18. SEGMENT INFORMATION

The Company has three operating and reportable segments, (i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks, (ii) Strategic Brands segment, which is primarily comprised of the various energy drink brands acquired from TCCC in 2015 as well as the Company’s Predator® energy drinks, and (iii) Other segment, which is comprised of certain products sold by AFF, 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, drug stores, mass merchandisers, convenience chains, foodservice 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, foodservice 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 and 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 years ended December 31, 2018, 2017 and 2016 are as follows:


	2018		2017		2016
Net sales:
Monster Energy® Drinks(1)	$	3,498,427	$	3,047,596	$	2,759,862
Strategic Brands		285,836		299,844		272,520
Other		22,920		21,605		17,011
Corporate and unallocated		—		—		—
	$	3,807,183	$	3,369,045	$	3,049,393


	2018		2017		2016
Operating Income:
Monster Energy® Drinks(1) (2)	$	1,371,062	$	1,264,579	$	1,148,427
Strategic Brands		176,520		174,458		163,121
Other		5,362		5,583		2,295
Corporate and unallocated		(269,325)		(245,833)		(228,505)
	$	1,283,619	$	1,198,787	$	1,085,338


	2018		2017		2016
Income before tax:
Monster Energy® Drinks(1) (2)	$	1,372,001	$	1,264,555	$	1,148,640
Strategic Brands		176,540		174,442		163,084
Other		5,362		5,583		2,295
Corporate and unallocated		(260,631)		(242,957)		(234,334)
	$	1,293,272	$	1,201,623	$	1,079,685

(1)

Includes $44.3 million, $43.4 million and $40.3 million for the years ended December 31, 2018, 2017 and 2016, respectively, related to the recognition of deferred revenue.

(2)

Includes $26.6 million, $35.4 million and $79.8 million for the years ended December 31, 2018, 2017 and 2016, respectively, related to distributor termination costs.


	2018		2017		2016
Depreciation and amortization:
Monster Energy® Drinks	$	36,387	$	29,591	$	24,048
Stategic Brands		7,774		7,443		7,113
Other		4,657		4,608		3,457
Corporate and unallocated		8,161		7,245		6,227
	$	56,979	$	48,887	$	40,845

Corporate and unallocated expenses were $269.3 million for the year ended December 31, 2018 and included $174.9 million of payroll costs, of which $57.1 million was attributable to stock-based compensation expense (See Note 14, "Stock-Based Compensation"), $53.6 million of professional service expenses, including accounting and legal costs, $6.0 million of insurance costs and $34.8 million of other operating expenses.

Corporate and unallocated expenses were $245.8 million for the year ended December 31, 2017 and included $156.3 million of payroll costs, of which $52.3 million was attributable to stock-based compensation expense (See Note 14, “Stock-Based Compensation”), $51.8 million of professional service expenses, including accounting and legal costs, $6.0 million of insurance costs and $31.7 million of other operating expenses.

Corporate and unallocated expenses were $228.5 million for the year ended December 31, 2016 and included $128.0 million of payroll costs, of which $45.8 million was attributable to stock-based compensation expense (See Note 14, “Stock-Based Compensation”), $66.3 million of professional service expenses, including accounting and legal costs, $6.0 million of insurance costs and $28.2 million of other operating expenses.

TCCC, through the TCCC Subsidiaries, accounted for approximately 3%, 18% and 41% of the Company's net sales for the years ended December 31, 2018, 2017 and 2016, respectively. As part of 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 the years ended December 31, 2018 and 2017.

CCBCC Operations, LLC accounted for approximately 13%, 13% and 9% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Reyes Coca-Cola Bottling accounted for approximately 12%, 6% and 2% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Coca-Cola European Partners accounted for approximately 10%, 9% and 9% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Net sales to customers outside the United States amounted to $1.09 billion, $909.3 million and $733.7 million for the years ended December 31, 2018, 2017 and 2016, respectively. Such sales were approximately 29%, 27% and 24% of net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of December 31, 2018 and 2017 are as follows:


	2018		2017
Goodwill and other intangible assets:
Monster Energy® Drinks	$	1,368,620	$	1,346,648
Strategic Brands		989,944		995,582
Other		18,957		23,498
Corporate and unallocated		—		—
	$	2,377,521	$	2,365,728