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SEGMENT INFORMATION | 6 Months Ended
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Jun. 30, 2017
SEGMENT INFORMATION |
SEGMENT INFORMATION | 16.SEGMENT INFORMATION 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® drinks, Monster Hydro TM energy drinks and Mutant® Super Soda drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits & Flavors LLC, a wholly-owned subsidiary of the Company, to independent third-party customers. The Company’s Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged 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, 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, 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, full service distributors or retailers, including, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, food service customers, drug stores and the military. To a lesser extent, the Company’s Strategic Brands segment generates net operating revenues by selling ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. 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, 2017 and 2016 are as follows:
|  | Three-Months Ended |  | Six-Months Ended |
|  | June 30, |  | June 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Net sales: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) |  | $ | 815,261 |  | $ | 743,453 |  | $ | 1,483,831 |  | $ | 1,365,381 |
Strategic Brands |  | 85,633 |  | 77,400 |  | 153,669 |  | 135,852 |
Other |  | 6,174 |  | 6,635 |  | 11,714 |  | 6,441 |
Corporate and unallocated |  | - |  | - |  | - |  | - |
|  | $ | 907,068 |  | $ | 827,488 |  | $ | 1,649,214 |  | $ | 1,507,674 |
|  | Three-Months Ended |  | Six-Months Ended |
|  | June 30, |  | June 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Operating Income: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) (2) |  | $ | 356,223 |  | $ | 298,942 |  | $ | 635,654 |  | $ | 566,329 |
Strategic Brands |  | 53,175 |  | 48,019 |  | 95,281 |  | 87,095 |
Other |  | 1,718 |  | 686 |  | 3,134 |  | 342 |
Corporate and unallocated |  | (61,075) |  | (59,124) |  | (119,766) |  | (110,529) |
|  | $ | 350,041 |  | $ | 288,523 |  | $ | 614,303 |  | $ | 543,237 |
|  | Three-Months Ended |  | Six-Months Ended |
|  | June 30, |  | June 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Income before tax: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks(1) (2) |  | $ | 356,316 |  | $ | 298,974 |  | $ | 635,651 |  | $ | 566,412 |
Strategic Brands |  | 53,174 |  | 48,008 |  | 95,268 |  | 87,068 |
Other |  | 1,718 |  | 686 |  | 3,134 |  | 342 |
Corporate and unallocated |  | (63,718) |  | (59,367) |  | (121,643) |  | (110,199) |
|  | $ | 347,490 |  | $ | 288,301 |  | $ | 612,410 |  | $ | 543,623 |
| (1) |  | Includes $10.2 million and $12.1 million for the three-months ended June 30, 2017 and 2016, respectively, related to the recognition of deferred revenue. Includes $20.1 million and $20.2 million for the six-months ended June 30, 2017 and 2016, respectively, related to the recognition of deferred revenue.
| (2) |  | Includes $0.2 million and $25.3 million for the three-months ended June 30, 2017 and 2016, respectively, related to distributor termination costs. Includes $20.1 million and $28.7 million for the six-months ended June 30, 2017 and 2016, respectively, related to distributor termination costs.
|  | Three-Months Ended |  | Six-Months Ended |
|  | June 30, |  | June 30, |
|  | 2017 |  | 2016 |  | 2017 |  | 2016 |
Depreciation and amortization: |  |  |  |  |  |  |  |  |
Monster Energy® Drinks |  | $ | 6,873 |  | $ | 5,795 |  | $ | 13,413 |  | $ | 11,573 |
Strategic Brands |  | 1,842 |  | 1,778 |  | 3,638 |  | 3,548 |
Other |  | 1,153 |  | 1,135 |  | 2,306 |  | 1,136 |
Corporate and unallocated |  | 1,725 |  | 1,598 |  | 3,418 |  | 3,072 |
|  | $ | 11,593 |  | $ | 10,306 |  | $ | 22,775 |  | $ | 19,329 |
|  | June 30, 2017 |  | December 31, 2016 |
Goodwill and other intangible assets: |  |  |  |  |
Monster Energy® Drinks |  | $ | 1,340,125 |  | $ | 1,334,494 |
Strategic Brands |  | 998,625 |  | 1,001,749 |
Other |  | 25,767 |  | 28,035 |
Corporate and unallocated |  | - |  | - |
|  | $ | 2,364,517 |  | $ | 2,364,278 |
Corporate and unallocated expenses for the three-months ended June 30, 2017 include $38.4 million of payroll costs, of which $12.8 million was attributable to stock-based compensation expenses (see Note 13, “Stock-Based Compensation”), as well as $14.0 million attributable to professional service expenses, including accounting and legal costs, and $8.6 million of other operating expenses. 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 expenses (see Note 13, “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 six-months ended June 30, 2017 include $76.1 million of payroll costs, of which $26.0 million was attributable to stock-based compensation expenses (see Note 13, “Stock-Based Compensation”), as well as $26.4 million attributable to professional service expenses, including accounting and legal costs, and $17.3 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 expenses (see Note 13, “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. TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 17% and 42% of the Company’s net sales for the three-months ended June 30, 2017 and 2016, respectively. The TCCC Subsidiaries accounted for approximately 25% and 44% of the Company’s net sales for the six-months ended June 30, 2017 and 2016, respectively. As part of TCCC’s North America Refranchising initiative (the “North America Refranchising”), the territories of certain TCCC Subsidiaries have been transitioned to certain independent/non wholly-owned TCCC bottlers/distributors. Accordingly, the Company’s percentage of net sales classified as sales to the TCCC Subsidiaries decreased for three- and six-months ended June 30, 2017. Net sales to customers outside the United States amounted to $247.9 million and $200.2 million for the three-months ended June 30, 2017 and 2016, respectively. Net sales to customers outside the United States amounted to $438.8 million and $349.3 million for the six-months ended June 30, 2017 and 2016, 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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&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=68060357&loc=d3e8906-108599 + Details
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