##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 
 FORM 10-K
 
 (Mark One)
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number 001-33647
 
 MercadoLibre, Inc.
 (Exact name of registrant as specified in its charter)
 
 Delaware
(State of incorporation)
    
    98-0212790
(I.R.S. Employer Identification Number)
 Tronador 4890, 8 th Floor
Buenos Aires, C1430DNN, Argentina
(Address of principal executive offices)
 011-54-11-5352-8000
(Registrants telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
 Title of Class
    
    Name of Exchange upon Which RegisteredCommon Stock, $0.001 par value per share
    
    Nasdaq Global Market
 Securities registered pursuant to Section 12(g) of the Act: None
 
 Yes þ No o
 Yes o No þ
 þ o
 Yes o No o
 o
  Large Accelerated Filer þ
    
    Accelerated Filer o
    
    Non-Accelerated Filer o
    
    Smaller reporting company o(Do not check if smaller reporting company)
 o þ
   Documents Incorporated By Reference




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##### 



MERCADOLIBRE, INC.
FORM 10-K
FOR FISCAL YEAR ENDED DECEMBER 31, 2009
 PageSPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
    
    
    3PART IITEM 1. BUSINESS
    
    
    4ITEM 1A. RISK FACTORS
    
    
    13ITEM 1B. UNRESOLVED STAFF COMMENTS
    
    
    30ITEM 2. PROPERTIES
    
    
    31ITEM 3. LEGAL PROCEEDINGS
    
    
    32ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    35PART IIITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
    
    
    35ITEM 6. SELECTED FINANCIAL DATA
    
    
    37ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
    
    
    39ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
    
    
    68ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
    
    
    71ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
    
    
    71ITEM 9A. CONTROLS AND PROCEDURES
    
    
    71ITEM 9B. OTHER INFORMATION
    
    
    72PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
    
    
    72ITEM 11. EXECUTIVE COMPENSATION
    
    
    72ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDERS MATTERS
    
    
    72ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND
DIRECTOR INDEPENDENCE
    
    
    74ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
    
    
    74PART IVITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
    
    
    75INDEX TO FINANCIAL STATEMENTS
    
    
    75EXHIBIT INDEX
    
    
    75SIGNATURES
    
    
    78Exhibit 10.19Exhibit 10.20Exhibit 10.21Exhibit 10.22Exhibit 10.23Exhibit 10.24Exhibit 10.25Exhibit 10.26Exhibit 21.01Exhibit 23.01Exhibit 31.01Exhibit 31.02Exhibit 32.01Exhibit 32.02
   2




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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
  
    
    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.
   3




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##### Table of Contents



PART I
 
 ITEM 1. BUSINESS
 www.mercadolibre.com
  
    
    The MercadoLibre marketplace: The MercadoLibre marketplace is a
fully-automated, topically-arranged and user-friendly online commerce
service. This service permits both businesses and individuals to list
items and conduct their sales and purchases online in either a
fixed-price or auction-based format. Additionally, through online
classified listings, our registered users can list and purchase motor
vehicles, vessels, aircraft, real estate and services. Users and
advertisers are also able to place, display and/or text advertisements
on our web pages in order to promote their brands and offerings. Any
Internet user can browse through the various products and services
that are listed on our web site and register with MercadoLibre to
list, bid for and purchase items and services. As a further
enhancement to the MercadoLibre marketplace, in 2009 we launched our
MercadoClics program to allow businesses to promote their products and
services on the web. MercadoClics offers advertisers a cost efficient
and automated platform with which to acquire traffic from us.
Advertisers purchase, on a cost per clicks basis, advertising space
that appear alongside product search results for specific categories.
These advertising placements are clearly differentiated from product
search results and direct traffic both on or off-platform to the
advertisers destination of choice.
    
    The MercadoPago online payments solution: To complement the
MercadoLibre marketplace, we developed MercadoPago, an integrated
online payments solution. MercadoPago is designed to facilitate
transactions both on and off the MercadoLibre marketplace by providing
a mechanism that allows our users to securely, easily and promptly
send and receive payments online.
  History of MercadoLibre
   MercadoLibre
    
    
    
    MercadoPagoCountry
    
    Launch date
    
    Office opening
    
    Launch dateArgentina
    
    August 1999
    
    July 1999
    
    November 2003Brazil
    
    October 1999
    
    September 1999
    
    January 2004Mexico
    
    November 1999
    
    October 1999
    
    January 2004Uruguay
    
    December 1999
    
    September 2004
    
    N/A
  4




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MercadoLibre
    
    
    
    MercadoPagoCountry
    
    Launch date
    
    Office opening
    
    Launch dateColombia
    
    February 2000
    
    January 2000
    
    December 2007Venezuela
    
    March 2000
    
    March 2000
    
    April 2005Chile
    
    March 2000
    
    April 2000 (*)
    
    September 2007Ecuador
    
    December 2000
    
    N/A
    
    N/APeru
    
    December 2004
    
    N/A
    
    N/ACosta Rica
    
    November 2006
    
    N/A
    
    N/ADominican Republic
    
    December 2006
    
    N/A
    
    N/APanama
    
    December 2006
    
    N/A
    
    N/A
 (*)
    
    During 2009 the office was closed    Lokau.com Lokau.com
     5




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Our strategy
  
    
    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,
such as our MercadoClics program and other advertising sales on our
websites and, 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, and selling
advertising and Internet marketing services on our platform.
Additionally, we intend to take advantage of the natural synergies
that exist between our marketplace and payments service by promoting
increased use of MercadoPago so that it becomes the preferred online
payment method on and off our platform.
    
    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
expansion of our off platform payments services, (d) the increase of
our 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.
    
    Enhance brand awareness. We believe that enhancing awareness of the
MercadoLibrebrand is important to achieve our business objectives. We
intend to continue to promote, advertise 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, by enhancing our e-commerce community
experience, we believe we will promote 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 at fostering 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.
  6




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
    
    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.
 The MercadoLibre marketplace
  The MercadoPago online payments solution
    Escrow product
   Direct payments product
   7




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
    
    A personal account that is available to all users and withholds payments for
12-14 days to ensure the security of the transaction; and
    
    a professional account available to users who have a good track record or who
complete a credit scoring process. Sellers with professional accounts may withdraw
their payments two days after receiving them. In the countries where direct
payments are available, we expect our high volume sellers will progressively
migrate to a professional account improving the speed of the transaction versus
the escrow method.
   MercadoPago strategy
   Marketing
   
    
    Entering into agreements with portals, networks and web sites that we believe could
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 all countries where we operate, except Ecuador,
Uruguay, Costa Rica, Dominican Republic, Perú and Panama. 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.
  8




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
    
    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.
    MercadoLibre
 Product development
        9




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Seasonality
 i.e.
   Competition
     10




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Intellectual property
   MercadoLibre
  Employees
  Number ofCountry
    
    employeesArgentina
    
    
    829Brazil
    
    
    410Colombia
    
    
    45Chile
    
    
    3Mexico
    
    
    33Uruguay
    
    
    4Venezuela
    
    
    142Total
    
    
    1,466
  (Sindicato dos Trabalhadores nas Empresas e Cursos de
Informática do Estado de São Paulo) s Federación
Argentina de Empleados de Comercio y Servicios(FAECYS)
  11




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Government regulation
     Segment and Geographic Information
  Offices
   12




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Available Information
 http://www.mercadolibre.com
 
 ITEM 1A.
    
    RISK FACTORS
 For purposes of this section, the term stockholders means the holders of shares of
our common stock. Set forth below are the risks that we believe are material to our
stockholders. You should carefully consider the following factors in evaluating our
company, our properties and our business. The occurrence of any of the following risks
might cause our stockholders to lose all or a part of their investment. The risks and
uncertainties described below are not the only ones facing us. Other risks that we do not
currently anticipate or that we currently deem immaterial also may affect our results of
operations and financial condition. Some statements in this report including statements
in the following risk factors constitute forward-looking statements. Please refer to the
section entitled Special Note Regarding Forward-Looking Statements at the beginning of
this report.
 Risks related to our business
 The market for the sale of goods over the Internet is developing in Latin America, and
our business depends on the continued growth of online commerce and the availability and
suitability of the Internet in Latin America.
   Our future success depends on our ability to expand and adapt our operations to meet
rapidly changing industry and technology standards in a cost-effective and timely manner,
and on the continued market acceptance of our products and services.
  Any delay or problem with upgrading our existing information technology infrastructure
could cause a disruption in our business and adversely impact our financial results.
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Internet regulation in the countries where we operate is scarce, and several legal issues
related to the Internet are uncertain. We are subject to a number of other laws and
regulations, and governments may enact laws or regulations that could adversely affect
our business.
        14




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Our business is an Internet platform for commercial transactions in which all commercial
activity depends on our users and is therefore largely outside of our control.
  We could face liability for the sale of regulated and prohibited items, unpaid items or
undelivered purchases, and the sale of defective items.
       15




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We could face legal and financial liability for the sale of items that infringe on the
intellectual property and distribution rights of others and for information disseminated
on the MercadoLibre marketplace.
     We are subject to risks with respect to information and material disseminated thorugh
our platforms.
  The market in which we operate is rapidly evolving and we may not be able to
maintain our profitability.
   16




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If we continue to grow, we may not be able to appropriately manage the increased size of
our business.
      Our systems may fail or suffer interruptions due to human acts, technical problems, or
natural disasters.
  We are subject to security breaches or other confidential data theft from our systems,
which can adversely affect our reputation and business.
   17




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We depend on key personnel, the loss of which could have a material adverse effect on us.
    Currently our revenues depend substantially on up-front and final value fees we charge to
sellers and may decrease if market conditions force us to lower such fees or if we fail
to diversify our sources of revenue.
  We are subject to consumer trends and could lose revenue if certain items become less
popular.
  The success of other e-commerce companies such as eBay and Amazon is not an indication of
our future financial performance.
  We could be subject to liability and forced to change our MercadoPago business practices
if we were found to be subject to or in violation of any laws or regulations governing
banking, money transmission, or electronic funds transfers in any country where we
operate.
   18




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MercadoPago is susceptible to illegal uses, and we could potentially face liability for
any illegal use of MercadoPago.
    Our failure to manage MercadoPago customer funds properly would harm our business.
  MercadoPago is a relatively new service that faces competition from other payment
methods, and competitors may adversely affect the success of MercadoPago.
     19




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We rely on banks or payment processors to fund transactions, and changes to credit card
association fees, rules or practices may adversely affect our business.
     Our operating results may be impacted by an economic crisis.
  The failure of the financial institutions with which we conduct business may have a
material adverse effect on our business, operating results, and financial condition.
  
    
    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.
  20




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
    
    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 poor market conditions.
 A rise in interest rates may negatively affect our MercadoPago payment volume .
  Changes in MercadoPagos funding mix could adversely affect MercadoPagos results.
  We have no business insurance coverage, which would require us to spend significant
resources in the event of a disruption of our services or other contingency.
  We may not be able to adequately protect and enforce our intellectual property rights. We
could potentially face claims alleging that our technologies infringe the property rights
of others.
     21




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We may not be able to secure licenses for third-party technologies upon which we rely.
  Problems that affect our third-party service providers could potentially adversely affect
us as well.
  Complaints from customers or negative publicity about our services can diminish consumer
confidence and adversely affect our business.
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We may incur unexpected liabilities in connection with our acquisition of CMG.
  We may incur unexpected liabilities in connection with our acquisition of DeRemate
operations.
  If our goodwill become impaired, we may be required to record a significant charge to
earnings.
  We may not realize benefits from recent or future strategic acquisitions of businesses,
technologies, services or products despite their costs in cash and dilution to our
stockholders.
   Our required contributions to the real estate trust for the construction of our
headquarters in Argentina may be materially higher than we currently estimate.
   23




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We are subject to seasonal fluctuations in our results of operations.
  We have spent significant resources to launch and market classified advertisements on the
MercadoLibre marketplace, which may not be successful in generating sufficient revenues
for us.
   We operate in a highly competitive and evolving market, and therefore face potential
reductions in the use of our service.
       24




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Risks related to doing business in Latin America
 Political and economic conditions in Venezuela may have an adverse impact on our
operations.
          25




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We face the risk of political and economic crises, instability, terrorism, civil strife,
expropriation and other risks of doing business in emerging markets.
    Latin American governments have exercised and continue to exercise significant influence
over the economies of the countries where we operate. This involvement, as well as
political and economic conditions, could adversely affect our business.
  Latin America, including Argentina, has experienced adverse economic conditions.
    26




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Local currencies used in the conduct of our business are subject to depreciation,
volatility and exchange controls.
   Our reporting currency is the U.S. dollar but our revenues are paid in foreign
currencies. Therefore, if the U.S. dollar strengthens relative to these foreign
currencies (i.e. the foreign currencies devaluate against the U.S. dollar), the economic
value of our revenues in U.S. dollar terms will decline.
 Foreign Currency
Translation.
 Inflation and certain government measures to curb inflation may have adverse effects on
the economies of the countries where we operate, our business and our operations.
  Developments in other markets may affect the Latin American countries where we operate,
our financial condition and results of operations.
   27




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E-commerce transactions in Latin America may be impeded by the lack of secure payment
methods.
  Risks related to our shares
 The price of our shares of common stock may fluctuate substantially, and our
stockholders investment may decline in value.
   We continue to be significantly influenced by a group of stockholders that control a
significant percentage of our common shares and the value of our common stock could be
negatively effected by any significant disposition of our shares by any of these
stockholders.
    28




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Provisions of our certificate of incorporation and Delaware law could inhibit others from
acquiring us, prevent a change of control, and may prevent efforts by our stockholders to
change our management.
  
    
    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;
    
    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.
  We may require additional capital in the future, and this additional capital may not be
available on acceptable terms or at all.
  Shares eligible for future sale may cause the market price of our common stock to drop
significantly, even if our business is doing well.
      29




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It is unlikely that we will declare any dividends on our capital stock.
  Requirements associated with being a public company require significant company resources
and management attention.
  It may be difficult to enforce judgments against us in U.S. courts.
  
 ITEM 1B.
    
    UNRESOLVED STAFF COMMENTS
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ITEM 2.
    
    PROPERTIES
  ApproximateCity and
    
    
    
    
    
    Square
    
    LeaseCountry
    
    Facility
    
    Address
    
    Meters
    
    Expiration DateBogotá, Colombia
    
    Colombia operation
    
    Calle 93 B # 17-25 Ofc.406,
Bogotá, Colombia
    
    
    107
    
    
    April 2010Bogotá, Colombia
    
    TuCarro Colombia
operation
    
    Calle 93 B # 17-25 Ofc.210
and 211, Bogotá, Colombia
    
    
    132
    
    
    January 2010. In
process of renewalBuenos Aires, 
Argentina
    
    Corporate
headquarters,
Argentina operation
& Customer service
center
    
    Tronador 4890floors 6th, 8th
and 2nd,
Buenos Aires, 1430Argentina
    
    
    2,282.5
    
    
    March 2010, March
2011 and May 2011Buenos Aires, 
Argentina
    
    Customer service
center
    
    Av. Costanera Rafael Obligado
y Geronimo Salguero, Buenos
Aires, Argentina
    
    
    1,740
    
    
    January 2012Caracas, Venezuela
    
    Venezuela operation
    
    Piso 7° Edificio Torre
Country, Francisco de
Miranda, Urbanización El
Rosal, Municipio de Chacao,
Estado de Miranda
    
    
    436
    
    
    April 2011Lithia Springs,
Georgia, U.S.A.
    
    SAVVIS Data Center
    
    375 Riverside Parkway
Lithia Springs, Georgia 30122,
    
    
    2.6
    
    
    July 2010Mexico City, Mexico
    
    Mexico operation
    
    Ibsen 43-101, 102, 301 and
304, Colonia Polanco, Miguel
Hidalgo, Código Postal 11650,
Mexico D.F. Mexico
    
    
    425
    
    
    June 2010Sterling, Virginia,
U.S.A.
    
    SAVVIS Data Center
    
    45901 Nokes Blvd. Sterling,
Virginia 20166
    
    
    135
    
    
    June 2010San Luis, Argentina
    
    Technology
Development center
    
    Av. Universitaria s/n, Ciudad
de la Punta, San Luis,
Argentina
    
    
    207
    
    
    No End DateSantana do Parnaíba, 
Brazil
    
    Brazilian
Subsidiary main
office  Customer
service center
    
    Rua Yojiro Takaoka, 4350 Cep
06541-038Santana do
Parnaíba, São Paulo, Brazil
    
    
    1,020
    
    
    October 2014São Paulo, Brazil
    
    Brazilian
subsidiary Office
    
    Rua Gomes de Carvalho, 1306
Vila Olimpia, Cep
04547-005São Paulo, Brazil
    
    
    598
    
    
    November 2011Zona America, 
Uruguay
    
    Uruguay Staff
    
    Ruta 8, km 17.5 Edificio 200,
local 208-07 Zona America,
Uruguay
    
    
    37
    
    
    December 2010
    31




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ITEM 3.
    
    LEGAL PROCEEDINGS
     Litigation
     32




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State of São Paulo Fraud Claim
  State of Minas Gerais Fraud Claim
  City of São Paulo Tax Claim
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Intelectual Property Claims
  
 ITEM 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 PART II
 
 ITEM 5.
    
    MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 Market Price of and Dividends on the Registrants Common Equity
  Closing stock priceHigh
    
    
    Low2007:3rd quarter
    
    $
    41.06
    
    
    $
    18.004th quarter
    
    $
    78.81
    
    
    $
    35.182008:1st quarter
    
    $
    70.01
    
    
    $
    31.722nd quarter
    
    $
    56.05
    
    
    $
    37.113rd quarter
    
    $
    36.98
    
    
    $
    20.104th quarter
    
    $
    21.58
    
    
    $
    8.282009:1st quarter
    
    $
    19.61
    
    
    $
    12.472nd quarter
    
    $
    28.94
    
    
    $
    18.533rd quarter
    
    $
    38.93
    
    
    $
    23.224th quarter
    
    $
    54.45
    
    
    $
    35.60
  35




---



##### Table of Contents



Recent Sales of Unregistered Securities
  Dividend Policy
  Equity Compensation Plan Information
  Performance Graph
  
  The foregoing graph and chart shall not be deemed incorporated by reference by any
general statement incorporating by reference this Annual Report on Form 10-K into any
filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act
of 1934, as amended, except to the extent we specifically incorporate this information by
reference, and shall not otherwise be deemed filed under those acts.
  36




---



##### Table of Contents



Issuer Purchases of Equity Securities
    
 ITEM 6.
    
    SELECTED FINANCIAL DATA
  Year ended December 31,(in millions)
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Statement of income data:Net revenues
    
    $
    28.2
    
    
    $
    52.1
    
    
    $
    85.1
    
    
    $
    137.0
    
    
    $
    172.8Cost of net revenues
    
    
    (6.1
    )
    
    
    (12.1
    )
    
    
    (18.3
    )
    
    
    (27.5
    )
    
    
    (36.0
    )Gross profit
    
    
    22.1
    
    
    
    40
    
    
    
    66.9
    
    
    
    109.5
    
    
    
    136.9Operating expenses:Product and technology development
    
    
    (2.2
    )
    
    
    (3.1
    )
    
    
    (4.4
    )
    
    
    (7.3
    )
    
    
    (12.1
    )Sales and marketing
    
    
    (14.7
    )
    
    
    (23.4
    )
    
    
    (27.6
    )
    
    
    (40.0
    )
    
    
    (42.9
    )General and administrative
    
    
    (4.4
    )
    
    
    (8.2
    )
    
    
    (13.2
    )
    
    
    (22.8
    )
    
    
    (25.8
    )Compensation
cost related to acquisitions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1.9
    )
    
    
    Total operating expenses
    
    
    (21.3
    )
    
    
    (34.6
    )
    
    
    (45.2
    )
    
    
    (72.0
    )
    
    
    (80.9
    )Income from operations
    
    
    0.8
    
    
    
    5.4
    
    
    
    21.7
    
    
    
    37.5
    
    
    
    56.0Other income (expenses):Interest income and other financial gains
    
    
    0.4
    
    
    
    0.5
    
    
    
    1.6
    
    
    
    1.8
    
    
    
    2.7Interest expense and other financial charges
    
    
    (0.5
    )
    
    
    (1.7
    )
    
    
    (2.7
    )
    
    
    (8.4
    )
    
    
    (13.4
    )Foreign currency (loss) gain
    
    
    0.3
    
    
    
    (0.4
    )
    
    
    (3.1
    )
    
    
    (1.5
    )
    
    
    (2.7
    )Other income
(expenses), net
    
    
    (0.3
    )
    
    
    (1.5
    )
    
    
    (3.0
    )
    
    
    0.1
    
    
    
    Net income before income and asset tax and cumulative
effect of change in accounting principle
    
    
    0.7
    
    
    
    2.3
    
    
    
    14.4
    
    
    
    29.4
    
    
    
    42.7Income and asset tax (expense) benefit
    
    
    1.4
    
    
    
    (1.2
    )
    
    
    (4.7
    )
    
    
    (10.6
    )
    
    
    (9.5
    )Net income before cumulative effect of change in
accounting principle and gain from discontinued
operations
    
    
    2.0
    
    
    
    1.1
    
    
    
    9.7
    
    
    
    18.8
    
    
    
    33.2Cumulative effect of change in accounting principle
    
    
    0.3
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    
    2.4
    
    
    
    1.1
    
    
    
    9.7
    
    
    
    18.8
    
    
    
    33.2Accretion of preferred stock
    
    
    (0.5
    )
    
    
    (0.5
    )
    
    
    (0.3
    )
    
    
    
    
    
    
    Net income available to common stockholders
    
    $
    1.9
    
    
    $
    0.6
    
    
    $
    9.4
    
    
    $
    18.8
    
    
    $
    33.2
   37




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##### Table of Contents



At December 31,(in millions)
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Balance sheet data:Total assets
    
    $
    44.4
    
    
    $
    53.8
    
    
    $
    134.5
    
    
    $
    156.7
    
    
    $
    182.6Long term debt
    
    
    12.0
    
    
    
    9.0
    
    
    
    
    
    
    
    3.1
    
    
    
    Total liabilities
    
    
    23.2
    
    
    
    30.5
    
    
    
    42.8
    
    
    
    63.3
    
    
    
    68.4Net assets
    
    
    21.2
    
    
    
    23.3
    
    
    
    91.7
    
    
    
    93.4
    
    
    
    114.2Mandatorily redeemable convertible preferred stock
    
    
    63.6
    
    
    
    64.1
    
    
    
    
    
    
    
    
    
    
    
    Common stock
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1
    
    
    
    0.1Stockholders equity (deficit)
    
    $
    (42.4
    )
    
    $
    (40.7
    )
    
    $
    91.7
    
    
    
    93.4
    
    
    
    114.2
 Year Ended December 31,2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Earnings (loss) per
share data:Basic net income
(loss) available to
common stockholders
per common share
    
    $
    0.05
    
    
    $
    0.01
    
    
    $
    0.22
    
    
    $
    0.43
    
    
    $
    0.75Diluted net income
per common share
    
    $
    0.05
    
    
    $
    
    
    
    $
    0.22
    
    
    $
    0.42
    
    
    $
    0.75Weighted average
shares (2):Basic
    
    
    13,065,496
    
    
    
    13,149,139
    
    
    
    25,149,405
    (1)
    
    
    44,239,443
    
    
    
    44,086,892Diluted
    
    
    13,671,359
    
    
    
    
    
    
    
    25,478,336
    
    
    
    44,348,950
    
    
    
    44,144,368
 
 (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, 2009 were 44,120,269. Year ended December 31,(in millions)
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009Other data:Number of confirmed
registered users at end of
period (1)
    
    
    12.2
    
    
    
    18.2
    
    
    
    24.9
    
    
    
    33.7
    
    
    
    42.6Number of confirmed new
registered users during
period (2)
    
    
    5.7
    
    
    
    6.0
    
    
    
    6.7
    
    
    
    8.8
    
    
    
    8.9Gross merchandise volume (3)
    
    $
    607.7
    
    
    $
    1,075.1
    
    
    $
    1,511.5
    
    
    $
    2,078.9
    
    
    $
    2,750.7Number of successful items
sold (4)
    
    
    8.4
    
    
    
    13.8
    
    
    
    17.5
    
    
    
    21.1
    
    
    
    29.5Total payment volume (5)
    
    $
    38.5
    
    
    $
    89.0
    
    
    $
    158.0
    
    
    $
    255.9
    
    
    $
    382.5Total payment transactions (6)
    
    
    
    
    
    
    
    
    
    
    1.3
    
    
    
    1.9
    
    
    
    3.1Capital expenditures
    
    $
    2.0
    
    
    $
    2.4
    
    
    $
    3.1
    
    
    $
    5.0
    
    
    $
    4.8Depreciation and amortization
    
    $
    1.6
    
    
    $
    2.0
    
    
    $
    2.3
    
    
    $
    3.3
    
    
    $
    3.9
 
 (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.  38




---



##### Table of Contents



(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
 You should read the following discussion and analysis of our financial condition and
results of our operations in conjunction with our Selected Financial Data and our
audited consolidated financial statements and the notes to those statements included
elsewhere in this report. This discussion contains forward-looking statements reflecting
our current expectations that involve risks and uncertainties. Actual results and the
timing of events may differ materially from those
contained in these forward-looking statements due to a number of factors, including
those discussed in the section entitled Risk Factors and elsewhere in this report.
  
    
    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, 2007, 2008, and
2009;
    
    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.
 Overview
     39




---



##### Table of Contents




    
    The MercadoLibre marketplace: The MercadoLibre marketplace is a
fully-automated, topically-arranged and user-friendly online commerce
service. This service permits both businesses and individuals to list
items and conduct their sales and purchases online in either a
fixed-price or auction-based format. Additionally, through online
classified listings, our registered users can list and purchase motor
vehicles, vessels, aircraft, real estate and services. Users and
advertisers are also able to place, display and/or text advertisements
on our web pages in order to promote their brands and offerings. Any
Internet user can browse through the various products and services
that are listed on our web site and register with MercadoLibre to
list, bid for and purchase items and services. As a further
enhancement to the MercadoLibre marketplace we have launched our
MercadoClics program to allow businesses to promote their products and
services on the web. MercadoClics offers advertisers a cost efficient
and automated platform with which to adquire traffic from us.
Advertisers purchase, on a cost per clicks basis, advertising space
that appear alongside product search results on specific categories.
These advertising placements are clearly differentiated from product
search results and direct traffic both on or off-platform to the
advertisers destination of choice.
    
    The MercadoPago online payments solution: To complement the
MercadoLibre marketplace, we developed MercadoPago, an integrated
online payments solution. MercadoPago is designed to facilitate
transactions both on and off the MercadoLibre marketplace by providing
a mechanism that allows our users to securely, easily and promptly
send and receive payments online.
     40




---



##### Table of Contents



Recent Developments
 Highly inflationary status in Venezuela
      Description of line items
 Net revenues
   
    
    listing fees;
    
    optional feature fees;
    
    final value fees; and
    
    online advertising fees.
  
    
    up front fees;
    
    final value fees; and
    
    online advertising fees.
  41




---



##### Table of Contents



Year ended December 31,(% of total MercadoLibre marketplace net revenues)
    
    2007
    
    
    2008
    
    
    2009Brazil
    
    
    54.0
    %
    
    
    46.1
    %
    
    
    42.6
    %Venezuela
    
    
    10.2
    
    
    
    20.1
    
    
    
    20.4Argentina
    
    
    16.3
    
    
    
    16.7
    
    
    
    18.3Mexico
    
    
    13.8
    
    
    
    11.4
    
    
    
    10.7Other countries
    
    
    5.7
    
    
    
    5.7
    
    
    
    8.0
  Year EndedDecember 31,2007
    
    
    2008
    
    
    2009Net Revenues breakdown by businessesAs a percentage of total net revenues:Marketplaces
    
    
    81.7
    %
    
    
    80.0
    %
    
    
    74.2
    %Payments
    
    
    18.3
    %
    
    
    20.0
    %
    
    
    25.8
    %
    Year ended December 31,(% of total consolidated net revenues)
    
    2007
    
    
    2008
    
    
    2009Brazil
    
    
    59.0
    %
    
    
    53.8
    %
    
    
    53.9
    %Venezuela
    
    
    9.0
    
    
    
    16.9
    
    
    
    15.8Argentina
    
    
    14.8
    
    
    
    14.5
    
    
    
    15.5Mexico
    
    
    12.6
    
    
    
    10.1
    
    
    
    8.9Other countries
    
    
    4.6
    
    
    
    4.7
    
    
    
    6.0
  Cost of net revenues
   42




---



##### Table of Contents



Product and technology development expenses
  Sales and marketing expenses
    General and administrative expenses
  Compensation
cost related to acquisitions
  Other
income (expenses), net
  Income and asset tax
   43




---



##### Table of Contents



Year ended December 31,(in millions)
    
    2007
    
    
    2008
    
    
    2009Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    5.0
    
    
    
    8.1
    
    
    
    11.55.0
    
    
    
    8.1
    
    
    
    11.5Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    (0.1
    )
    
    
    1.6
    
    
    
    (2.5
    )(0.1
    )
    
    
    1.6
    
    
    
    (2.5
    )4.9
    
    
    
    9.8
    
    
    
    9.0Asset Tax:Federal
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    (0.2
    )
    
    
    0.8
    
    
    
    0.5(0.2
    )
    
    
    0.8
    
    
    
    0.5Income / asset tax expense
    
    $
    4.7
    
    
    $
    10.6
    
    
    $
    9.5
 Seasonality
  Quarter endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2009Net Revenues
    
    
    32,322,501
    
    
    
    40,901,799
    
    
    
    50,599,276
    
    
    
    49,020,045Gross profit
    
    
    25,688,515
    
    
    
    32,306,322
    
    
    
    40,208,605
    
    
    
    38,682,129Net Income
    
    
    5,391,176
    
    
    
    6,679,779
    
    
    
    9,852,268
    
    
    
    11,285,570Net Income per share-basic
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.26Net Income per share-diluted
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.26Weighted average sharesBasic
    
    
    44,069,134
    
    
    
    44,074,462
    
    
    
    44,088,936
    
    
    
    44,108,207Diluted
    
    
    44,130,866
    
    
    
    44,127,208
    
    
    
    44,138,031
    
    
    
    44,143,2812008Net Revenues
    
    
    28,840,730
    
    
    
    34,471,508
    
    
    
    40,260,643
    
    
    
    33,449,739Gross profit
    
    
    22,822,449
    
    
    
    27,570,005
    
    
    
    32,106,781
    
    
    
    26,986,812Net Income
    
    
    2,067,677
    
    
    
    2,947,095
    
    
    
    5,875,792
    
    
    
    7,921,097Net Income per share-basic
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.18Net Income per share-diluted
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.17Weighted average sharesBasic
    
    
    44,227,460
    
    
    
    44,238,166
    
    
    
    44,290,540
    
    
    
    44,264,906Diluted
    
    
    44,368,011
    
    
    
    44,369,317
    
    
    
    44,379,682
    
    
    
    44,369,6352007Net Revenues
    
    
    16,459,337
    
    
    
    18,973,288
    
    
    
    22,800,130
    
    
    
    26,893,586Gross profit
    
    
    12,971,998
    
    
    
    14,973,366
    
    
    
    17,918,082
    
    
    
    20,989,955Net Income / (Loss)
    
    
    994,187
    
    
    
    590,886
    
    
    
    2,785,474
    
    
    
    5,322,393Net Income per share-basic
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.07
    
    
    
    0.13Net Income per share-diluted
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.07
    
    
    
    0.13Weighted average sharesBasic
    
    
    13,375,482
    
    
    
    13,575,158
    
    
    
    27,538,652
    
    
    
    41,226,563Diluted
    
    
    13,375,482
    
    
    
    13,987,128
    
    
    
    27,685,028
    
    
    
    41,375,907
  44




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##### Table of Contents



Critical accounting policies and estimates
   Foreign Currency Translation
    
    
    At the date of these financial statements, we do not have a history of
having obtained dividends remittances at the official exchange rate,
    
    The industry in which we operate may not influence our ability to access to
the official exchange rate,
  45




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##### Table of Contents




    
    The CADIVI volume of approvals of the use of the Official Rate was down 50%
on a year-to-year basis measured in July 2009.
    
    CADIVI has not only delayed approvals but also removed many items from
priority lists, further delaying approvals (current priorities appear to be
food and medicine) and causing delays in the repatriation of dividends for
many companies.
  Impairment of long-lived assets and goodwill
    Allowance for doubtful accounts and chargebacks
   46




---



##### Table of Contents



Year ended December 31,(in millions, except percentages)
    
    2007
    
    
    2008
    
    
    2009Net revenues
    
    $
    85.1
    
    
    $
    137.0
    
    
    $
    172.8Bad debt charges
    
    
    6.2
    
    
    
    8.7
    
    
    
    10.0Bad debt charges as a percentage of net revenues
    
    
    7.3
    %
    
    
    6.3
    %
    
    
    5.8
    %
   Legal Contingencies
   Income taxes
   Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,Deferred tax assets
    
    2009
    
    
    in %
    
    
    2008
    
    
    in %(in millions, except percentages)
    
    
    (in millions, except percentages)2005 DeRemate.com acquisition
    
    
    5.5
    
    
    
    28.4
    %
    
    
    4.8
    
    
    
    30.1
    %Brazilian operations
    
    
    4.7
    
    
    
    24.5
    %
    
    
    3.5
    
    
    
    21.7
    %Foreign tax credits & others domestic deferred tax assets
    
    
    3.1
    
    
    
    16.0
    %
    
    
    1.5
    
    
    
    9.3
    %Operations in others countries
    
    
    1.1
    
    
    
    6.0
    %
    
    
    0.6
    
    
    
    3.8
    %2008 DeRemate.com acquisition
    
    
    1.0
    
    
    
    5.5
    %
    
    
    1.8
    
    
    
    11.4
    %Mexican operations
    
    
    0.9
    
    
    
    4.7
    %
    
    
    1.0
    
    
    
    6.1
    %Venezuelan operations
    
    
    0.9
    
    
    
    4.6
    %
    
    
    1.8
    
    
    
    11.1
    %Argentine operations
    
    
    2.0
    
    
    
    10.2
    %
    
    
    1.0
    
    
    
    6.4
    %Total
    
    
    19.2
    
    
    
    100.0
    %
    
    
    16.1
    
    
    
    100.0
    %
   47




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##### Table of Contents



Year Ended
    
    
    Year EndedLoss carryforwards
    
    December 31,
    
    
    December 31,2009
    
    
    in %
    
    
    2008
    
    
    in %(in millions, except percentages)
    
    
    (in millions, except percentages)2005 DeRemate.com acquisition
    
    
    5.0
    
    
    
    47.1
    %
    
    
    4.6
    
    
    
    43.1
    %Brazilian operations
    
    
    3.0
    
    
    
    28.2
    %
    
    
    2.2
    
    
    
    20.7
    %2008 DeRemate.com acquisition
    
    
    1.0
    
    
    
    9.4
    %
    
    
    1.8
    
    
    
    16.4
    %Mexican operations
    
    
    0.6
    
    
    
    5.9
    %
    
    
    0.6
    
    
    
    5.2
    %Domestic loss carry forwards
    
    
    0.1
    
    
    
    0.5
    %
    
    
    1.0
    
    
    
    9.2
    %Chilean operations
    
    
    0.5
    
    
    
    5.2
    %
    
    
    0.5
    
    
    
    4.6
    %Operations in others countries
    
    
    0.4
    
    
    
    3.8
    %
    
    
    0.1
    
    
    
    0.8
    %Total
    
    
    10.5
    
    
    
    100
    %
    
    
    10.8
    
    
    
    100
    %
    Year Ended
    
    
    Year EndedDecember 31,
    
    
    December 31,Valuation Allowance
    
    2009
    
    
    in %
    
    
    2008
    
    
    in %(in millions, except percentages)
    
    
    (in millions, except percentages)2005 DeRemate.com acquisition
    
    
    4.6
    
    
    
    49.9
    %
    
    
    4.8
    
    
    
    41.6
    %Brazilian operations
    
    
    2.0
    
    
    
    21.4
    %
    
    
    2.2
    
    
    
    19.1
    %2008 DeRemate.com acquisition
    
    
    1.0
    
    
    
    11.3
    %
    
    
    1.8
    
    
    
    15.8
    %Operations in others countries
    
    
    1.6
    
    
    
    17.4
    %
    
    
    1.2
    
    
    
    10.6
    %United States
    
    
    0.0
    
    
    
    0.1
    %
    
    
    1.5
    
    
    
    12.9
    %Total
    
    
    9.3
    
    
    
    100
    %
    
    
    11.7
    
    
    
    100
    %
    Year ended December 31,(in millions, except percentages)
    
    2007
    
    
    2008
    
    
    2009Income and asset tax expense
    
    $
    (4.7
    )
    
    $
    (10.6
    )
    
    $
    (9.5
    )As a percentage of income before income and asset tax
    
    
    (32.8
    )%
    
    
    (36.1
    )%
    
    
    (22.3
    )%
   48




---



##### Table of Contents



Stock-based compensation
  Number ofrestrictedGrant date
    
    SharesSeptember 17, 2007
    
    
    2,000January 24, 2008
    
    
    600June 9, 2008
    
    
    1,348June 10, 2009
    
    
    2,305June 10, 2009
    
    
    8,350
       
    
    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).
   49




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##### Table of Contents




    
    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.
         50




---



##### Table of Contents



Recent accounting pronouncements
 Accounting for Transfers of Financial Assets
  Results of operations
  Year Ended December 31,2007
    
    
    2008
    
    
    2009Net revenues
    
    $
    85.1
    
    
    $
    137.0
    
    
    $
    172.8Cost of net revenues
    
    
    (18.3
    )
    
    
    (27.5
    )
    
    
    (36.0
    )Gross profit
    
    
    66.9
    
    
    
    109.5
    
    
    
    136.9Operating expenses:Product and technology development
    
    
    (4.4
    )
    
    
    (7.3
    )
    
    
    (12.1
    )Sales and marketing
    
    
    (27.6
    )
    
    
    (40.0
    )
    
    
    (42.9
    )General and administrative
    
    
    (13.2
    )
    
    
    (22.8
    )
    
    
    (25.8
    )Compensation cost related to acquisitions
    
    
    
    
    
    
    (1.9
    )
    
    
    Total operating expenses
    
    
    (45.2
    )
    
    
    (72.0
    )
    
    
    (80.9
    )Income from operations
    
    
    21.7
    
    
    
    37.5
    
    
    
    56.0Other income (expenses):Interest income and other financial gains
    
    
    1.6
    
    
    
    1.8
    
    
    
    2.7Interest expense and other financial charges
    
    
    (2.7
    )
    
    
    (8.4
    )
    
    
    (13.4
    )Foreign currency loss
    
    
    (3.1
    )
    
    
    (1.5
    )
    
    
    (2.7
    )Other income
(expenses), net
    
    
    (3.0
    )
    
    
    0.1
    
    
    
    Net income before income / asset tax expense
    
    
    14.4
    
    
    
    29.4
    
    
    
    42.7Income / asset tax expense
    
    
    (4.7
    )
    
    
    (10.6
    )
    
    
    (9.5
    )Net income
    
    $
    9.7
    
    
    $
    18.8
    
    
    $
    33.2Accretion of preferred stock
    
    
    (0.3
    )
    
    
    
    
    
    
    Net income available to common shareholders
    
    $
    9.4
    
    
    $
    18.8
    
    
    $
    33.2
   51




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##### Table of Contents



Year Ended December 31,(% of net revenues)
    
    2007
    
    
    2008
    
    
    2009Net revenues
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %Cost of net revenues
    
    
    (21.5
    )
    
    
    (20.1
    )
    
    
    (20.8
    )Gross profit
    
    
    78.5
    
    
    
    79.9
    
    
    
    79.2Operating expenses:Product and technology development
    
    
    (5.1
    )
    
    
    (5.3
    )
    
    
    (7.0
    )Sales and marketing
    
    
    (32.4
    )
    
    
    (29.2
    )
    
    
    (24.8
    )General and administrative
    
    
    (15.5
    )
    
    
    (16.6
    )
    
    
    (15.0
    )Compensation cost related to acquisitions
    
    
    
    
    
    
    (1.4
    )
    
    
    Total operating expenses
    
    
    (53.1
    )
    
    
    (52.5
    )
    
    
    (46.8
    )Income from operations
    
    
    25.4
    
    
    
    27.4
    
    
    
    32.4Other income (expenses):Interest income and other financial gains
    
    
    1.9
    
    
    
    1.3
    
    
    
    1.6Interest expense and other financial charges
    
    
    (3.2
    )
    
    
    (6.2
    )
    
    
    (7.7
    )Foreign currency loss
    
    
    (3.6
    )
    
    
    (1.1
    )
    
    
    (1.5
    )Other income (expenses),  net
    
    
    (3.5
    )
    
    
    
    
    
    
    Net income before income / asset tax expense
    
    
    16.9
    
    
    
    21.5
    
    
    
    24.7Income / asset tax expense
    
    
    (5.6
    )
    
    
    (7.8
    )
    
    
    (5.5
    )Net income
    
    
    11.4
    
    
    
    13.7
    
    
    
    19.2Accretion of preferred stock
    
    
    (0.4
    )
    
    
    
    
    
    
    Net income available to common shareholders
    
    
    11.0
    %
    
    
    13.7
    %
    
    
    19.2
    %
 Principal trends in results of operations
 Growth in net revenues from year to year
  Increased diversification of revenues from year to year
  Gross profit margins
    52




---



##### Table of Contents



Improving Operating income margins
  Growth in Net Income
  Year ended December 31, 2009 compared to year ended December 31, 2008
 Net revenues
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Business:Marketplaces
    
    $
    128.2
    
    
    $
    109.6
    
    
    $
    18.6
    
    
    
    17.0
    %Payments
    
    
    44.6
    
    
    
    27.4
    
    
    
    17.2
    
    
    
    62.6
    %Total Net Revenues
    
    $
    172.8
    
    
    $
    137.0
    
    
    $
    35.8
    
    
    
    26.1
    %
     53




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##### Table of Contents



Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Segment:Brazil Marketplace
    
    $
    54.6
    
    
    $
    50.5
    
    
    $
    4.1
    
    
    
    8.1
    %Argentina Marketplace
    
    
    23.5
    
    
    
    18.2
    
    
    
    5.3
    
    
    
    28.5
    %Mexico Marketplace
    
    
    13.7
    
    
    
    12.5
    
    
    
    1.2
    
    
    
    9.8
    %Venezuela Marketplace
    
    
    26.2
    
    
    
    22.0
    
    
    
    4.2
    
    
    
    19.3
    %Others Marketplace
    
    
    10.2
    
    
    
    6.4
    
    
    
    3.8
    
    
    
    60.4
    %Payments
    
    
    44.6
    
    
    
    27.4
    
    
    
    17.2
    
    
    
    62.6
    %Total Net Revenues
    
    $
    172.8
    
    
    $
    137.0
    
    
    $
    35.8
    
    
    
    26.1
    %
   Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Geography: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
    %
   54




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##### Table of Contents



Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in millions, except percentages)2009Net Revenues
    
    $
    32.3
    
    
    $
    40.9
    
    
    $
    50.6
    
    
    $
    49.0Percent change from prior quarter
    
    
    -3
    %
    
    
    27
    %
    
    
    24
    %
    
    
    -3
    %2008Net Revenues
    
    $
    28.8
    
    
    $
    34.5
    
    
    $
    40.3
    
    
    $
    33.4Percent change from prior quarter
    
    
    7
    %
    
    
    20
    %
    
    
    17
    %
    
    
    -17
    %2007Net Revenues
    
    $
    16.5
    
    
    $
    19.0
    
    
    $
    22.8
    
    
    $
    26.9Percent change from prior quarter
    
    
    6
    %
    
    
    15
    %
    
    
    20
    %
    
    
    18
    %
  Cost of net revenues
 Year Ended
    
    
    Change from 2008December 31,
    
    

    to 20092009
    
    
    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
    %
    55




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##### Table of Contents



Product and technology development
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    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
    %
   Sales and marketing
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    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
    %
   56




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##### Table of Contents



General and administrative
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    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
    %
   Compensation
cost related to acquisitions
  Other income (expenses), net
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    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
    %
    57




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##### Table of Contents



Income
and asset tax expense
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    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 EndedDecember 31,2009
    
    
    2008Blended tax rate
    
    
    22.3
    %
    
    
    36.1
    %Effective tax rate
    
    
    26.9
    %
    
    
    27.7
    %
 Year ended December 31, 2008 compared to year ended December 31, 2007
 Net revenues
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Business:Marketplaces
    
    $
    109.6
    
    
    $
    69.5
    
    
    $
    40.1
    
    
    
    57.6
    %Payments
    
    
    27.4
    
    
    
    15.6
    
    
    
    11.8
    
    
    
    75.8
    %Total Net Revenues
    
    $
    137.0
    
    
    $
    85.1
    
    
    $
    51.9
    
    
    
    61.0
    %
   58




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##### Table of Contents



Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Segment:Brazil Marketplace
    
    $
    50.5
    
    
    $
    37.6
    
    
    $
    12.9
    
    
    
    34.5
    %Argentina Marketplace
    
    
    18.3
    
    
    
    11.3
    
    
    
    6.9
    
    
    
    60.9
    %Mexico Marketplace
    
    
    12.5
    
    
    
    9.6
    
    
    
    2.8
    
    
    
    29.6
    %Venezuela Marketplace
    
    
    22.0
    
    
    
    7.1
    
    
    
    14.9
    
    
    
    210.1
    %Others Marketplace
    
    
    6.4
    
    
    
    3.9
    
    
    
    2.5
    
    
    
    63.3
    %Payments
    
    
    27.4
    
    
    
    15.6
    
    
    
    11.8
    
    
    
    75.8
    %Total Net Revenues
    
    $
    137.0
    
    
    $
    85.1
    
    
    $
    51.9
    
    
    
    61.0
    %
  Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Revenues by Geography:Brazil
    
    $
    73.7
    
    
    $
    50.3
    
    
    $
    23.4
    
    
    
    46.6
    %Venezuela
    
    
    23.1
    
    
    
    7.7
    
    
    
    15.4
    
    
    
    201.1
    %Argentina
    
    
    19.9
    
    
    
    12.6
    
    
    
    7.3
    
    
    
    57.9
    %México
    
    
    13.9
    
    
    
    10.7
    
    
    
    3.2
    
    
    
    29.9
    %Other Countries
    
    
    6.4
    
    
    
    3.9
    
    
    
    2.5
    
    
    
    65.1
    %Total Net Revenues
    
    $
    137.0
    
    
    $
    85.1
    
    
    $
    51.9
    
    
    
    61.0
    %
  Quarter EndedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,(in millions, except percentages)2008Net Revenues
    
    $
    28.8
    
    
    $
    34.5
    
    
    $
    40.3
    
    
    $
    33.4Percent change from prior quarter
    
    
    7
    %
    
    
    20
    %
    
    
    17
    %
    
    
    -17
    %2007Net Revenues
    
    $
    16.5
    
    
    $
    19.0
    
    
    $
    22.8
    
    
    $
    26.9Percent change from prior quarter
    
    
    6
    %
    
    
    15
    %
    
    
    20
    %
    
    
    18
    %
  59




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Cost of net revenues
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Total cost of net revenues
    
    $
    27.5
    
    
    $
    18.3
    
    
    $
    9.3
    
    
    
    50.7
    %As a percentage of net revenues
    
    
    20.1
    %
    
    
    21.5
    %
  Product and technology development
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Product and technology development
    
    $
    7.3
    
    
    $
    4.4
    
    
    $
    2.9
    
    
    
    67.2
    %As a percentage of net revenues
    
    
    5.3
    %
    
    
    5.1
    %
   Sales and marketing
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Sales and marketing
    
    $
    40.0
    
    
    $
    27.6
    
    
    $
    12.4
    
    
    
    44.8
    %As a percentage of net revenues
    
    
    29.2
    %
    
    
    32.4
    %
   60




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##### Table of Contents



General and administrative
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)General and administrative
    
    $
    22.8
    
    
    $
    13.2
    
    
    $
    9.5
    
    
    
    72.1
    %As a percentage of net revenues
    
    
    16.6
    %
    
    
    15.5
    %
  Compensation
cost related to acquisitions
  Other income (expenses), net
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Other income (expenses)
    
    $
    -8.1
    
    
    $
    -7.2
    
    
    $
    -0.9
    
    
    
    11.8
    %As a percentage of net revenues
    
    
    -5.9
    %
    
    
    -8.5
    %
    61




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##### Table of Contents



We may not be able to distribute dividends from our
Venezuelan subsidiaries at the official exchange rate as a result of changes in the
political, economic or regulatory environment in Venezuela Political and
economic conditions in Venezuela may have an adverse impact on our operations
  Income
and asset tax expense
 Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %Income and asset tax
    
    
    10.6
    
    
    
    4.7
    
    
    
    5.9
    
    
    
    124.9
    %As a percentage of net revenues
    
    
    7.8
    %
    
    
    5.6
    %
  Year EndedDecember 31,2008
    
    
    2007Blended tax rate
    
    
    36.1
    %
    
    
    32.8
    %Effective tax rate
    
    
    27.7
    %
    
    
    33.2
    %
    62




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##### Table of Contents



Factors affecting results of operations and financial condition
    
    
    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.
  Liquidity and capital resources
    63




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##### Table of Contents



Year Ended December 31,(In millions)
    
    2009
    
    
    2008(*)
    
    
    2007(*)Net cash provided by operating activities
    
    $
    49.7
    
    
    $
    55.8
    
    
    $
    7.6Net cash used in investing activities
    
    
    (3.1
    )
    
    
    (38.9
    )
    
    
    (49.4
    )Net cash (used in) provided by financing activities
    
    
    (15.3
    )
    
    
    (11.7
    )
    
    
    50.2Effect of exchange rates on cash and cash equivalents
    
    
    1.0
    
    
    
    (3.5
    )
    
    
    0.1Total increase in cash and cash equivalents
    
    $
    32.3
    
    
    $
    1.8
    
    
    $
    8.5
 (*)
    
    Certain items have been reclassified to comform with actual presentation.
See Note 2 Out of period adjustments to our consolidated financial statements for more
detail. Net cash provided by operating activities
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash provided by:Operating activities
    
    $
    49.7
    
    
    $
    55.8
    
    
    $
    -6.1
    
    
    
    -10.9
    %
   Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash provided by:Operating activities
    
    $
    55.8
    
    
    $
    7.6
    
    
    $
    48.2
    
    
    
    633.2
    %
  64




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##### Table of Contents



Net cash used in investing activities
 Year Ended
    
    
    Change from 2008December 31,
    
    
    to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash (used in) provided by:Investment activities
    
    $
    (3.1
    )
    
    $
    (38.9
    )
    
    $
    35.8
    
    
    
    -92.1
    %
    65




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##### Table of Contents



Year Ended
    
    
    Change from 2007December 31,
    
    
    to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash (used in) provided by:Investment activities
    
    $
    (38.9
    )
    
    $
    (49.4
    )
    
    $
    10.5
    
    
    
    -21.3
    %
    Net cash provided by (used in) financing activities
 Year Ended 
December 31,
    
    
    Change from 2008 
to 20092009
    
    
    2008
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash used in:Financing activities
    
    $
    (15.3
    )
    
    $
    (11.7
    )
    
    $
    (3.6
    )
    
    
    31.2
    %
   Year Ended
 December 31,
    
    
    Change from 2007 
to 20082008
    
    
    2007
    
    
    in Dollars
    
    
    in %(in millions, except percentages)Net Cash (used in) provided by:Financing activities
    
    $
    (11.7
    )
    
    $
    50.2
    
    
    $
    (61.9
    )
    
    
    -123.2
    %
  66




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##### Table of Contents



Debt
    Capital expenditures
     67




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##### Table of Contents



Off-balance sheet arrangements
  Contractual obligations
  Payment due by periodLess than
    
    
    1 to 3
    
    
    3 to 5
    
    
    More than(in millions)
    
    Total
    
    
    1 year
    
    
    Years
    
    
    years
    
    
    5 yearsOperating lease obligations (1)
    
    $
    2.9
    
    
    $
    1.5
    
    
    $
    1.1
    
    
    $
    0.3
    
    
    $
    Purchase obligations (2)
    
    
    6.0
    
    
    
    5.5
    
    
    
    0.5
    
    
    
    
    
    
    
    Total
    
    $
    8.9
    
    
    $
    7.0
    
    
    $
    1.6
    
    
    $
    0.3
    
    
    $
    
 
 (1)
    
    Includes leases of office space.(2)
    
    On June 19, 2008, our Argentine subsidiary agreed to participate
in a real estate trust, which investment represents a beneficial
ownership interest in 5,340 square meters divided in five floors
of an office building and 70 parking spots under construction in
the City of Buenos Aires, Argentina. We expect to relocate our
office headquarters to this newly acquired office space upon
completion of the building, which we expect to occur in the third
quarter of 2010. As of December 31, 2009, the Argentine
subsidiary has invested $7.2 million in the aforementioned trust
and is expected to invest an additional $2.2 million in the
following 6 months. Due to the impact of inflation and/or
currency fluctuations, future payments could differ from our
estimates. Certain of our officers and former officers also
entered into an investment in a portion of the trust, which
investment represents a beneficial ownership interest in a
separate floor of the same building. We do not intend to occupy
the space to be owned by this group.   
 ITEM 7A.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
   68




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##### Table of Contents



Foreign Currencies Risk
      Year Ended December 31,(In millions)
    
    2007
    
    
    2008
    
    
    2009Brazil
    
    
    50.3
    
    
    
    73.7
    
    
    
    93.1Argentina
    
    
    12.6
    
    
    
    19.9
    
    
    
    26.7Mexico
    
    
    10.7
    
    
    
    13.9
    
    
    
    15.3Venezuela
    
    
    7.7
    
    
    
    23.1
    
    
    
    27.3Other countries
    
    
    3.9
    
    
    
    6.4
    
    
    
    10.4Total
    
    
    85.1
    
    
    
    137.0
    
    
    
    172.8
  69




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##### Table of Contents



(In millions)
    
    -10%
    
    

    Actual
    
    
    +10%(1)
    
    
    
    
    
    (2)Net revenues
    
    
    191.9
    
    
    
    172.8
    
    
    
    157.2Expenses
    
    
    (129.6
    )
    
    
    (116.8
    )
    
    
    (106.3
    )Income from operations
    
    
    62.3
    
    
    
    56.0
    
    
    
    50.9Other income (expenses) and income tax related to P&L items
    
    
    (22.2
    )
    
    
    (20.1
    )
    
    
    (18.3
    )Foreign Currency impact related to the remeasument of our Net
Asset position
    
    
    (8.5
    )
    
    
    (2.7
    )
    
    
    1.9Net income
    
    
    31.6
    
    
    
    33.2
    
    
    
    34.5Total Shareholders Equity
    
    
    115.2
    
    
    
    114.2
    
    
    
    116.0
 (1)
    
    Apreciation of the subsidiaries local currency against U.S. Dollar(2)
    
    Depreciation of the subsidiaries local currency agains U.S. Dollar   Interest Rate Risk
     70




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##### Table of Contents



Equity Price Risk
   As of December 31, 2009MercadoLibre, Inc
    
    
    2009 variable(In US dollars)
    
    Equity Price
    
    
    LTRP liabilityChange in equity price in percentage40%
    
    
    64.05
    
    
    
    6,240,28530%
    
    
    59.48
    
    
    
    5,794,55020%
    
    
    54.90
    
    
    
    5,348,81510%
    
    
    50.33
    
    
    
    4,903,081Static (*)
    
    
    45.75
    
    
    
    4,457,346-10%
    
    
    41.18
    
    
    
    4,011,611-20%
    
    
    36.60
    
    
    
    3,565,877-30%
    
    
    32.03
    
    
    
    3,120,142-40%
    
    
    27.45
    
    
    
    2,674,408
 (*)
    
    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 DISCLOSURE
  
 ITEM 9A.
    
    CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   71




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##### Table of Contents



Changes in Internal Control Over Financial Reporting
  Managements Report on Internal Control Over Financial Reporting
    Inherent Limitations on Effectiveness of Controls
  
 ITEM 9B.
    
    OTHER INFORMATION
  
 PART III
 
 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
   72




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##### Table of Contents



Equity Compensation Plan InformationNumber of securitiesremaining available forNumber of securities
    
    
    Weighted-average
    
    
    future issuance underto be issued upon exercise
    
    
    exercise price of
    
    
    equity compensation plansof outstanding options,
    
    
    outstanding options,
    
    
    (excluding securitiesPlan Category
    
    Warrants and rights
    
    
    warrants and rights
    
    
    reflected in column (a))(a)
    
    
    (b)
    
    
    (c)Equity compensation
plans approved by
security holders
    
    
    
    
    
    
    
    
    
    
    294,529Equity compensation
plans not approved
by security
holders(1)
    
    
    18,889
    
    
    
    2.02
    
    
    
    Total
    
    
    18,889
    
    
    
    2.02
    
    
    
    294,529
 
 (1)
    
    Our Amended and Restated 1999 Stock Option and Restricted Stock
Plan was entered into prior to our IPO. Amended and Restated 1999 Stock Option and Restricted Stock Plan
  Number of shares of common stock available under the stock option plan
 Administration of the stock option plan
 Price, exercise and termination of awards
   73




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##### Table of Contents



Adjustments upon the occurrence of material transactions
 Transferability
 Restricted stock
 Amendment
 
 ITEM 13.
    
    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
  
 ITEM 14.
    
    PRINCIPAL ACCOUNTANT FEES AND SERVICES
   74




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##### Table of Contents



PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 
 Financial Statements and Schedules
 PageConsolidated Financial StatementsReport of Independent Registered Public Accounting Firm
    
    
    F-1Consolidated balance sheets as of December 31, 2009 and 2008
    
    
    F-3Consolidated statements of income for the three years ended December 31, 2009
    
    
    F-4Consolidated statements of changes in shareholders equity (deficit) for the
three years ended December 31, 2009
    
    
    F-5Consolidated statements of cash flows for the three years ended December 31, 2009
    
    
    F-7Notes to consolidated financial statements
    
    
    F-9
 Exhibits
 ExhibitNumber
    
    Exhibit Title2.01
    
    
    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
    
    
    Property Lease Agreement, dated June 28, 2005, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda. (1)10.08
    
    
    Property Lease Agreement, dated as of November 1, 2004, between MercadoLivre.com
Atividades de Internet Ltda. and Barros e Spitaletti Empreendimentos Ltda. (1)10.09
    
    
    Property Lease Agreement, dated of April, 1, 2008, between MercadoLivre.com Atividades
de Internet Ltda. And CNA Spitaletti Construtora e Incorporadora Ltda. (5)
  75




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##### Table of Contents



ExhibitNumber
    
    Exhibit Title10.10
    
    
    Arias Trust Contract, dated as of June 5, 2006 and amended as of May 29, 2008
(translated from Spanish) (5)10.11
    
    
    Management Incentive Bonus Plan of the Registrant. (2)10.12
    
    
    Amended and Restated 1999 Stock Option and Restricted Stock Plan (2)10.13
    
    
    Employment Agreements with Officers.(2)10.14
    
    
    Form of Restricted Stock Award for Outside directors. (3)10.15
    
    
    Employment Agreement with Osvaldo Gimenez, dated as of March 26, 2008* (5)10.16
    
    
    2009 Equity Compensation Plan* (7)10.17
    
    
    2008 Long-Term Retention Plan (6)10.18
    
    
    2009 Long-Term Retention Plan (6)10.19
    
    
    Property Lease Agreement, dated February 01, 2010, between MercadoLivre.com Atividades
de Internet Ltda. and Verbo Empreendimentos e Participações Ltda.*10.20
    
    
    Property Lease Agreement, dated June 28, 2005, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda.*10.21
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda.*10.22
    
    
    Property Lease Agreement, dated as of November 1, 2004, between MercadoLivre.com
Atividades de Internet Ltda. and Barros e Spitaletti Empreendimentos Ltda.*10.23
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda.*10.24
    
    
    Property Lease Agreement, dated of April, 1, 2008, between MercadoLivre.com Atividades
de Internet Ltda. and CNA Spitaletti Construtora e Incorporadora Ltda.*10.25
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and CNA Spitaletti Construtora e Incorporadora Ltda.*10.26
    
    
    Property Lease Amendment, dated May 5, 2008, between MercadoLibre Venezuela S.A. and G4
Grupo 4 Inmobiliaria Internacional Industrial Comercial, C.A.*21.01
    
    
    List of Subsidiaries*23.01
    
    
    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**
 *
    
    Filed Herewith  76




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##### Table of Contents



**
    
    Furnished Herewith(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  77




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##### Table of Contents



SIGNATURES
  MERCADOLIBRE, INC.By:
    
    /s/ Marcos Galperín

Marcos GalperínChief Executive OfficerDate: February 26, 2010
  78




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##### Table of Contents



Signature
    
    Title
    
    Date/s/ Marcos Galperín

Marcos Galperín
    
    Chief Executive Officer and Director
(Principal Executive Officer)
    
    February 26, 2010/s/ Hernán Kazah

Hernán Kazah
    
    Chief Financial Officer
(Principal Financial Officer and 
Principal Accounting Officer)
    
    February 26, 2010/s/ Mario Vazquez

Mario Vazquez
    
    Director
    
    February 26, 2010/s/ Anton Levy

Anton Levy
    
    Director
    
    February 26, 2010/s/ Michael Spence

Michael Spence
    
    Director
    
    February 26, 2010/s/ Verónica Allende Serra

Veronica Allende Serra
    
    Director
    
    February 26, 2010/s/ Nicolás Galperín

Nicolás Galperín
    
    Director
    
    February 26, 2010/s/ Emiliano Calemzuk

Emiliano Calemzuk
    
    Director
    
    February 26, 2010/s/ Martin de los Santos

Martin de los Santos
    
    Director
    
    February 26, 2010
  79




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##### Table of Contents



MercadoLibre, Inc.
 
 Consolidated Financial Statements
as of December 31, 2009 and 2008
and for the three years in the period
ended December 31, 2009




---



##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
 Internal Control  Integrated Framework
  F-1




---



##### Table of Contents



By
    
    (Partner)

Carlos Martín Barbafina
 
  F-2




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##### Table of Contents



MercadoLibre Inc.
 
 Consolidated Balance Sheets 
As of December 31, 2009 and 2008
 December 31,
    
    
    December 31,2009
    
    
    2008AssetsCurrent assets:Cash and cash equivalents
    
    $
    49,803,402
    
    
    $
    17,474,112Short-term investments
    
    
    14,580,185
    
    
    
    31,639,400Accounts receivable, net
    
    
    4,868,377
    
    
    
    3,856,392Funds receivable from customers
    
    
    3,785,802
    
    
    
    2,322,416Prepaid expenses
    
    
    547,138
    
    
    
    426,869Deferred tax assets
    
    
    5,481,182
    
    
    
    1,628,871Other assets
    
    
    3,068,930
    
    
    
    2,953,164Total current assets
    
    
    82,135,016
    
    
    
    60,301,224Non-current assets:Long-term investments
    
    
    26,627,357
    
    
    
    9,218,153Property and equipment, net
    
    
    5,948,276
    
    
    
    5,940,160Goodwill and intangible assets, net
    
    
    64,338,564
    
    
    
    72,911,546Deferred tax assets
    
    
    2,897,492
    
    
    
    14,270Other assets
    
    
    667,944
    
    
    
    8,353,396Total non-current assets
    
    
    100,479,633
    
    
    
    96,437,525Total assets
    
    $
    182,614,649
    
    
    $
    156,738,749Liabilities and Shareholders EquityCurrent liabilities:Accounts payable and accrued expenses
    
    $
    11,583,053
    
    
    $
    16,941,173Funds payable to customers
    
    
    31,453,410
    
    
    
    14,727,891Social security payable
    
    
    7,428,340
    
    
    
    4,387,943Taxes payable
    
    
    6,797,516
    
    
    
    4,989,704Loans payable and other financial liabilities
    
    
    3,213,992
    
    
    
    14,963,421Provisions
    
    
    16,581
    
    
    
    299,753Total current liabilities
    
    
    60,492,892
    
    
    
    56,309,885Non-current liabilities:Social security payable
    
    
    1,355,006
    
    
    
    339,854Loans payable
    
    
    
    
    
    
    3,050,061Deferred tax liabilities
    
    
    5,170,799
    
    
    
    2,556,120Other liabilities
    
    
    1,402,715
    
    
    
    1,058,848Total non-current liabilities
    
    
    7,928,520
    
    
    
    7,004,883Total liabilities
    
    $
    68,421,412
    
    
    $
    63,314,768Commitments and contingencies (Note 16)Shareholders equity:Common stock, $0.001 par value, 110,000,000 shares
authorized,
44,120,269 and 44,070,367 shares issued and
outstanding at
December 31,
2009 and December 31, 2008, respectively
    
    $
    44,120
    
    
    $
    44,071Additional paid-in capital
    
    
    120,257,998
    
    
    
    119,807,007Retained earnings / (Accumulated deficit)
    
    
    17,656,537
    
    
    
    (15,552,256
    )Accumulated other comprehensive loss
    
    
    (23,765,418
    )
    
    
    (10,874,841
    )Total shareholders equity
    
    
    114,193,237
    
    
    
    93,423,981Total liabilities and shareholders equity
    
    $
    182,614,649
    
    
    $
    156,738,749
   F-3




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##### Table of Contents



MercadoLibre Inc.
 
 Consolidated Statements of Income
For the three years ended December 31, 2009
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Net revenues
    
    $
    172,843,621
    
    
    $
    137,022,620
    
    
    $
    85,126,341Cost of net revenues
    
    
    (35,958,050
    )
    
    
    (27,536,573
    )
    
    
    (18,272,940
    )Gross profit
    
    
    136,885,571
    
    
    
    109,486,047
    
    
    
    66,853,401Operating expenses:Product and technology development
    
    
    (12,140,521
    )
    
    
    (7,307,008
    )
    
    
    (4,369,376
    )Sales and marketing
    
    
    (42,861,735
    )
    
    
    (39,975,307
    )
    
    
    (27,598,683
    )General and administrative
    
    
    (25,849,596
    )
    
    
    (22,759,931
    )
    
    
    (13,223,522
    )Compensation cost related to acquisitions (Note 6)
    
    
    
    
    
    
    (1,919,870
    )
    
    
    Total operating expenses
    
    
    (80,851,852
    )
    
    
    (71,962,116
    )
    
    
    (45,191,581
    )Income from operations
    
    
    56,033,719
    
    
    
    37,523,931
    
    
    
    21,661,820Other income (expenses):Interest income and other financial gains
    
    
    2,695,109
    
    
    
    1,822,385
    
    
    
    1,609,403Interest expense and other financial charges
    
    
    (13,357,554
    )
    
    
    (8,442,427
    )
    
    
    (2,737,901
    )Foreign currency loss
    
    
    (2,658,476
    )
    
    
    (1,531,144
    )
    
    
    (3,106,515
    )Other income (expenses), net
    
    
    
    
    
    
    73,159
    
    
    
    (3,006,416
    )Net income before income / asset tax expense
    
    
    42,712,798
    
    
    
    29,445,904
    
    
    
    14,420,391Income / asset tax expense
    
    
    (9,504,005
    )
    
    
    (10,634,243
    )
    
    
    (4,727,451
    )Net income
    
    $
    33,208,793
    
    
    $
    18,811,661
    
    
    $
    9,692,940Accretion of preferred stock
    
    
    
    
    
    
    
    
    
    
    (309,299
    )Net income available to common shareholders
    
    $
    33,208,793
    
    
    $
    18,811,661
    
    
    $
    9,383,641
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Basic EPSBasic net income per common share
    
    $
    0.75
    
    
    $
    0.43
    
    
    $
    0.22Weighted average shares
    
    
    44,086,892
    
    
    
    44,239,443
    
    
    
    25,149,405Diluted EPSDiluted net income per common
share
    
    $
    0.75
    
    
    $
    0.42
    
    
    $
    0.22Weighted average shares
    
    
    44,144,368
    
    
    
    44,348,950
    
    
    
    25,478,336
   F-4




---



##### Table of Contents



MercadoLibre Inc.
 
 Consolidated Statements of Changes in Shareholders Equity (Deficit)
For the three years ended December 31, 2009
 AccumulatedAdditional
    
    
    
    
    
    
    Preferred
    
    
    
    
    
    
    otherComprehensive
    
    
    Common stock
    
    
    paid-in
    
    
    Treasury
    
    
    stock
    
    
    Accumulated
    
    
    comprehensiveincome
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    Stock
    
    
    warrants
    
    
    deficit
    
    
    income (loss)
    
    
    TotalBalance as of December 31, 2006
    
    
    
    
    
    
    13,166,982
    
    
    $
    131,670
    
    
    $
    2,694,404
    
    
    $
    
    
    
    $
    
    
    
    $
    (44,054,817
    )
    
    $
    500,536
    
    
    $
    (40,728,207
    )Shares issued in 2000 and 2001 (1)
    
    
    
    
    
    
    204,000
    
    
    
    2,040
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,040
    )
    
    
    
    
    
    
    Stock options exercised
    
    
    
    
    
    
    483,470
    
    
    
    4,835
    
    
    
    33,742
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    38,577Stock-based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,477
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,477Stock-based compensation  restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,966
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,966Accretion of mandatorily redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309,299
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309,299
    )Change in par value of common stock
    
    
    
    
    
    
    
    
    
    
    (124,690
    )
    
    
    124,690
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common stock
    
    
    
    
    
    
    3,000,000
    
    
    
    3,000
    
    
    
    49,570,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,573,239Conversion of mandatorily redeemable convertible preferred stock
into common stock preferred stock
    
    
    
    
    
    
    27,187,838
    
    
    
    27,188
    
    
    
    64,358,656
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    64,385,844Reclassification of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,636,456
    
    
    
    
    
    
    
    
    
    
    
    4,636,456Exercise of warrants
    
    
    
    
    
    
    184,273
    
    
    
    184
    
    
    
    5,386,263
    
    
    
    
    
    
    
    (4,636,456
    )
    
    
    
    
    
    
    
    
    
    
    749,991Net income
    
    
    9,692,940
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,692,940
    
    
    
    
    
    
    
    9,692,940Currency translation adjustment
    
    
    3,755,601
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,755,601
    
    
    
    3,755,601Unrealized net gains on investments
    
    
    153,876
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    153,876
    
    
    
    153,876Realized net gain on investments
    
    
    (307,322
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (307,322
    )
    
    
    (307,322
    )Comprehensive income
    
    
    13,295,095Balance as of December 31, 2007
    
    
    
    
    
    
    44,226,563
    
    
    $
    44,227
    
    
    $
    121,890,138
    
    
    $
    
    
    
    $
    
    
    
    $
    (34,363,917
    )
    
    $
    4,102,691
    
    
    $
    91,673,139Stock options exercised and restricted shares issued
    
    
    
    
    
    
    93,504
    
    
    
    94
    
    
    
    82,995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,089Stock-based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,719
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,719Stock-based compensation  restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,560
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    105,560Stock -based compensation  long term retention plan (LTRP)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321,568
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    321,568Repurchase 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
    
    
    
    
    
    
    
    18,811,661Currency translation adjustment
    
    
    (14,923,284
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,923,284
    )
    
    
    (14,923,284
    )Unrealized net gains on investments
    
    
    3,642
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,642
    
    
    
    3,642Realized net gains on investments
    
    
    (57,890
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57,890
    )
    
    
    (57,890
    )Comprehensive income
    
    
    3,834,129Balance as of December 31, 2008
    
    
    
    
    
    
    44,070,367
    
    
    $
    44,071
    
    
    $
    119,807,007
    
    
    $
    
    
    
    $
    
    
    
    $
    (15,552,256
    )
    
    $
    (10,874,841
    )
    
    $
    93,423,981
 (1)
    
    These shares were issued in 2000 and 2001, but were not recorded until 2007. The amounts are
immaterial to revise prior years financial statements.   F-5




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##### Table of Contents



MercadoLibre Inc.
Consolidated Statements of Changes in Shareholders Equity (Deficit)
For the three years ended December 31, 2009
 Accumulated
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    Preferred
    
    
    deficit /
    
    
    otherComprehensive
    
    
    Common stock
    
    
    paid-in
    
    
    Treasury
    
    
    stock
    
    
    Retained
    
    
    comprehensiveincome
    
    
    Shares
    
    
    Amount
    
    
    capital
    
    
    Stock
    
    
    warrants
    
    
    Earnings
    
    
    income (loss)
    
    
    TotalBalance as of December 31, 2008
    
    
    
    
    
    
    44,070,367
    
    
    
    44,071
    
    
    $
    119,807,007
    
    
    $
    
    
    
    $
    
    
    
    $
    (15,552,256
    )
    
    $
    (10,874,841
    )
    
    $
    93,423,981Stock options exercised
    
    
    
    
    
    
    35,031
    
    
    
    35
    
    
    
    28,319
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,354Stock-based compensation  stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,752Stock-based compensation  restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,382
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    74,382Stock-based compensation LTRP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,453
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,453Restricted shares issued
    
    
    
    
    
    
    10,655
    
    
    
    10
    
    
    
    171,089
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,099LTRP shares issued
    
    
    
    
    
    
    3,600
    
    
    
    3
    
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Shares issued
    
    
    
    
    
    
    616
    
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income
    
    $
    33,208,793
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,208,793
    
    
    
    
    
    
    
    33,208,793Currency translation adjustment
    
    $
    (12,914,565
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,914,565
    )
    
    
    (12,914,565
    )Unrealized net gains on investments
    
    $
    27,630
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,630
    
    
    
    27,630Realized net gains on investments
    
    $
    (3,642
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,642
    )
    
    
    (3,642
    )Comprehensive income
    
    $
    20,318,216Balance 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



MercadoLibre Inc.
 
 Consolidated Statements of Cash Flows
For the three years ended December 31, 2009
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Cash flows from operations:Net income
    
    $
    33,208,793
    
    
    $
    18,811,661
    
    
    $
    9,692,940Adjustments to reconcile net income to net cash provided by
operating activities:Depreciation and amortization
    
    
    3,893,752
    
    
    
    3,335,673
    
    
    
    2,307,649Foreign currency gains
    
    
    
    
    
    
    (7,827,112
    )
    
    
    Interest expense
    
    
    213,878
    
    
    
    300,368
    
    
    
    Stock-based compensation expense  stock options
    
    
    1,752
    
    
    
    4,719
    
    
    
    15,477Stock-based compensation expense  restricted shares
    
    
    74,382
    
    
    
    105,560
    
    
    
    15,966LTRP accrued compensation
    
    
    1,924,149
    
    
    
    839,303
    
    
    
    Change in fair value of warrants
    
    
    
    
    
    
    
    
    
    
    3,045,992Deferred income taxes
    
    
    (3,607,292
    )
    
    
    (2,151,858
    )
    
    
    (198,368
    )Changes in assets and liabilities, excluding the effect of
acquisitions:Accounts receivable
    
    
    (2,974,890
    )
    
    
    4,026,218
    
    
    
    (736,431
    )Funds receivable from customers
    
    
    (942,407
    )
    
    
    26,573,209
    
    
    
    (15,517,486
    )Prepaid expenses
    
    
    (287,836
    )
    
    
    (153,582
    )
    
    
    56,399Other assets
    
    
    (2,591,353
    )
    
    
    (1,415,575
    )
    
    
    (967,264
    )Accounts payable and accrued expenses
    
    
    8,686,334
    
    
    
    10,610,141
    
    
    
    4,282,955Funds payable to customers
    
    
    12,421,412
    
    
    
    2,294,847
    
    
    
    5,423,976Provisions
    
    
    302,987
    
    
    
    (1,277,664
    )
    
    
    (274,101
    )Other liabilities
    
    
    (713,014
    )
    
    
    1,645,976
    
    
    
    689,154Accrued interest
    
    
    90,339
    
    
    
    57,293
    
    
    
    (228,877
    )Net cash provided by operating activities
    
    
    49,700,986
    
    
    
    55,779,177
    
    
    
    7,607,981Cash flows from investing activities:Purchase of investments
    
    
    (80,060,909
    )
    
    
    (110,056,368
    )
    
    
    (75,267,070
    )Proceeds from sale and maturity of investments
    
    
    81,728,485
    
    
    
    115,342,531
    
    
    
    28,920,382Payment for businesses acquired, net of cash acquired
    
    
    
    
    
    
    (39,181,473
    )
    
    
    Purchases of intangible assets
    
    
    (955,679
    )
    
    
    (58,238
    )
    
    
    (28,748
    )Purchases of property and equipment
    
    
    (3,798,170
    )
    
    
    (4,904,991
    )
    
    
    (3,058,813
    )Net cash (used in) provided by investing activities
    
    
    (3,086,273
    )
    
    
    (38,858,539
    )
    
    
    (49,434,249
    )Cash flows from financing activities:Increase in short term debt
    
    
    
    
    
    
    
    
    
    
    8,883,104Decrease in short term debt
    
    
    (310,634
    )
    
    
    (9,137,223
    )
    
    
    Loans paid
    
    
    (15,000,000
    )
    
    
    
    
    
    
    (9,000,000
    )Repurchase of Treasury Stock
    
    
    
    
    
    
    (2,598,223
    )
    
    
    Stock options exercised
    
    
    28,354
    
    
    
    83,089
    
    
    
    38,576Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    749,991Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    49,573,239Net cash (used in) provided by financing activities
    
    
    (15,282,280
    )
    
    
    (11,652,357
    )
    
    
    50,244,910Effect of exchange rate changes on cash and cash equivalents
    
    
    996,857
    
    
    
    (3,471,576
    )
    
    
    115,738Net increase in cash and cash equivalents
    
    
    32,329,290
    
    
    
    1,796,705
    
    
    
    8,534,380Cash and cash equivalents, beginning of the year
    
    
    17,474,112
    
    
    
    15,677,407
    
    
    
    7,143,027Cash and cash equivalents, end of the year
    
    $
    49,803,402
    
    
    $
    17,474,112
    
    
    $
    15,677,407
   F-7




---



##### Table of Contents



MercadoLibre Inc.
Consolidated Statements of Cash Flows
For the three years ended December 31, 2009
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Supplemental cash flow information:Cash paid for interest
    
    $
    12,332,592
    
    
    $
    7,138,402
    
    
    $
    1,572,909Cash paid for income taxes
    
    $
    11,650,007
    
    
    
    7,921,206
    
    
    
    3,864,908Non-cash financing activities:Accretion of preferred stock
    
    $
    
    
    
    $
    
    
    
    $
    309,299Conversion of mandatorily redeemable convertible preferred stock
into common stock
    
    $
    
    
    
    $
    
    
    
    $
    64,385,844Reclassifications of warrants
    
    $
    
    
    
    $
    
    
    
    $
    4,636,456Acquisition 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
    
    
    
    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-8




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##### Table of Contents



MercadoLibre Inc.
 
 Notes to Consolidated Financial Statements
 1. Nature of Business
       F-9




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 1.
    
    Nature of Business (Continued)
        F-10




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 1. Nature of Business (Continued)
    2. Summary of Significant Accounting Policies
 Principles of consolidation
     F-11




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Prior
Year Reclassification Adjustments
  Use of estimates
  Cash and cash equivalents
  Investments
  Fair Value Measurements
   F-12




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Fair Value Measurements (Continued)
  Concentration of credit risk
   Allowance for doubtful accounts
  Funds receivable and funds payable to customers
    F-13




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Transfer of Financial Assets
  Property and equipment, net
   Goodwill and intangible assets, net
   Impairment of Long-Lived Assets
   F-14




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Impairment of Long-Lived Assets (Continued)
   Revenue Recognition
     F-15




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Revenue Recognition (Continued)
     Derivative Financial Instruments
  Share-based payments
     F-16




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Share-based payments (Continued)
   Taxes on revenues
  Advertising Costs
  Comprehensive Income
  Mandatorily Redeemable Convertible Preferred Stock
   F-17




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Foreign Currency Translation
    Highly inflationary status in Venezuela
     F-18




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Income and Asset Taxes
       F-19




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 2. Summary of Significant Accounting Policies (Continued)
 Uncertainty in Income Taxes
    Recent Accounting Pronouncements
 Accounting for Transfers of Financial Assets
  3. Net income per share
    F-20




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 3. Net income per share (Continued)
    Year Ended December 31,2009
    
    
    2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income
    
    $
    33,208,793
    
    
    $
    33,208,793
    
    
    $
    18,811,661
    
    
    $
    18,811,661
    
    
    $
    9,692,940
    
    
    $
    9,692,940Accretion of preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (309,299
    )
    
    
    (309,299
    )Net income available to common
shareholders
    
    $
    33,208,793
    
    
    $
    33,208,793
    
    
    $
    18,811,661
    
    
    $
    18,811,661
    
    
    $
    9,383,641
    
    
    $
    9,383,641Net income available to common
shareholders attributable
to
unvested restricted shares
preferred stock
    
    
    3,515
    
    
    
    3,515
    
    
    
    
    
    
    
    
    
    
    
    (3,772,510
    )
    
    
    (3,734,758
    )Net income available to common
shareholders attributable
to common stock
    
    $
    33,205,278
    
    
    $
    33,205,278
    
    
    $
    18,811,661
    
    
    $
    18,811,661
    
    
    $
    5,611,131
    
    
    $
    5,648,883
  F-21




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 3. Net income per share (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Basic
    
    
    Diluted
    
    
    Basic
    
    
    Diluted
    
    
    Basic
    
    
    DilutedNet income available to common shareholders
per common share
    
    $
    0.75
    
    
    $
    0.75
    
    
    $
    0.43
    
    
    $
    0.42
    
    
    $
    0.22
    
    
    $
    0.22Numerator:Net income available to common shareholders
    
    $
    33,205,278
    
    
    $
    33,205,278
    
    
    $
    18,811,661
    
    
    $
    18,811,661
    
    
    $
    5,611,131
    
    
    $
    5,648,883Denominator:Weighted average of common stock outstanding for Basic
earnings per share
    
    
    44,086,892
    
    
    
    44,086,892
    
    
    
    44,239,443
    
    
    
    44,239,443
    
    
    
    25,149,405
    
    
    
    25,149,405Adjustment for stock options
    
    
    
    
    
    
    46,413
    
    
    
    
    
    
    
    98,507
    
    
    
    
    
    
    
    328,931Adjustment for restricted shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    498
    
    
    
    
    
    
    
    Adjustment for additional Shares
    
    
    
    
    
    
    3,366
    
    
    
    
    
    
    
    10,502
    
    
    
    
    
    
    
    Adjustment for shares granted under LTRP
    
    
    
    
    
    
    7,697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjusted weighted average of common stock outstanding
for Diluted earnings per share
    
    
    44,086,892
    
    
    
    44,144,368
    
    
    
    44,239,443
    
    
    
    44,348,950
    
    
    
    25,149,405
    
    
    
    25,478,336
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Anti-dilutive sharesWarrants
    
    
    
    
    
    
    
    
    
    
    114,603Restricted shares
    
    
    
    
    
    
    3,082
    
    
    
    3,895Shares granted under LTRP
    
    
    
    
    
    
    21,591
    
    
    
    
    
    
    
    24,673
    
    
    
    118,498
 4. Short-term and long-term investments
  December 31,
    
    
    December 31,2009
    
    
    2008Short-term investmentsTime Deposits
    
    $
    6,332,738
    
    
    $
    21,365,613Money Market Funds
    
    
    
    
    
    
    2,408,294Sovereign Debt Securities
    
    
    
    
    
    
    1,530,034Corporate Debt Securities
    
    
    8,247,447
    
    
    
    6,335,459Total
    
    $
    14,580,185
    
    
    $
    31,639,400Long-term investmentsArias Trust (1)
    
    $
    7,169,425
    
    
    $
    3,287,823Time Deposits
    
    
    19,191,406
    
    
    
    2,559,465Corporate Debt Securities
    
    
    266,526
    
    
    
    3,370,865Total
    
    $
    26,627,357
    
    
    $
    9,218,153
 (1)
    
    As this investment represents an undivided interest for more than 20% of the total
amount of the real estate trust, it is accounted for under the equity method and it is
classified as Long-Term Investments in the balance sheet (See note 16  Other Commitments).  F-22




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 4. Short-term and long-term investments (Continued)
      5. Balance sheet components
 December 31,
    
    
    December 31,2009
    
    
    2008Accounts receivable, net:Users
    
    $
    4,711,641
    
    
    $
    9,664,598Credit cards and other means of payments
    
    
    1,882,430
    
    
    
    1,471,203Advertising
    
    
    1,852,786
    
    
    
    1,203,710Others debtors
    
    
    119,527
    
    
    
    27,0088,566,384
    
    
    
    12,366,519Allowance for doubtful accounts
    
    
    (3,698,007
    )
    
    
    (8,510,127
    )$
    4,868,377
    
    
    $
    3,856,392
  F-23




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 5. Balance sheet components (Continued)
 December 31,
    
    
    December 31,2009
    
    
    2008Funds receivable from customersCredit cards and other means of payments
    
    $
    3,873,351
    
    
    $
    2,489,436Allowance for chargebacks
    
    $
    (87,549
    )
    
    
    (167,020
    )$
    3,785,802
    
    
    $
    2,322,416
 December 31,
    
    
    December 31,2009
    
    
    2008Other current assets:VAT credits
    
    $
    447,998
    
    
    $
    681,660Restricted assets
    
    
    
    
    
    
    358,900Other taxes
    
    
    1,705,650
    
    
    
    931,348Other
    
    
    915,282
    
    
    
    981,256$
    3,068,930
    
    
    $
    2,953,164
 December 31,
    
    
    December 31,2009
    
    
    2008Other non current assets:Foreign currency effect on assets (1)
    
    $
    
    
    
    $
    7,827,112Other
    
    
    667,944
    
    
    
    526,284$
    667,944
    
    
    $
    8,353,396
 (1)
    
    As of December 31, 2008, the Venezuelan subsidiaries maintained a foreign currency denominated
asset in the form of US dollar denominated cash and cash equivalents. In accordance with the
Companys stated accounting policy, this investment should first be re-measured into its
functional currency Bolivares Fuertes. Upon re-measurement into its functional currency, the
investment will then be translated into the reporting currency of the Company (US Dollar). As of
the December 31, 2008, the asset was re-measured at a parallel exchange rate of 5.4 Bolivares
Fuertes per US dollar. Further, the Venezuelan subsidiaries assets, liabilities, income and
expense accounts were translated at the rate applicable for dividend remittances, which as of
December 31, 2008 is the official rate of 2.15 Bolivares Fuertes per US dollar. Accordingly, as
of December 31, 2008, the asset was the result of applying the Companys accounting policy for the
related asset. As explained in Note 2, starting in the
fourth quarter of 2009, the Venezuelan subsidiaries assets, liabilities, income and expenses
accounts have been translated using the parallel exchange rate and, as such, this asset no longer
exists.  F-24




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 5. Balance sheet components (Continued)
 Estimateduseful life
    
    
    December 31,
    
    
    December 31,(years)
    
    
    2009
    
    
    2008Property and equipment, net:Equipment
    
    3-5
    
    
    $
    8,958,580
    
    
    $
    10,636,641Furniture and fixtures
    
    3-5
    
    
    
    2,847,345
    
    
    
    2,413,000Software
    
    3
    
    
    
    2,424,533
    
    
    
    1,693,95114,230,458
    
    
    
    14,743,592Accumulated depreciation
    
    
    
    
    
    
    (8,282,182
    )
    
    
    (8,803,432
    )$
    5,948,276
    
    
    $
    5,940,160
 Year Ended December 31,2009
    
    
    2008
    
    
    2007Depreciation and amortization:Cost of net revenues
    
    $
    308,260
    
    
    $
    333,029
    
    
    $
    103,772Product and technology
development
    
    
    2,552,921
    
    
    
    2,205,369
    
    
    
    1,854,345Sales and marketing
    
    
    38,567
    
    
    
    154,130
    
    
    
    22,772General and administrative
    
    
    994,004
    
    
    
    643,145
    
    
    
    326,760$
    3,893,752
    
    
    $
    3,335,673
    
    
    $
    2,307,649
 December 31,
    
    
    December 31,2009
    
    
    2008Accounts payable and accrued expenses:Accounts payable
    
    $
    7,230,325
    
    
    $
    7,980,983Accrued expensesAdvertising
    
    
    2,594,322
    
    
    
    2,205,954Professional fees
    
    
    586,945
    
    
    
    807,577Other expense provisions (1)
    
    
    1,168,371
    
    
    
    5,941,831Other current liabilities
    
    
    3,090
    
    
    
    4,828$
    11,583,053
    
    
    $
    16,941,173
 (1)
    
    As of December 31, 2008, includes $ 4,204,441 related to the re-measuarement of the
Venezuelan subsidiaries denominated in US dollars. See footnote (1) in Other non current assets
for more detail.  F-25




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 5. Balance sheet components (Continued)
 December 31,
    
    
    December 31,2009
    
    
    2008Loans payable and other financial liabilities:Loans related to DR operations acquisition (1)
    
    $
    3,213,878
    
    
    $
    14,769,395Written Put Options
    
    
    
    
    
    
    185,000Other Loans
    
    
    114
    
    
    
    9,026$
    3,213,992
    
    
    $
    14,963,421
 December 31,
    
    
    December 31,2009
    
    
    2008Non current loans payable:
    
    $
    
    
    
    $
    3,050,061Loans related to DR operations acquisition (1)
    
    $
    
    
    
    $
    3,050,061
 (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. As of December 31, 2008, the
figures shown above include accrued interest of $250,306 and $50,061 related to the
current and non-current related liabilities, respectively. As of December 31, 2008, the
Seller financing for the DeRemate acquisition is presented net of working capital
adjustment (See note 6 for more detail). December 31,
    
    
    December 31,
    
    
    December 31,2009
    
    
    2008
    
    
    2007Accumulated other comprehensive
income:Foreign currency translation
    
    $
    (23,793,048
    )
    
    $
    (10,878,483
    )
    
    $
    4,044,801Unrealized gains on investments
    
    
    41,466
    
    
    
    5,603
    
    
    
    89,061Estimated tax loss on
unrealized gains on
investments
    
    
    (13,836
    )
    
    
    (1,961
    )
    
    
    (31,171
    )$
    (23,765,418
    )
    
    $
    (10,874,841
    )
    
    $
    4,102,691
  F-26




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets
 Business Combinations
           F-27




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Business Combinations (Continued)
  Purchase Price
    
    $
    17,024,380Post-closing working capital adjustments
    
    
    150,000Direct cost of the business combination
    
    
    204,424Total aggregate purchase price
    
    $
    17,378,804Compensation Cost
    
    
    1,919,870Total Cash paid
    
    $
    19,298,674
   Post
    
    
    Net Tangible
    
    
    Identifiable
    
    
    Deferred
    
    
    
    
    
    
    AggregateAcquisition
    
    
    Assets /
    
    
    Intangible
    
    
    Tax
    
    
    
    
    
    
    PurchaseCompany Name
    
    Country
    
    Ownership
    
    
    (Liabilities)
    
    
    Assets
    
    
    Liabilities
    
    
    Goodwill
    
    
    PriceCMG Classified Media Group
Inc.
    
    Panama
    
    
    100
    %
    
    $
    846.3
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    846.3Venecapital 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
    
    
    
    14,523.8Clasificados
Internacionales S.A.
    
    Panama
    
    
    100
    %
    
    
    (44.8
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (44.8
    )ColClasificados S.A.
    
    Colombia
    
    
    100
    %
    
    
    36.4
    
    
    
    688.0
    
    
    
    (240.8
    )
    
    
    1,595.5
    
    
    
    2,079.1Clasificados Florida LLC
    
    USA
    
    
    100
    %
    
    
    1.2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1.2Total
    
    
    
    
    
    
    
    $
    686.9
    
    
    $
    5,622.2
    
    
    $
    (1,967.8
    )
    
    $
    13,037.5
    
    
    $
    17,378.8
     F-28




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Business Combinations (Continued)
        F-29




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##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Business Combinations (Continued)
   
 Cash paid
    
    $
    22,000,000Seller financing
    
    
    18,000,000Working Capital adjustment
    
    
    (480,912
    )Direct cost of the business combination
    
    
    494,301Total aggregate purchase price
    
    $
    40,013,389
  Post
    
    
    Net Tangible
    
    
    Identifiable
    
    
    Deferred
    
    
    
    
    
    
    AggregateAcquisition
    
    
    Assets /
    
    
    Intangible
    
    
    Tax
    
    
    
    
    
    
    PurchaseCompany Name
    
    Country
    
    
    Ownership
    
    
    (Liabilities)
    
    
    Assets
    
    
    Liabilities
    
    
    Goodwill
    
    
    PriceDeRemate.com de
Argentina S.A.
    
    
    Argentina
    
    
    
    100
    %
    
    $
    2,555.2
    
    
    $
    1,444.1
    
    
    $
    (505.4
    )
    
    $
    30,658.9
    
    
    $
    34,152.8DeRemate.com Chile S.A.
    
    
    Chile
    
    
    
    100
    %
    
    
    (1,978.9
    )
    
    
    302.2
    
    
    
    (105.8
    )
    
    
    6,659.4
    
    
    
    4,876.9Compañía de Negocios
Interactiva de
Colombia E.U.
    
    
    Colombia
    
    
    
    100
    %
    
    
    (753.4
    )
    
    
    25.6
    
    
    
    (9.0
    )
    
    
    1,417.2
    
    
    
    680.4Interactivos y
Digitales México S.A.
de C.V.
    
    
    Mexico
    
    
    
    100
    %
    
    
    (580.7
    )
    
    
    29.2
    
    
    
    (10.2
    )
    
    
    864.9
    
    
    
    303.2Total
    
    
    
    
    
    
    
    
    
    $
    (757.8
    )
    
    $
    1,801.1
    
    
    $
    (630.4
    )
    
    $
    39,600.4
    
    
    $
    40,013.3
   F-30




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Business Combinations (Continued)
     CMG
    
    
    DeRemate
    
    
    TotalCash and cash equivalents
    
    $
    554,739
    
    
    $
    136,893
    
    
    $
    691,632Funds receivable from customers
    
    
    
    
    
    
    117,473
    
    
    
    117,473Accounts receivable
    
    
    56,613
    
    
    
    6,512,485
    
    
    
    6,569,098Tax Credits
    
    
    
    
    
    
    604,419
    
    
    
    604,419Other current assets
    
    
    904,791
    
    
    
    14,065
    
    
    
    918,856Non current assets
    
    
    365,190
    
    
    
    139,737
    
    
    
    504,927Total assets acquired
    
    $
    1,881,333
    
    
    $
    7,525,072
    
    
    $
    9,406,405Accounts payable and accrued expenses
    
    
    69,516
    
    
    
    4,509,314
    
    
    
    4,578,830Funds payable to customers
    
    
    
    
    
    
    146,191
    
    
    
    146,191Taxes payable
    
    
    459,462
    
    
    
    745,017
    
    
    
    1,204,479Social security payable
    
    
    243,141
    
    
    
    151,971
    
    
    
    395,112Other liabilities
    
    
    
    
    
    
    1,590,371
    
    
    
    1,590,371Non current liabilities
    
    
    14,000
    
    
    
    
    
    
    
    14,000Provisions
    
    
    408,336
    
    
    
    1,140,055
    
    
    
    1,548,391Total liabilities assumed
    
    $
    1,194,455
    
    
    $
    8,282,919
    
    
    $
    9,477,374Net tangible assets (liabilities)
    
    $
    686,878
    
    
    $
    (757,847
    )
    
    $
    (70,969
    )
  F-31




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Goodwill and Intangible Assets
  December 31,
    
    
    December 31,2009
    
    
    2008Indefinite lived assets- Goodwill
    
    $
    59,822,746
    
    
    $
    65,652,774- Trademarks
    
    
    2,415,874
    
    
    
    5,537,715Amortizable intangible assets- Licenses and others
    
    
    2,227,315
    
    
    
    1,313,901- Non-compete agreement
    
    
    1,218,393
    
    
    
    1,051,531- Customer list
    
    
    1,593,861
    
    
    
    1,534,969Total intangible assets
    
    $
    67,278,189
    
    
    $
    75,090,890Accumulated amortization
    
    
    (2,939,625
    )
    
    
    (2,179,344
    )$
    64,338,564
    
    
    $
    72,911,546
 Goodwill
  Year Ended December 31, 2009MarketplacesBrazil
    
    
    Argentina
    
    
    Chile
    
    
    Mexico
    
    
    Venezuela
    
    
    Colombia
    
    
    Other Countries
    
    
    Total
    
    
    Payments
    
    
    ConsolidatedBalance, beginning of year
    
    $
    9,361,697
    
    
    $
    25,504,101
    
    
    $
    5,252,283
    
    
    $
    4,517,690
    
    
    $
    13,636,502
    
    
    $
    4,647,681
    
    
    $
    1,220,332
    
    
    $
    64,140,286
    
    
    $
    1,512,488
    
    
    $
    65,652,774- Effect of
exchange rates
changes
    
    
    3,203,365
    
    
    
    (2,328,927
    )
    
    
    1,339,741
    
    
    
    252,870
    
    
    
    (8,790,472
    )
    
    
    453,258
    
    
    
    138,955
    
    
    
    (5,731,210
    )
    
    
    (98,818
    )
    
    
    (5,830,028
    )Balance, end of the year
    
    $
    12,565,062
    
    
    $
    23,175,174
    
    
    $
    6,592,024
    
    
    $
    4,770,560
    
    
    $
    4,846,030
    
    
    $
    5,100,939
    
    
    $
    1,359,287
    
    
    $
    58,409,076
    
    
    $
    1,413,670
    
    
    $
    59,822,746
 Year Ended December 31, 2008MarketplacesBrazil
    
    
    Argentina
    
    
    Chile
    
    
    Mexico
    
    
    Venezuela
    
    
    Colombia
    
    
    Other Countries
    
    
    Total
    
    
    Payments
    
    
    ConsolidatedBalance, beginning of year
    
    $
    12,351,542
    
    
    $
    
    
    
    $
    
    
    
    $
    4,898,867
    
    
    $
    2,194,480
    
    
    $
    2,257,830
    
    
    $
    1,297,748
    
    
    $
    23,000,467
    
    
    $
    
    
    
    $
    23,000,467-Purchase of CMG
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,442,022
    
    
    
    1,595,482
    
    
    
    
    
    
    
    13,037,504
    
    
    
    
    
    
    $
    13,037,504-Purchase of DR Operations
    
    
    
    
    
    
    29,064,574
    
    
    
    6,518,624
    
    
    
    864,945
    
    
    
    
    
    
    
    1,417,239
    
    
    
    
    
    
    
    37,865,382
    
    
    
    1,735,151
    
    
    
    39,600,533- Effect of exchange rates
changes
    
    
    (2,989,845
    )
    
    
    (3,560,473
    )
    
    
    (1,266,341
    )
    
    
    (1,246,122
    )
    
    
    
    
    
    
    (622,870
    )
    
    
    (77,416
    )
    
    
    (9,763,067
    )
    
    
    (222,663
    )
    
    
    (9,985,730
    )Balance, end of the year
    
    $
    9,361,697
    
    
    $
    25,504,101
    
    
    $
    5,252,283
    
    
    $
    4,517,690
    
    
    $
    13,636,502
    
    
    $
    4,647,681
    
    
    $
    1,220,332
    
    
    $
    64,140,286
    
    
    $
    1,512,488
    
    
    $
    65,652,774
  F-32




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 6. Business Combinations, Goodwill and Intangible Assets (Continued)
 Amortizable intangible assets
   For year ended 12/31/2010
    
    $
    923,127For year ended 12/31/2011
    
    
    641,700For year ended 12/31/2012
    
    
    535,054For year ended 12/31/2013
    
    
    63$
    2,099,944
 7. Segments
      F-33




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 7. Segments (Continued)
  Year
Ended December 31, 2009MarketplacesBrazil
    
    
    Argentina
    
    
    Mexico
    
    
    Venezuela
    
    
    Other Countries
    
    
    Total
    
    
    Payments
    
    
    ConsolidatedNet revenues
    
    $
    54,624,180
    
    
    $
    23,463,144
    
    
    $
    13,699,140
    
    
    $
    26,219,636
    
    
    $
    10,216,056
    
    
    $
    128,222,156
    
    
    $
    44,621,465
    
    
    $
    172,843,621Direct costs
    
    
    (32,921,030
    )
    
    
    (9,634,092
    )
    
    
    (7,924,863
    )
    
    
    (12,995,971
    )
    
    
    (5,788,657
    )
    
    
    (69,264,613
    )
    
    
    (22,825,009
    )
    
    
    (92,089,622
    )Direct contribution
    
    
    21,703,150
    
    
    
    13,829,052
    
    
    
    5,774,277
    
    
    
    13,223,665
    
    
    
    4,427,399
    
    
    
    58,957,543
    
    
    
    21,796,456
    
    
    
    80,753,999Operating expenses and
indirect costs
of net revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,720,280
    )Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    56,033,719Other income (expenses):Interest income and other
financial gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,695,109Interest expense and other
financial results
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,357,554
    )Foreign currency loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,658,476
    )Net income before
income / asset tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    42,712,798
 Year Ended December 31, 2008MarketplacesBrazil
    
    
    Argentina
    
    
    Mexico
    
    
    Venezuela
    
    
    Other Countries
    
    
    Total
    
    
    Payments
    
    
    ConsolidatedNet revenues
    
    $
    50,509,927
    
    
    $
    18,254,621
    
    
    $
    12,473,883
    
    
    $
    21,972,235
    
    
    $
    6,369,111
    
    
    $
    109,579,777
    
    
    $
    27,442,843
    
    
    $
    137,022,620Direct costs
    
    
    (32,367,688
    )
    
    
    (8,710,260
    )
    
    
    (7,909,615
    )
    
    
    (11,455,690
    )
    
    
    (4,184,088
    )
    
    
    (64,627,341
    )
    
    
    (16,125,593
    )
    
    
    (80,752,934
    )Direct contribution
    
    
    18,142,239
    
    
    
    9,544,361
    
    
    
    4,564,268
    
    
    
    10,516,545
    
    
    
    2,185,023
    
    
    
    44,952,436
    
    
    
    11,317,250
    
    
    
    56,269,686Operating expenses and
indirect
costs of net revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18,745,755
    )Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    37,523,931Other income (expenses):Interest income and
other
financial gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,822,385Interest expense and
other
financial results
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,442,427
    )Foreign currency
loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,531,144
    )Other income, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,159Net income before
income / asset tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    29,445,904
 Year Ended December 31, 2007MarketplacesBrazil
    
    
    Argentina
    
    
    Mexico
    
    
    Venezuela
    
    
    Other Countries
    
    
    Total
    
    
    Payments
    
    
    ConsolidatedNet revenues
    
    $
    37,560,419
    
    
    $
    11,342,792
    
    
    $
    9,628,121
    
    
    $
    7,084,995
    
    
    $
    3,901,190
    
    
    $
    69,517,517
    
    
    $
    15,608,824
    
    
    $
    85,126,341Direct costs
    
    
    (24,079,798
    )
    
    
    (5,657,006
    )
    
    
    (6,339,762
    )
    
    
    (2,713,470
    )
    
    
    (3,434,102
    )
    
    
    (42,224,138
    )
    
    
    (10,509,002
    )
    
    
    (52,733,140
    )Direct contribution
    
    
    13,480,621
    
    
    
    5,685,786
    
    
    
    3,288,359
    
    
    
    4,371,525
    
    
    
    467,088
    
    
    
    27,293,379
    
    
    
    5,099,822
    
    
    
    32,393,201Operating expenses
and indirect costs of net
revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,731,381
    )Income from operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,661,820Other income (expenses):Interest income and
other
financial gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,609,403Interest expense and
other
financial results
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,737,901
    )Foreign currency loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,106,515
    )Other expenses, net
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,006,416
    )Net income before
income / asset tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    14,420,391
  F-34




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 7. Segments (Continued)
  December 31,
    
    
    December 31,2009
    
    
    2008US long-lived tangible assets
    
    $
    2,746,059
    
    
    $
    2,881,210Other countries long-lived tangible assetsArgentina
    
    
    1,978,652
    
    
    
    1,573,708Brazil
    
    
    883,712
    
    
    
    596,940Mexico
    
    
    71,064
    
    
    
    81,873Venezuela
    
    
    196,846
    
    
    
    749,605Other countries
    
    
    71,943
    
    
    
    56,824$
    3,202,217
    
    
    $
    3,058,950Total long-lived tangible assets
    
    $
    5,948,276
    
    
    $
    5,940,160
  December 31,
    
    
    December 31,2009
    
    
    2008US intangible assets
    
    $
    17,535
    
    
    $
    35,058Other countries goodwill and intangible assetsArgentina
    
    
    26,188,435
    
    
    
    28,196,325Brazil
    
    
    12,597,173
    
    
    
    9,397,304Mexico
    
    
    4,818,438
    
    
    
    4,585,212Venezuela
    
    
    6,602,677
    
    
    
    18,585,234Other countries
    
    
    14,114,306
    
    
    
    12,112,413$
    64,321,029
    
    
    $
    72,876,488Total goodwill and intangible assets
    
    $
    64,338,564
    
    
    $
    72,911,546
  F-35




---



##### Table of Contents



MercadoLibre Inc.  Notes to Consolidated Financial Statements
 7. Segments (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Brazil
    
    
    93,087,757
    
    
    $
    73,692,604
    
    
    $
    50,260,134Argentina
    
    
    26,737,938
    
    
    
    19,862,790
    
    
    
    12,580,873Mexico
    
    
    15,314,982
    
    
    
    13,894,730
    
    
    
    10,700,597Venezuela
    
    
    27,331,095
    
    
    
    23,123,837
    
    
    
    7,679,857Other countries
    
    
    10,371,849
    
    
    
    6,448,659
    
    
    
    3,904,880Total net revenues
    
    $
    172,843,621
    
    
    $
    137,022,620
    
    
    $
    85,126,341
 8. Fair Value Measurement of Assets and Liabilities
  Quoted Prices in
    
    
    
    
    
    
    Quoted Prices inBalances as of
    
    
    active markets for
    
    
    Balances as of
    
    
    active markets forDecember 31,
    
    
    identical Assets
    
    
    December 31,
    
    
    identical AssetsDescription
    
    2009
    
    
    (Level 1)
    
    
    2008
    
    
    (Level 1)AssetsCash and Cash Equivalents:Money Market Funds
    
    $
    26,298,189
    
    
    $
    26,298,189
    
    
    $
    
    
    
    $
    Investments:Money Market Funds
    
    
    
    
    
    
    
    
    
    
    2,408,294
    
    
    
    2,408,294Corporate Debt Securities
    
    
    8,045,048
    
    
    
    8,045,048
    
    
    
    
    
    
    
    Total financial Assets
    
    $
    34,343,237
    
    
    $
    34,343,237
    
    
    $
    2,408,294
    
    
    $
    2,408,294Liabilities
Loans payable and other
financial liabilities:Put Options
    
    $
    
    
    
    $
    
    
    
    $
    185,000
    
    
    $
    185,000Total financial Liabilities
    
    $
    
    
    
    $
    
    
    
    $
    185,000
    
    
    $
    185,000
   F-36




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 8. Fair Value Measurement of Assets and Liabilities (Continued)
     9. Common Stock
 Authorized, issued and outstanding shares
  Number ofClass of Common Stock
    
    sharesClass A
    
    
    65,000,000Class B-1
    
    
    6,400,000Class B-2
    
    
    6,400,000Class C
    
    
    8,600,000Class D-1
    
    
    3,000,000Class D-2
    
    
    3,000,000Class E-1
    
    
    8,200,000Class E-2
    
    
    8,200,000Total number of shares
    
    
    108,800,000
  F-37




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 9. Common Stock (Continued)
  Common
Stock
  Voting rights
  10. Mandatorily Redeemable Convertible Preferred Stock
      F-38




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 10. Mandatorily Redeemable Convertible Preferred Stock (Continued)
     SeriesA
    
    
    B-1
    
    
    B-2
    
    
    C
    
    
    D-1
    
    
    D-2
    
    
    E-1
    
    
    E-2
    
    
    TotalBalances at December 31, 2006
    
    $
    1,670,600
    
    
    $
    1,935,051
    
    
    $
    4,329,699
    
    
    $
    36,118,251
    
    
    $
    1,873,862
    
    
    $
    10,634,628
    
    
    $
    6,458,239
    
    
    $
    1,056,215
    
    
    $
    64,076,545Accretion
    
    
    5,875
    
    
    
    6,805
    
    
    
    15,227
    
    
    
    165,156
    
    
    
    8,569
    
    
    
    48,628
    
    
    
    50,741
    
    
    
    8,298
    
    
    
    309,299Conversión of Preferred stock
    
    
    (1,676,475
    )
    
    
    (1,941,856
    )
    
    
    (4,344,926
    )
    
    
    (36,283,407
    )
    
    
    (1,882,431
    )
    
    
    (10,683,256
    )
    
    
    (6,508,980
    )
    
    
    (1,064,513
    )
    
    
    (64,385,844
    )Balances at December 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
  11. Warrants
     F-39




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 11. Warrants (Continued)
    12. Compensation Plan for Outside Directors
       F-40




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 12. Compensation Plan for Outside Directors (Continued)
     13. Stock Option Plan and Restricted Shares
   Stock Options
   F-41




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 13. Stock Option Plan and Restricted Shares (Continued)
 Stock Options (Continued)
       2009
    
    
    2008Weighted-
    
    
    
    
    
    
    Weighted-Number of
    
    
    average
    
    
    Number of
    
    
    averageoptions
    
    
    exercise price
    
    
    options
    
    
    exercise priceOutstanding, beginning of year
    
    
    53,919
    
    
    $
    1.23
    
    
    
    144,174
    
    
    $
    1.04Forfeited or expired
    
    
    
    
    
    
    
    
    
    
    (703
    )
    
    
    1.29Exercised
    
    
    (35,030
    )
    
    
    0.81
    
    
    
    (89,552
    )
    
    
    0.93Outstanding, end of the year
    
    
    18,889
    
    
    
    2.02
    
    
    
    53,919
    
    
    
    1.23Exercisable, end of the year
    
    
    17,211
    
    
    $
    1.90
    
    
    
    47,217
    
    
    $
    1.06
  F-42




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 13. Stock Option Plan and Restricted Shares (Continued)
 Stock Options (Continued)
  December 31, 2009
    
    
    December 31, 2008Outstanding
    
    
    Exercisable
    
    
    
    
    
    
    Outstanding
    
    
    ExercisableWeighted-average
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Weighted-averageremaining
    
    
    
    
    
    
    
    
    
    
    
    
    
    remainingExercise
    
    Number of
    
    
    contractual
    
    
    Number of
    
    
    Exercise
    
    
    Number of
    
    
    contractual
    
    
    Number ofprice
    
    options
    
    
    life (years)
    
    
    options
    
    
    price
    
    
    options
    
    
    life (years)
    
    
    options$0.01
    
    
    1,000
    
    
    
    1.00
    
    
    
    1,000
    
    
    $
    0.01
    
    
    
    11,531
    
    
    
    4.22
    
    
    
    11,531$1.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    1.00
    
    
    
    20,000
    
    
    
    1.07
    
    
    
    20,000$1.50
    
    
    15,389
    
    
    
    5.38
    
    
    
    14,336
    
    
    $
    1.50
    
    
    
    18,888
    
    
    
    6.37
    
    
    
    13,561$3.00
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3.00
    
    
    
    1,000
    
    
    
    1.41
    
    
    
    1,000$6.00
    
    
    2,500
    
    
    
    6.55
    
    
    
    1,875
    
    
    $
    6.00
    
    
    
    2,500
    
    
    
    7.55
    
    
    
    1,12518,889
    
    
    
    5.30
    
    
    
    17,211
    
    
    
    
    
    
    
    53,919
    
    
    
    3.91
    
    
    
    47,217
 Weighted average Exercise Price
    
    
    
    
    
    Weighted average Exercise Price- Options outstanding
    
    $
    2.02
    
    
    - Options outstanding
    
    $
    1.23- Options exercisable
    
    $
    1.90
    
    
    - Options exercisable
    
    $
    1.06
 December 31,
    
    
    December 31,2009
    
    
    2008Aggregate intrinsic value- Options outstanding
    
    $
    941,679
    
    
    $
    818,363- Options exercisable
    
    $
    859,979
    
    
    $
    724,626
  Restricted Shares
    F-43




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 13. Stock Option Plan and Restricted Shares (Continued)
 Restricted Shares (Continued)
  14. 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.
   F-44




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 15. Income Taxes
  Year Ended December 31,2009
    
    
    2008
    
    
    2007United States
    
    $
    (842,576
    )
    
    $
    (2,280,498
    )
    
    $
    (4,702,517
    )Brazil
    
    
    17,516,520
    
    
    
    11,684,179
    
    
    
    11,414,462Argentina
    
    
    11,462,508
    
    
    
    9,903,988
    
    
    
    3,807,411Venezuela
    
    
    7,838,746
    
    
    
    7,998,791
    
    
    
    1,765,927Mexico
    
    
    2,605,974
    
    
    
    2,568,619
    
    
    
    1,748,510Other Countries
    
    
    4,131,626
    
    
    
    (429,175
    )
    
    
    386,598$
    42,712,798
    
    
    $
    29,445,904
    
    
    $
    14,420,391
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    Foreign
    
    
    11,489,043
    
    
    
    8,149,523
    
    
    
    5,023,18211,489,043
    
    
    
    8,149,523
    
    
    
    5,023,182Deferred:Federal
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    (2,512,958
    )
    
    
    1,645,474
    
    
    
    (114,964
    )(2,512,958
    )
    
    
    1,645,474
    
    
    
    (114,964
    )8,976,085
    
    
    
    9,794,997
    
    
    
    4,908,218Asset Tax:Federal
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    527,920
    
    
    
    839,246
    
    
    
    (180,767
    )527,920
    
    
    
    839,246
    
    
    
    (180,767
    )Income / asset tax expense
    
    $
    9,504,005
    
    
    $
    10,634,243
    
    
    $
    4,727,451
  F-45




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 15. Income Taxes (Continued)
  Year Ended December 31,2009
    
    
    2008
    
    
    2007Net income before income tax
    
    $
    42,712,798
    
    
    $
    29,445,904
    
    
    $
    14,420,391Blended income tax rate
    
    
    33
    %
    
    
    35
    %
    
    
    33
    %Provision at blended tax rate
    
    $
    14,083,389
    
    
    $
    10,192,881
    
    
    $
    4,749,688Permanent differences:Non-deductible expenses
    
    
    338,873
    
    
    
    1,560,262
    
    
    
    409,453Dividend distibutions
    
    
    1,246,218
    
    
    
    3,172,495
    
    
    
    Non-taxable income
    
    
    (3,025,270
    )
    
    
    (2,774,711
    )
    
    
    (145,945
    )Currency translation
    
    
    (269,553
    )
    
    
    (214,950
    )
    
    
    (293,740
    )Change in valuation allowance
    
    
    (3,430,348
    )
    
    
    (1,827,217
    )
    
    
    557,759Business Combination
    
    
    
    
    
    
    (362,381
    )
    
    
    True up
    
    
    32,776
    
    
    
    48,618
    
    
    
    (368,997
    )Income tax expense
    
    $
    8,976,085
    
    
    $
    9,794,997
    
    
    $
    4,908,218
  F-46




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 15. Income Taxes (Continued)
  December 31,
    
    
    December 31,2009
    
    
    2008Deferred tax assetsAllowance for doubtful accounts
    
    $
    2,032,421
    
    
    $
    1,571,322Property and equipment, net
    
    
    17,493
    
    
    
    401,402Accounts payable and accrued expenses
    
    
    71,800
    
    
    
    36,975Social security payable
    
    
    743,360
    
    
    
    270,224Other liabilities
    
    
    472,543
    
    
    
    1,474,360Customer lists
    
    
    58,450
    
    
    
    44,422Taxes payable
    
    
    620,380
    
    
    
    196,093Provisions
    
    
    1,786,431
    
    
    
    1,310,009Foreign tax credit
    
    
    2,879,999
    
    
    
    Tax loss carryforwards
    
    
    10,533,478
    
    
    
    10,771,859Total deferred tax assets
    
    
    19,216,355
    
    
    
    16,076,666Valuation allowance
    
    
    (9,269,395
    )
    
    
    (11,652,192
    )Net deferred tax assets
    
    
    9,946,960
    
    
    
    4,424,474Deferred tax liabilitiesUnrealized net gains on investments
    
    
    (14,258
    )
    
    
    Property and equipment, net
    
    
    (301,807
    )
    
    
    (75,265
    )Customer lists
    
    
    (289,717
    )
    
    
    (401,016
    )Non compete agreement
    
    
    (96,327
    )
    
    
    (187,338
    )Outside basis dividends
    
    
    (3,623,134
    )
    
    
    CMG trademarks
    
    
    (845,556
    )
    
    
    (1,967,766
    )Foreign exchange effect
    
    
    (1,568,286
    )
    
    
    (2,706,068
    )Total deferred tax liabilities
    
    
    (6,739,085
    )
    
    
    (5,337,453
    )$
    3,207,875
    
    
    $
    (912,979
    )
     F-47




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 15. Income Taxes (Continued)
 2010
    
    $
    231,8072011
    
    $
    267,9622012
    
    $
    219,4772013
    
    $
    1,893,785Thereafter
    
    $
    31,660,850Total
    
    $
    34,273,881
   16. Commitments and Contingencies
 Litigation and Other Legal Matters
     F-48




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 16. Commitments and Contingencies (Continued)
 Litigation and Other Legal Matters (Continued)
        F-49




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 16. Commitments and Contingencies (Continued)
 Litigation and Other Legal Matters (Continued)
  Litigation after December 31, 2009
  Other contingencies
  Other Commitments
  Operating Leases
   F-50




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 16. Commitments and Contingencies (Continued)
 Operating Leases (Continued)
  For the year ended December 31, 2010
    
    
    1,542,139For the year ended December 31, 2011
    
    
    884,066For the year ended December 31, 2012
    
    
    227,731For the year ended December 31, 2013
    
    
    136,199Thereafter
    
    
    96,242$
    2,886,377
 Employment Contracts
   17. Long Term Retention Plan
  
    
    Year 1 (2008): 17%
    
    Year 2 (2009): 22%
    
    Year 3 (2010): 27%
    
    Year 4 (2011): 34%
   F-51




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 17. Long Term Retention Plan (Continued)
     December 31,
    
    
    December 31,Number of Shares
    
    2009
    
    
    2008Granted
    
    
    21,591
    
    
    
    21,591Non-vested at the beginning of the year
    
    
    21,591
    
    
    
    Non-vested at the end of the period / year
    
    
    15,015
    
    
    
    21,591Forfeited
    
    
    2,976
    
    
    
    Vested and paid to the employees
    
    
    3,600
    
    
    
    Outstanding
    
    
    15,015
    
    
    
    21,591
  December 31, 2009Weighted-averageAggregate
    
    
    remainingIntrinsic
    
    
    contractualvalue
    
    
    life (years)Shares outstanding
    
    
    778,828
    
    
    
    1.39
  F-52




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 17. Long Term Retention Plan (Continued)
    
    
    6.25% of the amount will be calculated in nominal terms (the nominal basis
share),
    
    6.25% will be adjusted by multiplying the nominal amount by the average closing
stock price for the last 60 trading days of the year previous to the payment date and
divided by the average closing stock price for the last 60 trading days of 2008 which
is $13.81 (the variable share).
      December 31, 2009Weighted-averageAggregate
    
    
    remainingIntrinsic
    
    
    contractualvalue
    
    
    life (years)Outstanding
    
    
    4,457,346
    
    
    
    3.75
  F-53




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 18. Share Repurchase Plan
       TotalNumber of Shares
    
    
    185,000Premium
    
    
    341,508Average Price
    
    
    1.85Commissions and other fees
    
    
    (5,552
    )Cash received
    
    
    335,956
    F-54




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 18. Share Repurchase Plan (Continued)
      TotalNumber of Shares
    
    
    226,000Premium
    
    
    302,997Average Price
    
    
    1.34Commissions and other fees
    
    
    (6,782
    )Cash received
    
    
    296,215
    19. Related Party Transactions
 Indemnification agreements
   F-55




---



##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 19. Related Party Transactions (Continued)
 Curtidos San Luis S.A.
    eBay Inc.
  
    
    Principal amount: $12,000,000
    
    Interest Rate: 7%
    
    Maturity: 5 years, or upon an issuance of securities, such as an initial public offering
   F-56




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 20. Valuation and qualifying accounts
  Charged /Balance at
    
    
    credited to
    
    
    
    
    
    
    Charges
    
    
    Balancebeginning of
    
    
    Net income /
    
    
    DeRemate
    
    
    Utilized /
    
    
    at end ofyear
    
    
    (loss)
    
    
    acquisition
    
    
    Write-offs
    
    
    yearAllowance for doubtful accountsYear ended December 31, 2007
    
    
    4,428,271
    
    
    
    5,306,423
    
    
    
    
    
    
    
    (3,122,269
    )
    
    
    6,612,425Year ended December 31, 2008
    
    
    6,612,425
    
    
    
    8,369,652
    
    
    
    
    
    
    
    (6,471,950
    )
    
    
    8,510,127Year ended December 31, 2009
    
    
    8,510,127
    
    
    
    9,681,048
    
    
    
    
    
    
    
    (14,493,168
    )
    
    
    3,698,007Funds receivable from customers
allowance for chargebacksYear ended December 31, 2007
    
    
    191,235
    
    
    
    928,409
    
    
    
    
    
    
    
    (530,540
    )
    
    
    589,104Year ended December 31, 2008
    
    
    589,104
    
    
    
    64,839
    
    
    
    
    
    
    
    (486,923
    )
    
    
    167,020Year ended December 31, 2009
    
    
    167,020
    
    
    
    572,555
    
    
    
    
    
    
    
    (652,026
    )
    
    
    87,549Tax valuation allowanceYear ended December 31, 2007
    
    
    13,140,096
    
    
    
    3,880,190
    
    
    
    
    
    
    
    (2,023,098
    )
    
    
    14,997,188Year ended December 31, 2008
    
    
    14,997,188
    
    
    
    (1,507,873
    )
    
    
    (1,837,123
    )
    
    
    
    
    
    
    11,652,192Year ended December 31, 2009
    
    
    11,652,192
    
    
    
    (897,123
    )
    
    
    
    
    
    
    (1,485,674
    )
    
    
    9,269,395ContingenciesYear ended December 31, 2007
    
    
    493,165
    
    
    
    2,024,946
    
    
    
    
    
    
    
    (1,499,580
    )
    
    
    1,018,531Year ended December 31, 2008
    
    
    1,018,531
    
    
    
    
    
    
    
    
    
    
    
    31,785
    
    
    
    1,050,316Year ended December 31, 2009
    
    
    1,050,316
    
    
    
    1,543,438
    
    
    
    
    
    
    
    (1,354,174
    )
    
    
    1,239,580
 21. Initial Public Offering
     F-57




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 21. Initial Public Offering (Continued)
  
    
    sale of 3,000,000 shares of common stock, net of underwriting discount and offering
expenses,
    
    conversion of all of the Companys outstanding shares of Preferred Stock and
different classes of common stock into shares of one class of common stock,
    
    final adjustment to fair value and reclassification from liability to equity of all
of the Companys outstanding warrants,
    
    issuance of 184,273 shares upon the exercise of the Companys outstanding warrants.
  F-58




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##### Table of Contents



MercadoLibre Inc.
Notes to Consolidated Financial Statements
 22. Quarterly Financial Data (Unaudited)
  Quarter endedMarch 31,
    
    
    June 30,
    
    
    September 30,
    
    
    December 31,2009Net Revenues
    
    $
    32,322,501
    
    
    $
    40,901,799
    
    
    $
    50,599,276
    
    
    $
    49,020,045Gross profit
    
    
    25,688,515
    
    
    
    32,306,322
    
    
    
    40,208,605
    
    
    
    38,682,129Net Income
    
    
    5,391,176
    
    
    
    6,679,779
    
    
    
    9,852,268
    
    
    
    11,285,570Net Income per share-basic
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.26Net Income per share-diluted
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.22
    
    
    
    0.26Weighted average sharesBasic
    
    
    44,069,134
    
    
    
    44,074,462
    
    
    
    44,088,936
    
    
    
    44,108,207Diluted
    
    
    44,130,866
    
    
    
    44,127,208
    
    
    
    44,138,031
    
    
    
    44,143,2812008Net Revenues
    
    $
    28,840,730
    
    
    $
    34,471,508
    
    
    $
    40,260,643
    
    
    $
    33,449,739Gross profit
    
    
    22,822,449
    
    
    
    27,570,005
    
    
    
    32,106,781
    
    
    
    26,986,812Net Income
    
    
    2,067,677
    
    
    
    2,947,095
    
    
    
    5,875,792
    
    
    
    7,921,097Net Income per share-basic
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.18Net Income per share-diluted
    
    
    0.05
    
    
    
    0.07
    
    
    
    0.13
    
    
    
    0.17Weighted average sharesBasic
    
    
    44,227,460
    
    
    
    44,238,166
    
    
    
    44,290,540
    
    
    
    44,264,906Diluted
    
    
    44,368,011
    
    
    
    44,369,317
    
    
    
    44,379,682
    
    
    
    44,369,6352007Net Revenues
    
    $
    16,459,337
    
    
    $
    18,973,288
    
    
    $
    22,800,130
    
    
    $
    26,893,586Gross profit
    
    
    12,971,998
    
    
    
    14,973,366
    
    
    
    17,918,082
    
    
    
    20,989,955Net Income
    
    
    994,187
    
    
    
    590,886
    
    
    
    2,785,474
    
    
    
    5,322,393Net Income per share-basic
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.07
    
    
    
    0.13Net Income per share-diluted
    
    
    0.02
    
    
    
    0.01
    
    
    
    0.07
    
    
    
    0.13Weighted average sharesBasic
    
    
    13,375,482
    
    
    
    13,575,158
    
    
    
    27,538,652
    
    
    
    41,226,563Diluted
    
    
    13,375,482
    
    
    
    13,987,128
    
    
    
    27,685,028
    
    
    
    41,375,907
   F-59




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    Exhibit Title2.01
    
    
    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
    
    
    Property Lease Agreement, dated June 28, 2005, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda. (1)10.08
    
    
    Property Lease Agreement, dated as of November 1, 2004, between MercadoLivre.com
Atividades de Internet Ltda. and Barros e Spitaletti Empreendimentos Ltda. (1)10.09
    
    
    Property Lease Agreement, dated of April, 1, 2008, between MercadoLivre.com Atividades
de Internet Ltda. And CNA Spitaletti Construtora e Incorporadora Ltda. (5)10.10
    
    
    Arias Trust Contract, dated as of June 5, 2006 and amended as of May 29, 2008
(translated from Spanish) (5)10.11
    
    
    Management Incentive Bonus Plan of the Registrant. (2)10.12
    
    
    Amended and Restated 1999 Stock Option and Restricted Stock Plan (2)10.13
    
    
    Employment Agreements with Officers.(2)




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##### Table of Contents



ExhibitNumber
    
    Exhibit Title10.14
    
    
    Form of Restricted Stock Award for Outside directors. (3)10.15
    
    
    Employment Agreement with Osvaldo Gimenez, dated as of March 26, 2008* (5)10.16
    
    
    2009 Equity Compensation Plan* (7)10.17
    
    
    2008 Long-Term Retention Plan (6)10.18
    
    
    2009 Long-Term Retention Plan (6)10.19
    
    
    Property Lease Agreement, dated February 01, 2010, between MercadoLivre.com Atividades
de Internet Ltda. and Verbo Empreendimentos e Participações Ltda.*10.20
    
    
    Property Lease Agreement, dated June 28, 2005, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda.*10.21
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda.*10.22
    
    
    Property Lease Agreement, dated as of November 1, 2004, between MercadoLivre.com
Atividades de Internet Ltda. and Barros e Spitaletti Empreendimentos Ltda.*10.23
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and KW Radar Construtora e Incorporadora Ltda*10.24
    
    
    Property Lease Agreement, dated of April, 1, 2008, between MercadoLivre.com Atividades
de Internet Ltda. and CNA Spitaletti Construtora e Incorporadora Ltda.*10.25
    
    
    Amendment Agreement, dated October 30, 2009, between MercadoLivre.com Atividades de
Internet Ltda. and CNA Spitaletti Construtora e Incorporadora Ltda.*10.26
    
    
    Property Lease Amendment, dated May 5, 2008, between MercadoLibre Venezuela S.A. and G4
Grupo 4 Inmobiliaria Internacional Industrial Comercial, C.A.*21.01
    
    
    List of Subsidiaries*23.01
    
    
    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**
 *
    
    Filed Herewith**
    
    Furnished Herewith




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##### Table of Contents



(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