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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)

03/01/2021 | 03:58pm 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:

? The COVID-19 Pandemic - a discussion of the impact of the COVID-19 pandemic on

our business employees and operations;

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 - Qualitative and

Quantitative Disclosures About Market Risks").

The COVID - 19 Pandemic

The current COVID-19 pandemic has presented a substantial public health and
economic challenge around the world and is affecting our employees, communities
and business operations, as well as the global economy and financial markets.
The human and economic consequences of the COVID-19 pandemic as well as the
measures taken or that may be taken in the future by governments, and
consequently businesses (including the Company and its suppliers, full service
beverage bottlers/distributors ("bottlers/distributors"), co-packers and other
service providers) and the public at large to limit the COVID-19 pandemic, has
directly and indirectly impacted our business. The duration and severity of this
impact will depend on future developments that are highly uncertain and cannot
be accurately predicted, including new information that may emerge concerning
the COVID-19 pandemic, the actions taken to limit its spread and the economic
impact on local, regional, national and international markets. See "Part I, Item
1A - Risk Factors."

We have been actively addressing the COVID-19 pandemic with a global task force team working to mitigate the potential impacts to our people and business.


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Health and Safety of our Employees and Business Partners

From the beginning of the COVID-19 pandemic, our top priority has been the
health, safety and well-being of our employees. Early in March 2020, we
implemented global travel restrictions and work-from-home policies for employees
who are able to work remotely. For those employees who are unable to work
remotely, safety precautions have been instituted, which were developed and
adopted in line with guidance from public health authorities and professional
consultants. Currently, certain of our offices have partially reopened in the
U.S. and in certain countries, and generally, our field sales teams are working
with our bottler/distributors and retailers subject to certain safety protocols.
During the COVID-19 pandemic, we have taken a number of steps to support our
employees, including increasing employee communications, including topics such
as mental health and family welfare; creating wellness hotlines and enhancing
employee assistance programs; and conducting employee surveys to evaluate
employee morale. We are incredibly proud of the teamwork exhibited by our
employees, co-packers and bottlers/distributors around the world who are
ensuring the integrity of our supply chain.

Customer Demand


Despite the ongoing impact of the COVID-19 pandemic, we achieved record fourth
quarter net sales. While the performance in Europe, Middle East and Africa
("EMEA") was solid in the fourth quarter, EMEA remained adversely affected by
the COVID-19 pandemic.

Since mid-March 2020, we have seen a shift in consumer channel preferences and
package configurations, including an increase in at-home consumption and a
decrease in food service on-premise consumption.  Our sales in the 2020 second
quarter were initially adversely affected as a result of a decrease in foot
traffic in the convenience and gas channel (which is our largest channel) but
improved sequentially from the latter half of the 2020 second quarter and
throughout the 2020 third and fourth quarters. Our e-commerce, club store, mass
merchandiser and grocery and related business continued to increase in 2020,
while our food service on-premise business, which is a small channel for the
Company, remained challenged. The duration of these trends and the magnitude of
such impacts on future periods cannot be precisely estimated at this time, as
they are affected by a number of factors (many of which are outside our
control).

We have recently seen a resurgence of the COVID-19 pandemic in the Northern
Hemisphere while cases in the Southern Hemisphere continue to increase. As a
result, a number of countries, particularly in EMEA, have reinstituted lockdowns
and other restrictions, which could further impact customer demand.

A reduction in demand for our products or changes in consumer purchasing and
consumption patterns, as well as continued economic uncertainty as a result of
the COVID-19 pandemic, could adversely affect the financial conditions of
retailers and consumers, resulting in reduced or canceled orders for our
products, purchase returns and closings of retail or wholesale establishments or
other locations in which our products are sold.

Our Distribution and Supply Chain


As of the date of this filing, we do not foresee a material impact on the
ability of our co-packers to manufacture and our bottlers/distributors to
distribute our products as a result of the COVID-19 pandemic. We are continually
addressing the increase in our aluminum can requirements given our volume growth
and the current supply constraints in the aluminum can industry. Overall, we are
not experiencing significant raw material or finished product shortages and our
supply chain remains intact. Depending on the duration of any COVID-19 pandemic
related issues, we may experience material disruptions in our supply chain
as
the pandemic continues.

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Liquidity and Capital Resources

As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below.

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® Energy Water        ?   BU®
?   Monster Hydro® Super Sport         ?   Gladiator®
?   Monster HydroSport Super Fuel®     ?   Samurai®
?   Monster Super Fuel®                ?   Live+®
?   Monster Dragon Tea®                ?   Predator®
?   Reign Total Body Fuel®             ?   Fury®
?   Reign Inferno® Thermogenic Fuel




Our net sales of $4.60 billion for the year ended December 31, 2020 represented
record annual net sales. Net sales for the year ended December 31, 2020 were
negatively impacted by $15.2 million related to product returns from our
customers as a result of a European formulation issue with a limited number of
products in Europe and a labeling issue concerning one product in Japan (the
"Product Returns"). Net changes in foreign currency exchange rates had an
unfavorable impact on net sales of approximately $48.2 million for the year
ended December 31, 2020.

The vast majority of our net sales are derived from our Monster Energy® Drinks
segment. Net sales of our Monster Energy® Drinks segment were $4.31 billion for
the year ended December 31, 2020.  Net sales of our Strategic Brands segment
were $266.4 million for the year ended December 31, 2020. Our Monster Energy®
Drinks segment represented 93.6% and 92.9% of our net sales for the years ended
December 31, 2020 and 2019, respectively. Our Strategic Brands segment
represented 5.8% and 6.5% of our net sales for the years ended December 31, 2020
and 2019, respectively. Our Other segment represented 0.6% and 0.5% of our net
sales for the years ended December 31, 2020 and 2019, respectively. Net sales
for the Monster Energy® Drinks segment for the year ended December 31, 2020 were
negatively impacted by $15.2 million related to the Product Returns.

Net changes in foreign currency exchange rates had an unfavorable impact on net
sales in the Monster Energy® Drinks segment of approximately $44.0 million for
the year ended December 31, 2020. Net changes in foreign currency exchange rates
had an unfavorable impact on net sales in the Strategic Brands segment of
approximately $4.2 million for the year ended December 31, 2020.

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Our growth strategy includes expanding our international business. Net sales to
customers outside the United States amounted to $1.51 billion, $1.33 billion and
$1.09 billion for the years ended December 31, 2020, 2019 and 2018,
respectively. Such sales were approximately 33%, 32% and 29% of net sales for
the years ended December 31, 2020, 2019 and 2018, respectively. Net sales to
customers outside the United States for the year ended December 31, 2020 were
negatively impacted by $15.2 million related to the Product Returns.

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 retailers
and the military. Percentages of our gross billings to our various customer
types for the years ended December 31, 2020, 2019 and 2018 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.


                                                           2020      2019   

2018

U.S. full service bottlers/distributors                    56%       58%   

61%

International full service bottlers/distributors           34%       33%   

31%

Club stores and e-commerce retailers                        8%        7%   

6%

Retail grocery, direct convenience, specialty chains
and wholesalers                                             1%        1%        1%
Direct value stores and 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.,
Wal-Mart, Inc. (including Sam's Club), Costco Wholesale Corporation and
Amazon.com, Inc. A decision by any large customer to decrease amounts purchased
from us or to cease carrying our products could have a material adverse effect
on our financial condition and consolidated results of operations.

Coca-Cola Consolidated, Inc. accounted for approximately 12%, 13% and 13% of our net sales for the years ended December 31, 2020, 2019 and 2018, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 11%, 11% and 12% of our net sales for the years ended December 31, 2020, 2019 and 2018, respectively.

Coca-Cola European Partners accounted for approximately 10% of our net sales for the years ended December 31, 2020, 2019 and 2018.

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 154 countries and territories worldwide.


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   Profitable Growth - We believe "functional" value-added beverage 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 Fuel® 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.

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 2021 and beyond (See "Part II, Item 7 -
Results of Operations - Results of Operations for the Year Ended December 31,
2020, Compared to the Year Ended December 31, 2019").

As of December 31, 2020, the Company had working capital of $2.39 billion
compared to $1.66 billion as of December 31, 2019. The increase in working
capital was primarily the result of the $1.41 billion of net income earned
during the year ended December 31, 2020. For the year ended December 31, 2020,
our net cash provided by operating activities was approximately $1.36 billion as
compared to $1.11 billion for the year ended December 31, 2019. Principal uses
of cash flows in 2020, were purchases of investments, repurchase of our common
stock, development of our Monster Energy® brand internationally and acquisitions
of real property, 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 stockholder 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 continuation or worsening of the COVID-19 pandemic;

? 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;

? increases 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 and/or port congestion,

delays due to the COVID-19 pandemic, 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, and in

? particular, in certain package configurations such as the aluminum 24-ounce cap

can and 550ml aluminum can utilizing BRE resealable lids;


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

well for 550ml products utilizing BRE resealable lids;

? the long-term 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, 2020, 2019 and 2018, respectively.



(In thousands, except per share
amounts)                                                                   
      Percentage   Percentage
                                                                                    Change       Change
                                           2020          2019          2018       20 vs. 19    19 vs. 18
Net sales1                              $ 4,598,638   $ 4,200,819   $ 3,807,183         9.5%        10.3%
Cost of sales                             1,874,758     1,682,234     1,511,808        11.4%        11.3%
Gross profit*1                            2,723,880     2,518,585     2,295,375         8.2%         9.7%
Gross profit as a percentage of net
sales                                         59.2%         60.0%         60.3%

Operating expenses2                       1,090,727     1,115,646     1,011,756       (2.2)%        10.3%
Operating expenses as a percentage
of net sales                                  23.7%         26.6%         26.6%

Operating income1,2                       1,633,153     1,402,939     1,283,619        16.4%         9.3%
Operating income as a percentage of
net sales                                     35.5%         33.4%         

33.7%


Other (expense) income, net                 (6,996)        13,023         

9,653 (153.7)% 34.9%


Income before provision for income
taxes1,2                                  1,626,157     1,415,962     

1,293,272 14.8% 9.5%


Provision for income taxes                  216,563       308,127       

300,268 (29.7)% 2.6%


Income taxes as a percentage of
income before taxes                           13.3%         21.8%         23.2%

Net income1,2                           $ 1,409,594   $ 1,107,835   $   993,004        27.2%        11.6%
Net income as a percentage of net
sales                                         30.7%         26.4%         

26.1%


Net income per common share:
Basic                                   $      2.66   $      2.04   $      1.78        30.3%        14.6%
Diluted                                 $      2.64   $      2.03   $      1.76        30.0%        15.2%

Case sales (in thousands) (in
192­ounce case equivalents)                 504,821       448,770       410,886        12.5%         9.2%




¹ Includes $42.1 million, $46.3 million and $44.4 million for the years ended
December 31, 2020, 2019 and 2018, respectively, related to the recognition of
deferred revenue.

2 Includes $0.2 million, $11.3 million and $26.6 million for the years ended December 31, 2020, 2019 and 2018, 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, 2020 Compared to the Year Ended December 31, 2019.


Net Sales. Net sales were $4.60 billion for the year ended December 31, 2020, an
increase of approximately $397.8 million, or 9.5% higher than net sales of $4.20
billion for the year ended December 31, 2019. The COVID-19 pandemic had an
adverse impact on net sales for the year ended December 31, 2020. Net sales for
the year ended December 31, 2020 were negatively impacted by $15.2 million
related to the Product Returns. Net changes in foreign currency exchange rates
had an unfavorable impact on net sales of approximately $48.2 million for the
year ended December 31, 2020.

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Net sales for the Monster Energy® Drinks segment were $4.31 billion for the year
ended December 31, 2020, an increase of approximately $401.2 million, or 10.3%
higher than net sales of $3.90 billion for the year ended December 31, 2019. Net
sales for the Monster Energy® Drinks segment increased primarily due to
increased worldwide sales by volume of our Monster Energy® brand energy drinks
and increased sales by volume for our Reign Total Body Fuel® high performance
energy drinks, both as a result of increased consumer demand. The COVID-19
pandemic had an adverse impact on net sales of the Monster Energy® Drinks
segment for the year ended December 31, 2020. Net sales for the Monster Energy®
Drinks segment for the year ended December 31, 2020 were negatively impacted by
$15.2 million related to the Product Returns. Net changes in foreign currency
exchange rates had an unfavorable impact on net sales for the Monster Energy®
Drinks segment of approximately $44.0 million for the year ended December 31,
2020.

Net sales for the Strategic Brands segment were $266.4 million for the year
ended December 31, 2020, a decrease of approximately $8.6 million, or 3.1% lower
than net sales of $274.9 million for the year ended December 31, 2019. The
COVID-19 pandemic had a material adverse impact on net sales of the Strategic
Brands segment for the year ended December 31, 2020. The impact of the COVID-19
pandemic was more pronounced in the Strategic Brand segment, particularly in
EMEA, as our largest revenue generating countries for this segment experienced
extended lockdowns. Net changes in foreign currency exchange rates had an
unfavorable impact on net sales for the Strategic Brands segment of
approximately $4.2 million for the year ended December 31, 2020.

Net sales for the Other segment were $27.0 million for the year ended December
31, 2020, an increase of approximately $5.2 million, or 23.7% higher than net
sales of $21.9 million for the year ended December 31, 2019.

Case sales, in 192-ounce case equivalents, were 504.8 million cases for the year
ended December 31, 2020, an increase of approximately 56.1 million cases or
12.5% higher than case sales of 448.8 million cases for the year ended December
31, 2019. The overall average net sales per case (excluding net sales of AFF
Third-Party Products of $27.0 million and $21.9 million for the years ended
December 31, 2020 and 2019, respectively, as these sales do not have unit case
equivalents) decreased to $9.06 for the year ended December 31, 2020, which was
2.8% lower than the average net sales per case of $9.31 for the year ended
December 31, 2019.

Gross Profit.  Gross profit was $2.72 billion for the year ended December 31,
2020, an increase of approximately $205.3 million, or 8.2% higher than the gross
profit of $2.52 billion for the year ended December 31, 2019. The increase in
gross profit dollars was primarily the result of the $401.2 million increase in
net sales of our Monster Energy® Drinks segment for the year ended December 31,
2020.

Gross profit as a percentage of net sales decreased to 59.2% for the year ended
December 31, 2020 from 60.0% for the year ended December 31, 2019. The decrease
in gross profit as a percentage of net sales for the year ended December 31,
2020 was primarily the result of the impact of the Product Returns, associated
inventory provisions and other related costs as well as geographical sales mix.
Gross profit as a percentage of net sales (excluding the Product Returns,
associated inventory provisions and other related costs) was 59.6% for the year
ended December 31, 2020.

Operating Expenses.  Total operating expenses were $1.09 billion for the year
ended December 31, 2020, a decrease of approximately $24.9 million, or 2.2%
lower than total operating expenses of $1.12 billion for the year ended December
31, 2019. The decrease in operating expenses was primarily due to decreased
expenditures of $46.7 million for sponsorship and endorsements, decreased
expenditures of $27.7 million for travel and entertainment, each largely as a
consequence of the COVID-19 pandemic, decreased expenditures of $14.7 million
for legal settlements and decreased expenditures of $11.1 million related to the
costs associated with distributor terminations. The costs for certain postponed
or rescheduled events have been, or may be, deferred to future periods. Due to
the uncertainty surrounding the COVID-19 pandemic, we are unable to estimate in
what future periods, if any, such deferred sponsorship and endorsement costs
will be recognized. Provision for legal settlements for the year ended December
31, 2020 was lower by $14.7 million than in the comparable 2019 period. The
decrease in operating expenses was partially offset by increased payroll
expenses of $43.1 million (of

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which $6.9 million was related to an increase in stock-based compensation), increased expenditures of $25.3 million for social media and digital marketing, and increased out-bound freight and warehouse costs of $21.7 million.


Operating Income.  Operating income was $1.63 billion for the year ended
December 31, 2020, an increase of approximately $230.2 million, or 16.4% higher
than operating income of $1.40 billion for the year ended December 31, 2019.
Operating income as a percentage of net sales was 35.5% and 33.4% for the years
ended December 31, 2020 and December 31, 2019, respectively. Operating income
was $270.8 million and $229.2 million for the years ended December 31, 2020 and
2019, respectively, in connection with our operations in Europe, Middle East and
Africa ("EMEA"), Asia Pacific and South America.

Operating income for the Monster Energy® Drinks segment, exclusive of corporate
and unallocated expenses, was $1.82 billion for the year ended December 31,
2020, an increase of approximately $254.4 million, or 16.2% higher than
operating income of $1.57 billion for the year ended December 31, 2019. The
increase in operating income for the Monster Energy® Drinks segment was
primarily the result of the $401.2 million increase in net sales of our Monster
Energy® Drinks segment for the year ended December 31, 2020.

Operating income for the Strategic Brands segment, exclusive of corporate and
unallocated expenses, was $155.0 million for the year ended December 31, 2020, a
decrease of approximately $9.0 million, or 5.5% lower than operating income of
$164.1 million for the year ended December 31, 2019.

Operating income for the Other segment, exclusive of corporate and unallocated
expenses, was $5.9 million for the year ended December 31, 2020, an increase of
approximately $2.3 million, or 62.3% higher than operating income of $3.7
million for the year ended December 31, 2019.

Other (Expense) Income, net.  Other non-operating (expense) income, net, was
$(7.0) million for the year ended December 31, 2020, as compared to other
non-operating (expense) income, net, of $13.0 million for the year ended
December 31, 2019. Foreign currency transaction losses were $11.2 million and
$4.1 million for the years ended December 31, 2020 and 2019, respectively.
Interest income was $8.1 million and $17.8 million for the years ended December
31, 2020 and 2019, respectively.

Provision for Income Taxes.  Provision for income taxes was $216.6 million for
the year ended December 31, 2020, a decrease of $91.6 million, or 29.7% lower
than the provision for income taxes of $308.1 million for the year ended
December 31, 2019. The effective combined federal, state and foreign tax rate
decreased to 13.3% from 21.8% for the year ended December 31, 2020 and 2019,
respectively. The decrease in the effective tax rate was primarily attributable
to a non-recurring tax benefit of approximately $165.1 million due to an
intra-entity transfer of intangible assets between certain of the Company's
foreign subsidiaries which resulted in a step-up of the tax-deductible basis in
the transferred assets in a foreign jurisdiction, and created a temporary
difference between the tax basis and the book basis for such intangible assets.

The decrease in the effective tax rate was partially offset by the decrease in the equity compensation deduction.


Net Income.  Net income was $1.41 billion for the year ended December 31, 2020,
an increase of $301.8 million, or 27.2% higher than net income of $1.11 billion
for the year ended December 31, 2019. The increase in net income was primarily
due to the $205.3 million increase in gross profit, the decrease in the
provision for income taxes of $91.6 million and the decrease in operating
expenses of $24.9 million.

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 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

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"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, 2018. Net
sales for the Monster Energy® Drinks segment increased primarily due to (i)
sales of our Reign Total Body Fuel® 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.

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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.

Operating income for the Monster Energy® Drinks segment, exclusive of corporate
and unallocated expenses, 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, exclusive of corporate and
unallocated expenses, 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, exclusive of corporate and unallocated
expenses, 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.

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.

Key Business Metrics


We use certain key metrics and financial measures not prepared in accordance
with United States Generally Accepted Accounting Principles ("GAAP") to evaluate
and manage our business.  For a further discussion of how we use key metrics and
certain non-GAAP financial measures, see "Non-GAAP Financial Measures and Other
Key Metrics".

Non-GAAP Financial Measures and Other Key Metrics

Year Ended December 31, 2020 compared to the Year Ended December 31, 2019.

Gross Billings**. Gross Billings were $5.33 billion for the year ended December 31, 2020, an increase of approximately $507.3 million, or 10.5% higher than gross billings of $4.82 billion for the year ended December 31, 2019.


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The COVID-19 pandemic had an adverse impact on gross billings for the year ended
December 31, 2020. Gross billings for the year ended December 31, 2020 were
negatively impacted by $15.2 million related to the Product Returns. Net changes
in foreign currency exchange rates had an unfavorable impact on gross billings
of approximately $50.0 million for the year ended December 31, 2020.

Gross billings for the Monster Energy® Drinks segment were $4.99 billion for the
year ended December 31, 2020, an increase of approximately $509.4 million, or
11.4% higher than gross billings of $4.49 billion for the year ended December
31, 2019. Gross billings for the Monster Energy® Drinks segment increased
primarily due to increased worldwide sales by volume of our Monster Energy®
brand energy drinks and increased sales by volume for our Reign Total Body Fuel®
high performance energy drinks, both as a result of increased consumer demand.
The COVID-19 pandemic had an adverse impact on gross billings of the Monster
Energy® Drinks segment for the year ended December 31, 2020. Gross billings for
the Monster Energy® Drinks segment for the year ended December 31, 2020 were
negatively impacted by $15.2 million related to the Product Returns. Net changes
in foreign currency exchange rates had an unfavorable impact on gross billings
for the Monster Energy® Drinks segment of approximately $45.8 million for the
year ended December 31, 2020.

Gross billings for the Strategic Brands segment were $305.4 million for the year
ended December 31, 2020, a decrease of approximately $7.3 million, or 2.3% lower
than gross billings of $312.7 million for the year ended December 31, 2019. The
COVID-19 pandemic had a material adverse impact on gross billings of the
Strategic Brands segment for the year ended December 31, 2020. The impact of the
COVID-19 pandemic was more pronounced in the Strategic Brands segment,
particularly in EMEA, as our largest revenue generating countries for this
segment experienced extended lockdowns. Net changes in foreign currency exchange
rates had an unfavorable impact on gross billings for the Strategic Brands
segment of approximately $4.2 million for the year ended December 31, 2020.

Gross billings for the Other segment were $27.0 million for the year ended December 31, 2020, an increase of approximately $5.2 million, or 23.7% higher than gross billings of $21.9 million for the year ended December 31, 2019.


Promotional allowances, commissions and other expenses***. Promotional
allowances, commissions and other expenses, as described in the footnote below,
were $772.2 million for the year ended December 31, 2020, an increase of $105.3
million, or 15.8% higher than promotional allowances, commissions and other
expenses of $666.9 million for the year ended December 31, 2019. Promotional
allowances, commissions and other expenses as a percentage of gross billings
increased to 14.5% from 13.8% for the years ended December 31, 2020 and 2019,
respectively.

Amounts received from certain bottlers/distributors at inception of their
distribution contracts or at the inception of certain sales/marketing programs
are accounted for as deferred revenue and are recognized as revenue ratably over
the anticipated life of the respective distribution contract, generally 20
years, or through completion of the sales/marketing program. Revenue recognized
was $42.1 million and $46.3 million for the years ended December 31, 2020 and
2019, respectively.

Year Ended December 31, 2019 compared to the Year Ended December 31, 2018.

Gross Billings.  Gross billings were $4.82 billion for the year ended December
31, 2019, an increase of approximately $436.1 million, or 9.9% higher than gross
billings of $4.39 billion for the year ended December 31, 2018. Gross billings
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 gross billings of
approximately $82.5 million for the year ended December 31, 2019.

Gross billings for the Monster Energy® Drinks segment were $4.49 billion for the
year ended December 31, 2019, an increase of approximately $451.6 million, or
11.2% higher than gross billings of $4.04 billion for the year ended

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December 31, 2018. Gross billings for the Monster Energy® Drinks segment
increased primarily due to (i) sales of our Reign Total Body Fuel® 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
international consumer demand. Net changes in foreign currency exchange rates
had an unfavorable impact on gross billings for the Monster Energy® Drinks
segment of approximately $72.9 million for the year ended December 31, 2019.

Gross billings 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
billings of $327.1 million for the year ended December 31, 2018. Net changes in
foreign currency exchange rates had an unfavorable impact on gross billings in
the Strategic Brands segment of approximately $9.6 million for the year ended
December 31, 2019.

Gross billings 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 billings of $22.9 million for the year ended December 31, 2018.


Promotional allowances, commissions and other expenses. 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 billings decreased to
13.8% from 14.2% for the years ended December 31, 2019 and 2018, respectively.

Amounts received from certain bottlers/distributors at inception of their
distribution contracts or at the inception of certain sales/marketing programs
are accounted for as deferred revenue and are recognized as revenue ratably over
the anticipated life of the respective distribution contract, generally 20
years, or through completion of the sales/marketing program. Revenue recognized
was $46.3 million and $44.3 million for the years ended December 31, 2019 and
2018, respectively.

**Gross Billings (titled Gross Sales in prior filings) represent amounts
invoiced to customers net of cash discounts and returns.  Gross billings 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 is useful to investors in evaluating
overall Company performance. The use of gross billings 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
billings provides a useful measure of our operating performance. The use of
gross billings is not a measure that is recognized under GAAP and should not be
considered as an alternative to net sales, which is determined in accordance
with GAAP, and should not be used alone as an indicator of operating performance
in place of net sales. Additionally, gross billings may not be comparable to
similarly titled measures used by other companies, as gross billings has been
defined by our internal reporting practices. In addition, gross billings 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 billings with the most directly comparable GAAP financial measure of net sales:


                                                                                  Percentage   Percentage
In thousands                                                                        Change       Change
                                        2020           2019           2018        20 vs. 19    19 vs. 18
Gross Billings                       $ 5,328,683    $ 4,821,411    $ 4,385,262      10.5%         9.9%
Deferred Revenue                          42,110         46,287         44,260      (9.0%)        4.6%
Less: Promotional allowances,
commissions and other expenses***      (772,155)      (666,879)      (622,339)      15.8%         7.2%
Net Sales                            $ 4,598,638    $ 4,200,819    $ 3,807,183       9.5%        10.3%



***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

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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, 2020
and 2019 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.

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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 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").


                                      2020           2019           2018           2017           2016
Net Sales (in Thousands)
Quarter 1                          $ 1,062,097    $   945,991    $   850,921    $   742,146    $   680,186
Quarter 2                            1,093,896      1,104,045      1,015,873        907,068        827,488
Quarter 3                            1,246,362      1,133,577      1,016,160        909,476        787,954
Quarter 4                            1,196,283      1,017,206        924,229        810,355        753,765
Total                              $ 4,598,638    $ 4,200,819    $ 

3,807,183 $ 3,369,045 $ 3,049,393


Less: AFF third party net sales
(in Thousands)
Quarter 1                          $   (5,105)    $   (5,321)    $   (4,657)    $   (5,539)    $         -
Quarter 2                              (6,644)        (5,791)        (6,623)        (6,174)        (6,635)
Quarter 3                              (8,618)        (5,860)        (6,573)        (5,200)        (5,686)
Quarter 4                              (6,671)        (4,893)        (5,067)        (4,692)        (4,690)
Total                              $  (27,038)    $  (21,865)    $  (22,920)    $  (21,605)    $  (17,011)

Adjusted Net Sales (in
Thousands)¹
Quarter 1                          $ 1,056,992    $   940,670    $   846,264    $   736,607    $   680,186
Quarter 2                            1,087,252      1,098,254      1,009,250        900,894        820,853
Quarter 3                            1,237,744      1,127,717      1,009,587        904,276        782,268
Quarter 4                            1,189,612      1,012,313        919,162        805,663        749,075
Total                              $ 4,571,600    $ 4,178,954    $ 

3,784,263 $ 3,347,440 $ 3,032,382


Unit Case Volume / Sales (in
Thousands)
Quarter 1                              115,598        101,284         92,315         79,992         72,653
Quarter 2                              116,960        119,595        110,057         97,233         87,574
Quarter 3                              139,922        121,854        111,038         96,184         82,767
Quarter 4                              132,341        106,037         97,476         86,548         77,966
Total                                  504,821        448,770        410,886        359,957        320,960

Adjusted Average Net Sales Per
Case
Quarter 1                          $      9.14    $      9.29    $      9.17    $      9.21    $      9.36
Quarter 2                                 9.30           9.18           9.17           9.27           9.37
Quarter 3                                 8.85           9.25           9.09           9.40           9.45
Quarter 4                                 8.99           9.55           9.43           9.31           9.61
Total                              $      9.06    $      9.31    $      9.21    $      9.30    $      9.45




1Excludes Other segment net sales of $27.0 million, $21.9 million, $22.9
million, $21.6 million and $17.0 million for the years ended December 31, 2020,
2019, 2018, 2017 and 2016, 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)                   2020          2019          2018          2017          2016
Net sales                          $ 4,598,638   $ 4,200,819   $ 3,807,183   $ 3,369,045   $ 3,049,393
Less: AFF third-party sales           (27,038)      (21,865)      (22,920)      (21,605)      (17,011)
Adjusted net sales1                $ 4,571,600   $ 4,178,954   $ 3,784,263 

$ 3,347,440 $ 3,032,382


Case sales by segment:
Monster Energy® Drinks                 428,596       377,551       338,880       289,105       256,323
Strategic Brands                        76,225        71,219        72,006        70,852        64,637
Other                                        -             -             -             -             -
Total case sales                       504,821       448,770       410,886       359,957       320,960
Average net sales per case         $      9.06   $      9.31   $      9.21 
 $      9.30   $      9.45




1Excludes Other segment net sales of $27.0 million, $21.9 million, $22.9
million, $21.6 million and $17.0 million for the years ended December 31, 2020,
2019, 2018, 2017, and 2016, 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, 2020, 2019 or 2018.

Liquidity and Capital Resources


Cash flows provided by operating activities. Cash provided by operating
activities was $1.36 billion for the year ended December 31, 2020, as compared
with cash provided by operating activities of $1.11 billion for the year ended
December 31, 2019.

For the year ended December 31, 2020, cash provided by operating activities was
primarily attributable to net income earned of $1.41 billion and adjustments for
certain non-cash expenses, consisting of $61.0 million of depreciation and
amortization, $70.3 million of stock-based compensation and $8.7 million of
intangible impairments. For the year ended December 31, 2020, cash provided by
operating activities also increased due to a $30.3 million decrease in
inventories, a $26.4 million increase in accrued liabilities, an $18.7 million
increase in accounts payable, a $13.8 million increase in accrued promotional
allowances, a $10.4 million increase in income taxes payable, a $7.5 million
increase in accrued compensation, a $5.5 million decrease in prepaid income
taxes and a $1.0 million decrease in prepaid expenses and other assets. For the
year ended December 31, 2020, cash used in operating activities was primarily
attributable to a $156.9 million increase in deferred income taxes, a $120.1
million increase in accounts receivable and a $21.5 million decrease in deferred
revenue.

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.

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Cash flows used in investing activities. Net cash used in investing activities
was $472.5 million for the year ended December 31, 2020 as compared to cash used
in investing activities of $326.7 million for the year ended December 31, 2019.

For both the years ended December 31, 2020 and 2019, cash provided by investing
activities was primarily attributable to sales of available-for-sale
investments. For both the years ended December 31, 2020 and 2019, cash used in
investing activities was primarily attributable to purchases of
available-for-sale investments. For both the years ended December 31, 2020 and
2019, 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
$526.1 million for the year ended December 31, 2020 as compared to cash used in
financing activities of $628.5 million for the year ended December 31, 2019. The
cash flows used in financing activities for both the years ended December 31,
2020 and 2019 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, 2020, and 2019 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, 2020, we had $1.18 billion in cash and cash equivalents, $881.4 million in
short-term investments and $44.3 million in long-term investments, including
certificates of deposit, commercial paper, U.S. government agency securities,
U.S. treasuries, and to a lesser extent, municipal securities. 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 $1.18 billion of cash and cash equivalents held at December 31, 2020,
$677.1 million was held by our foreign subsidiaries. No short-term or long-term
investments were held by our foreign subsidiaries at December 31, 2020.

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,
2021.  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, 2020:


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

Contractual Obligations¹    $ 129,255    $   97,979    $ 31,223    $    53    $         -
Finance Leases                    828           803          22          3              -
Operating Leases               24,393         3,785       5,518      3,502         11,588
Purchase Commitments²         101,815       101,815           -          -              -
                            $ 256,291    $  204,382    $ 36,763    $ 3,558    $    11,588



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 $0.7 million of unrecognized tax benefits have been
recorded as liabilities as of December 31, 2020. It is expected that the amount
of unrecognized tax benefits will not significantly change within the next 12
months. As of December 31, 2020, we had $0.1 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.

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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 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 income (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 326-30-35, a security is considered to be impaired if the fair
value of the security is less than its amortized cost basis. Where the decline
in fair value below the amortized cost basis has resulted from a credit loss,
the Company will record an impairment relating to credit losses through an
allowance for credit losses. The allowance is limited by the amount that the
fair value is less than the amortized cost basis. Impairment that has not been
recorded through an allowance for credit losses is recorded through other
comprehensive income (loss), net of applicable taxes. The Company evaluates
whether the decline in fair value of its investments has resulted from credit
loss or other factors 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 an
impairment has resulted from credit loss or other factors 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.

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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
reasonably determines that it is more-likely-than-not that the fair value is
less than the carrying value, the Company performs its annual, or interim,
goodwill impairment test by comparing the fair value of a reporting unit with
its carrying amount. The Company will recognize an impairment for the amount by
which the carrying amount exceeds a reporting unit's fair value. For the years
ended December 31, 2020, 2019 and 2018 there were no impairments recorded and
there are no accumulated impairment balances.

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®, Monster
Super Fuel®, Espresso Monster®, Monster Energy Extra Strength Nitrous
Technology®, Muscle Monster®, Punch Monster®, Juice Monster®, Reign Total Body
Fuel®, Reign Inferno®, 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 year ended December 31, 2020, an impairment charge of $8.7
million was recorded to intangibles. For the years ended December 31, 2019 and
2018 no impairments were 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, 2020, 2019 and 2018, 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.

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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 income (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
income (loss) in stockholders' equity. During the years ended December 31, 2020,
2019 and 2018, 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, 2020 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 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, 2020 and December 31, 2019.

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;


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? 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 certain wholly-owned

? subsidiaries of TCCC and/or to certain companies accounted for under the equity

method by TCCC.

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 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,
supplement ingredients 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

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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 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:

The human and economic consequences of the COVID-19 pandemic, as well as the

measures taken or that may be taken in the future by governments, and ? consequently, businesses (including the Company and its suppliers, bottlers/

distributors, co-packers and other service providers) and the public at large

to limit the COVID-19 pandemic;

The impact on consumer demand of the resurgence of the COVID-19 pandemic, ? resulting in a number of countries, particularly in EMEA, reinstituting

lockdowns and other restrictions as well as the impact of possible resurgences

  in other countries;


  Fluctuations in growth and/or growth rates and/or decline in sales of the

domestic and international energy drink categories generally, including in the ? convenience and gas channel (which is our largest channel) and the impact on

demand for our products resulting from deteriorating economic conditions and/or

  financial uncertainties due to the COVID-19 pandemic;


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The impact of temporary plant closures, production slowdowns and disruptions in ? operations experienced by our suppliers, bottlers/distributors and/or

co-packers as a result of the COVID-19 pandemic, including any material

disruptions on the production and distribution of our products;

The impact of the reduction in our sponsorship and endorsement activities as ? well as our sampling activities as a result of COVID-19 on our future sales and

market share;

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 and possible reductions in the number of our SKUs carried by such

bottlers/distributors and/or such bottlers/distributors imposing limitations on

distributing new product SKUs;

? Closures of, and continued restrictions on, on-premise retailers and other

establishments which sell our products as the result of the COVID-19 pandemic;

? The limitation or reduction by our suppliers, bottlers/distributors and/or

co-packers of their activities and/or operations during the COVID-19 pandemic;

? The impact of the COVID-19 pandemic on our product sampling programs;

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

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

? Our ability to maintain relationships with TCCC system bottlers/distributors

and manage their ongoing commitment to focus on our products;

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

international bottlers/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 Food and Drug Administration (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 General Data Protection Regulation and the California Consumer Privacy Act

of 2018;

? Our ability to achieve profitability and/or repatriate cash from certain of our

operations outside the United States;

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 bottlers/distributors;

Changes in U.S. tax laws as a result of any legislation proposed by the new ? U.S. Presidential Administration or U.S. Congress, which may include efforts to

change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate

income tax rate reduction;

? 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;


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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 the long-term impact of the United Kingdom's

departure from the European Union (or "Brexit");

? Changes in accounting standards may affect our reported profitability;

? Implications of the Organization for Economic Cooperation and Development's

base erosion and profit shifting project;

Any proceedings which may be brought against us by the Securities and Exchange ? Commission (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, including changes in demand for different packages, sizes and ? configurations, 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, product safety and quality, water usage, environmental impact and

sustainability, human rights, our culture, workforce and labor and workplace

laws;

Changes in demand that are weather related and/or for other reasons, including

changes in product category and/or package consumption and changes in cost and ? availability of certain key ingredients including aluminum cans, 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 (such as the COVID-19 pandemic);

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 brands, including our Reign ? Total Body Fuel® high performance energy drinks, which could result in an

injunction barring us from selling certain of our products and/or require

changes to be made to our current trade dress;

? Our ability to introduce new products and the impact of the COVID-19 pandemic

on our innovation activities;

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

? An inability to achieve volume growth through product and packaging

initiatives;

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



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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 and/or lower

profit margins 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;

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

due to port strikes and related labor issues;

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 we are a member, and/or any international

beverage associations and the impact of our failure to satisfy such guidelines

may have on our business;

? 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 cans, 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, 24-ounce aluminum cap

cans and 550ml BRE aluminum cans with resealable ends;

? 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 ? bottlers/distributors of our products, most of whom distribute products that

  may be regarded as competitive with our products;


  Unilateral decisions by bottlers/distributors, buying groups, convenience

chains, grocery chains, mass merchandisers, specialty chain stores, e-commerce

retailers, e-commerce websites, 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, impose restrictions or

limitations on the sale of our products and/or devote less resources to the

sale of our products;

The impact of possible trading disputes between our bottler/distributors and ? their customers and/or one or more buying groups which may result in the

  delisting of certain of the Company products, temporarily or otherwise;

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

successfully adapt to the rapidly changing retail landscape;

? Our ability to adapt to the changing retail landscape with the rapid growth in

e-commerce retailers;

? The effects of bottler/distributor consolidation on our business;

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

marketing and promotional strategies;



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Table of Contents ? The success of our sports marketing, social media and other general marketing

endeavors both domestically and internationally;

Our ability to successfully adapt to the changing landscape of advertising, ? marketing, promotional, sponsorship and endorsement opportunities created by

the COVID-19 pandemic;

? Unforeseen economic and political changes and local or international

catastrophic events;

? Possible recalls of our products and/or the consequence and costs of 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 co-packers to manufacture our products on a

timely basis or at all;

? The impact of any reductions in productivity and disruptions to our business

routines while most office-based employees of the Company are working remotely;

? Other effects of the COVID-19 pandemic on our employees, such as mental health

challenges that employees may face;

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.



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Financials (USD)
Sales 2021 5 365 M - -
Net income 2021 1 388 M - -
Net cash 2021 1 897 M - -
P/E ratio 2021 35,5x
Yield 2021 -
Capitalization 49 420 M 49 420 M -
EV / Sales 2021 8,86x
EV / Sales 2022 7,96x
Nbr of Employees 3 340
Free-Float 58,9%
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Technical analysis trends MONSTER BEVERAGE CORPORATION
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Income Statement Evolution
Consensus
Sell
Buy
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
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