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SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2019

SEGMENT INFORMATION

SEGMENT INFORMATION

19. 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, value stores, e-commerce retailers 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 by such bottlers 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, value stores, e-commerce retailers 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 years ended December 31, 2019, 2018 and 2017 are as follows:


		2019			2018			2017
Net sales:
Monster Energy® Drinks⁽¹⁾		$	3,904,029		$	3,498,427		$	3,047,596
Strategic Brands			274,925			285,836			299,844
Other			21,865			22,920			21,605
Corporate and unallocated			—			—			—
		$	4,200,819		$	3,807,183		$	3,369,045


		2019			2018			2017
Operating Income:
Monster Energy® Drinks^{(1) (2)}		$	1,565,977		$	1,371,062		$	1,264,579
Strategic Brands			164,053			176,520			174,458
Other			3,650			5,362			5,583
Corporate and unallocated			(330,741)			(269,325)			(245,833)
		$	1,402,939		$	1,283,619		$	1,198,787


		2019			2018			2017
Income before tax:
Monster Energy® Drinks^{(1) (2)}		$	1,567,022		$	1,372,001		$	1,264,555
Strategic Brands			164,049			176,540			174,442
Other			3,655			5,362			5,583
Corporate and unallocated			(318,764)			(260,631)			(242,957)
		$	1,415,962		$	1,293,272		$	1,201,623

(1)

Includes $46.3 million, $44.3 million and $43.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to the recognition of deferred revenue.

(2)

Includes $11.3 million, $26.6 million and $35.4 million for the years ended December 31, 2019, 2018 and 2017, respectively, related to distributor termination costs.


		2019			2018			2017
Depreciation and amortization:
Monster Energy® Drinks		$	39,397		$	36,387		$	29,591
Stategic Brands			7,935			7,774			7,443
Other			4,637			4,657			4,608
Corporate and unallocated			8,758			8,161			7,245
		$	60,727		$	56,979		$	48,887

Corporate and unallocated expenses were $330.7 million for the year ended December 31, 2019 and included $203.3 million of payroll costs, of which $63.4 million was attributable to stock-based compensation expense (See Note 15, “Stock-Based Compensation”), $78.5 million of professional service expenses, including accounting and legal costs, $6.1 million of insurance costs and $42.8 million of other operating expenses.

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 15, “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 15, “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.

TCCC, through the TCCC Subsidiaries, accounted for approximately 2%, 3% and 18% of the Company's net sales for the years ended December 31, 2019, 2018 and 2017, 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, 2019, 2018 and 2017.

Coca-Cola Consolidated, Inc. accounted for approximately 13% of the Company’s net sales for the years ended December 31, 2019, 2018 and 2017.

Reyes Coca-Cola Bottling, LLC accounted for approximately 11%, 12% and 6% of the Company’s net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

Coca-Cola European Partners accounted for approximately 10%, 10% and 9% of the Company’s net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

Net sales to customers outside the United States amounted to $1.33 billion, $1.09 billion and $909.3 million for the years ended December 31, 2019, 2018 and 2017, respectively. Such sales were approximately 32%, 29% and 27% of net sales for the years ended December 31, 2019, 2018 and 2017, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of December 31, 2019 and 2018 are as follows:


		2019			2018
Goodwill and other intangible assets:
Monster Energy® Drinks		$	1,384,940		$	1,368,620
Strategic Brands			984,393			989,944
Other			14,415			18,957
Corporate and unallocated			—			—
		$	2,383,748		$	2,377,521