XML 36 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
SEGMENT INFORMATION
 6 Months Ended
Jun. 30, 2016
SEGMENT INFORMATION  
SEGMENT INFORMATION

 

17.SEGMENT INFORMATION

 

During the second quarter of 2016, the Company renamed and revised its reportable segments to reflect management’s current view of the business and to align its external financial reporting with its operating and internal financial model. Historical segment information has been revised to reflect the effect of this change.

 

The Company has three operating and reportable segments, (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is comprised of the Company’s Monster Energy® drink products (previously the Finished Products segment), (ii) Strategic Brands (“Strategic Brands”), which include the various energy drink brands acquired from TCCC as a result of the TCCC Transaction (previously the Concentrate segment) and (iii) Other, (“Other”) the principal products of which include the brands disposed of as a result of the TCCC Transaction as well as certain products acquired as part of the AFF Transaction that are sold to independent third-parties.

 

The Company’s Monster Energy® Drinks 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 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 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). To a lesser extent, the Company’s Strategic Brands 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.

 

Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margins than the Strategic Brands 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- and six-months ended June 30, 2016 and 2015 are as follows:

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Net sales:

 

 

 

 

 

 

 

 

 

Monster Energy® Drinks(1)

 

  $
743,453

 

  $
651,228

 

  $
1,365,381

 

  $
1,246,710

 

Strategic Brands

 
77,400

 
12,978

 
135,852

 
12,978

 

Other

 
6,635

 
29,516

 
6,441

 
60,824

 

Corporate and unallocated

 

-

 

-

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

  $
827,488

 

  $
693,722

 

  $
1,507,674

 

  $
1,320,512

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Operating Income:

 

 

 

 

 

 

 

 

 

Monster Energy® Drinks(1) (2)

 

  $
298,942

 

  $
251,551

 

  $
566,329

 

  $
307,172

 

Strategic Brands

 
48,019

 
9,084

 
87,095

 
9,084

 

Other(3)

 
686

 
163,661

 
342

 
165,660

 

Corporate and unallocated

 
(59,124)

 
(58,157)

 
(110,529)

 
(108,149)

 

 

 

 

 

 

 

 

 

 

 

 

 

  $
288,523

 

  $
366,139

 

  $
543,237

 

  $
373,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Income before tax:

 

 

 

 

 

 

 

 

 

Monster Energy® Drinks(1) (2)

 

  $
298,974

 

  $
251,740

 

  $
566,412

 

  $
307,435

 

Strategic Brands

 
48,008

 
9,084

 
87,068

 
9,084

 

Other(3)

 
686

 
163,661

 
342

 
165,660

 

Corporate and unallocated

 
(59,367)

 
(59,361)

 
(110,199)

 
(108,194)

 

 

 

 

 

 

 

 

 

 

 

 

 

  $
288,301

 

  $
365,124

 

  $
543,623

 

  $
373,985

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

Includes $12.1 million and $3.2 million for the three-months ended June 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. Includes $20.2 million and $46.5 million for the six-months ended June 30, 2016 and 2015, respectively, related to the recognition of deferred revenue.

 

(2)

Includes $25.3 million and $12.2 million for the three-months ended June 30, 2016 and 2015, respectively, related to distributor termination costs. Includes $28.7 million and $218.2 million for the six-months ended June 30, 2016 and 2015, respectively, related to distributor termination costs.

 

(3)

Includes $161.5 million gain on the sale of Monster Non-Energy for the three- and six-months ended June 30, 2015.

 

 

 

Three-Months Ended

 

Six-Months Ended

 

 

 

June 30,

 

June 30,

 

 

 

2016

 

2015

 

2016

 

2015

 

Depreciation and amortization

 

 

 

 

 

 

 

 

 

Monster Energy® Drinks

 

  $
5,795

 

  $
5,093

 

  $
11,573

 

  $
10,148

 

Strategic Brands

 
1,778

 
345

 
3,548

 
345

 

Other

 
1,135

 
92

 
1,136

 
231

 

Corporate and unallocated

 
1,598

 
1,250

 
3,072

 
2,525

 

 

 

 

 

 

 

 

 

 

 

 

 

  $
10,306

 

  $
6,780

 

  $
19,329

 

  $
13,249

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

June 30,
2016

 

December 31,
2015

 

 

 

 

 

 

 

Goodwill and other intangible assets:

 

 

 

 

 

Monster Energy® Drinks

 

  $
1,330,493

 

  $
699,346

 

Strategic Brands

 
1,004,995

 
1,008,355

 

Other

 
30,306

 

-

 

Corporate and unallocated

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  $

2,365,794

 

  $
1,707,701

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Corporate and unallocated expenses for the three-months ended June 30, 2016 include $31.1 million of payroll costs, of which $11.5 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $19.6 million attributable to professional service expenses, including accounting and legal costs, and $8.7 million of other operating expenses.  Corporate and unallocated expenses for the three-months ended June 30, 2015 include $28.3 million of payroll costs, of which $8.5 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $21.8 million attributable to professional service expenses, including accounting and legal costs, and $8.1 million of other operating expenses.

 

Corporate and unallocated expenses for the six-months ended June 30, 2016 include $59.5 million of payroll costs, of which $21.5 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $35.5 million attributable to professional service expenses, including accounting and legal costs, and $15.2 million of other operating expenses.  Corporate and unallocated expenses for the six-months ended June 30, 2015 include $56.9 million of payroll costs, of which $14.8 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $36.3 million attributable to professional service expenses, including accounting and legal costs, and $14.9 million of other operating expenses.

 

TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 42% and 45% of the Company’s net sales for the three-months ended June 30, 2016 and 2015, respectively. The TCCC Subsidiaries accounted for approximately 44% and 40% of the Company’s net sales for the six-months ended June 30, 2016 and 2015, respectively.

 

Net sales to customers outside the United States amounted to $200.2 million and $151.3 million for the three-months ended June 30, 2016 and 2015, respectively. Net sales to customers outside the United States amounted to $349.3 million and $264.3 million for the six-months ended June 30, 2016 and 2015, respectively.