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Dynamic quotes 
OFFON

MONSTER BEVERAGE CORPORATION

(MNST)
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MONSTER BEVERAGE : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-K)

02/28/2020 | 05:15pm EDT
The following Management's Discussion and Analysis of Financial Condition and
Results of Operations ("MD&A") is provided as a supplement to - and should be
read in conjunction with - our financial statements and the accompanying notes
("Notes") included in Part II, Item 8 of this Form 10-K. This discussion
contains forward-looking statements that are based on management's current
expectations, estimates and projections about our business and operations. Our
actual results may differ materially from those currently anticipated and
expressed in such forward-looking statements. See "Forward-Looking Statements"
and "Part I, Item 1A - Risk Factors."

This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections:

Our Business - a general description of our business, the value drivers of our

? business, and opportunities and risks facing our Company, stock repurchases,

acquisitions and divestitures;

? Results of Operations - an analysis of our consolidated results of operations

for the three years presented in our financial statements;

? Sales - details of our sales measured on a quarterly basis in both dollars and

cases;

? Inflation - information about the impact that inflation may or may not have on

our results;

? Liquidity and Capital Resources - an analysis of our cash flows, sources and

uses of cash and contractual obligations;

Accounting Policies and Pronouncements - a discussion of accounting policies

? that require critical judgments and estimates including newly issued accounting

pronouncements;

Forward-Looking Statements - cautionary information about forward-looking

? statements and a description of certain risks and uncertainties that could

cause our actual results to differ materially from the Company's historical

results or our current expectations or projections; and

Market Risks - information about market risks and risk management. (See

? "Forward-Looking Statements" and "Part II, Item 7A - Quantitative and

Qualitative Disclosures About Market Risks").


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  Table of Contents

Our Business

Overview

We develop, market, sell and distribute energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names:

?   Monster Energy®                     ?   NOS®
?   Monster Energy Ultra®               ?   Full Throttle®
?   Monster Rehab®                      ?   Burn®
?   Monster MAXX®                       ?   Mother®
?   Java Monster®                       ?   Nalu®
?   Muscle Monster®                     ?   Ultra Energy®
?   Espresso Monster®                   ?   Play® and Power Play® (stylized)
?   Punch Monster®                      ?   Relentless®
?   Juice Monster®                      ?   BPM®
?   Monster Hydro®                      ?   BU®
?   Monster HydroSport Super Fuel®      ?   Gladiator®
?   Monster Dragon Tea®                 ?   Samurai®
?   Caffé Monster®                      ?   Live+®
?   Reign Total Body FuelTM             ?   Predator®
?   Reign InfernoTM Thermogenic Fuel




Our net sales of $4.20 billion for the year ended December 31, 2019 represented
record annual net sales. Net sales for the year ended December 31, 2019 were
positively impacted by approximately $101.9 million as a result of a price
increase effective from November 1, 2018 in the United States ("the U.S. Price
Increase") and effective from February 1, 2019 in Canada (the "Canada Price
Increase"), on certain of our Monster Energy® brand energy drinks. Net changes
in foreign currency exchange rates had an unfavorable impact on net sales of
approximately $69.2 million for the year ended December 31, 2019.

The vast majority of our net sales are derived from our Monster Energy® Drinks
segment. Net sales of our Monster Energy® Drinks segment were $3.90 billion for
the year ended December 31, 2019.  Net sales of our Strategic Brands segment
were $274.9 million for the year ended December 31, 2019. Our Monster Energy®
Drinks segment represented 92.9% and 91.9% of our net sales for the years ended
December 31, 2019 and 2018, respectively. Our Strategic Brands segment
represented 6.5% and 7.5% of our net sales for the year ended December 31, 2019
and 2018, respectively. Our Other segment represented 0.5% and 0.6% of our net
sales for the years ended December 31, 2019 and 2018, respectively.

Net changes in foreign currency exchange rates had an unfavorable impact on net
sales in the Monster Energy® Drinks segment of approximately $59.6 million for
the year ended December 31, 2019. Net changes in foreign currency exchange rates
had an unfavorable impact on net sales in the Strategic Brands segment of
approximately $9.6 million for the year ended December 31, 2019.

Our growth strategy includes expanding our international business. Gross sales
to customers outside the United States amounted to $1.62 billion, $1.36 billion
and $1.09 billion for the years ended December 31, 2019, 2018 and 2017,
respectively. Such sales were approximately 33%, 31% and 28% of gross sales for
the years ended December 31, 2019, 2018 and 2017, respectively.

Our customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, value stores, e-commerce


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retailers and the military. Percentages of our gross sales to our various
customer types for the years ended December 31, 2019, 2018 and 2017 are
reflected below. Such information includes sales made by us directly to the
customer types concerned, which include our full service beverage
bottlers/distributors in the United States. Such full service beverage
bottlers/distributors in turn sell certain of our products to some of the same
customer types listed below. We limit our description of our customer types to
include only our sales to our full service bottlers/distributors without
reference to such bottlers/distributors' sales to their own customers.


                                                            2019    2018    

2017

U.S. full service bottlers/distributors                     58%     61%    

63%

International full service bottlers/distributors            33%     31%    

28%

Club stores, mass merchandisers and e-commerce retailers 7% 6%

7%

Retail grocery, specialty chains and wholesalers             1%      1%    
 1%
Other                                                        1%      1%      1%




Our customers include Coca-Cola Canada Bottling Limited, Coca-Cola Consolidated,
Inc., Coca-Cola Bottling Company United, Inc., Reyes Coca-Cola Bottling, LLC,
Great Lakes Coca-Cola Distribution, LLC, Coca-Cola Southwest Beverages LLC, The
Coca-Cola Bottling Company of Northern New England, Inc., Swire Pacific
Holdings, Inc. (USA), Liberty Coca-Cola Beverages, LLC, Coca-Cola European
Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Coca-Cola Amatil, Swire Coca-Cola
(China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola ?çecek and
certain other TCCC network bottlers, Asahi Soft Drinks, Co., Ltd., Kalil
Bottling Group (until March 5, 2019), Big Geyser, Inc. (until April 5, 2019),
Wal-Mart, Inc. (including Sam's Club) and Costco Wholesale Corporation. A
decision by any large customer to decrease amounts purchased from us or to cease
carrying our products could have a material negative effect on our financial
condition and consolidated results of operations.

TCCC, through the TCCC Subsidiaries, accounted for approximately 2%, 3% and 18%
of our net sales for the years ended December 31, 2019, 2018 and 2017,
respectively. As part of TCCC's North America Refranchising, the territories of
certain TCCC Subsidiaries have been transitioned to certain independent TCCC
bottlers/distributors and/or TCCC Related Parties. Accordingly, our percentage
of net sales to the TCCC Subsidiaries significantly decreased for the years
ended December 31, 2019, 2018 and 2017.

Coca-Cola Consolidated, Inc. accounted for approximately 13% of our net sales for the years ended December 31, 2019, 2018 and 2017.

Reyes Coca-Cola Bottling, LLC accounted for approximately 11%, 12% and 6% of the Company's net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

Coca-Cola European Partners accounted for approximately 10%, 10% and 9% of the Company's net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

We continue to incur expenditures in connection with the development and introduction of new products and flavors.

Value Drivers of our Business

We believe that the key value drivers of our business include the following:

International Growth - The introduction, development and sustained

? profitability of our Monster Energy® brand internationally remains a key value

driver for our corporate growth. One or more of our products are distributed in

   approximately 153 countries and territories worldwide.


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Profitable Growth - We believe "functional" value-added brands supported by

marketing and innovation and targeted to a diverse consumer base, drive

profitable growth. We continue to broaden our family of products to provide

more alternatives to consumers and launched Reign Total Body FuelTM high

? performance energy drinks in the first quarter of 2019. We are focused on

increasing the profit margins for both our Monster Energy® Drinks segment and

our Strategic Brands segment, and believe that tailored branding, packaging,

pricing and distribution channel strategies help achieve profitable growth. We

are implementing these strategies with a view to continuing profitable growth.

Cost Management - The principal focus of cost management will continue to be on

reducing input procurement and production costs on a per-case basis, including

raw material costs and co-packing fees, as well as reducing freight costs by

? securing additional co-packing facilities strategically localized. Another key

area of focus is to decrease promotional allowances, selling and general and

   administrative costs, including sponsorships, sampling, promotional and
   marketing expenses, as a percentage of net sales.

Efficient Capital Structure - Our capital structure is designed to optimize our

working capital in order to finance expansion, both domestically and

? internationally. We believe that with our strong capital position, our ability

to raise funds, if necessary, at a relatively low effective cost of borrowings,

provides a competitive advantage. The reduction of days outstanding for

accounts receivable and inventory days on hand will remain an area of focus.

We believe that, subject to increases in the costs of certain raw materials
being contained, these value drivers, when implemented and/or achieved in the
United States and internationally, will result in: (1) improving or maintaining
our product gross profit margins; (2) providing additional leverage over time
through reduced expenses as a percentage of net operating revenues; and
(3) enhancing our cost of capital. The ultimate measure of success is and will
be reflected in our current and future results of operations.

Gross and net sales, gross profit, operating income, net income and net income
per share represent key measurements of the above value drivers. These
measurements will continue to be a key management focus in 2020 and beyond (See
"Part II, Item 7 - Results of Operations - Results of Operations for the Year
Ended December 31, 2019, Compared to the Year Ended December 31, 2018").

As of December 31, 2019, the Company had working capital of $1.66 billion
compared to $1.20 billion as of December 31, 2018. The increase in working
capital was primarily the result of the $1.12 billion of net income earned
during the year ended December 31, 2019. For the year ended December 31, 2019,
our net cash provided by operating activities was approximately $1.11 billion as
compared to $1.16 billion for the year ended December 31, 2018. Principal uses
of cash flows in 2019, were purchases of investments, repurchase of our common
stock, development of our Monster Energy® brand internationally and acquisitions
of property and equipment. These principal uses of cash flows are expected to be
and remain our principal recurring use of cash and working capital funds in the
future (See "Part II, Item 7 - Liquidity and Capital Resources").

Opportunities, Challenges and Risks

Looking forward, our management has identified certain challenges and risks for
the beverage industry and the Company, including our significant commercial
relationship with TCCC and TCCC's status as a significant shareholder of the
Company, in each case as described above under "Part I, Item 1A - Risk Factors."

In addition, legislation has been proposed and/or adopted at the U.S., state,
county and/or municipal level and proposed and/or adopted in certain foreign
jurisdictions to restrict the sale of energy drinks (including prohibiting the
sale of energy drinks at certain establishments or pursuant to certain
governmental programs), limit caffeine content, require

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certain product labeling disclosures and/or warnings, impose taxes, limit
product sizes or impose age restrictions for the sale of energy drinks. In
addition, articles critical of the caffeine content in energy drinks and their
perceived benefits and articles indicating certain health risks of energy drinks
have been published. The proposal and/or adoption of such legislation and the
publication of such articles, or the future proposal and/or adoption of similar
legislation or publication of similar articles, may adversely affect our
Company. In addition, uncertainty and/or volatility in our domestic and/or our
international economic markets could negatively affect both the stability of our
industry and our Company. Furthermore, our growth strategy includes expanding
our international business, which exposes us to risks inherent in conducting
international operations, including the risks associated with foreign currency
exchange rate fluctuations. Consumer discretionary spending also represents a
challenge to the successful marketing and sale of our products. Increases in
consumer and regulatory awareness of the health problems arising from obesity
and inactive lifestyles continue to represent a challenge. We recognize that
obesity is a complex and serious public health problem. Our commitment to
consumers begins with our broad product line and a wide selection of diet, light
and low calorie beverages within our energy drink product lines. We continuously
strive to meet changing consumer needs through beverage innovation, choice and
variety. (See "Part I, Item 1A - Risk Factors").

Our historical success is attributable, in part, to our introduction of
different and innovative beverages which have been positively accepted by
consumers. Our future success will depend, in part, upon our continued ability
to develop and introduce different and innovative beverages that meet consumer
preferences, although there can be no assurance of our ability to do so. In
order to retain and expand our market share, we must continue to develop and
introduce different and innovative beverages and be competitive in the areas of
price, quality, method of distribution, brand image and intellectual property
protection. The beverage industry is subject to changing consumer preferences
that may adversely affect us if we misjudge such preferences.

In addition, other key challenges and risks that could impact our Company's future financial results include, but are not limited to:

? the risks associated with the realization of benefits from our relationship

with TCCC;

? the impact of TCCC's bottlers/distributors distributing Coca-Cola brand energy

drinks;

? changes in consumer preferences and demand for our products;

? economic uncertainty in the United States, Europe and other countries in which

we operate;

? the risks associated with foreign currency exchange rate fluctuations;

? maintenance of our brand image, product quality and corporate reputation;

increasing concern over various environmental, human rights and health matters,

? including obesity, caffeine consumption and energy drinks generally, and

changes in regulation and consumer preferences in response to those concerns;

profitable expansion and growth of our family of brands in the competitive

? market place (See "Part I, Item 1 - Business - Competition" and

"Part I, Item 1 - Business - Sales and Marketing");

? costs of establishing and promoting our brands internationally;

? increase in costs of raw materials used by us;

restrictions on imports and sources of supply, duties or tariffs, changes in

? related government regulations and disruptions in the timely import or export

of our products and/or ingredients due to port strikes, related labor issues or

other importation impediments;

protection of our existing intellectual property portfolio of trademarks and

? copyrights and the continuous pursuit to develop and protect new and innovative

trademarks and copyrights for our expanding product lines;

limitations on available quantities of aluminum cans in general as well as

? certain package containers and lids such as the aluminum 24-ounce cap can and

resealable lids;

? limitations on co-packing availability, particularly for retort production as

well for 550ml products utilizing BRE resealable lids;


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? the impact of Brexit on our business in Europe and the United Kingdom; and

the imposition of additional regulation, including regulation restricting the

? sale of energy drinks, limiting caffeine content in beverages, requiring

product labeling and/or warnings, imposing excise taxes and/or sales taxes,

and/or limiting product size and/or age restrictions.

See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.

We believe that the following opportunities exist for us:

? domestic and international growth potential of our products;

? growth potential of the energy drink category, both domestically and

internationally;

? planned and future new product and product line introductions with the

objective of increasing sales and/or contributing to higher profitability;

? the introduction of new package formats designed to generate strong revenue

growth;

? package, pricing and channel opportunities to increase profitable growth;

? effective strategic positioning to capitalize on industry growth;

? broadening distribution/expansion opportunities in both domestic and

international markets;

? launching and/or relaunching our products and new products into new domestic

and international markets and channels; and

? continued focus on reducing our cost base.


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Results of Operations

The following table sets forth key statistics for the years ended December 31, 2019, 2018 and 2017, respectively.



(In thousands, except per share
amounts)                                                                             Percentage   Percentage
                                                                                       Change       Change
                                            2019           2018           2017       19 vs. 18    18 vs. 17
Net sales1                               $ 4,200,819    $ 3,807,183    $ 3,369,045        10.3%        13.0%
Cost of sales                              1,682,234      1,511,808      1,231,355        11.3%        22.8%
Gross profit*1                             2,518,585      2,295,375      2,137,690         9.7%         7.4%
Gross profit as a percentage of net
sales                                          60.0%          60.3%          63.5%

Operating expenses2                        1,115,646      1,011,756        938,903        10.3%         7.8%
Operating expenses as a percentage
of net sales                                   26.6%          26.6%          27.9%

Operating income1,2                        1,402,939      1,283,619      1,198,787         9.3%         7.1%
Operating income as a percentage of
net sales                                      33.4%          33.7%          35.6%

Other income, net                             13,023          9,653          2,836        34.9%       240.4%

Income before provision for income
taxes1,2                                   1,415,962      1,293,272      

1,201,623 9.5% 7.6%

Provision for income taxes                   308,127        300,268       

380,945 2.6% (21.2%)


Income taxes as a percentage of
income before taxes                            21.8%          23.2%          31.7%

Net income1,2                            $ 1,107,835    $   993,004    $   820,678        11.6%        21.0%
Net income as a percentage of net
sales                                          26.4%          26.1%        

24.4%


Net income per common share:
Basic                                    $      2.04    $      1.78    $      1.45        14.6%        23.1%
Diluted                                  $      2.03    $      1.76    $      1.42        15.2%        23.8%

Case sales (in thousands) (in
192­ounce case equivalents)                  448,770        410,886       
359,957         9.2%        14.1%




¹ Includes $46.3 million, $44.3 million and $43.4 million for the years ended
December 31, 2019, 2018 and 2017, respectively, related to the recognition of
deferred revenue.

2 Includes $11.3 million, $26.6 million and $35.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to distributor termination costs.

*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.

Results of Operations for the Year Ended December 31, 2019 Compared to the Year Ended December 31, 2018.


Net Sales. Net sales were $4.20 billion for the year ended December 31, 2019, an
increase of approximately $393.6 million, or 10.3% higher than net sales of
$3.81 billion for the year ended December 31, 2018. Net sales for the year ended
December 31, 2019 were positively impacted by approximately $101.9 million as a
result of the U.S. Price Increase and the Canada Price Increase, on certain of
our Monster Energy® brand energy drinks. Net changes in foreign currency
exchange rates had an unfavorable impact on net sales of approximately $69.2
million for the year ended December 31, 2019.

Net sales for the Monster Energy® Drinks segment were $3.90 billion for the year
ended December 31, 2019, an increase of approximately $405.6 million, or 11.6%
higher than net sales of $3.50 billion for the year ended December 31,

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2018. Net sales for the Monster Energy® Drinks segment increased primarily due
to (i) sales of our Reign Total Body FuelTM high performance energy drinks,
introduced in the first quarter of 2019, (ii) the price increases described
above, and (iii) increased worldwide sales by volume of our Monster Energy®
brand energy drinks as a result of increased consumer demand. Net changes in
foreign currency exchange rates had an unfavorable impact on net sales for the
Monster Energy® Drinks segment of approximately $59.6 million for the year ended
December 31, 2019.

Net sales for the Strategic Brands segment were $274.9 million for the year
ended December 31, 2019, a decrease of approximately $10.9 million, or 3.8%
lower than net sales of $285.8 million for the year ended December 31, 2018. Net
changes in foreign currency exchange rates had an unfavorable impact on net
sales for the Strategic Brands segment of approximately $9.6 million for the
year ended December 31, 2019.

Net sales for the Other segment were $21.9 million for the year ended December
31, 2019, a decrease of approximately $1.1 million, or 4.6% lower than net sales
of $22.9 million for the year ended December 31, 2018.

Case sales, in 192-ounce case equivalents, were 448.8 million cases for the year
ended December 31, 2019, an increase of approximately 37.9 million cases or 9.2%
higher than case sales of 410.9 million cases for the year ended December 31,
2018. The overall average net sales per case (excluding net sales of AFF
Third-Party Products of $21.9 million and $22.9 million for the years ended
December 31, 2019 and 2018, respectively, as these sales do not have unit case
equivalents) increased to $9.31 for the year ended December 31, 2019, which was
1.1% higher than the average net sales per case of $9.21 for the year ended
December 31, 2018.  The increase in the average net sales per case was primarily
attributable to a price increase effective from November 1, 2018 in the United
States and effective from February 1, 2019 in Canada, on certain of our Monster
Energy® brand energy drinks.

Gross Profit. Gross profit was $2.52 billion for the year ended December 31,
2019, an increase of approximately $223.2 million, or 9.7% higher than the gross
profit of $2.30 billion for the year ended December 31, 2018. The increase in
gross profit dollars was primarily the result of the $405.6 million increase in
net sales of our Monster Energy® Drinks segment for the year ended December 31,
2019.

Gross profit as a percentage of net sales decreased to 60.0% for the year ended
December 31, 2019 from 60.3% for the year ended December 31, 2018. The decrease
for the year ended December 31, 2019 was primarily the result of geographical
and product sales mix. Such decrease was partially offset by the sales price
increases discussed above.

Operating Expenses. Total operating expenses were $1.12 billion for the year
ended December 31, 2019, an increase of approximately $103.9 million, or 10.3%
higher than total operating expenses of $1.01 billion for the year ended
December 31, 2018. The increase in operating expenses was primarily due to
increased payroll expenses of $36.0 million (of which $6.2 million was related
to an increase in stock-based compensation), increased expenditures of $25.1
million for professional service fees, including legal and accounting costs,
increased expenditures of $13.4 million for sponsorships and endorsements, and
increased expenditures of $19.1 million in other marketing expenses. The
increase in operating expenses was partially offset by decreased expenditures of
$15.4 million related to the costs associated with distributor terminations.
Operating expenses for the year ended December 31, 2019 included a $15.5 million
provision in connection with an intellectual property claim brought by the
descendants of Hubert Hansen in relation to the Company's use of the Hubert
Hansen name prior to the transaction with TCCC, that closed in 2015.

Operating Income. Operating income was $1.40 billion for the year ended December
31, 2019, an increase of approximately $119.3 million, or 9.3% higher than
operating income of $1.28 billion for the year ended December 31, 2018.
Operating income as a percentage of net sales was 33.4% and 33.7% for the years
ended December 31, 2019 and December 31, 2018, respectively. Operating income
was $229.2 million and $180.8 million for the years ended December 31, 2019 and
2018, respectively, in connection with our operations in Europe, Middle East and
Africa ("EMEA"), Asia Pacific and South America.

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Operating income* for the Monster Energy® Drinks segment was $1.57 billion for
the year ended December 31, 2019, an increase of approximately $195.0 million,
or 14.2% higher than operating income of $1.37 billion for the year ended
December 31, 2018. The increase in operating income for the Monster Energy®
Drinks segment was primarily the result of the $405.6 million increase in net
sales of our Monster Energy® Drinks segment for the year ended December 31,
2019.

Operating income* for the Strategic Brands segment was $164.1 million for the
year ended December 31, 2019, a decrease of approximately $12.5 million, or 7.1%
lower than operating income of $176.5 million for the year ended December 31,
2018.

Operating income* for the Other segment was $3.7 million for the year ended December 31, 2019, a decrease of approximately $1.7 million, or 31.9% lower than operating income of $5.4 million for the year ended December 31, 2018.

*Exclusive of corporate and unallocated expenses.


Other Income, net. Other non-operating income, net, was $13.0 million for the
year ended December 31, 2019, as compared to other non-operating income, net, of
$9.7 million for the year ended December 31, 2018. Foreign currency transaction
losses were $4.1 million and $4.0 million for the years ended December 31, 2019
and 2018, respectively. Interest income was $17.8 million and $13.8 million for
the years ended December 31, 2019 and 2018, respectively.

Provision for Income Taxes. Provision for income taxes was $308.1 million for
the year ended December 31, 2019, an increase of $7.9 million, or 2.6% higher
than the provision for income taxes of $300.3 million for the year ended
December 31, 2018. The effective combined federal, state and foreign tax rate
decreased to 21.8% from 23.2% for the year ended December 31, 2019 and 2018,
respectively. The decrease in effective tax rate was primarily attributable to
an increase in equity compensation deductions.  The decrease in the effective
tax rate was partially offset by increased income taxes in certain foreign
jurisdictions.

Net Income. Net income was $1.11 billion for the year ended December 31, 2019,
an increase of $114.8 million, or 11.6% higher than net income of $993.0 million
for the year ended December 31, 2018. The increase in net income was primarily
due to the $223.2 million increase in gross profit. The increase in net income
was partially offset by the increase in operating expenses of $103.9 million and
an increase in the provision for income taxes of $7.9 million.

Results of Operations for the Year Ended December 31, 2018 Compared to the Year Ended December 31, 2017.


Net Sales. Net sales were $3.81 billion for the year ended December 31, 2018, an
increase of approximately $438.1 million, or 13.0% higher than net sales of
$3.37 billion for the year ended December 31, 2017. Net sales for the year ended
December 31, 2018 were negatively impacted by approximately $42.2 million as a
result of the adoption of ASC 606. Net changes in foreign currency exchange
rates had a favorable impact on net sales of approximately $14.8 million for the
year ended December 31, 2018.

Net sales for the Monster Energy® Drinks segment were $3.50 billion for the year
ended December 31, 2018, an increase of approximately $450.8 million, or 14.8%
higher than net sales of $3.05 billion for the year ended December 31, 2017. Net
sales for the Monster Energy® Drinks segment for the year ended December 31,
2018 were negatively impacted by approximately $17.4 million as a result of the
adoption of ASC 606. Net changes in foreign currency exchange rates had a
favorable impact on net sales for the Monster Energy® Drinks segment of
approximately $14.6 million for the year ended December 31, 2018. Net sales for
the Monster Energy® Drinks segment increased primarily due to increased sales by
volume of our Monster Energy® brand energy drinks as a result of increased
domestic and international consumer demand.

Net sales for the Strategic Brands segment were $285.8 million for the year ended December 31, 2018, a decrease of approximately $14.0 million, or 4.7% lower than net sales of $299.8 million for the year ended December 31, 2017. Net


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sales for the Strategic Brands segment for the year ended December 31, 2018 were
negatively impacted by approximately $24.9 million as a result of the adoption
of ASC 606. Net changes in foreign currency exchange rates had a favorable
impact on net sales for the Strategic Brands segment of approximately $0.2
million for the year ended December 31, 2018.

Net sales for the Other segment were $22.9 million for the year ended December
31, 2018, an increase of approximately $1.3 million, or 6.1% higher than net
sales of $21.6 million for the year ended December 31, 2017.

Case sales, in 192-ounce case equivalents, were 410.9 million cases for the year
ended December 31, 2018, an increase of approximately 50.9 million cases or
14.1% higher than case sales of 360.0 million cases for the year ended December
31, 2017. The overall average net sales per case (excluding net sales of AFF
Third-Party Products of $22.9 million and $21.6 million for the years ended
December 31, 2018 and 2017, respectively, as these sales do not have unit case
equivalents) decreased to $9.21 for the year ended December 31, 2018, which was
1.0% lower than the average net sales per case of $9.30 for the year ended
December 31, 2017, due to the adoption of ASC 606. Without the adoption of ASC
606, the overall average net sales per case increased to $9.31 for the year
ended December 31, 2018, as compared to average net sales per case of $9.30 for
the year ended December 31, 2017.

Gross Profit. Gross profit was $2.30 billion for the year ended December 31,
2018, an increase of approximately $157.7 million, or 7.4% higher than the gross
profit of $2.14 billion for the year ended December 31, 2017. The increase in
gross profit dollars was primarily the result of the $450.8 million increase in
net sales of our Monster Energy® brand energy drinks segment for the year ended
December 31, 2018.

Gross profit as a percentage of net sales decreased to 60.3% for the year ended
December 31, 2018 from 63.5% for the year ended December 31, 2017. Gross profit
as a percentage of net sales, excluding the impact of ASC 606, was 60.7% for the
year ended December 31, 2018.

The decrease in gross profit as a percentage of net sales was primarily
attributable to (i) increases in certain input costs, principally aluminum cans,
freight in and other input costs; (ii) domestic product sales mix (iii)
geographical sales mix, as a result of our international sales increasing as a
percentage of total net sales (our foreign operations generally have lower gross
profit margins); (iv) the $42.2 million of commissions accounted for as a
reduction to net sales due to the adoption of ASC 606; and (v) increases in
promotional allowances as a percentage of gross sales.

Operating Expenses. Total operating expenses were $1.01 billion for the year
ended December 31, 2018, an increase of approximately $72.9 million, or 7.8%
higher than total operating expenses of $938.9 million for the year ended
December 31, 2017. The increase in operating expenses was primarily due to
increased out-bound freight and warehouse costs of $38.5 million, increased
payroll expenses of $28.6 million (of which $4.8 million was related to an
increase in stock-based compensation), increased expenditures of $14.8 million
for sponsorships and endorsements, and increased expenditures of $12.1 million
for other marketing expenses.  The increase in operating expenses was partially
offset by the $8.8 million decrease in costs associated with distributor
terminations. Commissions included in operating expenses were $16.7 million, or
65.1% lower than commissions included in operating expenses of $47.7 million for
the year ended December 31, 2017. Without the adoption of ASC 606, an additional
$42.2 million of commissions would have been included in operating expenses for
the year ended December 31, 2018 (such commissions are included as a reduction
to net sales).

Operating Income. Operating income was $1.28 billion for the year ended December
31, 2018, an increase of approximately $84.8 million, or 7.1% higher than
operating income of $1.20 billion for the year ended December 31, 2017.
Operating income as a percentage of net sales decreased to 33.7% for the year
ended December 31, 2018 from 35.6% for the year ended December 31, 2017.
Operating income was $180.8 million and $139.3 million for the years ended
December 31, 2018 and 2017, respectively, in connection with our operations in
EMEA, Asia Pacific and South America.

Operating income* for the Monster Energy® Drinks segment was $1.37 billion for
the year ended December 31, 2018, an increase of approximately $106.5 million,
or 8.4% higher than operating income of $1.26 billion for the year ended

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December 31, 2017. The increase in operating income for the Monster Energy®
Drinks segment was primarily the result of the $455.1 million increase in net
sales of our Monster Energy® brand energy drinks for the year ended December 31,
2018.

Operating income* for the Strategic Brands segment was $176.5 million for the
year ended December 31, 2018, an increase of approximately $2.1 million, or 1.2%
higher than operating income of $174.5 million for the year ended December 31,
2017.

Operating income* for the Other segment was $5.4 million for the year ended December 31, 2018, a decrease of approximately $0.2 million, or 4.0% lower than operating income of $5.6 million for the year ended December 31, 2017.

*Exclusive of corporate and unallocated expenses.


Other Income, net.  Other non-operating income, net, was $9.7 million for the
year ended December 31, 2018, as compared to other non-operating income, net, of
$2.8 million for the year ended December 31, 2017. Foreign currency transaction
(losses)/gains were ($4.0) million and ($3.3) million for the years ended
December 31, 2018 and 2017, respectively. Interest income was $13.8 million and
$6.8 million for the years ended December 31, 2018 and 2017, respectively.

Provision for Income Taxes. Provision for income taxes was $300.3 million for
the year ended December 31, 2018, a decrease of $80.7 million, or 21.2% lower
than the provision for income taxes of $380.9 million for the year ended
December 31, 2017. The effective combined federal, state and foreign tax rate
decreased to 23.2% from 31.7% for the years ended December 31, 2018 and 2017,
respectively. The decrease in the effective tax rate was primarily due to the
reduction in the U.S. federal statutory tax rate as a result of the Tax Reform
Act signed into law on December 22, 2017 (before considering the potential
impact of further clarification of certain matters related to the Tax Reform
Act), and to a reduction in certain foreign income that is subject to U.S.
taxation.  The decrease in the provision for income taxes was partially offset
by the elimination of the domestic production deduction following the Tax Reform
Act as well as a decrease in the stock based compensation tax deduction.

Net Income. Net income was $993.0 million for the year ended December 31, 2018,
an increase of $172.3 million, or 21.0% higher than net income of $820.7 million
for the year ended December 31, 2017. The increase in net income was primarily
due to the $157.7 million increase in gross profit and the $80.7 million
decrease in the provision for income taxes. The increase in net income was
partially offset by the increase in operating expenses of $72.9 million.

Non-GAAP Financial Measures

For the year ended December 31, 2019 compared to the year ended December 31, 2018.




Gross Sales**. Gross sales were $4.87 billion for the year ended December 31,
2019, an increase of approximately $438.2 million, or 9.9% higher than gross
sales of $4.43 billion for the year ended December 31, 2018. Gross sales for the
year ended December 31, 2019 were positively impacted by approximately $101.9
million as a result of U.S. Price Increase and the Canada Price Increase, on
certain of our Monster Energy® brand energy drinks. Net changes in foreign
currency exchange rates had an unfavorable impact on gross sales of
approximately $82.5 million for the year ended December 31, 2019.

Gross sales for the Monster Energy® Drinks segment were $4.53 billion for the
year ended December 31, 2019, an increase of approximately $453.6 million, or
11.1% higher than gross sales of $4.08 billion for the year ended December 31,
2018. Gross sales for the Monster Energy® Drinks segment increased primarily due
to (i) sales of our Reign Total Body FuelTM high performance energy drinks,
introduced in the first quarter of 2019, (ii) the price increases described
above, and (iii) increased sales by volume of our Monster Energy® brand energy
drinks as a result of increased domestic and

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international consumer demand. Net changes in foreign currency exchange rates
had an unfavorable impact on gross sales for the Monster Energy® Drinks segment
of approximately $72.9 million for the year ended December 31, 2019.

Gross sales for the Strategic Brands segment were $312.7 million for the year
ended December 31, 2019, a decrease of $14.4 million, or 4.4% lower than gross
sales of $327.1 million for the year ended December 31, 2018. Net changes in
foreign currency exchange rates had an unfavorable impact on gross sales in the
Strategic Brands segment of approximately $9.6 million for the year ended
December 31, 2019.

Gross sales for the Other segment were $21.9 million for the year ended December
31, 2019, a decrease of $1.1 million, or 4.6% lower than gross sales of $22.9
million for the year ended December 31, 2018.

Promotional allowances, commissions and other expenses, as described in the
footnote below, were $666.9 million for the year ended December 31, 2019, an
increase of $44.5 million, or 7.2% higher than promotional allowances,
commissions and other expenses of $622.3 million for the year ended December 31,
2018. Promotional allowances, commissions and other expenses as a percentage of
gross sales decreased to 13.7% from 14.0% for the year ended December 31, 2019
and 2018, respectively.

For the year ended December 31, 2018 compared to the year ended December 31, 2017.


Gross Sales**. Gross sales were $4.43 billion for the year ended December 31,
2018, an increase of approximately $568.2 million, or 14.7% higher than gross
sales of $3.86 billion for the year ended December 31, 2017.

Gross sales for the Monster Energy® Drinks segment were $4.08 billion for the
year ended December 31, 2018, an increase of $558.2 million, or 15.9% higher
than gross sales of $3.52 billion for the year ended December 31, 2017. Gross
sales of our Monster Energy® Drinks segment increased partially due to increased
sales by volume as a result of increased domestic and international consumer
demand.

Gross sales for the Strategic Brands segment were $327.1 million for the year
ended December 31, 2018, an increase of $8.6 million, or 2.7% higher than gross
sales of $318.5 million for the year ended December 31, 2017.

Gross sales for the Other segment were $22.9 million for the year ended December
31, 2018, an increase of $1.3 million, or 6.1% higher than gross sales of $21.6
million for the year ended December 31, 2017.

No other individual product line contributed either a material increase or decrease to gross sales for the year ended December 31, 2018.

Promotional and other allowances, as described in the footnote below, were
$622.3 million for the year ended December 31, 2018, an increase of $130.0
million, or 26.4% higher than promotional and other allowances of $492.3 million
for the year ended December 31, 2017. Promotional and other allowances as a
percentage of gross sales increased to 14.0% from 12.7% for the years ended
December 31, 2018 and 2017, respectively, partially due to an increase in
commissions of $42.2 million included in net sales, related to the adoption of
ASC 606.

Net changes in foreign currency exchange rates had a favorable impact on gross
sales in the Monster Energy® Drinks segment of approximately $21.6 million for
the year ended December 31, 2018. Net changes in foreign currency exchange rates
had a favorable impact on gross sales in the Strategic Brands segment of
approximately $0.2 million for the year ended December 31, 2018.

**Gross sales are used internally by management as an indicator of and to
monitor operating performance, including sales performance of particular
products, salesperson performance, product growth or declines and overall
Company performance. The use of gross sales allows evaluation of sales
performance before the effect of any promotional items, which can mask certain
performance issues. We therefore believe that the presentation of gross sales
provides a useful measure of our operating performance. The use of gross sales
is not a measure that is recognized under GAAP and should not be considered as
an alternative to net sales, which is determined in

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accordance with GAAP, and should not be used alone as an indicator of operating
performance in place of net sales. Additionally, gross sales may not be
comparable to similarly titled measures used by other companies, as gross sales
has been defined by our internal reporting practices. In addition, gross sales
may not be realized in the form of cash receipts as promotional payments and
allowances may be deducted from payments received from certain customers.

The following table reconciles the non-GAAP financial measure of gross sales with the most directly comparable GAAP financial measure of net sales:



                                                                                      Percentage   Percentage
In thousands                                                                            Change       Change
                                          2019            2018            2017        19 vs. 18    18 vs. 17
Gross sales, net of discounts and
returns                                $ 4,867,698     $ 4,429,522     $ 3,861,368       9.9%        14.7%
Less: Promotional and other
allowances***                              666,879         622,339         492,323       7.2%        26.4%
Net Sales                              $ 4,200,819     $ 3,807,183     $ 3,369,045      10.3%        13.0%



***Although the expenditures described in this line item are determined in
accordance with GAAP and meet GAAP requirements, the presentation thereof does
not conform to GAAP presentation requirements. Additionally, our definition of
promotional and other allowances may not be comparable to similar items
presented by other companies. Promotional and other allowances primarily include
consideration given to our bottlers/distributors or retail customers including,
but not limited to the following: (i) discounts granted off list prices to
support price promotions to end-consumers by retailers; (ii) reimbursements
given to our bottlers/distributors for agreed portions of their promotional
spend with retailers, including slotting, shelf space allowances and other fees
for both new and existing products; (iii) our agreed share of fees given to
bottlers/distributors and/or directly to retailers for advertising, in-store
marketing and promotional activities; (iv) our agreed share of slotting, shelf
space allowances and other fees given directly to retailers, club stores and/or
wholesalers; (v) incentives given to our bottlers/distributors and/or retailers
for achieving or exceeding certain predetermined sales goals; (vi) discounted or
free products; (vii) contractual fees given to our bottlers/distributors related
to sales made by us direct to certain customers that fall within the
bottlers'/distributors' sales territories; and (viii) certain commissions paid
based on sales to our bottlers/distributors. The presentation of promotional and
other allowances facilitates an evaluation of their impact on the determination
of net sales and the spending levels incurred or correlated with such sales.
Promotional and other allowances constitute a material portion of our marketing
activities. Our promotional allowance programs with our numerous
bottlers/distributors and/or retailers are executed through separate agreements
in the ordinary course of business. These agreements generally provide for one
or more of the arrangements described above and are of varying durations,
ranging from one week to one year. The primary drivers of our promotional and
other allowance activities for the years ended December 31, 2019 and 2018 were
(i) to increase sales volume and trial, (ii) to address market conditions, and
(iii) to secure shelf and display space at retail.

Sales

The table set forth below discloses selected quarterly data regarding sales for the past five years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends.

Sales of beverages are expressed in unit case volume. A "unit case" means a unit
of measurement equal to 192 U.S. fluid ounces of finished beverage (24
eight-ounce servings). Unit case volume means the number of unit cases (or unit
case equivalents) of finished products or concentrates, as if converted into
finished products, sold by us.

Our quarterly results of operations reflect seasonal trends that are primarily
the result of increased demand in the warmer months of the year. It has been our
experience that beverage sales tend to be lower during the first and fourth
quarters of each calendar year. In addition, our experience with our energy
drink products suggests they are less seasonal than the seasonality expected
from traditional beverages. Quarterly fluctuations may also be affected by other
factors including the introduction of new products, the opening of new markets
where temperature fluctuations are more

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pronounced, the addition of new bottlers/distributors and customers, changes in
the sales mix of our products and changes in and/or increased advertising and
promotional expenses. (See "Part I, Item 1 - Business - Seasonality").


                             2019            2018            2017            2016            2015
Net Sales (in
Thousands)
Quarter 1                 $   945,991     $   850,921     $   742,146     $   680,186     $   626,791
Quarter 2                   1,104,045       1,015,873         907,068         827,488         693,722
Quarter 3                   1,133,577       1,016,160         909,476         787,954         756,619
Quarter 4                   1,017,206         924,229         810,355         753,765         645,432
Total                     $ 4,200,819     $ 3,807,183     $ 3,369,045     $ 3,049,393     $ 2,722,564
Less: AFF third party
net sales (in
Thousands)
Quarter 1                 $   (5,321)     $   (4,657)     $   (5,539)     $         -     $         -
Quarter 2                     (5,791)         (6,623)         (6,174)         (6,635)               -
Quarter 3                     (5,860)         (6,573)         (5,200)         (5,686)               -
Quarter 4                     (4,893)         (5,067)         (4,692)         (4,690)               -
Total                     $  (21,865)     $  (22,920)     $  (21,605)     $  (17,011)     $         -

Adjusted Net Sales
(in Thousands)¹
Quarter 1                 $   940,670     $   846,264     $   736,607     $   680,186     $   626,791
Quarter 2                   1,098,254       1,009,250         900,894         820,853         693,722
Quarter 3                   1,127,717       1,009,587         904,276         782,268         756,619
Quarter 4                   1,012,313         919,162         805,663         749,075         645,432
Total                     $ 4,178,954     $ 3,784,263     $ 3,347,440     $ 3,032,382     $ 2,722,564

Unit Case Volume /
Sales (in Thousands)
Quarter 1                     101,284          92,315          79,992          72,653          57,779
Quarter 2                     119,595         110,057          97,233          87,574          68,037
Quarter 3                     121,854         111,038          96,184          82,767          81,274
Quarter 4                     106,037          97,476          86,548          77,966          67,531
Total                         448,770         410,886         359,957         320,960         274,621

Adjusted Average Net
Sales Per Case
Quarter 1                 $      9.29     $      9.17     $      9.21     $      9.36     $     10.85
Quarter 2                        9.18            9.17            9.27            9.37           10.20
Quarter 3                        9.25            9.09            9.40            9.45            9.31
Quarter 4                        9.55            9.43            9.31            9.61            9.56
Total                     $      9.31     $      9.21     $      9.30     $      9.45     $      9.91



1Excludes Other segment net sales of $21.9 million, $22.9 million and $21.6 million for the years ended December 31, 2019, 2018 and 2017, respectively, comprised of sales of our AFF Third-Party Products to independent third parties as these sales do not have unit case equivalents.


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The following represents case sales by segment for the years ended December 31:



(In thousands, except average
net sales per case)
                                       2019           2018           2017           2016           2015
Net sales                           $ 4,200,819    $ 3,807,183    $ 3,369,045    $ 3,049,393    $ 2,722,564
Less: AFF third-party sales            (21,865)       (22,920)       (21,605)       (17,011)              -
Adjusted net sales¹                 $ 4,178,954    $ 3,784,263    $ 3,347,440    $ 3,032,382    $ 2,722,564

Case sales by segment:
Monster Energy® Drinks                  377,551        338,880        289,105        256,323        228,628
Strategic Brands                         71,219         72,006         70,852         64,637         34,791
Other                                         -              -              -              -         11,202
Total case sales                        448,770        410,886        359,957        320,960        274,621
Average net sales per case          $      9.31    $      9.21    $      9.30    $      9.45    $      9.91



1Excludes Other segment net sales of $21.9 million, $22.9 million and $21.6 million for the years ended December 31, 2019, 2018 and 2017, respectively, comprised of sales of our AFF Third-Party Products to independent third parties as these sales do not have unit case equivalents.

Inflation

We do not believe that inflation had a significant impact on our results of operations for the years ended December 31, 2019, 2018 or 2017.

Liquidity and Capital Resources


Cash flows provided by operating activities. Cash provided by operating
activities was $1.11 billion for the year ended December 31, 2019, as compared
with cash provided by operating activities of $1.16 billion for the year ended
December 31, 2018.

For the year ended December 31, 2019, cash provided by operating activities was
primarily attributable to net income earned of $1.11 billion and adjustments for
certain non-cash expenses, consisting of $64.8 million of depreciation and
amortization and $63.4 million of stock-based compensation. For the year ended
December 31, 2019, cash provided by operating activities also increased due to a
$28.8 million increase in accounts payable, a $21.9 million increase in accrued
promotional allowances, a $9.5 million decrease in prepaid income taxes, an $8.1
million increase in income taxes payable, a $7.2 million increase in accrued
compensation, a $6.5 million decrease in distributor receivables and a $1.3
million decrease in deferred income taxes. For the year ended December 31, 2019,
cash used in operating activities was primarily attributable to an $85.2 million
increase in inventories, a $66.4 million increase in accounts receivable, a
$24.9 million decrease in deferred revenue, a $14.3 million decrease in accrued
liabilities and a $13.8 million increase in prepaid expenses and other assets.

For the year ended December 31, 2018, cash provided by operating activities was
primarily attributable to net income earned of $993.0 million and adjustments
for certain non-cash expenses, consisting of $57.1 million of stock-based
compensation and $57.0 million of depreciation and amortization. For the year
ended December 31, 2018, cash provided by operating activities also increased
due to a $98.7 million decrease in prepaid income taxes, an $11.7 million
increase in accrued promotional allowances, an $18.1 million increase in accrued
liabilities, a $10.0 million decrease in distributor receivables, a $9.9 million
increase in accounts payable, a $5.5 million increase in accrued compensation
and a $1.9 million increase in income taxes payable. For the year ended December
31, 2018, cash used in operating activities was primarily attributable to a
$48.4 million increase in accounts receivable, a $26.1 million increase in
inventories, a $20.0 million decrease in deferred revenue and a $6.7 million
increase in prepaid expenses and other assets.

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Cash flows (used in) provided by investing activities. Net cash used in
investing activities was $326.7 million for the year ended December 31, 2019 as
compared to cash provided by investing activities of $273.0 million for the year
ended December 31, 2018.

For both the years ended December 31, 2019 and 2018, cash provided by investing
activities was primarily attributable to sales of available-for-sale
investments. For both the years ended December 31, 2019 and 2018, cash used in
investing activities was primarily attributable to purchases of
available-for-sale investments. For both the years ended December 31, 2019 and
2018, cash used in investing activities also included the acquisition of fixed
assets consisting of vans and promotional vehicles, coolers and other equipment
to support our marketing and promotional activities, production equipment,
furniture and fixtures, office and computer equipment, real property, computer
software, equipment used for sales and administrative activities, certain
leasehold improvements, improvements to real property as well as the
acquisition, defense and maintenance of trademarks. We expect to continue to use
a portion of our cash in excess of our requirements for operations for
purchasing short-term and long-term investments, leasehold improvements, the
acquisition of capital equipment (specifically, vans, trucks and promotional
vehicles, coolers, other promotional equipment, merchandise displays,
warehousing racks as well as items of production equipment required to produce
certain of our existing and/or new products and to develop our brand in
international markets) and for other corporate purposes. From time to time, we
may also use cash to purchase additional real property related to our beverage
business and/or acquire compatible businesses.

Cash flows used in financing activities. Cash used in financing activities was
$628.5 million for the year ended December 31, 2019 as compared to cash used in
financing activities of $1.32 billion for the year ended December 31, 2018. The
cash flows used in financing activities for both the years ended December 31,
2019 and 2018 was primarily the result of the repurchases of our common stock.
The cash flows provided by financing activities for both the years ended
December 31, 2019, and 2018 was primarily attributable to the issuance of our
common stock.

Purchases of inventories, increases in accounts receivable and other assets,
acquisition of property and equipment (including real property, personal
property and coolers), leasehold improvements, advances for or the purchase of
equipment for our bottlers, acquisition and maintenance of trademarks, payments
of accounts payable, income taxes payable and purchases of our common stock are
expected to remain our principal recurring use of cash.

Cash and cash equivalents, short-term and long-term investments - As of December
31, 2019, we had $798.0 million in cash and cash equivalents, $533.1 million in
short-term investments and $12.9 million in long-term investments. We have
historically invested these amounts in U.S. treasuries, U.S. government agency
securities and municipal securities (which may have an auction reset feature),
certificates of deposit, commercial paper, variable rate demand notes and money
market funds meeting certain criteria. We maintain our investments for cash
management purposes and not for purposes of speculation. Our risk management
policies emphasize credit quality (primarily based on short-term ratings by
nationally recognized statistical rating organizations) in selecting and
maintaining our investments. We regularly assess market risk of our investments
and believe our current policies and investment practices adequately limit those
risks. However, certain of these investments are subject to general credit,
liquidity, market and interest rate risks. These risks associated with our
investment portfolio may have an adverse effect on our future results of
operations, liquidity and financial condition.

Of our $798.0 million of cash and cash equivalents held at December 31, 2019,
$416.9 million was held by our foreign subsidiaries. No short-term or long-term
investments were held by our foreign subsidiaries at December 31, 2019.

We believe that cash available from operations, including our cash resources and
our revolving line of credit, will be sufficient for our working capital needs,
including purchase commitments for raw materials and inventory, increases in
accounts receivable, payments of tax liabilities, expansion and development
needs, purchases of shares of our common stock, as well as purchases of capital
assets, equipment and properties, through at least the next 12 months. Based on
our current plans, capital expenditures (exclusive of common stock repurchases)
are currently estimated to be approximately $150.0 million through December 31,
2020.  However, future business opportunities may cause a change in this
estimate.

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The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2019:


                                         Payments due by period (in thousands)
                                          Less than       1­3          3­5       More than
      Obligations             Total         1 year        years       years       5 years

Contractual Obligations¹     $ 181,896     $ 121,675     $ 56,721     $ 3,500     $       -
Finance Leases                   1,500         1,500            -           -             -
Operating Leases                33,814         3,661        6,203       5,762        18,188
Purchase Commitments²           86,712        86,712            -           -             -
                             $ 303,922     $ 213,548     $ 62,924     $ 9,262     $  18,188



1 Contractual obligations include our obligations related to sponsorships and other commitments.

2 Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.


In addition, approximately $3.0 million of unrecognized tax benefits have been
recorded as liabilities as of December 31, 2019. It is expected that the amount
of unrecognized tax benefits will not significantly change within the next 12
months. As of December 31, 2019, we had $0.4 million of accrued interest and
penalties related to unrecognized tax benefits.

Accounting Policies and Pronouncements

Critical Accounting Policies

Our consolidated financial statements are prepared in accordance with GAAP.

 GAAP requires us to make estimates and assumptions that affect the reported
amounts in our consolidated financial statements. The following summarizes our
most significant accounting and reporting policies and practices:

Business Combinations - Business acquisitions are accounted for in accordance
with Financial Accounting Standards Board ("FASB") Accounting Standards
Codification ("ASC") 805 "Business Combinations".  FASB ASC 805 requires the
reporting entity to identify the acquirer, determine the acquisition date,
recognize and measure the identifiable tangible and intangible assets acquired,
the liabilities assumed and any non-controlling interest in the acquired entity,
and recognize and measure goodwill or a gain from the purchase. The acquiree's
results are included in the Company's consolidated financial statements from the
date of acquisition. Assets acquired and liabilities assumed are recorded at
their fair values and the excess of the purchase price over the amounts assigned
is recorded as goodwill. Adjustments to fair value assessments are recorded to
goodwill over the measurement period (not longer than twelve months). The
acquisition method also requires that acquisition-related transaction and
post-acquisition restructuring costs be charged to expense and requires the
Company to recognize and measure certain assets and liabilities including those
arising from contingencies and contingent consideration in a business
combination.

Cash and Cash Equivalents - The Company considers all highly liquid investments
with an original maturity of three months or less from date of purchase to be
cash equivalents. Throughout the year, the Company has had amounts on deposit at
financial institutions that exceed the federally insured limits. The Company has
not experienced any loss as a result of these deposits and does not expect to
incur any losses in the future.

Investments - The Company's investments in debt securities are classified as
either held-to-maturity, available-for-sale or trading, in accordance with FASB
ASC 320. Held-to-maturity securities are those securities that the Company has
the positive intent and ability to hold until maturity. Trading securities are
those securities that the Company intends to sell

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in the near term. All other securities not included in the held-to-maturity or
trading category are classified as available-for-sale. Held-to-maturity
securities are recorded at amortized cost which approximates fair market value.
Trading securities are carried at fair value with unrealized gains and losses
charged to earnings. Available-for-sale securities are carried at fair value
with unrealized gains and losses recorded within accumulated other comprehensive
loss as a separate component of stockholders' equity. FASB ASC 820 defines fair
value as the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the
measurement date. FASB ASC 820 also establishes a fair value hierarchy which
requires an entity to maximize the use of observable inputs, where available.
Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily
impaired if the present value of cash flows expected to be collected are less
than the security's amortized cost basis (the difference being defined as the
"Credit Loss") or if the fair value of the security is less than the security's
amortized cost basis and the investor intends, or will be required, to sell the
security before recovery of the security's amortized cost basis. If an
other-than-temporary impairment exists, the charge to earnings is limited to the
amount of Credit Loss if the investor does not intend to sell the security, and
will not be required to sell the security, before recovery of the security's
amortized cost basis. Any remaining difference between fair value and amortized
cost is recognized in other comprehensive loss, net of applicable taxes. The
Company evaluates whether the decline in fair value of its investments is
other-than-temporary at each quarter-end. This evaluation consists of a review
by management, and includes market pricing information and maturity dates for
the securities held, market and economic trends in the industry and information
on the issuer's financial condition and, if applicable, information on the
guarantors' financial condition. Factors considered in determining whether a
loss is temporary include the length of time and extent to which the
investment's fair value has been less than its cost basis, the financial
condition and near-term prospects of the issuer and guarantors, including any
specific events which may influence the operations of the issuer and our intent
and ability to retain the investment for a reasonable period of time sufficient
to allow for any anticipated recovery of fair value.

Accounts Receivable - The Company evaluates the collectability of its trade
accounts receivable based on a number of factors. In circumstances where the
Company becomes aware of a specific customer's inability to meet its financial
obligations to the Company, a specific reserve for bad debts is estimated and
recorded, which reduces the recognized receivable to the estimated amount the
Company believes will ultimately be collected. In addition to specific customer
identification of potential bad debts, bad debt charges are recorded based on
the Company's recent loss history and an overall assessment of past due trade
accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its
consolidated balance sheets, the Company has presented accounts receivable, net
of promotional allowances, only for those customers that it allows net
settlement. All other accounts receivable and related promotional allowances are
shown on a gross basis.

Inventories - Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value).


Property and Equipment - Property and equipment are stated at cost. Depreciation
of furniture and fixtures, office and computer equipment, computer software,
equipment, and vehicles is based on their estimated useful lives (three to
ten years) and is calculated using the straight-line method. Amortization of
leasehold improvements is based on the lesser of their estimated useful lives or
the terms of the related leases and is calculated using the straight-line
method. Normal repairs and maintenance costs are expensed as incurred.
Expenditures that materially increase values or extend useful lives are
capitalized. The related costs and accumulated depreciation of disposed assets
are eliminated and any resulting gain or loss on disposition is included in net
income.

Goodwill - The Company records goodwill when the consideration paid for an
acquisition exceeds the fair value of net tangible and intangible assets
acquired, including related tax effects. Goodwill is not amortized; instead
goodwill is tested for impairment on an annual basis, or more frequently if the
Company believes indicators of impairment exist. The Company first assesses
qualitative factors to determine whether it is more-likely-than-not that the
fair value of a reporting unit is less than its carrying value. If the Company
determines that the fair value is less than the carrying value, the Company will
use a two-step process to determine the amount of goodwill impairment. The first
step requires comparing the fair value of the reporting unit to its net book
value, including goodwill. A potential impairment exists if the fair value
of
the reporting

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unit is lower than its net book value. The second step of the process, performed
only if a potential impairment exists, involves determining the difference
between the fair value of the reporting unit's net assets, other than goodwill,
and the fair value of the reporting unit. An impairment charge is recognized for
the excess of the carrying value of goodwill over its implied fair value. For
the years ended December 31, 2019, 2018 and 2017 there were no impairments
recorded.

Other Intangibles - Other Intangibles are comprised of trademarks that represent
the Company's exclusive ownership of the Monster Energy®,
[[Image Removed: Graphic]]®, Monster Energy Ultra®, Unleash the Beast!®, Monster
Rehab®, Java Monster®, Monster Hydro®, Monster HydroSport Super Fuel®, Espresso
Monster®, Caffé Monster®, Monster Energy Extra Strength Nitrous Technology®,
Muscle Monster®, Punch Monster®, Juice Monster®, Reign Total Body FuelTM, Reign
InfernoTM, M3(stylized)®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®,
Ultra Energy®, Play® and Power Play® (stylized), Gladiator®, Relentless®,
Samurai®, Predator® and BPM® trademarks, all used in connection with the
manufacture, sale and distribution of beverages. The Company also owns in its
own right a number of other trademarks, flavors and formulas in the United
States, as well as in a number of countries around the world. In addition, in
2016 through our acquisition of AFF, we secured the intellectual property of our
most important flavors for certain of our Monster Energy® Brand energy drinks in
perpetuity. In accordance with FASB ASC 350, intangible assets with indefinite
lives are not amortized but instead are measured for impairment at least
annually, or when events indicate that an impairment exists. The Company
calculates impairment as the excess of the carrying value of its
indefinite-lived assets over their estimated fair value. If the carrying value
exceeds the estimate of fair value a write-down is recorded. The Company
amortizes its intangibles with finite useful lives over their respective useful
lives. For the years ended December 31, 2019, 2018 and 2017 there were no
impairments recorded.

Long-Lived Assets - Management regularly reviews property and equipment and
other long-lived assets, including certain definite-lived intangible assets, for
possible impairment. This review occurs annually, or more frequently if events
or changes in circumstances indicate the carrying amount of the asset may not be
recoverable. If there is indication of impairment, management then prepares an
estimate of future cash flows (undiscounted and without interest charges)
expected to result from the use of the asset and its eventual disposition. If
these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value. The fair
value is estimated using the present value of the future cash flows discounted
at a rate commensurate with management's estimates of the business risks.
Preparation of estimated expected future cash flows is inherently subjective and
is based on management's best estimate of assumptions concerning expected future
conditions. For the years ended December 31, 2019, 2018 and 2017, there were no
impairment indicators identified. Long-lived assets held for sale are recorded
at the lower of their carrying amount or fair value less cost to sell.

Foreign Currency Translation and Transactions - The accounts of the Company's
foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign
currency transaction gains and losses are recognized in other income, net, at
the time they occur. Net foreign currency exchange gains or losses resulting
from the translation of assets and liabilities of foreign subsidiaries whose
functional currency is not the U.S. dollar are recorded as a part of accumulated
other comprehensive loss in stockholders' equity. Unrealized foreign currency
exchange gains and losses on certain intercompany transactions that are of a
long-term investment nature (i.e., settlement is not planned or anticipated in
the foreseeable future) are also recorded in accumulated other comprehensive
loss in stockholders' equity. During the years ended December 31, 2019, 2018 and
2017, we entered into forward currency exchange contracts with financial
institutions to create an economic hedge to specifically manage a portion of the
foreign exchange risk exposure associated with certain consolidated subsidiaries
non-functional currency denominated assets and liabilities. All foreign currency
exchange contracts outstanding as of December 31, 2019 have terms of three
months or less. We do not enter into forward currency exchange contracts for
speculation or trading purposes.

Revenue Recognition - The Company's Monster Energy® Drinks segment generates net
operating revenues by selling ready-to-drink packaged energy drinks primarily to
bottlers and full service beverage distributors. In some cases, the

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Company sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value retailers, e-commerce retailers and the military.


The Company's Strategic Brands segment primarily generates net operating
revenues by selling "concentrates" and/or "beverage bases" to authorized
bottling and canning operations. Such bottlers generally combine the
concentrates and/or beverage bases with sweeteners, water and other ingredients
to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged
energy drinks are then sold to other bottlers and full service distributors and
to retail grocery and specialty chains, wholesalers, club stores, mass
merchandisers, convenience chains, foodservice customers, drug stores and the
military. To a lesser extent, our Strategic Brands segment generates net
operating revenues by selling certain ready-to-drink packaged energy drinks to
bottlers and full service beverage distributors.

The majority of the Company's revenue is recognized when it satisfies a single
performance obligation by transferring control of its products to a customer.
Control is generally transferred when the Company's products are either shipped
or delivered based on the terms contained within the underlying contracts or
agreements. Certain of the Company's bottlers/distributors may also perform a
separate function as a co-packer on the Company's behalf. In such cases, control
of the Company's products passes to such bottlers/distributors when they notify
the Company that they have taken possession or transferred the relevant portion
of the Company's finished goods. The Company's general payment terms are
short-term in duration. The Company does not have significant financing
components or payment terms. The Company did not have any material unsatisfied
performance obligations as of December 31, 2019 and December 31, 2018.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to the Company's bottlers/distributors or retail customers including, but not limited to the following:

? discounts granted off list prices to support price promotions to end-consumers

by retailers;

reimbursements given to the Company's bottlers/distributors for agreed portions

? of their promotional spend with retailers, including slotting, shelf space

allowances and other fees for both new and existing products;

the Company's agreed share of fees given to bottlers/distributors and/or

? directly to retailers for advertising, in-store marketing and promotional

activities;

? the Company's agreed share of slotting, shelf space allowances and other fees

given directly to retailers;

? incentives given to the Company's bottlers/distributors and/or retailers for

achieving or exceeding certain predetermined sales goals;

? discounted or free products;

contractual fees given to the Company's bottlers/distributors related to sales

? made directly by the Company to certain customers that fall within the

bottlers'/distributors' sales territories; and

? commissions paid to TCCC based on our sales to the TCCC Subsidiaries and/or the

TCCC Related Parties.

The Company's promotional allowance programs with its bottlers/distributors
and/or retailers are executed through separate agreements in the ordinary course
of business. These agreements generally provide for one or more of the
arrangements described above and are of varying durations, ranging from one week
to one year. The Company's promotional and other allowances are calculated based
on various programs with bottlers/distributors and retail customers, and
accruals are established during the year for its anticipated liabilities. These
accruals are based on agreed upon terms as well as the Company's historical
experience with similar programs and require management's judgment with respect
to estimating consumer participation and/or distributor and retail customer
performance levels. Differences between such

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estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined.


Amounts received pursuant to new and/or amended distribution agreements entered
into with certain distributors, relating to the costs associated with
terminating the Company's prior distributors, are accounted for as revenue
ratably over the anticipated life of the respective distribution agreements,
generally 20 years.

The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing our trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience.


Cost of Sales - Cost of sales consists of the costs of flavors, concentrates
and/or beverage bases, the costs of raw materials utilized in the manufacture of
beverages, co-packing fees, repacking fees, in-bound freight charges, as well as
internal transfer costs, warehouse expenses incurred prior to the manufacture of
the Company's finished products and certain quality control costs. In addition,
the Company includes in costs of sales certain costs such as depreciation,
amortization and payroll costs that relate to the direct manufacture by the
Company of certain flavors and concentrates. Raw materials account for the
largest portion of cost of sales. Raw materials include cans, bottles, other
containers, flavors, ingredients and packaging materials.

Operating Expenses - Operating expenses include selling expenses such as
distribution expenses to transport products to customers and warehousing
expenses after manufacture, as well as expenses for advertising, sampling and
in-store demonstration costs, costs for merchandise displays, point-of-sale
materials and premium items, sponsorship expenses, other marketing expenses and
design expenses. Operating expenses also include such costs as payroll costs,
travel costs, professional service fees (including legal fees), termination
payments made to certain of the Company's prior distributors, depreciation and
other general and administrative costs.

Income Taxes - The Company utilizes the liability method of accounting for
income taxes as set forth in FASB ASC 740. Under the liability method, deferred
taxes are determined based on the temporary differences between the financial
statement and tax basis of assets and liabilities using tax rates expected to be
in effect during the years in which the basis differences reverse. A valuation
allowance is recorded when it is more likely than not that some of the deferred
tax assets will not be realized. In determining the need for valuation
allowances the Company considers projected future taxable income and the
availability of tax planning strategies. If in the future the Company determines
that it would not be able to realize its recorded deferred tax assets, an
increase in the valuation allowance would be recorded, decreasing earnings in
the period in which such determination is made.

The Company assesses its income tax positions and records tax benefits for
all years subject to examination based upon the Company's evaluation of the
facts, circumstances and information available at the reporting date. For those
tax positions where there is a greater than 50% likelihood that a tax benefit
will be sustained, the Company has recorded the largest amount of tax benefit
that may potentially be realized upon ultimate settlement with a taxing
authority that has full knowledge of all relevant information. For those income
tax positions where there is less than 50% likelihood that a tax benefit will be
sustained, no tax benefit has been recognized in the financial statements.

Recent Accounting Pronouncements

See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 -
Organization and Summary of Significant Accounting Policies - Recent Accounting
Pronouncements" for a full description of recent accounting

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pronouncements including the respective expected dates of adoption and expected
effects on the Company's consolidated financial position, results of operations
or liquidity.

Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a safe
harbor for forward-looking statements made by or on behalf of the Company.
Certain statements made in this report may constitute forward-looking statements
(within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Exchange Act, as amended) regarding our expectations with
respect to revenues, profitability, adequacy of funds from operations and our
existing credit facility, among other things. All statements containing a
projection of revenues, income (loss), earnings (loss) per share, capital
expenditures, dividends, capital structure or other financial items, a statement
of management's plans and objectives for future operations, or a statement of
future economic performance contained in management's discussion and analysis of
financial condition and results of operations, including statements related to
new products, volume growth and statements encompassing general optimism about
future operating results and non-historical information, are forward-looking
statements within the meaning of the Act. Without limiting the foregoing, the
words "believes," "thinks," "anticipates," "plans," "expects," "estimates," and
similar expressions are intended to identify forward-looking statements.

Management cautions that these statements are qualified by their terms and/or
important factors, many of which are outside our control and involve a number of
risks, uncertainties and other factors, that could cause actual results and
events to differ materially from the statements made including, but not limited
to, the following:

We have extensive commercial arrangements with TCCC and, as a result, our ? future performance is substantially dependent on the success of our

relationship with TCCC;

? The impact of TCCC's bottlers/distributors distributing Coca-Cola brand energy

drinks;

? The effect of TCCC being one of our significant shareholders and the potential

divergence of TCCC's interests from those of our other shareholders;

The effect of TCCC's refranchising initiative to transition from a TCCC owned ? system to an independent bottling system, including our ability to maintain

relationships with TCCC system bottlers/distributors and manage their ongoing

commitment to focus on our products;

The possible slowing of and/or decline in the sales growth rates of the ? domestic and international energy drink categories and/or the U.S. convenience

store market generally;

Disruption in distribution or sales and/or decline in sales due to the ? termination and/or appointment of existing and/or new domestic and/or

international distributors;

? Lack of anticipated demand for our products in domestic and/or international

markets;

? Fluctuations in the inventory levels of our bottlers/distributors, planned or

otherwise, and the resultant impact on our revenues;

Unfavorable regulations, including taxation requirements, age restrictions ? imposed on the sale, purchase, or consumption of our products, marketing

restrictions, product registration requirements, tariffs, trade restrictions,

container size limitations and/or ingredient restrictions;

The effect of inquiries from, and/or actions by, state attorneys general, the

Federal Trade Commission (the "FTC"), the FDA, municipalities, city attorneys,

other government agencies, quasi-government agencies, government officials ? (including members of U.S. Congress) and/or analogous central and local

agencies and other authorities in the foreign countries in which our products

are manufactured and/or distributed, into the advertising, marketing,

promotion, ingredients, sale and/or consumption of our energy drink products,

including voluntary and/or required changes to our business practices;

Our ability to comply with laws, regulations and evolving industry standards ? regarding consumer privacy and data use and security, including with respect to

the GDPR and the CCPA;



? Our ability to achieve profitability from certain of our operations outside the
  United States;


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Our ability to manage legal and regulatory requirements in foreign ? jurisdictions, potential difficulties in staffing and managing foreign

operations and potentially higher incidence of fraud or corruption and credit

risk of foreign customers and/or distributors;

? Our ability to produce our products in international markets in which they are

sold, thereby reducing freight costs and/or product damages;

? Our ability to absorb, reduce or pass on to our bottlers/distributors increases

in freight costs;

? Our ability to effectively manage our inventories and/or our accounts

receivables;

Our foreign currency exchange rate risk with respect to our sales, expenses, ? profits, assets and liabilities denominated in currencies other than the U.S.

dollar, which will continue to increase as foreign sales increase;

? Uncertainties surrounding Brexit;

? Changes in accounting standards may affect our reported profitability;

? Implications of OECD's BEPS project;

? Any proceedings which may be brought against us by the SEC, the FDA, the FTC or

other governmental agencies or bodies;

The outcome and/or possibility of future shareholder derivative actions or ? shareholder securities litigation that may be filed against us and/or against

certain of our officers and directors, and the possibility of other private

shareholder litigation;

The outcome of product liability or consumer fraud litigation and/or class

action litigation (or its analog in foreign jurisdictions) regarding the safety ? of our products and/or the ingredients in and/or claims made in connection with

our products and/or alleging false advertising, marketing and/or promotion, and

the possibility of future product liability and/or class action lawsuits;

? Exposure to significant liabilities due to litigation, legal or regulatory

proceedings;

? Intellectual property injunctions;

? Unfavorable resolution of tax matters;

? Uncertainty and volatility in the domestic and global economies, including risk

of counterparty default or failure;

? Our ability to address any significant deficiencies or material weakness in our

internal controls over financial reporting;

? Our ability to continue to generate sufficient cash flows to support our

expansion plans and general operating activities;

Decreased demand for our products resulting from changes in consumer ? preferences, obesity and other perceived health concerns, including concerns

relating to certain ingredients in our products or packaging, product safety

concerns and/or from decreased consumer discretionary spending power;

Adverse publicity surrounding obesity and health concerns related to our ? products, water usage, environmental impact, human rights and labor and

workplace laws;

Changes in demand that are weather related and/or for other reasons, including ? changes in product category consumption and changes in cost and availability of

certain key ingredients, as well as disruptions to the supply chain, as a

result of climate change and extreme weather conditions;

The impact of unstable political conditions, civil unrest, large scale ? terrorist acts, the outbreak or escalation of armed hostilities, major natural

disasters and extreme weather conditions, or widespread outbreaks of infectious

diseases;

? The impact on our global supply chain and our operations due to the recent

coronavirus (or COVID-19) outbreak;

The impact on our business of competitive products and pricing pressures and

our ability to gain or maintain our share of sales in the marketplace as a ? result of actions by competitors, including unsubstantiated and/or misleading

claims, false advertising claims and tortious interference, as well as

competitors selling misbranded products;

The impact on our business of trademark and trade dress infringement ? proceedings brought against us relating to our Reign Total Body FuelTM high

performance energy drinks;

? Our ability to introduce new products;

? Our ability to implement and/or maintain price increases;

? An inability to achieve volume growth through product and packaging

  initiatives;


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Our ability to sustain the current level of sales and/or achieve growth for our ? Monster Energy® brand energy drinks and/or our other products, including our

Strategic Brands;

The impact of criticism of our energy drink products and/or the energy drink

market generally and/or legislation enacted (whether as a result of such

criticism or otherwise) that restricts the marketing or sale of energy drinks ? (including prohibiting the sale of energy drinks at certain establishments or

pursuant to certain governmental programs), limits caffeine content in

beverages, requires certain product labeling disclosures and/or warnings,

imposes excise and/or sales taxes, limits product sizes and/or imposes age

restrictions for the sale of energy drinks;

Our ability to comply with and/or resulting lower consumer demand for energy

drinks due to proposed and/or future U.S. federal, state and local laws and

regulations and/or proposed or existing laws and regulations in certain foreign

jurisdictions and/or any changes therein, including changes in taxation

requirements (including tax rate changes, new tax laws, new and/or increased

excise, sales and/or other taxes on our products and revised tax law

interpretations) and environmental laws, as well as the Federal Food, Drug, and

Cosmetic Act and regulations or rules made thereunder or in connection ? therewith by the FDA, as well as changes in any other food, drug or similar

laws in the United States and internationally, especially those changes that

may restrict the sale of energy drinks (including prohibiting the sale of

energy drinks at certain establishments or pursuant to certain governmental

programs), limit caffeine content in beverages, require certain product

labeling disclosures and/or warnings, impose excise taxes, impose sugar taxes,

limit product sizes, or impose age restrictions for the sale of energy drinks,

as well as laws and regulations or rules made or enforced by the Bureau of

Alcohol, Tobacco, Firearms and Explosives and/or the FTC or their foreign

counterparts;

Our ability to satisfy all criteria set forth in any model energy drink

guidelines, including, without limitation, those adopted by the American ? Beverage Association, of which the Company is a member, and/or any

international beverage association and the impact on the Company of such

guidelines;

? Disruptions in the timely import or export of our products and/or ingredients

due to port strikes and related labor issues;

? The effect of unfavorable or adverse public relations, press, articles,

comments and/or media attention;

Changes in the cost, quality and availability of containers, packaging

materials, aluminum, the Midwest and other premiums, raw materials and other ? ingredients and juice concentrates, and our ability to obtain and/or maintain

favorable supply arrangements and relationships and procure timely and/or

sufficient production of all or any of our products to meet customer demand;

Any shortages that may be experienced in the procurement of containers and/or ? other raw materials including, without limitation, aluminum cans generally, PET

containers used for our Monster Hydro® energy drinks and 24-ounce aluminum cap

cans;

? The impact on our cost of sales of corporate activity among the limited number

of suppliers from whom we purchase certain raw materials;

Our ability to pass on to our customers all or a portion of any increases in ? the costs of raw materials, ingredients, commodities and/or other cost inputs

affecting our business;

Our ability to achieve both internal domestic and international forecasts,

which may be based on projected volumes and sales of many product types and/or ? new products, certain of which are more profitable than others; there can be no

assurance that we will achieve projected levels of sales as well as forecasted

product and/or geographic mixes;

Our ability to penetrate new domestic and/or international markets and/or gain ? approval or mitigate the delay in securing approval for the sale of our

products in various countries;

The effectiveness of sales and/or marketing efforts by us and/or by the full ? service bottlers/distributors of our products, most of whom distribute products

that may be regarded as competitive with our products;

Unilateral decisions by full service bottlers/distributors, convenience chains,

grocery chains, mass merchandisers, specialty chain stores, club stores and ? other customers to discontinue carrying all or any of our products that they

are carrying at any time, restrict the range of our products they carry and/or

devote less resources to the sale of our products;

? The effects of retailer consolidation on our business and our ability to

successfully adapt to the rapidly changing retail landscape;

? The costs and/or effectiveness, now or in the future, of our advertising,

marketing and promotional strategies;

? The success of our sports marketing endeavors both domestically and

  internationally;


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? Unforeseen economic and political changes and local or international

catastrophic events;

? Possible recalls of our products and/or defective production;

Our ability to make suitable arrangements and/or procure sufficient capacity ? for the co-packing of any of our products both domestically and

internationally, the timely replacement of discontinued co-packing arrangements

and/or limitations on co-packing availability, including for retort production;

? Our ability to make suitable arrangements for the timely procurement of

non-defective raw materials;

Our inability to protect and/or the loss of our intellectual property rights ? and/or our inability to use our trademarks, trade names or designs and/or trade

dress in certain countries;

Volatility of stock prices which may restrict stock sales, stock purchases or ? other opportunities as well as negatively impact the motivation of equity award

grantees;

Provisions in our organizational documents and/or control by insiders which may ? prevent changes in control even if such changes would be beneficial to other

stockholders;

? The failure of our bottlers and/or contract packers to manufacture our products

on a timely basis or at all;

Any disruption in and/or lack of effectiveness of our information technology ? systems, including a breach of cyber security, that disrupts our business or

negatively impacts customer relationships, as well as cybersecurity incidents

involving data shared with third parties; and

? Recruitment and retention of senior management, other key employees and our

employee base in general.

The foregoing list of important factors and other risks detailed from time to
time in our reports filed with the Securities and Exchange Commission is not
exhaustive. See "Part I, Item 1A - Risk Factors," for a more complete discussion
of these risks and uncertainties and for other risks and uncertainties. Those
factors and the other risk factors described therein are not necessarily all of
the important factors that could cause actual results or developments to differ
materially from those expressed in any of our forward-looking statements. Other
unknown or unpredictable factors also could harm our results. Consequently, our
actual results could be materially different from the results described or
anticipated by our forward-looking statements due to the inherent uncertainty of
estimates, forecasts and projections, and may be better or worse than
anticipated. Given these uncertainties, you should not rely on forward-looking
statements. Forward-looking statements represent our estimates and assumptions
only as of the date that they were made. We expressly disclaim any duty to
provide updates to forward-looking statements, and the estimates and assumptions
associated with them, after the date of this report, in order to reflect changes
in circumstances or expectations or the occurrence of unanticipated events
except to the extent required by applicable securities laws.

© Edgar Online, source Glimpses

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Financials (USD)
Sales 2021 5 367 M - -
Net income 2021 1 386 M - -
Net cash 2021 1 894 M - -
P/E ratio 2021 35,6x
Yield 2021 -
Capitalization 49 367 M 49 367 M -
EV / Sales 2021 8,85x
EV / Sales 2022 7,95x
Nbr of Employees 3 340
Free-Float 58,9%
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Mean consensus OUTPERFORM
Number of Analysts 22
Average target price 102,71 $
Last Close Price 93,40 $
Spread / Highest target 26,3%
Spread / Average Target 9,96%
Spread / Lowest Target -18,6%
EPS Revisions
Managers and Directors
NameTitle
Rodney Cyril Sacks Chairman & Co-Chief Executive Officer
Hilton Hiller Schlosberg Vice Chairman & Co-Chief Executive Officer
Thomas J. Kelly CFO & Principal Accounting Officer
Gary P. Fayard Independent Director
Benjamin M. Polk Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
MONSTER BEVERAGE CORPORATION0.99%49 367
THE COCA-COLA COMPANY1.29%239 514
PEPSICO, INC.0.18%205 269
NONGFU SPRING CO., LTD.-21.58%62 374
KEURIG DR PEPPER INC.8.91%49 397
COCA-COLA EUROPACIFIC PARTNERS PLC28.26%27 966