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SEGMENT INFORMATION | 9 Months Ended
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Sep. 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) as well as Mutant TM Super Soda drink products, (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 non-energy 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 nine-months ended September 30, 2016 and 2015 are as follows:
|  | Three-Months Ended |  | Nine-Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Net sales: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) |  | $ | 710,130 |  | $ | 686,684 |  | $ | 2,075,511 |  | $ | 1,933,467 |
Strategic Brands |  | 72,138 |  | 69,935 |  | 207,990 |  | 82,913 |
Other |  | 5,686 |  | - |  | 12,127 |  | 60,751 |
Corporate and unallocated |  | - |  | - |  | - |  | - |
|  | $ | 787,954 |  | $ | 756,619 |  | $ | 2,295,628 |  | $ | 2,077,131 |
|  | Three-Months Ended |  | Nine-Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Operating Income: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) (2) |  | $ | 308,493 |  | $ | 289,544 |  | $ | 874,822 |  | $ | 596,716 |
Strategic Brands |  | 40,075 |  | 45,291 |  | 127,169 |  | 54,375 |
Other(3) |  | 1,186 |  | (283) |  | 1,528 |  | 165,377 |
Corporate and unallocated |  | (59,379) |  | (43,114) |  | (169,909) |  | (151,263) |
|  | $ | 290,375 |  | $ | 291,438 |  | $ | 833,610 |  | $ | 665,205 |
|  | Three-Months Ended |  | Nine-Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Income before tax: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) (2) |  | $ | 308,612 |  | $ | 289,649 |  | $ | 875,024 |  | $ | 597,084 |
Strategic Brands |  | 40,073 |  | 45,275 |  | 127,141 |  | 54,359 |
Other(3) |  | 1,186 |  | (284) |  | 1,528 |  | 165,376 |
Corporate and unallocated |  | (60,533) |  | (46,564) |  | (170,734) |  | (154,758) |
|  | $ | 289,338 |  | $ | 288,076 |  | $ | 832,959 |  | $ | 662,061 |
(1) Includes $8.4 million and $8.2 million for the three-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. Includes $28.6 million and $54.7 million for the nine-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. (2) Includes $4.7 million and $2.5 million for the three-months ended September 30, 2016 and 2015, respectively, related to distributor termination costs. Includes $33.4 million and $220.7 million for the nine-months ended September 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 nine-months ended September 30, 2015.
|  | Three-Months Ended |  | Nine-Months Ended |
|  | September 30, |  | September 30, |
|  | 2016 |  | 2015 |  | 2016 |  | 2015 |
Depreciation and amortization: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks |  | $ | 5,974 |  | $ | 5,408 |  | $ | 17,651 |  | $ | 15,556 |
Strategic Brands |  | 1,777 |  | 1,757 |  | 5,325 |  | 2,102 |
Other |  | 1,151 |  | - |  | 2,305 |  | 232 |
Corporate and unallocated |  | 1,522 |  | 1,341 |  | 4,593 |  | 3,867 |
|  | $ | 10,424 |  | $ | 8,506 |  | $ | 29,874 |  | $ | 21,757 |
|  | September 30, 2016 |  | December 31, 2015 |
Goodwill and other intangible assets: |  |  |  |  |
Monster Energy® Drinks |  | $ | 1,331,931 |  | $ | 699,346 |
Strategic Brands |  | 1,003,355 |  | 1,008,355 |
Other |  | 29,170 |  | - |
Corporate and unallocated |  | - |  | - |
|  | $ | 2,364,456 |  | $ | 1,707,701 |
Corporate and unallocated expenses for the three-months ended September 30, 2016 include $33.2 million of payroll costs, of which $12.1 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $16.9 million attributable to professional service expenses, including accounting and legal costs, and $9.3 million of other operating expenses. Corporate and unallocated expenses for the three-months ended September 30, 2015 include $27.1 million of payroll costs, of which $8.9 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $10.3 million attributable to professional service expenses, including accounting and legal costs, of which $0.3 million was attributable to TCCC Transaction expenses, and $5.7 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2016 include $92.7 million of payroll costs, of which $33.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $52.4 million attributable to professional service expenses, including accounting and legal costs, of which $4.5 million was attributable to AFF Transaction expenses, and $24.8 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2015 include $83.9 million of payroll costs, of which $23.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $46.6 million attributable to professional service expenses, including accounting and legal costs, of which $15.4 million was attributable to TCCC Transaction expenses, and $20.8 million of other operating expenses. TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 41% and 42% of the Company’s net sales for the three-months ended September 30, 2016 and 2015, respectively. The TCCC Subsidiaries accounted for approximately 43% and 41% of the Company’s net sales for the nine-months ended September 30, 2016 and 2015, respectively. Net sales to customers outside the United States amounted to $190.8 million and $170.6 million for the three-months ended September 30, 2016 and 2015, respectively. Net sales to customers outside the United States amounted to $540.2 million and $435.1 million for the nine-months ended September 30, 2016 and 2015, respectively.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8981-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 41 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9038-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8971-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8595-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8933-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8844-108599 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8984-108599 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9031-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8538-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8864-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8924-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=51669610&loc=d3e8906-108599 + Details
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