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SEGMENT INFORMATION | 3 Months Ended
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Mar. 31, 2019
SEGMENT INFORMATION |
SEGMENT INFORMATION | 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 and Reign Total Body Fuel TM high performance energy drinks, (ii) Strategic Brands segment, which is comprised primarily of the various energy drink brands acquired from TCCC in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment, which is comprised of the AFF Third-Party Products. The Company’s Monster Energy® Drinks segment primarily 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, 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 certain 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 margin percentages 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 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-months ended March 31, 2019 and 2018 are as follows:
|  | Three-Months Ended
|  | March 31,
|  | 2019 |  | 2018
Net sales: |  |  |  |  |  |
Monster Energy® Drinks (1) |  | $ | 870,384 |  | $ | 780,505
Strategic Brands |  |  | 70,286 |  |  | 65,759
Other |  |  | 5,321 |  |  | 4,657
Corporate and unallocated |  |  | — |  |  | —
|  | $ | 945,991 |  | $ | 850,921
|  | Three-Months Ended
|  | March 31,
|  | 2019 |  | 2018
Operating Income: |  |  |  |  |  |
Monster Energy® Drinks (1)(2) |  | $ | 342,999 |  | $ | 301,702
Strategic Brands |  |  | 45,581 |  |  | 42,602
Other |  |  | 902 |  |  | 971
Corporate and unallocated |  |  | (78,021) |  |  | (65,360)
|  | $ | 311,461 |  | $ | 279,915
|  | Three-Months Ended
|  | March 31,
|  | 2019 |  | 2018
Income before tax: |  |  |  |  |  |
Monster Energy® Drinks (1)(2) |  | $ | 343,016 |  | $ | 301,964
Strategic Brands |  |  | 45,577 |  |  | 42,583
Other |  |  | 902 |  |  | 971
Corporate and unallocated |  |  | (75,292) |  |  | (63,798)
|  | $ | 314,203 |  | $ | 281,720
| (1) |  | Includes $14.2 million and $11.2 million for the three-months ended March 31, 2019 and 2018, respectively, related to the recognition of deferred revenue.
| (2) |  | Includes $10.7 million and $7.0 million for the three-months ended March 31, 2019 and 2018, respectively, related to distributor termination costs.
|  | Three-Months Ended
|  | March 31,
|  | 2019 |  | 2018
Depreciation and amortization: |  |  |  |  |  |
Monster Energy® Drinks |  | $ | 9,798 |  | $ | 8,809
Strategic Brands |  |  | 1,963 |  |  | 1,926
Other |  |  | 1,155 |  |  | 1,159
Corporate and unallocated |  |  | 1,954 |  |  | 2,097
|  | $ | 14,870 |  | $ | 13,991
Corporate and unallocated expenses for the three-months ended March 31, 2019 include $50.4 million of payroll costs, of which $15.3 million was attributable to stock-based compensation expenses (see Note 15 "Stock-Based Compensation"), as well as $17.5 million attributable to professional service expenses, including accounting and legal costs, and $10.1 million of other operating expenses. Corporate and unallocated expenses for the three-months ended March 31, 2018 include $43.1 million of payroll costs, of which $13.4 million was attributable to stock-based compensation expenses (see Note 15, “Stock-Based Compensation”), as well as $12.4 million attributable to professional service expenses, including accounting and legal costs, and $9.9 million of other operating expenses. CCBCC Operations, LLC accounted for approximately 13% and 14% of the Company's net sales for the three-months ended March 31, 2019 and 2018, respectively. Reyes Coca-Cola Bottling accounted for approximately 12% and 13% of the Company's net sales for the three-months ended March 31, 2019 and 2018, respectively. Coca-Cola European Partners accounted for approximately 9% and 10% of the Company's net sales for the three-months ended March 31, 2019 and 2018, respectively. Net sales to customers outside the United States amounted to $284.1 million and $242.1 million for the three-months ended March 31, 2019 and 2018, respectively. Such sales were approximately 30% and 28% of net sales for the three-months ended March 31, 2019 and 2018, respectively. Goodwill and other intangible assets for the Company's reportable segments as of March 31, 2019 and December 31, 2018 are as follows:
|  | March 31, |  | December 31,
|  | 2019 |  | 2018
Goodwill and other intangible assets: |  |  |  |  |  |
Monster Energy® Drinks |  | $ | 1,368,115 |  | $ | 1,368,620
Strategic Brands |  |  | 988,545 |  |  | 989,944
Other |  |  | 17,822 |  |  | 18,957
Corporate and unallocated |  |  | — |  |  | —
|  | $ | 2,374,482 |  | $ | 2,377,521

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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 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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