MercadoLibre, Inc. to Report Venezuela Results at SICAD II Exchange Rate

MercadoLibre, Inc. to Report Venezuela Results at SICAD II Exchange Rate

BUENOS AIRES, Argentina, May 16, 2014 (GLOBE NEWSWIRE) -- MercadoLibre, Inc.
(Nasdaq:MELI) (http://www.mercadolibre.com), Latin America's leading
e-commerce technology company, announced today that it will no longer use
Venezuela's SICAD 1 floating exchange rate, which is currently at 10 bolivars
per U.S. dollar, and that the company has adopted the SICAD 2 floating rate of
approximately 50 bolivars per U.S. dollar.

Pedro Arnt, Chief Financial Officer, commented, "MercadoLibre remains
committed to our business in Venezuela, which continues to show consistent
growth in underlying business metrics. At this moment, given the existence of
an additional legal exchange rate, it makes sense for us to report our
Venezuela segment at SICAD 2 in order to provide a more accurate
representation of our earnings in the country."

Since January 24, MercadoLibre reported its Venezuela results at the SICAD 1
rate, which fluctuated between 10 and 11.8 bolivars per dollar, but the
company was never able to access this rate to convert currency. MercadoLibre
had previously used the official rate of 6.3 bolivars per dollar, the only
published legal rate allowable for translation of currencies at the time
according to U.S. GAAP.

Given its lack of access to the SICAD 1 rate and the greater likelihood of
settling transactions at the SICAD 2 rate, MercadoLibre has determined that it
will use SICAD 2 as the exchange rate to re-measure its bolivar-denominated
monetary assets and liabilities and to re-measure the revenues and expenses of
its Venezuelan subsidiaries, effective as of May 16.

As a result of this change, MercadoLibre expects to incur a one-time
re-measurement charge between $47 million and $57 million dollars in the
second quarter due to the write-down of all of its bolivar-denominated assets.

Furthermore, the company also expects to recognize a foreign exchange loss of
between $14.5 million and $21.5 million and a deferred income tax gain of
between $6.5 million and $9.5 million derived from the loss on foreign
exchange related to the revaluation of its dollar-denominated liabilities
during the second quarter of 2014.

Finally, MercadoLibre estimates that the change to SICAD 2 will reduce second
quarter revenues from its Venezuelan segment by approximately $12 million to
$18 million versus same period revenues had the change in exchange rate not
occurred.

"Along with MercadoLibre's significant growth opportunities comes the
volatility and uncertainty inherent to developing economies, and we manage our
business to seize these opportunities over the long run. Venezuela is a major
Latin American economy, one of the world's largest energy producers, and has a
sizable and active internet population," Arnt concluded.

CONTACT: MercadoLibre, Inc.
         Investor Relations
         investor@mercadolibre.com
         http://investor.mercadolibre.com

company logo
 
Press spacebar to pause and continue. Press esc to stop.