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REVENUE RECOGNITION | 3 Months Ended
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Mar. 31, 2019
REVENUE RECOGNITION |
REVENUE RECOGNITION | 3.REVENUE RECOGNITION The Company has three operating and reportable segments, (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of the Company’s Monster Energy® drinks and Reign Total Body FuelTM high performance energy drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is comprised primarily of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”). The Company's Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged energy 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, drug stores, 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 and full service distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores and the military. To a lesser extent, our Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of March 31, 2019 or December 31, 2018. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses. Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to the Company's bottlers/distributors or retail customers including, but not limited to the following:
| · |  | discounts granted off list prices to support price promotions to end-consumers by retailers;
| · |  | reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;
| · |  | the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities;
| · |  | the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers;
| · |  | incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals;
| · |  | discounted or free products;
| · |  | contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors' sales territories; and
| · |  | commissions paid to TCCC based on the Company’s sales to certain wholly-owned subsidiaries of TCCC (the “TCCC Subsidiaries”) and/or to certain companies accounted for by TCCC under the equity method (“the TCCC Related Parties”).
The Company's promotional allowance programs with its bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year. The Company's promotional and other allowances are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established during the year for its anticipated liabilities. These accruals are based on agreed upon terms as well as the Company's historical experience with similar programs and require management's judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Amounts received pursuant to new and/or amended distribution agreements entered into with certain distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years. The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company’s trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels. Disaggregation of Revenue The following tables disaggregate the Company's revenue by geographical markets and reportable segments:
|  | Three-Months Ended March 31, 2019
|  |  |  |  |  |  |  |  |  |  | Latin |  |  |
|  |  |  |  |  |  |  |  |  |  | America |  |  |
|  | U.S. and |  |  |  |  |  |  | and |  |
Net Sales |  | Canada |  | EMEA 1 |  | Asia Pacific |  | Caribbean |  | Total
Monster Energy® Drinks |  | $ | 642,826 |  | $ | 124,637 |  | $ | 62,456 |  | $ | 40,465 |  | $ | 870,384
Strategic Brands |  |  | 41,750 |  |  | 21,908 |  |  | 6,225 |  |  | 403 |  |  | 70,286
Other |  |  | 5,321 |  |  | — |  |  | — |  |  | — |  |  | 5,321
Total Net Sales |  | $ | 689,897 |  | $ | 146,545 |  | $ | 68,681 |  | $ | 40,868 |  | $ | 945,991
|  | Three-Months Ended March 31, 2018 |  |
|  |  |  |  |  |  |  |  |  |  | Latin |  |  |
|  |  |  |  |  |  |  |  |  |  | America |  |  |
|  | U.S. and |  |  |  |  |  |  |  | and |  |  |
Net Sales |  | Canada |  | EMEA 1 |  | Asia Pacific |  | Caribbean |  | Total
Monster Energy® Drinks |  | $ | 588,817 |  | $ | 110,929 |  | $ | 47,431 |  | $ | 33,328 |  | $ | 780,505
Strategic Brands |  |  | 39,724 |  |  | 19,313 |  |  | 5,548 |  |  | 1,174 |  |  | 65,759
Other |  |  | 4,657 |  |  | — |  |  | — |  |  | — |  |  | 4,657
Total Net Sales |  | $ | 633,198 |  | $ | 130,242 |  | $ | 52,979 |  | $ | 34,502 |  | $ | 850,921
1 Europe, Middle East and Africa (“EMEA”) Contract Liabilities Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of March 31, 2019, the Company had $346.8 million of deferred revenue, which is included in current and long-term deferred revenue in the Company's condensed consolidated balance sheet. As of December 31, 2018, the Company had $356.3 million of deferred revenue, which is included in current and long-term deferred revenue in the Company's condensed consolidated balance sheet. During the three-months ended March 31, 2019 and 2018, $14.2 million and $11.2 million, respectively, of deferred revenue was recognized in net sales. See Note 11.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI http://asc.fasb.org/topic&trid=2122369 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 + Details
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