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SEGMENT INFORMATION
 3 Months Ended
Mar. 31, 2016
SEGMENT INFORMATION  
SEGMENT INFORMATION

17.SEGMENT INFORMATION

 

The Company has three operating and reportable segments, (i) Finished Products, which is comprised primarily of the Company’s Monster Energy® drink products (previously comprising the majority of the former Direct Store Delivery segment) (“Finished Products”), (ii) Concentrate, the principal products of which include the various energy drink brands acquired from TCCC as a result of the TCCC Transaction  (“Concentrate”) and (iii) Other, the principal products of which include the brands disposed of as a result of the TCCC Transaction (previously comprising the majority of the former Warehouse segment and the Peace Tea® brand) (“Other”).

 

The Company’s Finished Products segment generates net operating revenues by selling ready-to-drink packaged energy drinks to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, food service customers and the military.

 

The Company’s Concentrate segment 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 and water, which are then filled in authorized containers bearing the Company’s respective trademarks and sold to customers directly (or in some cases through wholesalers or other bottlers).

 

Generally, the Finished Products segment generates higher per case net operating revenues, but lower per case gross profit margins than the Concentrate segment.

 

Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided for in the Company’s reportable segments as management does not measure or allocate such assets on a segment basis.

 

The net revenues derived from the Company’s reportable segments and other financial information related thereto for the three-months ended March 31, 2016 and 2015 are as follows:

 

 

 

Three-Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

Net sales:

 

 

 

 

 

Finished Products(1)

 

  $
624,292

 

  $
595,482

 

Concentrate

 
55,894

 

-

 

Other

 

-

 
31,309

 

Corporate and unallocated

 

-

 

-

 

 

 

 

 

 

 

 

 

  $
680,186

 

  $
626,791

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

Operating Income:

 

 

 

 

 

Finished Products(1) (2)

 

  $
267,996

 

  $
55,621

 

Concentrate

 
38,122

 

-

 

Other

 

-

 
1,999

 

Corporate and unallocated

 
(51,405)

 
(49,991)

 

 

 

 

 

 

 

 

 

  $
254,713

 

  $
7,629

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

Income before tax:

 

 

 

 

 

Finished Products(1) (2)

 

  $
268,047

 

  $
55,695

 

Concentrate

 
38,107

 

-

 

Other

 

-

 
1,999

 

Corporate and unallocated

 
(50,833)

 
(48,832)

 

 

 

 

 

 

 

 

 

  $
255,321

 

  $
8,862

 

 

 

 

 

 

 

 

 

 

(1)

Includes $8.2 million and $43.3 million for the three-months ended March 31, 2016 and 2015, respectively, related to the recognition of deferred revenue.

 

(2)

Includes $3.4 million and $206.0 million for the three-months ended March 31, 2016 and 2015, respectively, related to distributor termination costs.

 

 

 

Three-Months Ended

 

 

 

March 31,

 

 

 

2016

 

2015

 

Depreciation and amortization

 

 

 

 

 

Finished Products

 

  $
5,779

 

  $
5,055

 

Concentrate

 
1,770

 

-

 

Other

 

-

 
140

 

Corporate and unallocated

 
1,475

 
1,275

 

 

 

 

 

 

 

 

 

  $
9,024

 

  $
6,470

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31,
2016

 

December 31,
2015

 

Goodwill and other intangible assets:

 

 

 

 

 

Finished Products

 

  $
701,651

 

  $
699,346

 

Concentrate

 
1,006,642

 
1,008,355

 

Other

 

-

 

-

 

Corporate and unallocated

 

-

 

-

 

 

 

 

 

 

 

 

 

  $
1,708,293

 

  $
1,707,701

 

 

 

 

 

 

 

 

 

 

Corporate and unallocated expenses for the three-months ended March 31, 2016 include $28.4 million of payroll costs, of which $10.1 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $16.0 million attributable to professional service expenses, including accounting and legal costs, and $7.0 million of other operating expenses.  Corporate and unallocated expenses for the three-months ended March 31, 2015 include $28.5 million of payroll costs, of which $6.4 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $14.5 million attributable to professional service expenses, including accounting and legal costs, and $7.0 million attributable to other operating expenses.

 

Coca-Cola Refreshments USA Inc. (“CCR”) accounted for approximately 46% and 35% of the Company’s net sales for the three-months ended March 31, 2016 and 2015, respectively.

 

Net sales to customers outside the United States amounted to $149.1 million and $113.0 million for the three-months ended March 31, 2016 and 2015, respectively.