SEC Comment Letter for MERCADOLIBRE INC (MELI) (CIK 0001099590) (MELI) — Jun 24, 2013
MERCADOLIBRE INC (MELI) (CIK 0001099590)
Date: June 24, 2013 · CIK: 0001099590 · Accession: 0000000000-13-034398
AI Filing Summary & Sentiment
File numbers found in text: 001-33647
Referenced dates: May 23, 2013
Letter
June 24, 2013 Via E -mail Pedro Arnet Executive VP & CFO MercadoLibre, Inc. Arias 3751, 7th Floor Buenos Aires, C1430CRG, Argentina
Re: MercadoLibre, Inc Form 10-K for Fiscal Year Ended December 31, 201 2 Filed February 28, 201 3 File No. 001-33647
Dear Mr. Arnet :
We have reviewed your letter dated May 23, 2013 in connection with the above - referenced filing an d have the following comment s. In our comment s, we may ask you to provide us with information so we may better understand your disclosure.
Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response . If you do not believe our comment s apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response.
After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments. Unless otherwise noted , where prior comments are referred to they refer to our letter dated May 9 , 2013 .
Form 10 -K for Fiscal Year Ended December 31, 201 2
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Critical Accounting Policies and Estimates
Foreign Currency Translation, page 49
1. We note in your response to prior comment 1 you state that there is no legal prohibition in Venezuela in connection with divi dend distributions. However, it appears based on your response that the only means by which you are currently able to obtain U.S. dollars to make dividend distributions is through the CADIVI. Please clarify whether this is the case, and if so, tell us wh at consideration you gave to disclosing this. In addition, we note
Mr. Pedro Arnet MercadoLibre, Inc. June 24 , 2013 Page 2
that no dividends were declared by your Venezuelan subsidiary during fiscal 2012. Please explain why and to the extent this is due to potential delays in obtaining CADIVI approval in a tim ely manner, tell us whether you considered addressing the impact this process may have on your liquidity. Lastly, please tell us what consideration you gave to disclosing the factors that you provide in your response regarding the reasons why you expect t hat the current restrictions will not have a material adverse effect on your overall business plan in the long run.
2. We note in your response to prior comment 2 you state that because of the manner in which foreign exchange regulations have been implemen ted by the Venezuelan government as of the date of your Form 10 -K for the year ended December 31, 2012, it did not imply the deconsolidation risk to be a material risk at the time of that filing. Please explain to us the specific factors that you consider ed as it relates to deconsolidation risk and describe further the factors that were in place at December 31, 2011, which indicated deconsolidated was a significant risk at such time.
Results of Operations
Year Ended December 31, 2012 compared to year e nded December 31, 2012 , Page 61
3. We note your response to prior comment 3 where you indicate that the various service categories that make up your revenue streams such as ad sales, real estate, motors, off platform payment fees, and financing fees represent, on an individual basis, a small percen tage of your net revenues. However, we note your disclosure on page 61 that non - marketplace revenues from financing and off -platform payments grew 37% in the year ended December 31, 2012 as compared to the same period in 2011, mainly as a consequence of a 36.2% increase in total payments volume paid using MercadoPago. Please clarify the dollar value of revenues generated from financing and off -platform payment fees and tell us what consideration you gave to also separately disclosing these revenues consid ering you disclose other metrics relating to these revenue sources. Please also tell us what consideration you gave to including this disclosure in your segment discussion.
Item 11. Executive Compensation (Incorporated by Reference from Definitive Proxy Statement Filed April 26, 2013)
Executive Compensation, page 21
4. In the first two bullet points on pag e 27, you disclose certain company performance measures that are based on adjustments “as determined by the compensation committee.” In future filings, please revi se to disclose how the adjustments are calculated so that your disclosure complies with Instruction 5 to Item 402(b) of Regulation S -K.
Mr. Pedro Arnet MercadoLibre, Inc. June 24 , 2013 Page 3
You may contact Laura Veator , Staff Accountant , at (202) 551 -3716 if you have questions regarding comments on the finan cial statements and re lated matters. If you have any other questions, please contact Gabriel Eckstein, Attorney -Advisor, at (202) 551 -3286 or Maryse Mills -Apenteng, Special Counsel, at (202) 551 -3457. If you require further assistance, do not hesitate to contact me at (202) 551 -3499.
Sincerely,
/s/ Kathleen Collins
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June 24, 2013 Via E -mail Pedro Arnet Executive VP & CFO MercadoLibre, Inc. Arias 3751, 7th Floor Buenos Aires, C1430CRG, Argentina Re: MercadoLibre, Inc Form 10-K for Fiscal Year Ended December 31, 201 2 Filed February 28, 201 3 File No. 001-33647 Dear Mr. Arnet : We have reviewed your letter dated May 23, 2013 in connection with the above - referenced filing an d have the following comment s. In our comment s, we may ask you to provide us with information so we may better understand your disclosure. Please respond to this letter within ten business days by amending your filing, by providing the requested information, or by advising us when you will provide the requested response . If you do not believe our comment s apply to your facts and circumstances or do not believe an amendment is appropriate, please tell us why in your response. After reviewing any amendment to your filing and the information you provide in response to these comment s, we may have additional comments. Unless otherwise noted , where prior comments are referred to they refer to our letter dated May 9 , 2013 . Form 10 -K for Fiscal Year Ended December 31, 201 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations Critical Accounting Policies and Estimates Foreign Currency Translation, page 49 1. We note in your response to prior comment 1 you state that there is no legal prohibition in Venezuela in connection with divi dend distributions. However, it appears based on your response that the only means by which you are currently able to obtain U.S. dollars to make dividend distributions is through the CADIVI. Please clarify whether this is the case, and if so, tell us wh at consideration you gave to disclosing this. In addition, we note Mr. Pedro Arnet MercadoLibre, Inc. June 24 , 2013 Page 2 that no dividends were declared by your Venezuelan subsidiary during fiscal 2012. Please explain why and to the extent this is due to potential delays in obtaining CADIVI approval in a tim ely manner, tell us whether you considered addressing the impact this process may have on your liquidity. Lastly, please tell us what consideration you gave to disclosing the factors that you provide in your response regarding the reasons why you expect t hat the current restrictions will not have a material adverse effect on your overall business plan in the long run. 2. We note in your response to prior comment 2 you state that because of the manner in which foreign exchange regulations have been implemen ted by the Venezuelan government as of the date of your Form 10 -K for the year ended December 31, 2012, it did not imply the deconsolidation risk to be a material risk at the time of that filing. Please explain to us the specific factors that you consider ed as it relates to deconsolidation risk and describe further the factors that were in place at December 31, 2011, which indicated deconsolidated was a significant risk at such time. Results of Operations Year Ended December 31, 2012 compared to year e nded December 31, 2012 , Page 61 3. We note your response to prior comment 3 where you indicate that the various service categories that make up your revenue streams such as ad sales, real estate, motors, off platform payment fees, and financing fees represent, on an individual basis, a small percen tage of your net revenues. However, we note your disclosure on page 61 that non - marketplace revenues from financing and off -platform payments grew 37% in the year ended December 31, 2012 as compared to the same period in 2011, mainly as a consequence of a 36.2% increase in total payments volume paid using MercadoPago. Please clarify the dollar value of revenues generated from financing and off -platform payment fees and tell us what consideration you gave to also separately disclosing these revenues consid ering you disclose other metrics relating to these revenue sources. Please also tell us what consideration you gave to including this disclosure in your segment discussion. Item 11. Executive Compensation (Incorporated by Reference from Definitive Proxy Statement Filed April 26, 2013) Executive Compensation, page 21 4. In the first two bullet points on pag e 27, you disclose certain company performance measures that are based on adjustments “as determined by the compensation committee.” In future filings, please revi se to disclose how the adjustments are calculated so that your disclosure complies with Instruction 5 to Item 402(b) of Regulation S -K. Mr. Pedro Arnet MercadoLibre, Inc. June 24 , 2013 Page 3 You may contact Laura Veator , Staff Accountant , at (202) 551 -3716 if you have questions regarding comments on the finan cial statements and re lated matters. If you have any other questions, please contact Gabriel Eckstein, Attorney -Advisor, at (202) 551 -3286 or Maryse Mills -Apenteng, Special Counsel, at (202) 551 -3457. If you require further assistance, do not hesitate to contact me at (202) 551 -3499. Sincerely, /s/ Kathleen Collins Kathleen Collins Accounting Bra nch Chief cc: Marcelo Melamud Chief Accounting Officer