1.2 | 5.7 | % | 0.9 | 4.7 | % | ||||||||||
Venezuelan operations | 1.1 | 5.4 | % | 0.9 | 4.6 | % | ||||||||||
Argentine operations | 2.6 | 12.6 | % | 2.0 | 10.2 | % | ||||||||||
Total | 20.7 | 100 | % | 19.2 | 100 | % | ||||||||||
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Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Loss carryforwards | 2010 | in % (*) | 2009 | in % (*) | ||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||||
2005 DeRemate.com acquisition | 3.9 | 42.7 | % | 5.0 | 47.1 | % | ||||||||||
Brazilian operations | 3.0 | 32.7 | % | 3.0 | 28.2 | % | ||||||||||
2008 DeRemate.com acquisition | 0.5 | 5.8 | % | 1.0 | 9.4 | % | ||||||||||
Mexican operations | 0.9 | 10.3 | % | 0.6 | 5.9 | % | ||||||||||
Domestic loss carry forwards | 0.1 | 1.1 | % | 0.1 | 0.5 | % | ||||||||||
Chilean operations | 0.7 | 7.1 | % | 0.5 | 5.2 | % | ||||||||||
Operations in others countries | 0.1 | 0.4 | % | 0.4 | 3.8 | % | ||||||||||
Total | 9.2 | 100 | % | 10.5 | 100 | % | ||||||||||
(*) | Percentages have been calculated using the whole figures, instead on rounding figures. |
Year Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
Valuation Allowance | 2010 | in % (*) | 2009 | in % (*) | ||||||||||||
(in millions, except percentages) | (in millions, except percentages) | |||||||||||||||
2005 DeRemate.com acquisition | 0.1 | 1.8 | % | 4.6 | 49.9 | % | ||||||||||
Brazilian operations | 2.1 | 42.6 | % | 2.0 | 21.4 | % | ||||||||||
2008 DeRemate.com acquisition | 0.6 | 12.4 | % | 1.0 | 11.3 | % | ||||||||||
Operations in others countries | 2.1 | 43.2 | % | 1.6 | 17.4 | % | ||||||||||
United States | 0.0 | 0.0 | % | 0.0 | 0.1 | % | ||||||||||
Total | 4.8 | 100 | % | 9.3 | 100 | % | ||||||||||
(*) | Percentages have been calculated using the whole figures, instead on rounding figures. |
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Year ended December 31, | ||||||||||||
(in millions, except percentages) | 2008 | 2009 | 2010 | |||||||||
Income and asset tax expense | $ | (10.6 | ) | $ | (9.5 | ) | $ | (15.8 | ) | |||
As a percentage of income before income and asset tax | (36.1 | )% | (22.3 | )% | (22.0 | )% | ||||||
Number of | ||||
restricted | ||||
Grant date | Shares | |||
January 24, 2008 | 600 | |||
June 9, 2008 | 1,348 | |||
June 10, 2009 | 2,305 | |||
June 10, 2009 | 8,350 |
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• | Year One — Paid on or before March 31, 2009: 17% (8.5% in cash and 8.5% in common stock); | ||
• | Year Two — Paid on or before March 31, 2010: 22% (11% in cash and 11% in common stock); | ||
• | Year Three — Paid on or before March 31, 2011: 27% (13.5% in cash and 13.5% in common stock); and | ||
• | Year Four — Paid on or before March 31, 2012: 34% (17% in cash and 17% in common stock). |
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• | 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 “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 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 “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. |
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• | an annual fixed cash retainer for service on the board (the “Fixed Retainer”); | |
• | an annual fixed cash retainer for service as chairman of the audit committee (the “Audit Chairman Retainer”), compensation committee (the “Compensation Chairman Retainer”), nominating and corporate governance committee (the “Nominating Chairman Retainer”) and lead independent director (the “Lead Director Retainer”), as applicable; and | |
• | an annual variable cash retainer based upon the change in our stock price from year to year (the “Variable Retainer”). |
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Year Ended December 31, | ||||||||||||
(In millions) | 2008 | 2009 | 2010 | |||||||||
Net revenues | $ | 137.0 | $ | 172.8 | $ | 216.7 | ||||||
Cost of net revenues | (27.5 | ) | (36.0 | ) | (46.5 | ) | ||||||
Gross profit | 109.5 | 136.9 | 170.2 | |||||||||
Operating expenses: | ||||||||||||
Product and technology development | (7.3 | ) | (12.1 | ) | (15.9 | ) | ||||||
Sales and marketing | (40.0 | ) | (42.9 | ) | (48.9 | ) | ||||||
General and administrative | (22.8 | ) | (25.8 | ) | (30.8 | ) | ||||||
Compensation Cost related to acquisitions | (1.9 | ) | — | — | ||||||||
Total operating expenses | (72.0 | ) | (80.9 | ) | (95.6 | ) | ||||||
Income from operations | 37.5 | 56.0 | 74.6 | |||||||||
Other income (expenses): | ||||||||||||
Interest income and other financial gains | 1.8 | 2.7 | 4.9 | |||||||||
Interest expense and other financial charges | (8.4 | ) | (13.4 | ) | (7.6 | ) | ||||||
Foreign currency gains / losses | (1.5 | ) | (2.7 | ) | (0.1 | ) | ||||||
Other income (expenses), net | 0.1 | — | — | |||||||||
Net income before income / asset tax expense | 29.4 | 42.7 | 71.9 | |||||||||
Income / asset tax expense | (10.6 | ) | (9.5 | ) | (15.8 | ) | ||||||
Net income | $ | 18.8 | $ | 33.2 | $ | 56.0 | ||||||
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Year Ended December 31, | ||||||||||||
(% of net revenues) | 2008 | 2009 | 2010 | |||||||||
Net revenues | 100 | % | 100 | % | 100 | % | ||||||
Cost of net revenues | (20.1 | ) | (20.8 | ) | (21.5 | ) | ||||||
Gross profit | 79.9 | 79.2 | 78.5 | |||||||||
Operating expenses: | ||||||||||||
Product and technology development | (5.3 | ) | (7.0 | ) | (7.3 | ) | ||||||
Sales and marketing | (29.2 | ) | (24.8 | ) | (22.6 | ) | ||||||
General and administrative | (16.6 | ) | (15.0 | ) | (14.2 | ) | ||||||
Compensation Cost related to acquisitions | (1.4 | ) | — | — | ||||||||
Total operating expenses | (52.5 | ) | (46.8 | ) | (44.1 | ) | ||||||
Income from operations | 27.4 | 32.4 | 34.4 | |||||||||
Other income (expenses): | ||||||||||||
Interest income and other financial gains | 1.3 | 1.6 | 2.3 | |||||||||
Interest expense and other financial charges | (6.2 | ) | (7.7 | ) | (3.5 | ) | ||||||
Foreign currency loss | (1.1 | ) | (1.5 | ) | — | |||||||
Other expenses, net | — | — | — | |||||||||
Net income before income / asset tax expenses | 21.5 | 24.7 | 33.2 | |||||||||
Income / asset tax expense | (7.8 | ) | (5.5 | ) | (7.3 | ) | ||||||
Net income | 13.7 | 19.2 | 25.9 | |||||||||
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Year Ended | Change from | |||||||||||||||
December 31, | 2009 to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Total Net Revenues | $ | 216.7 | $ | 172.8 | $ | 43.9 | 25.4 | % | ||||||||
As a percentage of net revenues (*) | 100.0 | % | 100.0 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Net Revenues: | ||||||||||||||||
Brazil | $ | 122.8 | $ | 93.1 | $ | 29.7 | 31.9 | % | ||||||||
Argentina | 39.9 | 26.7 | 13.2 | 49.2 | % | |||||||||||
Venezuela | 20.9 | 27.3 | (6.4 | ) | -23.6 | % | ||||||||||
Mexico | 19.0 | 15.3 | 3.6 | 23.7 | % | |||||||||||
Other Countries | 14.2 | 10.4 | 3.8 | 36.5 | % | |||||||||||
Total Net Revenues | $ | 216.7 | $ | 172.8 | $ | 43.9 | 25.4 | % | ||||||||
(*) | 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 | $ | 56.0 | $ | 62.3 | ||||||||
Percent change from prior quarter | -6 | % | 14 | % | 7 | % | 11 | % | ||||||||
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 | % | ||||||||
2007 | ||||||||||||||||
Net Revenues | $ | 16.5 | $ | 19.0 | $ | 22.8 | $ | 26.9 | ||||||||
Percent change from prior quarter | 6 | % | 15 | % | 20 | % | 18 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year Ended | Change from | |||||||||||||||
December 31, | 2009 to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Total cost of net revenues | $ | 46.5 | $ | 36.0 | $ | 10.5 | 29.5 | % | ||||||||
As a percentage of net revenues (*) | 21.5 | % | 20.8 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Product and technology development | $ | 15.9 | $ | 12.1 | $ | 3.8 | 30.6 | % | ||||||||
As a percentage of net revenues (*) | 7.3 | % | 7.0 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Sales and marketing | $ | 48.9 | $ | 42.9 | $ | 6.0 | 14.0 | % | ||||||||
As a percentage of net revenues (*) | 22.6 | % | 24.8 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
General and administrative | $ | 30.8 | $ | 25.8 | $ | 5.0 | 19.3 | % | ||||||||
As a percentage of net revenues (*) | 14.2 | % | 15.0 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Other (expenses) income | $ | (2.7 | ) | $ | (13.3 | ) | $ | 10.6 | -79.5 | % | ||||||
As a percentage of net revenues | -1.3 | % | -7.7 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2009 | |||||||||||||||
December 31, | to 2010 (*) | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Income and asset tax | 15.8 | 9.5 | 6.3 | 66.7 | % | |||||||||||
As a percentage of net revenues (*) | 7.3 | % | 5.5 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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Year Ended | |||||||||||
December 31, | |||||||||||
2010 | 2009 | ||||||||||
Blended tax rate | 22.0 | % | 22.3 | % | |||||||
Effective tax rate | 30.8 | % | 26.9 | % |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Total Net Revenues | $ | 172.8 | $ | 137.0 | $ | 35.8 | 26.1 | % | ||||||||
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Net Revenues by Segment: | ||||||||||||||||
Brazil | $ | 93.1 | $ | 73.7 | $ | 19.4 | 26.3 | % | ||||||||
Venezuela | 27.3 | 23.1 | 4.2 | 18.2 | % | |||||||||||
Argentina | 26.7 | 19.9 | 6.8 | 34.6 | % | |||||||||||
México | 15.3 | 13.9 | 1.4 | 10.2 | % | |||||||||||
Other Countries | 10.4 | 6.4 | 4.0 | 60.8 | % | |||||||||||
Total Net Revenues | $ | 172.8 | $ | 137.0 | $ | 35.8 | 26.1 | % | ||||||||
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Quarter Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
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 | % | ||||||||
2007 | ||||||||||||||||
Net Revenues | $ | 16.5 | $ | 19.0 | $ | 22.8 | $ | 26.9 | ||||||||
Percent change from prior quarter | 6 | % | 15 | % | 20 | % | 18 | % |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Total cost of net revenues | $ | 36.0 | $ | 27.5 | $ | 8.5 | 30.9 | % | ||||||||
As a percentage of net revenues | 20.8 | % | 20.1 | % |
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Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Product and technology development | $ | 12.1 | $ | 7.3 | $ | 4.8 | 66.1 | % | ||||||||
As a percentage of net revenues | 7.0 | % | 5.3 | % |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Sales and marketing | $ | 42.9 | $ | 40.0 | $ | 2.9 | 7.2 | % | ||||||||
As a percentage of net revenues | 24.8 | % | 29.2 | % |
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Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
General and administrative | $ | 25.8 | $ | 22.8 | $ | 3.1 | 13.6 | % | ||||||||
As a percentage of net revenues | 15.0 | % | 16.6 | % |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Other income (expenses) | $ | -13.3 | $ | -8.1 | $ | -5.2 | 64.9 | % | ||||||||
As a percentage of net revenues | -7.7 | % | -5.9 | % |
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Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
Income and asset tax | 9.5 | 10.6 | (1.1 | ) | -10.6 | % | ||||||||||
As a percentage of net revenues | 5.5 | % | 7.8 | % |
Year Ended | ||||||||
December 31, | ||||||||
2009 | 2008 | |||||||
Blended tax rate | 22.3 | % | 36.1 | % | ||||
Effective tax rate | 26.9 | % | 27.7 | % |
• | Accounts receivables, net increased 159.2% mainly as a result of a change in the billing cicle period. In 2009 we billed to customers on a daily basis and in 2010 we billed to customers once a month. | ||
• | Other assets increased 123.8%, due to an increase in VAT related to the possession of the office building in Argentina and an increase in withholding taxes. | ||
• | Deferred income tax increased 234.1% mainly as a result of a reversal of the valuation allowance to net operating loss carryforwards in Brazil for an amount of 4.6 million. |
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• | continued growth of online commerce and Internet usage in Latin America; | ||
• | our ability to expand our operations and adapt to rapidly changing technologies; | ||
• | governmental regulation in the countries where we operate, including exchange controls; | ||
• | litigation, legal liability and intellectual property rights enforcement; | ||
• | system interruptions or failures; | ||
• | our ability to attract and retain qualified personnel; | ||
• | the announcement or introduction of new sites, services and products by us or our competitors, and price competition; | ||
• | reliance on third-party service providers; | ||
• | increasing consumer confidence in and acceptance of the Internet and other online services for commerce and, in particular, the trading of products such as those listed on our web site; | ||
• | security breaches and consumer confidence in the security of transactions over the Internet; | ||
• | consumer trends and popularity of certain categories of items; | ||
• | our ability to attract new customers, retain existing customers and increase revenues; | ||
• | seasonal fluctuations; and | ||
• | political, social and economic conditions in Latin America, particularly Venezuela, including foreign exchange rate fluctuations. |
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Year Ended December 31, | ||||||||||||
(In millions) | 2010 | 2009 | 2008 | |||||||||
Net cash provided by operating activities | $ | 67.9 | $ | 49.7 | $ | 55.8 | ||||||
Net cash used in investing activities | (58.8 | ) | (3.1 | ) | (38.9 | ) | ||||||
Net cash (used in) provided by financing activities | (3.0 | ) | (15.3 | ) | (11.7 | ) | ||||||
Effect of exchange rates on cash and cash equivalents | 0.9 | 1.0 | (3.5 | ) | ||||||||
Total increase in cash and cash equivalents | $ | 7.0 | $ | 32.3 | $ | 1.8 | ||||||
Year Ended December 31, | Change from 2009 to 2010 | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
(*) | ||||||||||||||||
Net Cash provided by: | ||||||||||||||||
Operating activities | $ | 67.9 | $ | 49.7 | $ | 18.2 | 36.6 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Net Cash provided by: | ||||||||||||||||
Operating activities | $ | 49.7 | $ | 55.8 | $ | -6.1 | -10.9 | % |
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Year Ended December 31, | Change from 2009 to 2010 | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
(*) | ||||||||||||||||
Net Cash used in: | ||||||||||||||||
Investing activities | $ | (58.8 | ) | $ | (3.1 | ) | $ | (55.7 | ) | 1806.3 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | In % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Net Cash (used in) provided by: | ||||||||||||||||
Investment activities | $ | (3.1 | ) | $ | (38.9 | ) | $ | 35.8 | -92.1 | % |
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Year Ended December 31, | Change from 2009 to 2010 | |||||||||||||||
2010 | 2009 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
(*) | ||||||||||||||||
Net Cash used in: | ||||||||||||||||
Financing activities | $ | (3.0 | ) | $ | (15.3 | ) | $ | 12.3 | -80.5 | % |
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
Year Ended | Change from 2008 | |||||||||||||||
December 31, | to 2009 | |||||||||||||||
2009 | 2008 | in Dollars | in % | |||||||||||||
(in millions, except percentages) | ||||||||||||||||
Net Cash used in: | ||||||||||||||||
Financing activities | $ | (15.3 | ) | $ | (11.7 | ) | $ | (3.6 | ) | 31.2 | % |
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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 (1) | $ | 0.3 | $ | 0.1 | $ | 0.2 | $ | — | $ | — | ||||||||||
Operating lease obligations (2) | 4.3 | 1.7 | 1.8 | 0.7 | 0.1 | |||||||||||||||
Purchase obligations | 4.6 | 4.2 | 0.4 | — | — | |||||||||||||||
Total | $ | 9.2 | $ | 6.0 | $ | 2.4 | $ | 0.7 | $ | 0.1 | ||||||||||
(1) | 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 July 2013. | |
(2) | Includes leases of office space. |
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ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
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Year ended December 31, | ||||||||||||
(In millions) | 2010 | 2009 | 2008 | |||||||||
(in millions, except percentages) | ||||||||||||
Net Revenues: | ||||||||||||
Brazil | $ | 122.8 | $ | 93.1 | $ | 73.7 | ||||||
Argentina | 39.9 | 26.7 | 19.9 | |||||||||
Venezuela | 20.9 | 27.3 | 23.1 | |||||||||
Mexico | 19.0 | 15.3 | 13.9 | |||||||||
Other Countries | 14.2 | 10.4 | 6.4 | |||||||||
Total Net Revenues | $ | 216.7 | $ | 172.8 | $ | 137.0 | ||||||
(*) | Percentages have been calculated using whole-dollar amounts rather than rounded amounts that appear in the table. |
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(In millions) | -10% | Actual | +10% | |||||||||
(1) | (2) | |||||||||||
Net revenues | 240.7 | 216.7 | 197.1 | |||||||||
Expenses | (157.7 | ) | (142.1 | ) | (129.3 | ) | ||||||
Income from operations | 82.9 | 74.6 | 67.8 | |||||||||
Other income (expenses) and income tax related to P&L items | (20.6 | ) | (18.5 | ) | (16.9 | ) | ||||||
Foreign Currency impact related to the remeasurement of our Net Asset position | (8.7 | ) | (0.1 | ) | 7.1 | |||||||
Net income | 53.7 | 56.0 | 57.9 | |||||||||
Total Shareholders’ Equity | 177.6 | 171.7 | 166.9 | |||||||||
(1) | Apreciation of the subsidiaries local currency against U.S. Dollar | |
(2) | Depreciation of the subsidiaries local currency against U.S. Dollar |
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• | 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. |
As of December 31, 2010 | |||||||||
MercadoLibre, Inc | 2009 and 2010 variable | ||||||||
(In US dollars) | Equity Price | LTRP liability | |||||||
Change in equity price in percentage | |||||||||
40% | 91.58 | 13,130,918 | |||||||
30% | 85.04 | 12,192,995 | |||||||
20% | 78.50 | 11,255,072 | |||||||
10% | 71.96 | 10,317,150 | |||||||
Static (*) | 65.41 | 9,379,227 | |||||||
-10% | 58.87 | 8,441,304 | |||||||
-20% | 52.33 | 7,503,382 | |||||||
-30% | 45.79 | 6,565,459 | |||||||
-40% | 39.25 | 5,627,536 |
(*) | Average closing stock price for the last 60 trading days of the closing date |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES |
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Table of Contents
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
80
Table of Contents
ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS |
Equity Compensation Plan Information | ||||||||||||
Number of | ||||||||||||
securities | ||||||||||||
remaining | ||||||||||||
available for | ||||||||||||
future issuance | ||||||||||||
Number of | under | |||||||||||
securities | equity | |||||||||||
to be issued | compensation | |||||||||||
upon exercise | plans | |||||||||||
of outstanding | Weighted-average | (excluding | ||||||||||
options, | exercise price of | securities | ||||||||||
Warrants and | outstanding options, | reflected in | ||||||||||
Plan Category | Rights | Warrants and rights | column (a)) | |||||||||
(a) | (b) | (c) | ||||||||||
Equity compensation plans approved by security holders (1) | — | — | 279,893 | |||||||||
Equity compensation plans not approved by security holders(2) | 11,763 | 1.69 | — | |||||||||
Total | 11,763 | 1.69 | 279,893 | |||||||||
(1) | Represents our 2009 Equity Compensation which was approved by our stockholders on June 10, 2009 | |
(2) | Our Amended and Restated 1999 Stock Option and Restricted Stock Plan was entered into prior to our IPO. |
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ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Page | ||||
Consolidated Financial Statements | ||||
F-1 | ||||
F-4 | ||||
F-5 | ||||
F-6 | ||||
F-8 | ||||
F-10 | ||||
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Exhibit | ||||
Number | Exhibit Title | |||
2.01 | Stock Purchase Agreement, dated August 25, 2008, by and among Hammer.com, LLC, MercadoLibre, Inc., Hispanoamerican Educational Investments BV, S.A. La Nación, 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. (4) | |||
2.02 | Asset Purchase Agreement, dated August 25, 2008, by and among Hispanoamerican Educational Investments BV, S.A. La Nación, Intangible Assets LLC, Emprendimientos Veta, S.A., DeRemate.com USA, Inc., MercadoLibre, Inc. and Hammer.com, LLC. (4) | |||
3.01 | Registrant’s Amended and Restated Certificate of Incorporation. (1) | |||
3.02 | Registrant’s Amended and Restated Bylaws. (1) | |||
4.01 | Form of Specimen Certificate for Registrant’s Common Stock (5) | |||
4.02 | Second Amended and Restated Registration Rights Agreement, dated September 24, 2001, by and among the Registrant and the investors named therein. (1) | |||
10.01 | Form of Indemnity Agreement entered into by Registrant with each of its directors and executive officers. (2) | |||
10.02 | Lease Agreement, dated as of March 31, 2007, between Curtidos San Luis S.A. and MercadoLibre S.A. (2) (translated from Spanish) | |||
10.03 | Amendment Agreement, dated as of November 13, 2008, to the Lease Agreement, dated March 31, 2007, between Curtidos San Luis S.A. and MercadoLibre S.A. (5) (translated from Spanish) | |||
10.04 | Lease Agreement, dated as of April 1, 2008, between Curtidos San Luis S.A. and MercadoLibre S.A. (translated from Spanish) (5) | |||
10.05 | Lease Agreement, dated as of May 5, 2008, between Curtidos San Luis S.A. and MercadoLibre S.A. (translated from Spanish) (5) | |||
10.06 | Concession Contract, dated as February 7, 2007, between Border’s Parking S.R.L. and MercadoLibre S.A. (1) | |||
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Exhibit | ||||
Number | Exhibit Title | |||
10.7 | Arias Trust Contract, dated as of June 5, 2006 and amended as of May 29, 2008 (translated from Spanish) (5) | |||
10.8 | Management Incentive Bonus Plan of the Registrant. (2) | |||
10.9 | Amended and Restated 1999 Stock Option and Restricted Stock Plan (2) | |||
10.10 | Employment Agreements with Officers.(2) | |||
10.11 | Form of Restricted Stock Award for Outside directors. (3) | |||
10.12 | Employment Agreement with Osvaldo Gimenez, dated as of March 26, 2008* (5) | |||
10.13 | 2009 Equity Compensation Plan* (7) | |||
10.14 | 2008 Long-Term Retention Plan (6) | |||
10.15 | 2009 Long-Term Retention Plan (6) | |||
10.16 | Property Lease Agreement, dated February 1, 2011, between MercadoLibre Colombia S.A and Mongiana Ltda* | |||
10.17 | Property Lease Amendment, dated May 5, 2008, between MercadoLibre Venezuela S.A. and G4 Grupo 4 Inmobiliaria Internacional Industrial Comercial, C.A. (8) | |||
10.18 | Property Lease Agreement, dated July 6, 2010 between MercadoLivre.com Atividades de Internet Ltda. and STM Sociedade Técnica de Montageus Ltda.* |
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Exhibit | ||||
Number | Exhibit Title | |||
21.01 | List of Subsidiaries* | |||
23.01 | Consent of Deloitte & Co. S.R.L., Independent Registered Public Accounting Firm* | |||
23.02 | Consent of Price Watherhouse & Co. S.R.L., Independent Registered Public Accounting Firm* | |||
31.01 | CEO Certification pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |||
31.02 | CFO Certification pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |||
32.01 | CEO Certification required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |||
32.02 | CFO Certification required by 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 | |
*** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. | |
(1) | Incorporated by reference to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on May 11, 2007; | |
(2) | Incorporated by reference to Amendment No. 1 to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on July 13, 2007. | |
(3) | Incorporated by reference to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on January 25, 2008 | |
(4) | Incorporated by reference to the Current Report on Form 8-K filed on August 26, 2008. | |
(5) | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009 | |
(6) | Incorporated by reference to the Current Report on Form 8-K filed on July 21, 2009 | |
(7) | Incorporated by reference to the Registration Statement on Form S-8 filed on June 11, 2009 | |
(8) | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 26, 2010 |
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MERCADOLIBRE, INC. | ||||||
By: | /s/ Marcos Galperín | |||||
Chief Executive Officer | ||||||
Date: February 25, 2011 |
Signature | Title | Date | ||
/s/ Marcos Galperín | Chief Executive Officer and Director (Principal Executive Officer) | February 25, 2011 | ||
/s/ Hernán Kazah | Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) | February 25, 2011 | ||
/s/ Mario Vazquez | Director | February 25, 2011 | ||
/s/ Anton Levy | Director | February 25, 2011 | ||
/s/ Michael Spence | Director | February 25, 2011 | ||
/s/ Verónica Allende Serra | Director | February 25, 2011 | ||
/s/ Nicolás Galperín | Director | February 25, 2011 | ||
/s/ Emiliano Calemzuk | Director | February 25, 2011 | ||
/s/ Martin de los Santos | Director | February 25, 2011 |
87
Table of Contents
Exhibit | ||||
Number | Exhibit Title | |||
2.01 | Stock Purchase Agreement, dated August 25, 2008, by and among Hammer.com, LLC, MercadoLibre, Inc., Hispanoamerican Educational Investments BV, S.A. La Nación, 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. (4) | |||
2.02 | Asset Purchase Agreement, dated August 25, 2008, by and among Hispanoamerican Educational Investments BV, S.A. La Nación, Intangible Assets LLC, Emprendimientos Veta, S.A., DeRemate.com USA, Inc., MercadoLibre, Inc. and Hammer.com, LLC. (4) | |||
3.01 | Registrant’s Amended and Restated Certificate of Incorporation. (1) | |||
3.02 | Registrant’s Amended and Restated Bylaws. (1) | |||
4.01 | Form of Specimen Certificate for Registrant’s Common Stock (5) | |||
4.02 | Second Amended and Restated Registration Rights Agreement, dated September 24, 2001, by and among the Registrant and the investors named therein. (1) | |||
10.01 | Form of Indemnity Agreement entered into by Registrant with each of its directors and executive officers. (2) | |||
10.02 | Lease Agreement, dated as of March 31, 2007, between Curtidos San Luis S.A. and MercadoLibre S.A. (2) (translated from Spanish) | |||
10.03 | Amendment Agreement, dated as of November 13, 2008, to the Lease Agreement, dated March 31, 2007, between Curtidos San Luis S.A. and MercadoLibre S.A. (5) (translated from Spanish) | |||
10.04 | Lease Agreement, dated as of April 1, 2008, between Curtidos San Luis S.A. and MercadoLibre S.A. (translated from Spanish) (5) | |||
10.05 | Lease Agreement, dated as of May 5, 2008, between Curtidos San Luis S.A. and MercadoLibre S.A. (translated from Spanish) (5) | |||
10.06 | Concession Contract, dated as February 7, 2007, between Border’s Parking S.R.L. and MercadoLibre S.A. (1) | |||
10.07 | Arias Trust Contract, dated as of June 5, 2006 and amended as of May 29, 2008 (translated from Spanish) (5) | |||
10.08 | Management Incentive Bonus Plan of the Registrant. (2) | |||
10.09 | Amended and Restated 1999 Stock Option and Restricted Stock Plan (2) | |||
10.10 | Employment Agreements with Officers.(2) | |||
10.11 | Form of Restricted Stock Award for Outside directors. (3) | |||
10.12 | Employment Agreement with Osvaldo Gimenez, dated as of March 26, 2008* (5) | |||
10.13 | 2009 Equity Compensation Plan* (7) |
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Exhibit | ||||
Number | Exhibit Title | |||
10.14 | 2008 Long-Term Retention Plan (6) | |||
10.15 | 2009 Long-Term Retention Plan (6) | |||
10.16 | Property Lease Agreement, dated February 1, 2011, between MercadoLibre Colombia S.A and Mongiana Ltda* | |||
10.17 | Property Lease Amendment, dated May 5, 2008, between MercadoLibre Venezuela S.A. and G4 Grupo 4 Inmobiliaria Internacional Industrial Comercial, C.A. (8) | |||
10.18 | Property Lease Agreement, dated July 6, 2010 between MercadoLivre.com Atividades de Internet Ltda. and STM Sociedade Técnica de Montageus Ltda.* | |||
21.01 | List of Subsidiaries* | |||
23.01 | Consent of Deloitte & Co. S.R.L., Independent Registered Public Accounting Firm* | |||
23.02 | Consent of Price Watherhouse & Co. S.R.L., Independent Registered Public Accounting Firm* | |||
31.01 | CEO Certification pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |||
31.02 | CFO Certification pursuant to Securities Exchange Act Rule 13a-14, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* | |||
32.01 | CEO Certification required by 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002** | |||
32.02 | CFO Certification required by 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 | |
*** | Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. | |
(1) | Incorporated by reference to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on May 11, 2007; | |
(2) | Incorporate by reference to Amendment No. 1 to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on July 13, 2007. | |
(3) | Incorporated by reference to the Registration Statement on Form S-1 of MercadoLibre, Inc. filed on January 25, 2008 | |
(4) | Incorporated by reference to the Current Report on Form 8-K filed on August 26, 2008. | |
(5) | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2008 filed on February 27, 2009 | |
(6) | Incorporated by reference to the Current Report on Form 8-K filed on July 21, 2009 | |
(7) | Incorporated by reference to the Registration Statement on Form S-8 filed on June 11, 2009 | |
(8) | Incorporated by reference to the Annual Report on Form 10-K for the year ended December 31, 2009 filed on February 26, 2010 | |
(9) | Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended March 31, 2010 filed on May 7, 2010 | |
(10) | Incorporated by reference to the Current Report on Form 8-K filed on June 29, 2010. | |
(11) | Incorporated by reference to the Quarterly Report on Form 10-Q for the quarter ended June 30, 2010 filed on August 6, 2010 |
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Consolidated Financial Statements
as of December 31, 2010 and 2009
and for the three years in the period
ended December 31, 2010
Table of Contents
Shareholders of MercadoLibre, Inc.
F-1
Table of Contents
February 25, 2011
DELOITTE & Co. S.R.L.
Partner
F-2
Table of Contents
Shareholders’ of MercadoLibre, Inc.:
By | (Partner) | |||
Carlos Martín Barbafina |
F-3
Table of Contents
As of December 31, 2010 and 2009
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 56,830,466 | $ | 49,803,402 | ||||
Short-term investments | 5,342,766 | 14,580,185 | ||||||
Accounts receivable, net | 12,618,173 | 4,868,377 | ||||||
Funds receivable from customers | 6,151,518 | 3,785,802 | ||||||
Prepaid expenses | 913,262 | 547,138 | ||||||
Deferred tax assets | 12,911,256 | 5,481,182 | ||||||
Other assets | 6,867,767 | 3,068,930 | ||||||
Total current assets | 101,635,208 | 82,135,016 | ||||||
Non-current assets: | ||||||||
Long-term investments | 78,846,281 | 26,627,357 | ||||||
Property and equipment, net | 20,817,712 | 5,948,276 | ||||||
Goodwill, net | 60,496,314 | 59,822,746 | ||||||
Intangible assets, net | 4,141,167 | 4,515,818 | ||||||
Deferred tax assets | 2,975,118 | 2,897,492 | ||||||
Other assets | 771,223 | 667,944 | ||||||
Total non-current assets | 168,047,815 | 100,479,633 | ||||||
Total assets | $ | 269,683,023 | $ | 182,614,649 | ||||
Liabilities and Shareholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 17,232,103 | $ | 11,599,634 | ||||
Funds payable to customers | 48,788,225 | 31,453,410 | ||||||
Payroll and social security payable | 10,786,534 | 7,428,340 | ||||||
Taxes payable | 11,487,574 | 6,797,516 | ||||||
Loans payable and other financial liabilities | 100,031 | 3,213,992 | ||||||
Total current liabilities | 88,394,467 | 60,492,892 | ||||||
Non-current liabilities: | ||||||||
Payroll and social security payable | 2,562,343 | 1,355,006 | ||||||
Loans payable and other financial liabilities | 188,846 | — | ||||||
Deferred tax liabilities | 5,167,699 | 5,170,799 | ||||||
Other liabilities | 1,651,398 | 1,402,715 | ||||||
Total non-current liabilities | 9,570,286 | 7,928,520 | ||||||
Total liabilities | $ | 97,964,753 | $ | 68,421,412 | ||||
Commitments and contingencies (Note 15) | ||||||||
Shareholders’ equity: | ||||||||
Common stock, $0.001 par value, 110,000,000 shares authorized, 44,131,376 and 44,120,269 shares issued and outstanding at December 31, 2010 and December 31, 2009, respectively | $ | 44,131 | $ | 44,120 | ||||
Additional paid-in capital | 120,391,622 | 120,257,998 | ||||||
Retained earnings | 73,681,556 | 17,656,537 | ||||||
Accumulated other comprehensive loss | (22,399,039 | ) | (23,765,418 | ) | ||||
Total shareholders’ equity | 171,718,270 | 114,193,237 | ||||||
Total liabilities and shareholders’ equity | $ | 269,683,023 | $ | 182,614,649 | ||||
F-4
Table of Contents
For the three years ended December 31, 2010
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net revenues | $ | 216,715,713 | $ | 172,843,621 | $ | 137,022,620 | ||||||
Cost of net revenues | (46,549,845 | ) | (35,958,050 | ) | (27,536,573 | ) | ||||||
Gross profit | 170,165,868 | 136,885,571 | 109,486,047 | |||||||||
Operating expenses: | ||||||||||||
Product and technology development | (15,855,992 | ) | (12,140,521 | ) | (7,307,008 | ) | ||||||
Sales and marketing | (48,883,167 | ) | (42,861,735 | ) | (39,975,307 | ) | ||||||
General and administrative | (30,828,146 | ) | (25,849,596 | ) | (22,759,931 | ) | ||||||
Compensation cost related to acquisitions (Note 6) | — | — | (1,919,870 | ) | ||||||||
Total operating expenses | (95,567,305 | ) | (80,851,852 | ) | (71,962,116 | ) | ||||||
Income from operations | 74,598,563 | 56,033,719 | 37,523,931 | |||||||||
Other income (expenses): | ||||||||||||
Interest income and other financial gains | 4,931,215 | 2,695,109 | 1,822,385 | |||||||||
Interest expense and other financial charges | (7,601,671 | ) | (13,357,554 | ) | (8,442,427 | ) | ||||||
Foreign currency loss | (62,447 | ) | (2,658,476 | ) | (1,531,144 | ) | ||||||
Other income (expenses), net | — | — | 73,159 | |||||||||
Net income before income / asset tax expense | 71,865,660 | 42,712,798 | 29,445,904 | |||||||||
Income / asset tax expense | (15,840,641 | ) | (9,504,005 | ) | (10,634,243 | ) | ||||||
Net income | $ | 56,025,019 | $ | 33,208,793 | $ | 18,811,661 | ||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Basic EPS | ||||||||||||
Basic net income per common share | $ | 1.27 | $ | 0.75 | $ | 0.43 | ||||||
Weighted average shares | 44,124,018 | 44,086,892 | 44,239,443 | |||||||||
Diluted EPS | ||||||||||||
Diluted net income per common share | $ | 1.27 | $ | 0.75 | $ | 0.42 | ||||||
Weighted average shares | 44,146,858 | 44,144,368 | 44,348,950 | |||||||||
F-5
Table of Contents
For the three years ended December 31, 2010
(Accumulated | Accumulated | |||||||||||||||||||||||||||||||
Additional | deficit) / | other | ||||||||||||||||||||||||||||||
Comprehensive | Common stock | paid-in | Treasury | Retained | comprehensive | |||||||||||||||||||||||||||
income | Shares | Amount | capital | Stock | Earnings | income / (loss) | Total | |||||||||||||||||||||||||
Balance as of December 31, 2007 | 44,226,563 | $ | 44,227 | $ | 121,890,138 | $ | — | $ | (34,363,917 | ) | $ | 4,102,691 | $ | 91,673,139 | ||||||||||||||||||
Stock options exercised and restricted shares issued | 93,504 | 94 | 82,995 | — | — | — | 83,089 | |||||||||||||||||||||||||
Stock-based compensation — stock options | — | — | 4,719 | — | — | — | 4,719 | |||||||||||||||||||||||||
Stock-based compensation — restricted shares | — | — | 105,560 | — | — | — | 105,560 | |||||||||||||||||||||||||
Stock-based compensation — long term retention plan (“LTRP”) | — | — | 321,568 | — | — | — | 321,568 | |||||||||||||||||||||||||
Repurchase of Treasury Stock | — | — | — | (2,598,223 | ) | — | — | (2,598,223 | ) | |||||||||||||||||||||||
Retirement of Treasury Stock | (249,700 | ) | (250 | ) | (2,597,973 | ) | 2,598,223 | — | — | — | ||||||||||||||||||||||
Net income | $ | 18,811,661 | — | — | — | — | 18,811,661 | — | 18,811,661 | |||||||||||||||||||||||
Currency translation adjustment | $ | (14,923,284 | ) | — | — | — | — | — | (14,923,284 | ) | (14,923,284 | ) | ||||||||||||||||||||
Unrealized net gains on investments | $ | 3,642 | — | — | — | — | — | 3,642 | 3,642 | |||||||||||||||||||||||
Realized net gains on investments | $ | (57,890 | ) | — | — | — | — | — | (57,890 | ) | (57,890 | ) | ||||||||||||||||||||
Comprehensive income | $ | 3,834,129 | ||||||||||||||||||||||||||||||
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 | 35,031 | 35 | 28,319 | — | — | — | 28,354 | |||||||||||||||||||||||||
Stock-based compensation — stock options | — | — | 1,752 | — | — | — | 1,752 | |||||||||||||||||||||||||
Stock-based compensation — restricted shares | — | — | 74,382 | — | — | — | 74,382 | |||||||||||||||||||||||||
Stock-based compensation LTRP | — | — | 175,453 | — | — | — | 175,453 | |||||||||||||||||||||||||
Restricted shares issued | 10,655 | 10 | 171,089 | — | — | — | 171,099 | |||||||||||||||||||||||||
LTRP shares issued | 3,600 | 3 | (3 | ) | — | — | — | — | ||||||||||||||||||||||||
Shares issued | 616 | 1 | (1 | ) | — | — | — | — | ||||||||||||||||||||||||
Net income | $ | 33,208,793 | — | — | — | — | 33,208,793 | — | 33,208,793 | |||||||||||||||||||||||
Currency translation adjustment | $ | (12,914,565 | ) | — | — | — | — | — | (12,914,565 | ) | (12,914,565 | ) | ||||||||||||||||||||
Unrealized net gains on investments | $ | 27,630 | — | — | — | — | — | 27,630 | 27,630 | |||||||||||||||||||||||
Realized net gains on investments | $ | (3,642 | ) | — | — | — | — | — | (3,642 | ) | (3,642 | ) | ||||||||||||||||||||
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 | ||||||||||||||||||
F-6
Table of Contents
Consolidated Statement of Changes in Shareholders’ Equity
For the three years ended December 31, 2010
(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 | 7,126 | 7 | 18,192 | — | — | 18,199 | ||||||||||||||||||||||
Stock-based compensation — stock options | — | — | 244 | — | — | 244 | ||||||||||||||||||||||
Stock-based compensation — restricted shares | — | — | 37,696 | — | — | 37,696 | ||||||||||||||||||||||
Stock-based compensation LTRP | — | — | 77,496 | — | — | 77,496 | ||||||||||||||||||||||
LTRP shares issued | 3,981 | 4 | (4 | ) | — | — | — | |||||||||||||||||||||
Net income | $ | 56,025,019 | — | — | — | 56,025,019 | — | 56,025,019 | ||||||||||||||||||||
Currency translation adjustment | 1,348,482 | — | — | — | — | 1,348,482 | 1,348,482 | |||||||||||||||||||||
Unrealized net gains on investments | 45,527 | — | — | — | — | 45,527 | 45,527 | |||||||||||||||||||||
Realized net gains on investments | (27,630 | ) | — | — | — | — | (27,630 | ) | (27,630 | ) | ||||||||||||||||||
Comprehensive income | $ | 57,391,398 | ||||||||||||||||||||||||||
Balance as of December 31, 2010 | 44,131,376 | $ | 44,131 | $ | 120,391,622 | $ | 73,681,556 | $ | (22,399,039 | ) | $ | 171,718,270 | ||||||||||||||||
F-7
Table of Contents
For the three years ended December 31, 2010
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Cash flows from operations: | ||||||||||||
Net income | $ | 56,025,019 | $ | 33,208,793 | $ | 18,811,661 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 4,921,650 | 3,893,752 | 3,335,673 | |||||||||
Foreign currency gains | — | — | (7,827,112 | ) | ||||||||
Interest expense | — | 213,878 | 300,368 | |||||||||
Accrued interest | (504,874 | ) | 90,339 | 57,293 | ||||||||
Stock-based compensation expense — stock options | 244 | 1,752 | 4,719 | |||||||||
Stock-based compensation expense — restricted shares | 37,696 | 74,382 | 105,560 | |||||||||
LTRP accrued compensation | 3,479,066 | 1,924,149 | 839,303 | |||||||||
Deferred income taxes | (7,053,030 | ) | (3,607,292 | ) | (2,151,858 | ) | ||||||
Changes in assets and liabilities, excluding the effect of acquisitions: | ||||||||||||
Accounts receivable | (7,063,942 | ) | (2,974,890 | ) | 4,026,218 | |||||||
Funds receivable from customers | (2,324,575 | ) | (942,407 | ) | 26,573,209 | |||||||
Prepaid expenses | (333,755 | ) | (287,836 | ) | (153,582 | ) | ||||||
Other assets | (3,643,650 | ) | (2,591,353 | ) | (1,415,575 | ) | ||||||
Accounts payable and accrued expenses | 9,051,139 | 8,686,334 | 10,610,141 | |||||||||
Funds payable to customers | 15,458,416 | 12,421,412 | 2,294,847 | |||||||||
Provisions | (63,549 | ) | 302,987 | (1,277,664 | ) | |||||||
Other liabilities | (89,402 | ) | (713,014 | ) | 1,645,976 | |||||||
Net cash provided by operating activities | 67,896,453 | 49,700,986 | 55,779,177 | |||||||||
Cash flows from investing activities: | ||||||||||||
Purchase of investments | (121,266,157 | ) | (80,060,909 | ) | (110,056,368 | ) | ||||||
Proceeds from sale and maturity of investments | 76,062,629 | 81,728,485 | 115,342,531 | |||||||||
Payment for businesses acquired, net of cash acquired | — | — | (39,181,473 | ) | ||||||||
Purchases of intangible assets | (416,450 | ) | (955,679 | ) | (58,238 | ) | ||||||
Purchases of property and equipment | (13,214,043 | ) | (3,798,170 | ) | (4,904,991 | ) | ||||||
Net cash used in investing activities | (58,834,021 | ) | (3,086,273 | ) | (38,858,539 | ) | ||||||
Cash flows from financing activities: | ||||||||||||
Decrease in short term debt | — | (310,634 | ) | (9,137,223 | ) | |||||||
Loans paid | (3,000,000 | ) | (15,000,000 | ) | — | |||||||
Repurchase of Treasury Stock | — | — | (2,598,223 | ) | ||||||||
Stock options exercised | 18,199 | 28,354 | 83,089 | |||||||||
Net cash used in financing activities | (2,981,801 | ) | (15,282,280 | ) | (11,652,357 | ) | ||||||
Effect of exchange rate changes on cash and cash equivalents | 946,433 | 996,857 | (3,471,576 | ) | ||||||||
Net increase in cash and cash equivalents | 7,027,064 | 32,329,290 | 1,796,705 | |||||||||
Cash and cash equivalents, beginning of the year | 49,803,402 | 17,474,112 | 15,677,407 | |||||||||
Cash and cash equivalents, end of the year | $ | 56,830,466 | $ | 49,803,402 | $ | 17,474,112 | ||||||
F-8
Table of Contents
Consolidated Statement of Cash Flows
For the three years ended December 31, 2010
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Supplemental cash flow information: | ||||||||||||
Cash paid for interest | $ | 5,781,058 | $ | 12,332,592 | $ | 7,138,402 | ||||||
Cash paid for income taxes | 22,253,947 | 11,650,007 | 7,921,206 | |||||||||
Acquisition of DeRemate and Classified Media Group: | ||||||||||||
Cash and cash equivalents | $ | — | $ | — | $ | 691,632 | ||||||
Funds receivable from customers | — | — | 117,473 | |||||||||
Accounts receivable | — | — | 6,569,098 | |||||||||
Tax credits | — | — | 604,419 | |||||||||
Other current assets | — | — | 918,856 | |||||||||
Non current assets | — | — | 504,927 | |||||||||
Total assets acquired | — | — | 9,406,405 | |||||||||
Accounts payable and accrued expenses | — | — | 4,578,830 | |||||||||
Funds payable to customers | — | — | 146,191 | |||||||||
Taxes payable | — | — | 1,204,479 | |||||||||
Payroll and social security payable | — | — | 395,112 | |||||||||
Other liabilities | — | — | 1,590,371 | |||||||||
Non current liabilities | — | — | 14,000 | |||||||||
Provisions | — | — | 1,548,391 | |||||||||
Total liabilities assumed | — | — | 9,477,374 | |||||||||
Net assets acquired | — | — | (70,969 | ) | ||||||||
Goodwill | — | — | 52,638,036 | |||||||||
Trademarks | — | — | 5,622,188 | |||||||||
Customer lists | — | — | 1,227,600 | |||||||||
Non Compete Agreement | — | — | 573,484 | |||||||||
Deferred income tax on intangible assets | — | — | (2,598,145 | ) | ||||||||
Total purchase price | — | — | 57,392,194 | |||||||||
Cash and cash equivalents acquired | — | — | (691,632 | ) | ||||||||
Payment for businesses acquired, net of cash acquired | $ | — | $ | — | $ | 39,181,473 | ||||||
Seller financing for DeRemate business acquisition (1) | $ | — | $ | — | $ | 17,519,088 | ||||||
(1) | The Seller financing for DeRemate business acquisition is presented net of working capital adjustment (See note 6 for more details) |
F-9
Table of Contents
1. | Nature of Business |
F-10
Table of Contents
Notes to Consolidated Financial Statements
1. | Nature of Business (Continued) |
2. | Summary of Significant Accounting Policies |
F-11
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-12
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-13
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-14
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-15
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-16
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-17
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-18
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-19
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-20
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-21
Table of Contents
Notes to Consolidated Financial Statements
2. | Summary of Significant Accounting Policies (Continued) |
F-22
Table of Contents
Notes to Consolidated Financial Statements
3. | Net income per share |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
Net income available to common shareholders | $ | 56,025,019 | $ | 56,025,019 | $ | 33,208,793 | $ | 33,208,793 | $ | 18,811,661 | $ | 18,811,661 | ||||||||||||
Net income available to common shareholders attributable to unvested restricted shares | 4,679 | 4,679 | 3,515 | 3,515 | — | — | ||||||||||||||||||
Net income available to common shareholders attributable to common stock | $ | 56,020,340 | $ | 56,020,340 | $ | 33,205,278 | $ | 33,205,278 | $ | 18,811,661 | $ | 18,811,661 | ||||||||||||
F-23
Table of Contents
Notes to Consolidated Financial Statements
3. | Net income per share (Continued) |
Year Ended December 31, | ||||||||||||||||||||||||
2010 | 2009 | 2008 | ||||||||||||||||||||||
Basic | Diluted | Basic | Diluted | Basic | Diluted | |||||||||||||||||||
Net income available to common shareholders per common share | $ | 1.27 | $ | 1.27 | $ | 0.75 | $ | 0.75 | $ | 0.43 | $ | 0.42 | ||||||||||||
Numerator: | ||||||||||||||||||||||||
Net income available to common shareholders | $ | 56,020,340 | $ | 56,020,340 | $ | 33,205,278 | $ | 33,205,278 | $ | 18,811,661 | $ | 18,811,661 | ||||||||||||
Denominator: | ||||||||||||||||||||||||
Weighted average of common stock outstanding for Basic earnings per share | $ | 44,124,018 | $ | 44,124,018 | 44,086,892 | 44,086,892 | 44,239,443 | 44,239,443 | ||||||||||||||||
Adjustment for stock options | — | 13,982 | — | 46,413 | — | 98,507 | ||||||||||||||||||
Adjustment for restricted shares | — | — | — | — | — | 498 | ||||||||||||||||||
Adjustment for additional shares | — | — | — | 3,366 | — | 10,502 | ||||||||||||||||||
Adjustment for shares granted under LTRP | — | 8,858 | — | 7,697 | — | — | ||||||||||||||||||
Adjusted weighted average of common stock outstanding for Diluted earnings per share | $ | 44,124,018 | $ | 44,146,858 | $ | 44,086,892 | $ | 44,144,368 | $ | 44,239,443 | $ | 44,348,950 | ||||||||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Anti-dilutive shares | ||||||||||||
Restricted shares | — | — | 3,082 | |||||||||
Shares granted under LTRP | — | — | 21,591 | |||||||||
— | — | 24,673 | ||||||||||
F-24
Table of Contents
Notes to Consolidated Financial Statements
4. | Short-term and long-term investments |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Short-term investments | ||||||||
Time Deposits | $ | 4,944,761 | $ | 6,332,738 | ||||
Corporate Debt Securities | 398,005 | 8,247,447 | ||||||
Total | $ | 5,342,766 | $ | 14,580,185 | ||||
Long-term investments | ||||||||
Arias Trust (1) | $ | — | $ | 7,169,425 | ||||
Time Deposits | 40,396,183 | 19,191,406 | ||||||
Sovereign Debt Securities | 13,147,239 | — | ||||||
Corporate Debt Securities | 10,983,756 | 266,526 | ||||||
Asset Backed Securities | 14,319,103 | — | ||||||
Total | $ | 78,846,281 | $ | 26,627,357 | ||||
(1) | As of December 31, 2009, this investment represented an undivided interest for more than 20% of the total amount of the real estate trust, for that reason, it was accounted for under the equity method and it was classified as Long-Term Investments in the balance sheet (See Note 15 — Other Commitments and Note 2 “Property and equipment, net”). |
F-25
Table of Contents
Notes to Consolidated Financial Statements
5. | Balance sheet components |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Accounts receivable, net: | ||||||||
Users | $ | 21,722,252 | $ | 4,711,641 | ||||
Credit cards and other means of payments | 861,082 | 1,882,430 | ||||||
Advertising | 1,591,855 | 1,852,786 | ||||||
Others debtors | 3,552 | 119,527 | ||||||
24,178,741 | 8,566,384 | |||||||
Allowance for doubtful accounts | (11,560,568 | ) | (3,698,007 | ) | ||||
$ | 12,618,173 | $ | 4,868,377 | |||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Funds receivable from customers | ||||||||
Credit cards and other means of payments | $ | 6,285,150 | $ | 3,873,351 | ||||
Allowance for chargebacks | (133,632 | ) | (87,549 | ) | ||||
$ | 6,151,518 | $ | 3,785,802 | |||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Other current assets: | ||||||||
VAT credits | $ | 1,299,578 | $ | 447,998 | ||||
Other taxes | 4,377,870 | 1,705,650 | ||||||
Other | 1,190,319 | 915,282 | ||||||
$ | 6,867,767 | $ | 3,068,930 | |||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Other non current assets: | ||||||||
Legal Deposits | $ | 428,926 | $ | 334,680 | ||||
Other | 342,297 | 333,264 | ||||||
$ | 771,223 | $ | 667,944 | |||||
F-26
Table of Contents
Notes to Consolidated Financial Statements
5. | Balance sheet components (Continued) |
Estimated | ||||||||||||
useful life | December 31, | December 31, | ||||||||||
(years) | 2010 | 2009 | ||||||||||
Property and equipment, net: | ||||||||||||
Equipment | 3-5 | $ | 12,930,592 | $ | 8,958,580 | |||||||
Building | 50 | 8,854,879 | — | |||||||||
Furniture and fixtures | 3-5 | 6,697,246 | 2,847,345 | |||||||||
Software | 3 | 3,447,549 | 2,424,533 | |||||||||
Cars | 3 | 362,962 | — | |||||||||
32,293,228 | 14,230,458 | |||||||||||
Accumulated depreciation | (11,475,516 | ) | (8,282,182 | ) | ||||||||
$ | 20,817,712 | $ | 5,948,276 | |||||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Depreciation and amortization: | ||||||||||||
Cost of net revenues | $ | 384,635 | $ | 308,260 | $ | 333,029 | ||||||
Product and technology development | 3,327,350 | 2,552,921 | 2,205,369 | |||||||||
Sales and marketing | 42,175 | 38,567 | 154,130 | |||||||||
General and administrative | 1,167,490 | 994,004 | 643,145 | |||||||||
$ | 4,921,650 | $ | 3,893,752 | $ | 3,335,673 | |||||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Accounts payable and accrued expenses: | ||||||||
Accounts payable | $ | 11,527,279 | $ | 7,230,325 | ||||
Accrued expenses | ||||||||
Advertising | 2,592,734 | 2,594,322 | ||||||
Professional fees | 598,830 | 586,945 | ||||||
Other expense provisions | 2,407,873 | 1,184,952 | ||||||
Other current liabilities | 105,387 | 3,090 | ||||||
$ | 17,232,103 | $ | 11,599,634 | |||||
F-27
Table of Contents
Notes to Consolidated Financial Statements
5. | Balance sheet components (Continued) |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Current loans payable and other financial liabilities: | ||||||||
Loans related to DR operations acquisition (1) | $ | — | $ | 3,213,878 | ||||
Other loans | — | 114 | ||||||
Car leasing financing (2) | 100,031 | — | ||||||
$ | 100,031 | $ | 3,213,992 | |||||
(1) | Due to the acquisition of DeRemate, on September 5, 2008, the Company issued to the Sellers ten (10) unsecured promissory notes having an aggregate principal amount of $18,000,000. According to the modification of terms dated February 12, 2009, these promissory notes mature 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 and can be prepaid by the Company without penalty. As of December 31, 2009, the outstanding seller financing includes accrued interest for $213,878. | |
(2) | See note 15 — Operating Leasing |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Non current loans payable and other financial liabilities: | ||||||||
Car leasing financing (1) | $ | 188,846 | $ | — | ||||
$ | 188,846 | $ | — | |||||
(1) | See note 15 — Operating Leasing |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Non current other liabilities: | ||||||||
Provisions and contingencies | $ | 1,651,140 | $ | 1,402,457 | ||||
Other | 258 | 258 | ||||||
$ | 1,651,398 | $ | 1,402,715 | |||||
December 31, | December 31, | December 31, | ||||||||||
2010 | 2009 | 2008 | ||||||||||
Accumulated other comprehensive income: | ||||||||||||
Foreign currency translation | $ | (22,444,566 | ) | $ | (23,793,048 | ) | $ | (10,878,483 | ) | |||
Unrealized gains on investments | 71,733 | 41,466 | 5,603 | |||||||||
Estimated tax loss on unrealized gains on investments | (26,206 | ) | (13,836 | ) | (1,961 | ) | ||||||
$ | (22,399,039 | ) | $ | (23,765,418 | ) | $ | (10,874,841 | ) | ||||
F-28
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets |
Business Combinations |
The following acquisitions were consummated by the Company during the year ended December 31, 2008. No acquisitions were consummated during the years ended December 31, 2009 and 2010. |
a) | Classified Media Group, Inc. |
On January 22, 2008, the Company completed the acquisition of 100% of the issued and outstanding shares of capital stock of CMG Classified Media Group, Inc. (“CMG”) and its subsidiaries from 2050 Capital Group Inc., a Panama corporation, Abax Group Inc., a Panama corporation, Gabinete De Diseño Industrial Inc., a Panama corporation, Stamford One Group Ltd., a British Virgin Islands limited company, EO Financial Group Inc., a Panama corporation, Meck Investments Ltd., a British Virgin Islands limited company, CG Interventures Inc., a Panama corporation, and other individuals (the “Sellers”). CMG and its subsidiaries operate an online classified advertisements platform primarily dedicated to the sale of automobiles (at www.tucarro.com) in Colombia, Venezuela and Puerto Rico and real estate (at www.tuinmueble.com) in Venezuela, Colombia, Panama, the United States, Costa Rica and the Canary Islands. This acquisition allows the Company to expand its operations mainly in Venezuela and Colombia, solidify its market leadership position in those countries and continue growing of online classified advertisements platform in the locations were the acquired company operates. |
On the acquisition date, the Company paid in cash for CMG $19,000,000. |
The purchase price for the shares of CMG and its subsidiaries was $17,024,380, subject to an escrow to cover unexpected liabilities and working capital adjustments. In addition, acquisition costs amounting to $204,424 which were considered in the purchase price allocation as part of the aggregate purchase price. On May 7, 2008, the Company paid $150,000 related to certain working capital adjustments. On the Closing Date, an aggregate of $1,975,620, was placed into an escrow account for a period of twelve (12) months after the Closing Date, in order to secure the obligations of the former CMG shareholders that remained as managers, pursuant to each of their respective employment agreements. |
Under US GAAP, the Company has recognized this contingent consideration paid to the former shareholders, as compensation for services. On May 12, 2008, the Company and these former shareholders agreed to an early release of the $1,975,620 escrow on or before September 30, 2008, in exchange for a discount to the Company. |
On June 27, 2008, the Company released to the former CMG shareholders $1,919,870 in full satisfaction of the management escrow after deducting the aforementioned discount. |
As of December 31, 2008, the compensation expenses related to escrow release were included in “Compensation costs related to acquisitions” within operating expenses, for a total amount of $1,919,870. |
F-29
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Business Combinations (Continued) |
On January 22, 2009, the Company released the escrow balance of $1.1 million to the Sellers. |
The following table summarizes the allocation of the cash paid in the acquisition: |
Purchase Price | $ | 17,024,380 | ||
Post-closing working capital adjustments | 150,000 | |||
Direct cost of the business combination | 204,424 | |||
Total aggregate purchase price | $ | 17,378,804 | ||
Compensation Cost | 1,919,870 | |||
Total Cash paid | $ | 19,298,674 | ||
As from the acquisition date in January 2008, the acquired company results of operations have been included in the Company’s income statement. | ||
The following table summarizes an allocation of the purchase price for the companies acquired in the transaction (in thousands): |
Post | Net Tangible | Identifiable | Deferred | Aggregate | ||||||||||||||||||||||||
Acquisition | Assets / | Intangible | Tax | Purchase | ||||||||||||||||||||||||
Company Name | Country | Ownership | (Liabilities) | Assets | Liabilities | Goodwill | Price | |||||||||||||||||||||
CMG Classified Media Group Inc. | Panama | 100 | % | $ | 846.3 | $ | — | $ | — | $ | — | $ | 846.3 | |||||||||||||||
Venecapital Group Inc. | Panama | 100 | % | (26.8 | ) | — | — | — | (26.8 | ) | ||||||||||||||||||
Grupo Veneclasificados C.A. | Venezuela | 100 | % | (125.4 | ) | 4,934.2 | (1,727.0 | ) | 11,442.0 | 14,523.8 | ||||||||||||||||||
Clasificados Internacionales S.A. | Panama | 100 | % | (44.8 | ) | — | — | — | (44.8 | ) | ||||||||||||||||||
ColClasificados S.A. | Colombia | 100 | % | 36.4 | 688.0 | (240.8 | ) | 1,595.5 | 2,079.1 | |||||||||||||||||||
Clasificados Florida LLC | USA | 100 | % | 1.2 | — | — | — | 1.2 | ||||||||||||||||||||
Total | $ | 686.9 | $ | 5,622.2 | $ | (1,967.8 | ) | $ | 13,037.5 | $ | 17,378.8 | |||||||||||||||||
Tangible net assets were valued at their respective carrying amounts adjusted to US GAAP since the management of the Company believes that these amounts approximated their current fair values at the acquisition date. The valuation of identifiable intangible assets acquired reflects management’s estimates based on, among other factors, use of established valuation methods. Such assets consist of trademarks and trade names for a total amount of $5,622,188. | ||
Management of the Company estimates that trademarks have an indefinite lifetime. For that reason, these intangible assets are not amortized but they are subject to an annual impairment test. | ||
The goodwill of $13,037,504 is not expected to be deductible for tax purposes. |
F-30
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Business Combinations (Continued) |
b) | DeRemate Operations |
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 operated 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 were 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 were subject to set-off rights in favor of the Company for indemnification obligations of the Sellers and the remaining $6,000,000 were not subject to set-off rights. Each of the promissory notes had a one-year term, bore 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 could 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 might 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 bore 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. |
On June 3, 2009, the Company paid to the Sellers $3,113,203 including principal plus accrued interest. |
F-31
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Business Combinations (Continued) |
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 December 31, 2010, the Company has paid all the promissory notes related to DeRemate acquisition. |
The Sellers and certain of their affiliates have also agreed to enter into certain non-compete agreements with the Company for 5 years. |
The Company’s statement of income includes the results of operations of the acquired companies from September 1, 2008. |
The following table summarizes the allocation of the cash paid and debt assumed in the acquisition: |
Cash paid | $ | 22,000,000 | ||
Seller financing | 18,000,000 | |||
Working Capital adjustment | (480,912 | ) | ||
Direct cost of the business combination | 494,301 | |||
Total aggregate purchase price | $ | 40,013,389 | ||
The following table summarizes the purchase price allocation of the Acquired Entities in the transaction (in thousands): |
Post | Net Tangible | Identifiable | Deferred | Aggregate | ||||||||||||||||||||||||
Acquisition | Assets / | Intangible | Tax | Purchase | ||||||||||||||||||||||||
Company Name | Country | Ownership | (Liabilities) | Assets | Liabilities | Goodwill | Price | |||||||||||||||||||||
DeRemate.com de Argentina S.A. | Argentina | 100 | % | $ | 2,555.2 | $ | 1,444.1 | $ | (505.4 | ) | $ | 30,658.9 | $ | 34,152.8 | ||||||||||||||
DeRemate.com Chile S.A. | Chile | 100 | % | (1,978.9 | ) | 302.2 | (105.8 | ) | 6,659.4 | 4,876.9 | ||||||||||||||||||
Compañía de Negocios Interactiva de Colombia E.U. | Colombia | 100 | % | (753.4 | ) | 25.6 | (9.0 | ) | 1,417.2 | 680.4 | ||||||||||||||||||
Interactivos y Digitales México S.A. de C.V. | Mexico | 100 | % | (580.7 | ) | 29.2 | (10.2 | ) | 864.9 | 303.2 | ||||||||||||||||||
Total | $ | (757.8 | ) | $ | 1,801.1 | $ | (630.4 | ) | $ | 39,600.4 | $ | 40,013.3 | ||||||||||||||||
F-32
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Business Combinations (Continued) |
Assets acquired and liabilities assumed were valued at their respective carrying amounts adjusted to U.S. GAAP because management of the Company believes that these amounts approximated their current fair values at the acquisition date. The valuation of identifiable intangible assets acquired reflects management’s estimates based on, among other factors, use of established valuation methods. Such assets consist of customer lists and non-compete agreements for a total amount of $1,801,084. Intangible assets associated with customer list and non-compete agreements are amortized over a five year period. |
The company recognized a significant amount of goodwill because the acquisition is expected to significantly expand the company’s business in Chile while strengthening the company’s leadership position in Argentina. Management expects significant synergies between both businesses to be realized, mainly through improving the monetization of DeRemate’s gross merchandise volume and by generating efficiencies in operations and technology. As a result, a significant portion of the consideration was based on the expected financial performance and the synergies of DeRemate business acquired and not the asset value on the books of DeRemate at the time of acquisition. |
Goodwill of $39,600,533 is not expected to be deductible for tax purposes. |
The results of operations for periods prior to the acquisition for each acquisition, both individually and in the aggregate, were not material to the consolidated statements of operations of the Company and, accordingly, pro forma results of operations have not been presented. |
F-33
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Business Combinations (Continued) |
The following table summarizes the net tangible assets acquired in the abovementioned business combinations: |
CMG | DeRemate | Total | ||||||||||
Cash and cash equivalents | $ | 554,739 | $ | 136,893 | $ | 691,632 | ||||||
Funds receivable from customers | — | 117,473 | 117,473 | |||||||||
Accounts receivable | 56,613 | 6,512,485 | 6,569,098 | |||||||||
Tax Credits | — | 604,419 | 604,419 | |||||||||
Other current assets | 904,791 | 14,065 | 918,856 | |||||||||
Non current assets | 365,190 | 139,737 | 504,927 | |||||||||
Total assets acquired | $ | 1,881,333 | $ | 7,525,072 | $ | 9,406,405 | ||||||
Accounts payable and accrued expenses | 69,516 | 4,509,314 | 4,578,830 | |||||||||
Funds payable to customers | — | 146,191 | 146,191 | |||||||||
Taxes payable | 459,462 | 745,017 | 1,204,479 | |||||||||
Social security payable | 243,141 | 151,971 | 395,112 | |||||||||
Other liabilities | — | 1,590,371 | 1,590,371 | |||||||||
Non current liabilities | 14,000 | — | 14,000 | |||||||||
Provisions | 408,336 | 1,140,055 | 1,548,391 | |||||||||
Total liabilities assumed | $ | 1,194,455 | $ | 8,282,919 | $ | 9,477,374 | ||||||
Net tangible assets (liabilities) | $ | 686,878 | $ | (757,847 | ) | $ | (70,969 | ) | ||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Goodwill | $ | 60,496,314 | $ | 59,822,746 | ||||
Intangible assets with indefinite lives | ||||||||
- Trademarks | 2,460,952 | 2,415,874 | ||||||
Amortizable intangible assets | ||||||||
- Licenses and others | 2,606,402 | 2,227,315 | ||||||
- Non-compete agreement | 1,241,357 | 1,218,393 | ||||||
- Customer list | 1,607,097 | 1,593,861 | ||||||
Total intangible assets | $ | 7,915,808 | $ | 7,455,443 | ||||
Accumulated amortization | (3,774,641 | ) | (2,939,625 | ) | ||||
Total intangible assets, net | $ | 4,141,167 | $ | 4,515,818 | ||||
F-34
Table of Contents
Notes to Consolidated Financial Statements
6. | Business Combinations, Goodwill and Intangible Assets (Continued) |
Goodwill and Intangible Assets (Continued) |
Goodwill | ||
The changes in the carrying amount of goodwill for the years ended December 31, 2010 and 2009, are as follows: |
Year Ended December 31, 2010 | ||||||||||||||||||||||||||||||||
Brazil | Argentina | Chile | Mexico | Venezuela | Colombia | Other Countries | Total | |||||||||||||||||||||||||
Balance, beginning of year | $ | 12,565,062 | $ | 24,446,463 | $ | 6,734,405 | $ | 4,770,560 | $ | 4,846,030 | $ | 5,100,939 | $ | 1,359,287 | $ | 59,822,746 | ||||||||||||||||
- Effect of exchange rates changes | 565,587 | (1,082,137 | ) | 562,483 | 255,063 | — | 347,129 | 25,443 | 673,568 | |||||||||||||||||||||||
Balance, end of the period | $ | 13,130,649 | $ | 23,364,326 | $ | 7,296,888 | $ | 5,025,623 | $ | 4,846,030 | $ | 5,448,068 | $ | 1,384,730 | $ | 60,496,314 | ||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||||||||||||
Brazil | Argentina | Chile | Mexico | Venezuela | Colombia | Other Countries | Total | |||||||||||||||||||||||||
Balance, beginning of year | $ | 9,361,697 | $ | 26,903,145 | $ | 5,365,727 | $ | 4,517,690 | $ | 13,636,502 | $ | 4,647,681 | $ | 1,220,332 | $ | 65,652,774 | ||||||||||||||||
- Effect of exchange rates changes | 3,203,365 | (2,456,682 | ) | 1,368,678 | 252,870 | (8,790,472 | ) | 453,258 | 138,955 | (5,830,028 | ) | |||||||||||||||||||||
Balance, end of the year | $ | 12,565,062 | $ | 24,446,463 | $ | 6,734,405 | $ | 4,770,560 | $ | 4,846,030 | $ | 5,100,939 | $ | 1,359,287 | $ | 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 $841,774, $590,793, and $364,288 for the years ended December 31, 2010, 2009 and 2008, respectively. | ||
Expected future intangible asset amortization from acquisitions completed as of December 31, 2010 is as follows: |
For year ended 12/31/2011 | $ | 750,957 | ||
For year ended 12/31/2012 | 686,827 | |||
For year ended 12/31/2013 | 242,431 | |||
$ | 1,680,215 | |||
7. | 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. |
F-35
Table of Contents
Notes to Consolidated Financial Statements
7. | Segments (Continued) |
Until the end of the second quarter of 2010, the Company had two reportable business segments: marketplace and payments. The payments segment included charges for the use of the payments platform that allowed buyers to use credit cards for payments, and a financial charge when payments in installments were chosen. Since the third quarter of 2010, the Company has redefined its segment reporting eliminating the business segmentation between marketplace and payments segments because management has decided to cease charging to buyers as a separate fee for using the payments platform in Brazil and Argentina, and rather allow all buyers to pay either directly to sellers or through the Company’s platform without a special charge. The former payment fees are now embedded in the MercadoLibre Marketplace fees. As a result, most of the revenue that used to be derived from the payments segment is no longer billed to buyers, and so management ceased the monitoring of the payment platform activity as a separate segment. Consequently, since the third quarter of 2010, the Company segment reporting is based on geographic areas, being this the new criteria used by management to evaluate the Company’s performance. MercadoPago continues charging a specific fee to its users when their payments are not related to a Mercadolibre marketplace transactions and a financing charge when the installment-payment option is chosen by marketplace and non-marketplace users. The Company’s segments are five including Brazil, Argentina, Mexico, Venezuela and Other Countries (such as Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal and Uruguay). |
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 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. |
F-36
Table of Contents
Notes to Consolidated Financial Statements
7. | Segments (Continued) |
The following tables summarize the financial performance of the Company’s reporting segments (the tables related to the years ended December 31, 2009 and 2008 have been restated accordingly): |
Year Ended December 31, 2010 | ||||||||||||||||||||||||
Brazil | Argentina | Mexico | Venezuela | Other Countries | Total | |||||||||||||||||||
Net revenues | $ | 122,825,076 | $ | 39,892,763 | $ | 18,950,450 | $ | 20,885,541 | $ | 14,161,883 | $ | 216,715,713 | ||||||||||||
Direct costs | (73,393,467 | ) | (19,649,506 | ) | (11,723,168 | ) | (9,875,510 | ) | (7,785,914 | ) | (122,427,565 | ) | ||||||||||||
Direct contribution | 49,431,609 | 20,243,257 | 7,227,282 | 11,010,031 | 6,375,969 | 94,288,148 | ||||||||||||||||||
Operating expenses and indirect costs of net revenues | (19,689,585 | ) | ||||||||||||||||||||||
Income from operations | 74,598,563 | |||||||||||||||||||||||
Other income (expenses): | ||||||||||||||||||||||||
Interest income and other financial gains | 4,931,215 | |||||||||||||||||||||||
Interest expense and other financial results | (7,601,671 | ) | ||||||||||||||||||||||
Foreign currency gains | (62,447 | ) | ||||||||||||||||||||||
Other income, net | — | |||||||||||||||||||||||
— | ||||||||||||||||||||||||
Net income before income / asset tax expense | $ | 71,865,660 | ||||||||||||||||||||||
Year Ended December 31, 2009 | ||||||||||||||||||||||||
Brazil | Argentina | Mexico | Venezuela | Other Countries | Consolidated | |||||||||||||||||||
Net revenues | $ | 93,087,758 | $ | 26,737,937 | $ | 15,314,982 | $ | 27,331,095 | $ | 10,371,849 | $ | 172,843,621 | ||||||||||||
Direct costs | (50,230,893 | ) | (12,506,604 | ) | (9,655,783 | ) | (13,717,899 | ) | (5,978,443 | ) | $ | (92,089,622 | ) | |||||||||||
Direct contribution | 42,856,865 | 14,231,333 | 5,659,199 | 13,613,196 | 4,393,406 | 80,753,999 | ||||||||||||||||||
Operating expenses and indirect costs of net revenues | (24,720,280 | ) | ||||||||||||||||||||||
Income from operations | 56,033,719 | |||||||||||||||||||||||
Other income (expenses): | ||||||||||||||||||||||||
Interest income and other financial gains | 2,695,109 | |||||||||||||||||||||||
Interest expense and other financial results | (13,357,554 | ) | ||||||||||||||||||||||
Foreign currency loss | (2,658,476 | ) | ||||||||||||||||||||||
Other income, net | — | |||||||||||||||||||||||
Net income before income / asset tax expense | $ | 42,712,798 | ||||||||||||||||||||||
Year Ended December 31, 2008 | ||||||||||||||||||||||||
Brazil | Argentina | Mexico | Venezuela | Other Countries | Consolidated | |||||||||||||||||||
Net revenues | $ | 73,692,604 | $ | 19,862,790 | $ | 13,894,730 | $ | 23,123,837 | $ | 6,448,659 | $ | 137,022,620 | ||||||||||||
Direct costs | (44,369,978 | ) | (10,710,931 | ) | (9,207,740 | ) | (12,166,313 | ) | (4,296,080 | ) | $ | (80,751,042 | ) | |||||||||||
Direct contribution | 29,322,626 | 9,151,859 | 4,686,990 | 10,957,524 | 2,152,579 | 56,271,578 | ||||||||||||||||||
Operating expenses and indirect costs of net revenues | (18,747,647 | ) | ||||||||||||||||||||||
Income from operations | 37,523,931 | |||||||||||||||||||||||
Other income (expenses): | ||||||||||||||||||||||||
Interest income and other financial gains | 1,822,385 | |||||||||||||||||||||||
Interest expense and other financial results | (8,442,427 | ) | ||||||||||||||||||||||
Foreign currency loss | (1,531,144 | ) | ||||||||||||||||||||||
Other expenses, net | 73,159 | |||||||||||||||||||||||
Net income before income / asset tax expense | $ | 29,445,904 | ||||||||||||||||||||||
F-37
Table of Contents
Notes to Consolidated Financial Statements
7. | Segments (Continued) |
The following table summarizes the allocation of the long-lived tangible assets based on geography: |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
US long-lived tangible assets | $ | 3,617,420 | $ | 2,746,059 | ||||
Other countries long-lived tangible assets | ||||||||
Argentina | 13,580,175 | 1,978,652 | ||||||
Brazil | 3,264,625 | 883,712 | ||||||
Mexico | 68,878 | 71,064 | ||||||
Venezuela | 206,815 | 196,846 | ||||||
Other countries | 79,799 | 71,943 | ||||||
$ | 17,200,292 | $ | 3,202,217 | |||||
Total long-lived tangible assets | $ | 20,817,712 | $ | 5,948,276 | ||||
The following table summarizes the allocation of the goodwill and intangible assets based on geography: |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
US intangible assets | $ | 3,507 | $ | 17,535 | ||||
Other countries goodwill and intangible assets | ||||||||
Argentina | 24,825,718 | 26,188,435 | ||||||
Brazil | 13,137,658 | 12,597,173 | ||||||
Mexico | 5,043,335 | 4,818,438 | ||||||
Venezuela | 6,595,866 | 6,602,677 | ||||||
Other countries | 15,031,397 | 14,114,306 | ||||||
$ | 64,633,974 | $ | 64,321,029 | |||||
Total goodwill and intangible assets | $ | 64,637,481 | $ | 64,338,564 | ||||
F-38
Table of Contents
Notes to Consolidated Financial Statements
8. | Fair Value Measurement of Assets and Liabilities |
Quoted Prices in | Quoted Prices in | |||||||||||||||
Balances as of | active markets for | Balances as of | active markets for | |||||||||||||
December 31, | identical Assets | December 31, | identical Assets | |||||||||||||
Description | 2010 | (Level 1) | 2009 | (Level 1) | ||||||||||||
Assets | ||||||||||||||||
Cash and Cash Equivalents: | ||||||||||||||||
Money Market Funds | $ | 14,578,477 | $ | 14,578,477 | $ | 26,298,189 | $ | 26,298,189 | ||||||||
Investments: | ||||||||||||||||
Asset backed securities | 14,319,103 | 14,319,103 | — | — | ||||||||||||
Sovereign Debt Securities | 13,147,239 | 13,147,239 | — | — | ||||||||||||
Corporate Debt Securities | 11,381,761 | 11,381,761 | 8,045,048 | 8,045,048 | ||||||||||||
Total financial Assets | $ | 53,426,580 | $ | 53,426,580 | $ | 34,343,237 | $ | 34,343,237 | ||||||||
F-39
Table of Contents
Notes to Consolidated Financial Statements
8. | Fair Value Measurement of Assets and Liabilities (Continued) |
December 31, 2010 | ||||||||||||||||
Gross | ||||||||||||||||
Gross Amortized | Unrealized | Gross Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses (1) | Value | |||||||||||||
Short-term investments | ||||||||||||||||
Corporate Debt Securities | $ | 398,752 | $ | 26 | $ | (773 | ) | $ | 398,005 | |||||||
Total short-term investments | $ | 398,752 | $ | 26 | $ | (773 | ) | $ | 398,005 | |||||||
Long-term investments | ||||||||||||||||
Sovereign Debt Securities | $ | 13,282,207 | $ | 98,958 | $ | (233,926 | ) | $ | 13,147,239 | |||||||
Corporate Debt Securities | 10,987,910 | 110,521 | (114,675 | ) | 10,983,756 | |||||||||||
Asset Back Securities | 14,107,501 | 439,239 | (227,637 | ) | 14,319,103 | |||||||||||
Total long-term investments | $ | 38,377,618 | $ | 648,718 | $ | (576,238 | ) | $ | 38,450,098 | |||||||
Total | $ | 38,776,370 | $ | 648,744 | $ | (577,011 | ) | $ | 38,848,103 | |||||||
(1) | Unrealized loss position is for less than six months. |
December 31, 2009 | ||||||||||||||||
Gross | ||||||||||||||||
Gross Amortized | Unrealized | Gross Unrealized | Estimated Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Short-term investments | ||||||||||||||||
Corporate Debt Securities | $ | 7,742,922 | $ | 62,285 | $ | (26,685 | ) | $ | 7,778,522 | |||||||
Total short-term investments | $ | 7,742,922 | $ | 62,285 | $ | (26,685 | ) | $ | 7,778,522 | |||||||
Long-term investments | ||||||||||||||||
Corporate Debt Securities | $ | 260,660 | $ | 5,866 | $ | — | $ | 266,526 | ||||||||
Total long-term investments | $ | 260,660 | $ | 5,866 | $ | — | $ | 266,526 | ||||||||
Total | $ | 8,003,582 | $ | 68,151 | $ | (26,685 | ) | $ | 8,045,048 | |||||||
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Notes to Consolidated Financial Statements
8. | Fair Value Measurement of Assets and Liabilities (Continued) |
2011 | $ | 398,005 | ||
2012 | 4,944,253 | |||
2013 | 4,162,437 | |||
2014 | 3,701,173 | |||
Thereafter | 25,642,235 | |||
Total | $ | 38,848,103 | ||
9. | Common Stock |
10. | Mandatorily Redeemable Convertible Preferred Stock |
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Notes to Consolidated Financial Statements
11. | Compensation Plan for Outside Directors |
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Notes to Consolidated Financial Statements
12. | Stock Option Plan and Restricted Shares |
2010 | 2009 | |||||||||||||||
Weighted- | Weighted- | |||||||||||||||
Number of | average | Number of | average | |||||||||||||
options | exercise price | options | exercise price | |||||||||||||
Outstanding, beginning of year | 18,889 | $ | 2.02 | 53,919 | $ | 1.23 | ||||||||||
Exercised | (7,126 | ) | 2.55 | (35,030 | ) | 0.81 | ||||||||||
Outstanding, end of the year | 11,763 | 1.69 | 18,889 | 2.02 | ||||||||||||
Exercisable, end of the year | 11,763 | $ | 1.69 | 17,211 | 1.90 | |||||||||||
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Notes to Consolidated Financial Statements
12. | Stock Option Plan and Restricted Shares (Continued) |
December 31, 2010 | December 31, 2009 | |||||||||||||||||||||||||||||||
Outstanding | Exercisable | Outstanding | Exercisable | |||||||||||||||||||||||||||||
Weighted-average | Weighted-average | |||||||||||||||||||||||||||||||
remaining | remaining | |||||||||||||||||||||||||||||||
Exercise | Number of | contractual | Number of | Exercise | Number of | contractual | Number of | |||||||||||||||||||||||||
price | options | life (years) | options | price | options | life (years) | options | |||||||||||||||||||||||||
$ | 0.01 | — | — | — | $ | 0.01 | 1,000 | 1.00 | 1,000 | |||||||||||||||||||||||
$ | 1.50 | 11,263 | 4.21 | 11,263 | $ | 1.50 | 15,389 | 5.38 | 14,336 | |||||||||||||||||||||||
$ | 6.00 | 500 | 5.75 | 500 | $ | 6.00 | 2,500 | 6.55 | 1,875 | |||||||||||||||||||||||
11,763 | 4.28 | 11,763 | 18,889 | 5.30 | 17,211 | |||||||||||||||||||||||||||
Weighted average Exercise Price | Weighted average Exercise Price | |||||||||||||||||||||||||||||||
- Options outstanding | $ | 1.69 | - Options outstanding | $ | 2.02 | |||||||||||||||||||||||||||
- Options exercisable | $ | 1.69 | - Options exercisable | $ | 1.90 |
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Aggregate intrinsic value | ||||||||
- Options outstanding | $ | 764,051 | $ | 941,679 | ||||
- Options exercisable | $ | 764,051 | $ | 859,979 |
On September 17, 2007, the Company awarded each of the two outside directors 1,000 Restricted Shares for their original grants. On January 24, 2008, the Company awarded a new outside director 600 Restricted Shares for his original grant. On May 6, 2008, the Board also designated a new director and a current director as outside directors, determining to extend the Company’s outside director compensation program to these two directors. On June 9, 2008, the Company awarded each of the two new outside directors 674 Restricted Shares for their original grants. As of December 31, 2010 and 2009, these shares are fully vested and are not restricted anymore. |
However, as described in Note 11, the 8,350 shares related to the second year of board service were restricted shares for the year ended December 31, 2009 and vested in the 2010 annual stockholder’s meeting. As of December 31, 2010, there are no unvested shares awarded to outside directors. |
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Notes to Consolidated Financial Statements
12. | Stock Option Plan and Restricted Shares (Continued) |
13. | Management incentive bonus plan |
• | If the purchase price is equal or greater than $20,000,000, then Participants shall be entitled to receive i) a sale bonus equal to 5.5% of the purchase price and ii) a stay bonus equal to 7.1% of the purchase price; provided, however, that in no event shall the amount paid or payable by the purchaser considered for the Incentive Plan calculation exceed $78,335,000. Each Participant shall participate on these bonuses based on its Participation Percentage. | ||
• | If the purchase price is less than $20,000,000, then Participants shall be entitled to receive a stay bonus equal to 7.1% of the purchase price. Each Participant shall participate on this stay bonus based on its Participation Percentage. |
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Notes to Consolidated Financial Statements
14. | Income Taxes |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
United States | $ | (757,843 | ) | $ | (842,576 | ) | $ | (2,280,498 | ) | |||
Brazil | 38,264,509 | 17,516,520 | 11,684,179 | |||||||||
Argentina | 17,131,466 | 11,462,508 | 9,903,988 | |||||||||
Venezuela | 9,272,804 | 7,838,746 | 7,998,791 | |||||||||
Mexico | 4,485,169 | 2,605,974 | 2,568,619 | |||||||||
Other Countries | 3,469,555 | 4,131,626 | (429,175 | ) | ||||||||
$ | 71,865,660 | $ | 42,712,798 | $ | 29,445,904 | |||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Current: | ||||||||||||
Federal | $ | — | $ | — | $ | — | ||||||
Foreign | 22,170,007 | 11,489,043 | 8,149,523 | |||||||||
22,170,007 | 11,489,043 | 8,149,523 | ||||||||||
Deferred: | ||||||||||||
Federal | 416,098 | — | — | |||||||||
Foreign | (6,785,532 | ) | (2,512,958 | ) | 1,645,474 | |||||||
(6,369,434 | ) | (2,512,958 | ) | 1,645,474 | ||||||||
15,800,573 | 8,976,085 | 9,794,997 | ||||||||||
Asset Tax: | ||||||||||||
Federal | — | — | — | |||||||||
Foreign | 40,068 | 527,920 | 839,246 | |||||||||
40,068 | 527,920 | 839,246 | ||||||||||
Income / asset tax expense | $ | 15,840,641 | $ | 9,504,005 | $ | 10,634,243 | ||||||
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Notes to Consolidated Financial Statements
14. | Income Taxes (Continued) |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Net income before income tax | $ | 71,865,660 | $ | 42,712,798 | $ | 29,445,904 | ||||||
Weighted average income tax rate | 34 | % | 33 | % | 35 | % | ||||||
Provision at blended tax rate | $ | 24,540,595 | $ | 14,083,389 | $ | 10,192,881 | ||||||
Permanent differences: | ||||||||||||
Non-deductible expenses | 1,286,090 | 338,873 | 1,560,262 | |||||||||
Dividend distibutions | 622,334 | 1,246,218 | 3,172,495 | |||||||||
Non-taxable income | (4,984,027 | ) | (3,025,270 | ) | (2,774,711 | ) | ||||||
Currency translation | (686,151 | ) | (269,553 | ) | (214,950 | ) | ||||||
Change in valuation allowance | (4,535,603 | ) | (3,430,348 | ) | (1,827,217 | ) | ||||||
Business Combination | — | — | (362,381 | ) | ||||||||
True up | (442,665 | ) | 32,776 | 48,618 | ||||||||
Income tax expense | $ | 15,800,573 | $ | 8,976,085 | $ | 9,794,997 | ||||||
December 31, | December 31, | |||||||
2010 | 2009 | |||||||
Deferred tax assets | ||||||||
Allowance for doubtful accounts | $ | 4,034,439 | $ | 2,032,421 | ||||
Property and equipment, net | 70,734 | 17,493 | ||||||
Accounts payable and accrued expenses | 144,606 | 71,800 | ||||||
Payroll and social security payable | 1,388,920 | 743,360 | ||||||
Other liabilities | 270,746 | 472,543 | ||||||
Customer lists | 72,478 | 58,450 | ||||||
Taxes payable | 770,632 | 620,380 | ||||||
Provisions | 2,308,378 | 1,786,431 | ||||||
Foreign tax credit | 2,436,224 | 2,879,999 | ||||||
Tax loss carryforwards | 9,207,470 | 10,533,478 | ||||||
Total deferred tax assets | 20,704,627 | 19,216,355 | ||||||
Valuation allowance | (4,818,253 | ) | (9,269,395 | ) | ||||
Net deferred tax assets | 15,886,374 | 9,946,960 | ||||||
Deferred tax liabilities | ||||||||
Unrealized net gains on investments | (26,206 | ) | (14,258 | ) | ||||
Property and equipment, net | (587,209 | ) | (301,807 | ) | ||||
Customer lists | (189,906 | ) | (289,717 | ) | ||||
Non compete agreement | (86,639 | ) | (96,327 | ) | ||||
Outside basis dividends | (2,806,200 | ) | (3,623,134 | ) | ||||
CMG trademarks | (861,333 | ) | (845,556 | ) | ||||
Foreign exchange effect | (610,206 | ) | (1,568,286 | ) | ||||
Total deferred tax liabilities | (5,167,699 | ) | (6,739,085 | ) | ||||
$ | 10,718,675 | $ | 3,207,875 | |||||
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Notes to Consolidated Financial Statements
14. | Income Taxes (Continued) |
2011 | $ | 67 | ||
2012 | 48 | |||
2013 | 1,217,408 | |||
2014 | 1,729,138 | |||
Thereafter | 27,334,030 | |||
Total | $ | 30,280,691 | ||
15. | Commitments and Contingencies |
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Notes to Consolidated Financial Statements
15. | Commitments and Contingencies (Continued) |
F-49
Table of Contents
Notes to Consolidated Financial Statements
15. | Commitments and Contingencies (Continued) |
F-50
Table of Contents
Notes to Consolidated Financial Statements
15. | Commitments and Contingencies (Continued) |
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Notes to Consolidated Financial Statements
15. | Commitments and Contingencies (Continued) |
For the year ended December 31, 2011 | 1,678,641 | |||
For the year ended December 31, 2012 | 931,981 | |||
For the year ended December 31, 2013 | 896,485 | |||
For the year ended December 31, 2014 | 535,685 | |||
Thereafter | 247,753 | |||
$ | 4,290,545 | |||
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Notes to Consolidated Financial Statements
15. | Commitments and Contingencies (Continued) |
16. | Long Term Retention Plan |
• | Year 1 (2008): 17% | ||
• | Year 2 (2009): 22% | ||
• | Year 3 (2010): 27% | ||
• | Year 4 (2011): 34% |
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Notes to Consolidated Financial Statements
16. | Long Term Retention Plan (Continued) |
December 31, | December 31, | |||||||
Number of Shares | 2010 | 2009 | ||||||
Granted | 21,591 | 21,591 | ||||||
Non-vested at the beginning of the year | 15,015 | 21,591 | ||||||
Non-vested at the end of the year | 10,163 | 15,015 | ||||||
Forfeited | 3,847 | 2,976 | ||||||
Vested and paid to the employees | 7,581 | 3,600 | ||||||
Outstanding | 10,163 | 15,015 |
December 31, 2010 | ||||||||
Weighted-average | ||||||||
Aggregate | remaining | |||||||
Intrinsic | contractual | |||||||
value | life (years) | |||||||
Shares outstanding | 677,313 | 0.81 |
• | 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”). |
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Notes to Consolidated Financial Statements
16. | Long Term Retention Plan (Continued) |
December 31, 2010 | ||||||||
Weighted-average | ||||||||
Aggregate | remaining | |||||||
Intrinsic | contractual | |||||||
value | life (years) | |||||||
Outstanding | 5,095,701 | 3.25 |
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Notes to Consolidated Financial Statements
16. | 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”). |
December 31, 2010 | ||||||||
Weighted-average | ||||||||
Aggregate | remaining | |||||||
Intrinsic | contractual | |||||||
value | life (years) | |||||||
Outstanding | 4,283,526 | 3.75 |
17. | Share Repurchase Plan |
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Notes to Consolidated Financial Statements
17. | Share Repurchase Plan (Continued) |
Total | ||||
Number of Shares | 226,000 | |||
Premium | 302,997 | |||
Average Price | 1.34 | |||
Commissions and other fees | (6,782 | ) | ||
Cash received | 296,215 |
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Notes to Consolidated Financial Statements
18. | Related Party Transactions |
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Notes to Consolidated Financial Statements
19. | Valuation and qualifying accounts |
Charged / | ||||||||||||||||||||
Balance at | credited to | Charges | Balance | |||||||||||||||||
beginning of | Net income / | DeRemate | Utilized / | at end of | ||||||||||||||||
year | (loss) | acquisition | Write-offs | year | ||||||||||||||||
Allowance for doubtful accounts | ||||||||||||||||||||
Year ended December 31, 2008 | 6,612,425 | 8,369,652 | — | (6,471,950 | ) | 8,510,127 | ||||||||||||||
Year ended December 31, 2009 | 8,510,127 | 9,681,048 | — | (14,493,168 | ) | 3,698,007 | ||||||||||||||
Year ended December 31, 2010 | 3,698,007 | 15,093,326 | — | (7,230,765 | ) | 11,560,568 | ||||||||||||||
Funds receivable from customers allowance for chargebacks | ||||||||||||||||||||
Year ended December 31, 2008 | 589,104 | 64,839 | — | (486,923 | ) | 167,020 | ||||||||||||||
Year ended December 31, 2009 | 167,020 | 572,555 | — | (652,026 | ) | 87,549 | ||||||||||||||
Year ended December 31, 2010 | 87,549 | 46,083 | — | — | 133,632 | |||||||||||||||
Tax valuation allowance | ||||||||||||||||||||
Year ended December 31, 2008 | 14,997,188 | (1,507,873 | ) | (1,837,123 | ) | — | 11,652,192 | |||||||||||||
Year ended December 31, 2009 | 11,652,192 | (897,123 | ) | — | (1,485,674 | ) | 9,269,395 | |||||||||||||
Year ended December 31, 2010 | 9,269,395 | (3,946,289 | ) | — | (504,853 | ) | 4,818,253 | |||||||||||||
Contingencies | ||||||||||||||||||||
Year ended December 31, 2008 | 1,018,531 | — | — | 31,785 | 1,050,316 | |||||||||||||||
Year ended December 31, 2009 | 1,050,316 | 1,543,438 | — | (1,354,174 | ) | 1,239,580 | ||||||||||||||
Year ended December 31, 2010 | 1,239,580 | 1,735,239 | — | (1,326,285 | ) | 1,648,534 |
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Notes to Consolidated Financial Statements
20. | Quarterly Financial Data (Unaudited) |
Quarter Ended | ||||||||||||||||
March 31, | June 30, | September 30, | December 31, | |||||||||||||
2010 | ||||||||||||||||
Net Revenues | $ | 45,937,774 | $ | 52,510,331 | $ | 55,951,378 | $ | 62,316,230 | ||||||||
Gross profit | 36,044,723 | 41,098,770 | 44,500,459 | 48,521,916 | ||||||||||||
Net Income | 9,620,601 | 11,673,962 | 18,790,963 | 15,939,493 | ||||||||||||
Net Income per share-basic | 0.22 | 0.26 | 0.43 | 0.36 | ||||||||||||
Net Income per share-diluted | 0.22 | 0.26 | 0.43 | 0.36 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,113,595 | 44,121,087 | 44,129,762 | 44,131,376 | ||||||||||||
Diluted | 44,149,700 | 44,145,255 | 44,151,367 | 44,151,762 | ||||||||||||
2009 | ||||||||||||||||
Net Revenues | $ | 32,322,501 | $ | 40,901,799 | $ | 50,599,276 | $ | 49,020,045 | ||||||||
Gross profit | 25,688,515 | 32,306,322 | 40,208,605 | 38,682,129 | ||||||||||||
Net Income | 5,391,176 | 6,679,779 | 9,852,268 | 11,285,570 | ||||||||||||
Net Income per share-basic | 0.12 | 0.15 | 0.22 | 0.26 | ||||||||||||
Net Income per share-diluted | 0.12 | 0.15 | 0.22 | 0.26 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,069,134 | 44,074,462 | 44,088,936 | 44,108,207 | ||||||||||||
Diluted | 44,130,866 | 44,127,208 | 44,138,031 | 44,143,281 | ||||||||||||
2008 | ||||||||||||||||
Net Revenues | $ | 28,840,730 | $ | 34,471,508 | $ | 40,260,643 | $ | 33,449,739 | ||||||||
Gross profit | 22,822,449 | 27,570,005 | 32,106,781 | 26,986,812 | ||||||||||||
Net Income | 2,067,677 | 2,947,095 | 5,875,792 | 7,921,097 | ||||||||||||
Net Income per share-basic | 0.05 | 0.07 | 0.13 | 0.18 | ||||||||||||
Net Income per share-diluted | 0.05 | 0.07 | 0.13 | 0.17 | ||||||||||||
Weighted average shares | ||||||||||||||||
Basic | 44,227,460 | 44,238,166 | 44,290,540 | 44,264,906 | ||||||||||||
Diluted | 44,368,011 | 44,369,317 | 44,379,682 | 44,369,635 |
21. | Subsequent Events |
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