Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Oct. 20, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | Monster Beverage Corp | |
Entity Central Index Key | 865,752 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 190,324,886 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 341,526 | $ 2,175,417 |
Short-term investments | 257,653 | 744,610 |
Accounts receivable, net | 467,348 | 352,955 |
TCCC Transaction receivable | 125,000 | 125,000 |
Inventories | 167,840 | 156,121 |
Prepaid expenses and other current assets | 35,016 | 26,967 |
Prepaid income taxes | 155,641 | 18,462 |
Total current assets | 1,550,024 | 3,599,532 |
INVESTMENTS | 9,519 | 15,348 |
PROPERTY AND EQUIPMENT, net | 144,625 | 97,354 |
DEFERRED INCOME TAXES | 142,116 | 140,468 |
GOODWILL | 1,283,643 | 1,279,715 |
OTHER INTANGIBLE ASSETS, net | 1,080,813 | 427,986 |
OTHER ASSETS | 25,691 | 10,874 |
Total Assets | 4,236,431 | 5,571,277 |
CURRENT LIABILITIES: | ||
Accounts payable | 172,159 | 144,763 |
Accrued liabilities | 91,819 | 81,786 |
Accrued promotional allowances | 140,952 | 115,530 |
Accrued distributor terminations | 5,650 | 11,018 |
Deferred revenue | 34,407 | 32,271 |
Accrued compensation | 21,820 | 22,159 |
Income taxes payable | 5,835 | 2,750 |
Total current liabilities | 472,642 | 410,277 |
DEFERRED REVENUE | 365,389 | 351,590 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock - $0.005 par value; 240,000 shares authorized; 207,384 shares issued and 190,426 outstanding as of September 30, 2016; 207,019 shares issued and 202,900 outstanding as of December 31, 2015 | 1,037 | 1,035 |
Additional paid-in capital | 4,036,204 | 3,991,857 |
Retained earnings | 1,934,601 | 1,394,863 |
Accumulated 0ther Comprehensive Income (Loss), Net of Tax | (14,534) | (21,878) |
Common stock in treasury, at cost; 16,958 shares and 4,119 shares as of September 30, 2016 and December 31, 2015, respectively | (2,558,908) | (556,467) |
Total stockholders' equity | 3,398,400 | 4,809,410 |
Total Liabilities and Stockholders' Equity | $ 4,236,431 | $ 5,571,277 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
CONDENSED CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, shares authorized | 240,000,000 | 240,000,000 |
Common stock, shares issued | 207,384,000 | 207,019,000 |
Common stock, shares outstanding | 190,426,000 | 202,900,000 |
Common stock in treasury, shares | 16,958,000 | 4,119,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
NET SALES | $ 787,954 | $ 756,619 | $ 2,295,628 | $ 2,077,131 |
COST OF SALES | 284,979 | 291,143 | 851,741 | 848,191 |
GROSS PROFIT | 502,975 | 465,476 | 1,443,887 | 1,228,940 |
OPERATING EXPENSES | 212,600 | 174,038 | 610,277 | 725,205 |
GAIN ON SALE OF MONSTER NON-ENERGY | 161,470 | |||
OPERATING INCOME | 290,375 | 291,438 | 833,610 | 665,205 |
INTEREST and OTHER EXPENSE, net | (1,037) | (3,362) | (651) | (3,144) |
INCOME BEFORE PROVISION FOR INCOME TAXES | 289,338 | 288,076 | 832,959 | 662,061 |
PROVISION FOR INCOME TAXES | 97,695 | 113,502 | 293,221 | 254,070 |
NET INCOME | $ 191,643 | $ 174,574 | $ 539,738 | $ 407,991 |
NET INCOME PER COMMON SHARE: | ||||
Basic (in dollars per share) | $ 1.01 | $ 0.85 | $ 2.72 | $ 2.22 |
Diluted (in dollars per share) | $ 0.99 | $ 0.84 | $ 2.67 | $ 2.17 |
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: | ||||
Basic (in shares) | 190,379 | 205,051 | 198,073 | 184,098 |
Diluted (in shares) | 194,431 | 208,094 | 202,093 | 188,131 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) | Oct. 14, 2016 |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | |
Common stock dividend percentage | 2 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income, as reported | $ 191,643 | $ 174,574 | $ 539,738 | $ 407,991 |
Other comprehensive income (loss): | ||||
Change in foreign currency translation adjustment | (57) | (1,778) | 7,344 | (9,398) |
Other comprehensive income (loss) | (57) | (1,778) | 7,344 | (9,398) |
Comprehensive income | $ 191,586 | $ 172,796 | $ 547,082 | $ 398,593 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 539,738 | $ 407,991 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 29,874 | 21,757 |
Gain on disposal of property and equipment | (171) | (212) |
Gain on sale of Monster Non-Energy | (161,470) | |
Stock-based compensation | 33,735 | 23,689 |
Deferred income taxes | (1,652) | (115,098) |
Effect on cash of changes in operating assets and liabilities, net of effects of acquisitions: | ||
Accounts receivable | (100,233) | (132,614) |
Distributor receivables | (21,034) | 393 |
Inventories | 18,355 | (9,076) |
Prepaid expenses and other current assets | (8,805) | (6,863) |
Prepaid income taxes | (136,899) | (83,276) |
Accounts payable | 21,795 | 75,142 |
Accrued liabilities | 8,303 | 29,296 |
Accrued promotional allowances | 23,411 | 15,196 |
Accrued distributor terminations | (5,466) | 7,706 |
Accrued compensation | (346) | 2,414 |
Income taxes payable | 3,340 | 312,750 |
Deferred revenue | 16,757 | (35,991) |
Net cash provided by operating activities | 420,702 | 351,734 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Maturities of held-to-maturity investments | 892,453 | 998,762 |
Sales of available-for-sale investments | 2,993 | 4,001 |
Sales of trading investments | 2,625 | |
Proceeds from transfer of distribution rights to TCCC | 179,658 | |
Purchases of held-to-maturity investments | (378,254) | (1,760,178) |
Purchases of available-for-sale investments | (24,405) | |
Purchases of property and equipment | (67,527) | (25,627) |
Proceeds from the sale of Monster Non-Energy | 198,008 | |
Proceeds from sale of property and equipment | 705 | 484 |
Purchases of AFF Assets, net | (688,485) | |
Increase in intangibles | (4,255) | (5,352) |
Decrease (Increase) in other assets | 56 | (1,039) |
Net cash used in investing activities | (266,719) | (408,658) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on debt | (1,731) | (807) |
Issuance of common stock | 10,615 | 1,691,051 |
Purchases of common stock held in treasury | (2,002,441) | (758,974) |
Net cash (used in) provided by financing activities | (1,993,557) | 931,270 |
Effect of exchange rate changes on cash and cash equivalents | 5,683 | (3,952) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,833,891) | 870,394 |
CASH AND CASH EQUIVALENTS, beginning of period | 2,175,417 | 370,323 |
CASH AND CASH EQUIVALENTS, end of period | 341,526 | 1,240,717 |
Cash paid during the period for: | ||
Interest | 53 | 21 |
Income taxes | $ 429,371 | $ 141,184 |
CONDENSED CONSOLIDATED STATEME8
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Capital leases for the acquisition of promotional vehicles | $ 2.2 | $ 1.1 |
Net change in accrued liabilities related to intangible addition | $ 2.3 | 3.1 |
Purchase of treasury stock includes accounts payable | $ 40.7 | |
Coca-Cola Transaction Asset Transfer Agreement | TCCC | ||
Number of shares issued for acquisition | 11,800,000 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2016 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION Reference is made to the Notes to Consolidated Financial Statements, in Monster Beverage Corporation and Subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2015 (“Form 10-K”) for a summary of significant accounting policies utilized by the Company and its consolidated subsidiaries and other disclosures, which should be read in conjunction with this Quarterly Report on Form 10-Q (“Form 10-Q”). The Company’s condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations applicable to interim financial reporting. They do not include all the information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP. The information set forth in these interim condensed consolidated financial statements for the three- and nine-months ended September 30, 2016 and 2015, respectively, is unaudited and reflects all adjustments, which include only normal recurring adjustments and which in the opinion of management are necessary to make the interim condensed consolidated financial statements not misleading. Results of operations for periods covered by this report may not necessarily be indicative of results of operations for the full year. The preparation of financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from these estimates. Adjustment – Subsequent to the issuance of the Company’s condensed consolidated financial statements on Form 10-Q for the quarterly period ended June 30, 2016, management concluded that its presentation of prepaid income taxes, deferred income taxes and income taxes payable should be adjusted to conform to its filed 2015 United States (“U.S.”) Federal income tax return. As a result of such adjustments, prepaid income taxes increased by $16.9 million, deferred income taxes decreased by $120.8 million and income taxes payable decreased by $103.9 million in the comparable condensed consolidated balance sheet as of December 31, 2015. During the second quarter of 2016, the Company renamed and revised its reportable segments to reflect management’s current view of the business and to align its external financial reporting with its operating and internal financial model. Historical segment information has been revised to reflect the effect of this change. See Note 17 for additional information about the Company’s reporting segments. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITIONS AND DIVESTITURES | |
ACQUISITIONS AND DIVESTITURES | 2. ACQUISITIONS AND DIVESTITURES American Fruits & Flavors On April 1, 2016, the Company completed its acquisition of flavor supplier and long-time business partner American Fruits & Flavors (“AFF”), in an asset acquisition that brought the Company’s primary flavor supplier in-house, secured the intellectual property of the Company’s most important flavors in perpetuity and further enhanced its flavor development and global flavor footprint capabilities (the “AFF Transaction”). Pursuant to the terms of the AFF Transaction, the Company purchased AFF for $688.5 million in cash after adjustments. The Company accounted for the AFF Transaction in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”. The following table summarizes the preliminary fair value allocations of the AFF Transaction consideration: Identifiable Consideration Intangibles - flavor formulas (non-amortizing) ¹ $ 618,000 $ - Intangibles - flavor formulas (amortizing) 641 - Intangibles - customer relationships (amortizing) 30,100 - Intangibles - trademarks (amortizing) 500 - Intangibles - other (amortizing) 200 - Working capital (excluding inventory) 1,861 - Inventory 27,600 - Property and equipment, net 1,175 - Favorable leases 4,480 - Goodwill 3,928 - Cash - 688,485 Total $ 688,485 $ 688,485 1 Represents proprietary formulas for the Company’s principal products. The fair value analysis has yet to progress to a stage where there is sufficient information for a definitive measurement of the respective fair values. Accordingly, the respective fair value allocations are preliminary and are based on valuations derived from estimated fair value assumptions used by management. The Company expects to complete its fair value analysis at a level of detail necessary to finalize the underlying fair value allocation as soon as practicable, but no later than twelve months from the closing of the AFF Transaction. The final respective fair value allocations and the preliminary estimates of management may differ substantially. However, the impact of any such differences on the Company’s financial position, results of operations and liquidity would not be material. The Company determined the estimated fair values as follows: · Flavor formulas (non-amortizing) – multi-period excess earnings method · Flavor formulas (amortizing) – replacement cost method · Customer relationships – multi-period excess earnings method · Trademarks – relief-from-royalty method · Inventory – comparative sales method and replacement cost method · Property and equipment, net – replacement cost method · Favorable leases – discounted cash flow method The preliminary book value of the working capital (excluding inventory) approximates fair value. The Company has determined goodwill in accordance with ASC 805-30-30-1, “Business Combinations,” which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date. For tax purposes, the AFF Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the AFF assets, net, equal to the purchase price. In accordance with Regulation S-X, pro forma unaudited condensed financial information for the AFF Transaction has not been provided as the impact of the transaction on the Company’s financial position, results of operations and liquidity was not material. The Coca-Cola Company On June 12, 2015, the Company completed the transactions contemplated by the definitive agreements entered into with The Coca-Cola Company (“TCCC”) on August 14, 2014 (the “TCCC Transaction”), which provided for a long-term strategic relationship in the global energy drink category. In consequence of the TCCC Transaction, (1) the Company issued to TCCC 34,040,534 newly issued Company common shares representing approximately 16.7% of the total number of outstanding Company common shares (after giving effect to such issuance) at such time and TCCC appointed two individuals to the Company’s Board of Directors, (2) TCCC transferred all of its rights in and to TCCC’s worldwide energy drink business (“KO Energy”) to the Company, (3) the Company transferred all of its rights in and to its non-energy drink business (“Monster Non-Energy”) to TCCC, (4) the Company and TCCC amended the distribution coordination agreements previously existing between them to govern the transition of third parties’ rights to distribute the Company’s energy products in most territories in the U.S. to members of TCCC’s distribution network, which consists of owned or controlled bottlers/distributors and independent bottling/distribution partners, and (5) TCCC and one of its subsidiaries made an aggregate net cash payment to the Company of $2.15 billion, $125.0 million of which was held in escrow through June 17, 2016, subject to release upon the achievement of milestones relating to the transition of distribution rights to TCCC’s distribution network. Under the terms of the escrow agreement and the transition payment agreement entered into in connection therewith, if the distribution rights in the U.S. transitioned to TCCC’s distribution network represented case sales in excess of the following percentages of a target case sale amount agreed to by the parties, amounts in the escrow fund in excess of the applicable amounts below would be released to the Company: Percentage Transitioned Escrow Release 40% Amounts in excess of $375 million 50% Amounts in excess of $312.5 million 60% Amounts in excess of $250 million 70% Amounts in excess of $187.5 million 80% Amounts in excess of $125 million 90% Amounts in excess of $62.5 million 95% All remaining amounts As of September 30, 2016, distribution rights in the U.S. representing approximately 89% of the target case sales had been transitioned to TCCC’s distribution network. As a result, on the one-year anniversary of the closing of the TCCC Transaction, the then-remaining escrow amount of $125 million was released to TCCC. Going forward TCCC will directly pay to the Company the amounts described above that become payable as a result of future target case sale transitions. The Company expects to transition sufficient additional distribution rights to receive all such amounts. The following unaudited pro forma condensed combined financial information is presented as if the TCCC Transaction had closed on January 1, 2015: Three-Months Ended September 30, 2015 Pro Forma Adjustments Monster ¹ KO Energy Disposal of Other Pro Forma Net sales $ 756,619 $ - $ - $ - $ 756,619 Net income 174,574 - - 180 174,754 Nine-Months Ended September 30, 2015 Pro Forma Adjustments Monster ² KO Energy ³ Disposal of 4 Other Pro Forma Net sales $ 2,077,131 $ 138,127 $ (60,824) $ 6,803 $ 2,161,237 Net income 407,991 100,575 (101,881) (36,487) 370,198 1 Includes net sales of $69.9 million and net income of $27.4 million (tax affected) related to the acquired KO Energy assets for the three-months ended September 30, 2015. 2 Includes net sales of $82.9 million and net income of $32.9 million (tax affected) related to the acquired KO Energy assets from June 12, 2015 (the date of acquisition) through September 30, 2015. 3 Includes results through June 12, 2015, the date the TCCC Transaction was finalized. The $100.6 million of net income for KO Energy for the nine-months ended September 30, 2015, is presented before tax. The associated estimated provision for income taxes is included in the “Other” category. Net income for KO Energy includes only net revenues and direct operating expenses, rather than full “carve-out” financial statements, because such financial statements would not be meaningful given that it is not possible to provide a meaningful allocation of business unit and corporate costs, interest or tax in respect of KO Energy. 4 Includes results through June 12, 2015. Net income includes the gain recognized on the sale of Monster Non-Energy of $161.5 million. Pro-Forma Adjustments – Other include the following: Three-Months Ended Nine-Months Ended Net sales: Amortization of deferred revenue $ - $ 6,803 Net income: Amortization of deferred revenue $ - $ 6,803 To record sales commissions - (15,470) To record amortization of definite lived KO Energy intangibles - (3,126) To eliminate TCCC Transaction expenses 292 15,425 Estimated provision for income taxes on pro forma adjustments (112) (1,398) Estimated provision for income taxes on KO Energy income - (38,721) Total $ 180 $ (36,487) For purposes of the unaudited pro forma financial information, a combined U.S. Federal and state statutory tax rate of 38.5% has been used. This rate does not reflect the Company’s expected effective tax rate, which includes other tax charges and benefits, and does not take into account any historical or possible future tax events that may impact the combined company. The unaudited pro forma financial information is presented for information purposes only and is not intended to represent or be indicative of the combined results of operations that the Company would have reported had the TCCC Transaction been completed as of the date and for the periods presented, and should not be taken as representative of the Company’s consolidated results of operations following the completion of the TCCC Transaction. In addition, the unaudited pro forma financial information is not intended to project the future financial results of operations of the combined company. The unaudited pro forma combined financial information does not reflect any cost savings, operational synergies or revenue enhancements that the combined company may achieve as a result of the TCCC Transaction, or the costs to combine the operations or costs necessary to achieve cost savings, operating synergies and revenue enhancements. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
RECENT ACCOUNTING PRONOUNCEMENTS. | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS In August 2016, the FASB issued ASU No. 2016-15, “Statement of Cash Flows (Topic 230)”. The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. ASU No. 2016-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted, provided that all of the amendments are adopted in the same period. The guidance requires application using a retrospective transition method. The Company is currently evaluating the impact of ASU No. 2016-15 on its financial position, results of operations and liquidity. In June 2016, the FASB issued ASU No. 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The accounting standard changes the methodology for measuring credit losses on financial instruments and the timing when such losses are recorded. ASU No. 2016-13 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The Company is currently evaluating the impact of ASU No. 2016-13 on its financial position, results of operations and liquidity. In March 2016, the FASB issued ASU No. 2016-09, “Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting”, which changes how companies account for certain aspects of share-based payments to employees. The new guidance identifies areas for simplification involving several aspects of accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, an option to recognize gross stock compensation expense with actual forfeitures recognized as they occur, and certain classifications on the statement of cash flows. The update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within those annual reporting periods with early application permitted. The Company early adopted the standards update effective January 1, 2016, electing (i) retrospective adjustment in the statement of cash flows and (ii) continued recognition of stock compensation based on estimated forfeitures. For the nine-months ended September 30, 2015, net cash provided by operating activities increased and net cash provided by financing activities decreased by $303.9 million, respectively, as a result of such retrospective adjustment. For the three-and nine-months ended September 30, 2016, the Company recorded $3.5 million and $7.1 million of excess tax benefits in net income that previously would have been recorded in additional paid-in-capital. The adoption of ASU No. 2016-09 did not have a material impact on the Company’s financial position, results of operations or liquidity. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”. This update is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2016-02 on its financial position, results of operations and liquidity. In November 2015, the FASB issued ASU No. 2015-17, “Income Taxes (Topic 740), Balance Sheet Classification of Deferred Taxes”. The amendments under the new guidance require that deferred tax liabilities and assets be classified as noncurrent in the classified balance sheets. The guidance is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. The Company adopted the standards update effective December 31, 2015, electing to apply it retrospectively to all periods presented. In July 2015, the FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. ASU No. 2015-11 requires entities to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. ASU No. 2015-11 is effective for annual periods, and interim periods within those years, beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU No. 2015-11 is not expected to have a material impact on the Company’s financial position, results of operations or liquidity. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers”, which supersedes previous revenue recognition guidance. ASU No. 2014-09 requires that a company recognize revenue at an amount that reflects the consideration to which the company expects to be entitled in exchange for transferring goods or services to a customer. In applying the new guidance, a company will (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the contract’s performance obligations; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. ASU No. 2014-09 was to be effective for reporting periods beginning after December 15, 2016. However, on July 9, 2015, the FASB voted to approve a one-year deferral of the effective date. This new guidance is effective for the Company beginning January 1, 2018 and can be adopted using either a full retrospective or modified approach. The Company is currently evaluating the impact of ASU No. 2014-09 on its financial position, results of operations and liquidity. |
INVESTMENTS
INVESTMENTS | 9 Months Ended |
Sep. 30, 2016 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS The following table summarizes the Company’s investments at: September 30, 2016 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ 28,318 $ - $ - $ 28,318 $ - $ - Municipal securities 181,843 - 222 181,621 222 - U.S. government agency securities 26,080 1 3 26,078 3 - Long-term: Municipal securities 9,519 - 19 9,500 19 - Available-for-Sale: Short-term: Variable rate demand notes 21,412 - - 21,412 - - Total $ 267,172 $ 1 $ 244 $ 266,929 $ 244 $ - December 31, 2015 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ 3,978 $ - $ - $ 3,978 $ - $ - Municipal securities 709,207 63 192 709,078 192 - U.S. government agency securities 23,369 - 58 23,311 58 - U.S. Treasuries 8,056 - 13 8,043 13 - Long-term: Municipal securities 11,071 - 8 11,063 8 - U.S. government agency securities 4,277 - 25 4,252 25 - Total $ 759,958 $ 63 $ 296 $ 759,725 $ 296 $ - During the three- and nine-months ended September 30, 2016 and 2015, realized gains or losses recognized on the sale of investments were not significant. The Company’s investments at September 30, 2016 and December 31, 2015 in commercial paper, municipal securities, U.S. government agency securities, variable rate demand notes (“VRDNs”) and/or U.S. Treasuries carried investment grade credit ratings. VRDNs are floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. While they are classified as marketable investment securities, the put option allows the VRDNs to be liquidated at par on a same day or more generally, on a seven day settlement basis. The following table summarizes the underlying contractual maturities of the Company’s investments at: September 30, 2016 December 31, 2015 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ 28,318 $ 28,318 $ 3,978 $ 3,978 Municipal securities 181,843 181,621 709,207 709,078 U.S. government agency securities 26,080 26,078 23,369 23,311 U.S. Treasuries - - 8,056 8,043 Due 1 -10 years: Municipal securities 9,519 9,500 11,071 11,063 U.S. government agency securities - - 4,277 4,252 Variable rate demand notes 6,003 6,003 - - Due 11 - 20 years: Variable rate demand notes 8,005 8,005 - - Due 21 - 30 years: Variable rate demand notes 4,002 4,002 - - Due 31 - 40 years: Variable rate demand notes 3,402 3,402 - - Total $ 267,172 $ 266,929 $ 759,958 $ 759,725 |
FAIR VALUE OF CERTAIN FINANCIAL
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 5. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below. · Level 1: Quoted prices in active markets for identical assets or liabilities. · Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. · Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible. The following tables present the Company’s held-to-maturity investments at amortized cost and the fair value of the Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at: September 30, 2016 Level 1 Level 2 Level 3 Total Cash $ 267,056 $ - $ - $ 267,056 Money market funds 27,784 - - 27,784 Certificates of deposit - 4,908 - 4,908 Commercial paper - 43,503 - 43,503 Variable rate demand notes - 21,412 - 21,412 Municipal securities - 217,955 - 217,955 U.S. government agency securities - 26,080 - 26,080 Foreign currency derivatives - 105 - 105 Total $ 294,840 $ 313,963 $ - $ 608,803 Amounts included in: Cash and cash equivalents $ 294,840 $ 46,686 $ - $ 341,526 Short-term investments - 257,653 - 257,653 Accounts receivable, net - 231 - 231 Investments - 9,519 - 9,519 Accrued liabilities - (126 ) - (126 ) Total $ 294,840 $ 313,963 $ - $ 608,803 December 31, 2015 Level 1 Level 2 Level 3 Total Cash $ 255,723 $ - $ - $ 255,723 Money market funds 664,005 - - 664,005 Certificates of deposit - 85,007 - 85,007 Commercial paper - 430,605 - 430,605 U.S. Treasuries - 260,035 - 260,035 Municipal securities - 731,744 - 731,744 U.S. government agency securities - 508,256 - 508,256 Foreign currency derivatives - (217 ) - (217 ) Total $ 919,728 $ 2,015,430 $ - $ 2,935,158 Amounts included in: Cash and cash equivalents $ 919,728 $ 1,255,689 $ - $ 2,175,417 Short-term investments - 744,610 - 744,610 Accounts receivable, net - 371 - 371 Investments - 15,348 - 15,348 Accrued liabilities - (588 ) - (588 ) Total $ 919,728 $ 2,015,430 $ - $ 2,935,158 All of the Company’s short-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments, which include money market funds, is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments, which include municipal securities, commercial paper, U.S. Treasuries, certificates of deposit, variable rate demand notes and U.S. government agency securities, is based on other observable inputs, specifically a market approach which utilizes valuation models, pricing systems, mathematical tools and other relevant information for the same or similar securities. The Company’s valuation of its Level 2 foreign currency contracts is based on quoted market prices of the same or similar instruments, adjusted for counterparty risk. There were no transfers between Level 1 and Level 2 measurements during the nine-months ended September 30, 2016 or the year ended December 31, 2015, and there were no changes in the Company’s valuation techniques. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the nine-months ended September 30, 2016 and the year ended December 31, 2015, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities. All foreign currency exchange contracts of the Company that were outstanding as of September 30, 2016 have terms of one month or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes. The Company has not designated its foreign currency exchange contracts as hedge transactions under ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in interest and other (expense) income, net, in the condensed consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. The notional amount and fair value of all outstanding foreign currency derivative instruments in the condensed consolidated balance sheets consist of the following at: September 30, 2016 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ 16,283 $ 46 Accounts receivable, net Receive EUR/pay USD 30,682 31 Accounts receivable, net Receive USD/pay AUD 17,978 63 Accounts receivable, net Receive USD/pay ZAR 19,861 65 Accounts receivable, net Receive USD/pay BRL 3,046 26 Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive CAD/pay USD $ 20,609 $ (14) Accrued liabilities Receive USD/pay MXN 27,360 (65) Accrued liabilities Receive USD/pay NZD 3,119 (11) Accrued liabilities Receive USD/pay SEK 1,856 (1) Accrued liabilities Receive USD/pay CLP 3,435 (10) Accrued liabilities Receive USD/pay COP 2,041 (21) Accrued liabilities Receive SGD/pay USD 2,571 (4) Accrued liabilities December 31, 2015 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ 18,146 $ 168 Accounts receivable, net Receive USD/pay ZAR 17,411 144 Accounts receivable, net Receive USD/pay RUB 2,173 9 Accounts receivable, net Receive USD/pay BRL 2,478 49 Accounts receivable, net Receive USD/pay COP 1,351 1 Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive EUR/pay USD $ 39,578 $ (429) Accrued liabilities Receive USD/pay AUD 14,040 (82) Accrued liabilities Receive USD/pay CAD 2,804 (15) Accrued liabilities Receive USD/pay JPY 2,495 (2) Accrued liabilities Receive USD/pay MXN 8,122 (15) Accrued liabilities Receive SGD/pay USD 3,837 (30) Accrued liabilities Receive USD/pay NZD 1,978 (3) Accrued liabilities Receive USD/pay CLP 3,519 (12) Accrued liabilities The net gains (losses) on derivative instruments in the condensed consolidated statements of income were as follows: Amount of gain (loss) Three-months ended Derivatives not designated as Location of gain (loss) September 30, September 30, Foreign currency exchange contracts Interest and other expense, net $ (882) $ 3,552 Amount of gain (loss) Nine-months ended Derivatives not designated as Location of gain (loss) September 30, September 30, Foreign currency exchange contracts Interest and other expense, net $ (424) $ 1,634 |
INVENTORIES
INVENTORIES | 9 Months Ended |
Sep. 30, 2016 | |
INVENTORIES | |
INVENTORIES | 7. INVENTORIES Inventories consist of the following at: September 30, December 31, Raw materials $ 68,860 $ 52,043 Finished goods 98,980 104,078 $ 167,840 $ 156,121 |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 9 Months Ended |
Sep. 30, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, Net | 8. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following at: September 30, December 31, Land $ 46,597 $ 6,792 Leasehold improvements 2,726 2,804 Furniture and fixtures 3,607 3,551 Office and computer equipment 11,538 11,080 Computer software 3,203 2,530 Equipment 107,704 93,465 Buildings 41,943 39,848 Vehicles 31,737 29,804 249,055 189,874 Less: accumulated depreciation and amortization (104,430) (92,520) $ 144,625 $ 97,354 In September 2016, the Company completed its acquisition of approximately 49 acres of land, located in Rialto, CA, for a purchase price of approximately $39.1 million. The Company intends to build an approximately 1,000,000 square-foot building to replace its current leased warehouse and distribution space located in Corona, CA. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 9. GOODWILL AND OTHER INTANGIBLE ASSETS The following is a roll-forward of goodwill for the nine-months ended September 30, 2016 by reportable segment: Monster Strategic Other Total Balance at December 31, 2015 $ 641,716 $ 637,999 $ - $ 1,279,715 Acquisitions 3,928 - - 3,928 Balance at September 30, 2016 $ 645,644 $ 637,999 $ - $ 1,283,643 Intangible assets consist of the following at: September 30, December 31, Amortizing intangibles $ 71,227 $ 35,263 Accumulated amortization (11,574) (3,899) 59,653 31,364 Non-amortizing intangibles 1,021,160 396,622 $ 1,080,813 $ 427,986 Amortizing intangibles primarily consist of customer relationships. All amortizing intangibles have been assigned an estimated finite useful life and such intangibles are amortized on a straight-line basis over the number of years that approximate their respective useful lives, generally five to seven years. Total amortization expense recorded was $3.0 million and $1.8 million for the three-months ended September 30, 2016 and 2015, respectively. Total amortization expense recorded was $7.7 million and $2.1 million for the nine-months ended September 30, 2016 and 2015, respectively. |
DISTRIBUTION AGREEMENTS
DISTRIBUTION AGREEMENTS | 9 Months Ended |
Sep. 30, 2016 | |
DISTRIBUTION AGREEMENTS | |
DISTRIBUTION AGREEMENTS | 10. DISTRIBUTION AGREEMENTS In accordance with ASC No. 420 “Exit or Disposal Cost Obligations”, the Company expenses distributor termination costs in the period in which the written notification of termination occurs. The Company incurred termination costs of $4.7 million and $2.5 million for the three-months ended September 30, 2016 and 2015, respectively. The Company incurred termination costs of $33.4 million and $220.7 million for the nine-months ended September 30, 2016 and 2015, respectively. Such termination costs have been expensed in full and are included in operating expenses for the three- and nine-months ended September 30, 2016 and 2015. In the normal course of business, amounts received pursuant to new and/or amended distribution agreements entered into with certain distributors, relating to the costs associated with terminating agreements with the Company’s prior distributors, are accounted for as deferred revenue and are recognized as revenue ratably over the anticipated life of the respective distribution agreement, generally 20 years. Revenue recognized was $8.4 million and $8.2 million for the three-months ended September 30, 2016 and 2015, respectively. There was no acceleration of deferred revenue in the three-months ended September 30, 2016 and 2015, respectively. Revenue recognized was $28.6 million and $54.7 million for the nine-months ended September 30, 2016 and 2015, respectively. Included in the $28.6 million of revenue recognized for the nine-months ended September 30, 2016, was $5.0 million related to the accelerated amortization of the deferred revenue balances associated with certain of the Company’s prior distributors who were sent notices of termination during the nine-months ended September 30, 2016. Included in the $54.7 million of revenue recognized for the nine-months ended September 30, 2015 was $39.8 million related to the accelerated amortization of the deferred revenue balances associated with certain of the Company’s prior distributors who were sent notices of termination during the nine-months ended September 30, 2015. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES The Company had purchase commitments aggregating approximately $55.0 million at September 30, 2016, which represented commitments made by the Company and its subsidiaries to various suppliers of raw materials for the production of its products. These obligations vary in terms, but are generally satisfied within one year. The Company had contractual obligations aggregating approximately $140.9 million at September 30, 2016, which related primarily to sponsorships and other marketing activities. The Company had operating lease commitments aggregating approximately $18.6 million at September 30, 2016, which related primarily to warehouse and office space. In July 2016, the Company entered into an agreement to acquire an approximately 75,425 square foot, free standing, three-story office building, including the real property thereunder and improvements thereon, located in Corona, CA adjacent to its current corporate headquarters, for a purchase price of approximately $12.6 million. The purchase is subject to various conditions precedent that must be satisfied prior to the closing. If the Company ultimately acquires the building, it intends to complete any necessary improvements and occupy the building as an extension of its existing corporate headquarters at some time in the future. In September 2016, the Company completed its acquisition of approximately 49 acres of land, located in Rialto, CA, for a purchase price of approximately $39.1 million. The Company intends to build an approximately 1,000,000 square-foot building to replace its current leased warehouse and distribution facilities located in Corona, CA. The Company has entered into an approximately $36.8 million guaranteed maximum price construction contract for the construction of the building. Legal Proceedings Litigation – The Company has been named a defendant in numerous personal injury lawsuits, claiming that the death or other serious injury of the plaintiffs was caused by consumption of Monster Energy® brand energy drinks. The plaintiffs in these lawsuits allege strict product liability, negligence, fraudulent concealment, breach of implied warranties and wrongful death. The Company believes that each complaint is without merit and plans a vigorous defense. The Company also believes that any damages, if awarded, would not have a material adverse effect on the Company’s financial position or results of operations. State Attorney General Inquiry – In July 2012, the Company received a subpoena from the Attorney General for the State of New York in connection with its investigation concerning the Company’s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy® brand energy drinks. Production of documents pursuant to that subpoena was completed in approximately May 2014. On August 6, 2014, the Attorney General for the State of New York issued a second subpoena seeking additional documents and the deposition of a Company employee. On September 8, 2014, the Company moved to quash the second subpoena in the Supreme Court, New York County. The motion was fully briefed and was argued on March 17, 2015. No decision has been rendered. It is unknown what, if any, action the state attorney general may take against the Company, the relief which may be sought in the event of any such proceeding or whether such proceeding could have a material adverse effect on the Company’s business, financial condition or results of operations. San Francisco City Attorney Litigation – On October 31, 2012, the Company received a written request for information from the City Attorney for the City and County of San Francisco concerning the Company’s advertising and marketing of its Monster Energy® brand energy drinks and specifically concerning the safety of its products for consumption by adolescents. In a letter dated March 29, 2013, the San Francisco City Attorney threatened to bring suit against the Company if it did not agree to take the following five steps immediately: (i) “Reformulate its products to lower the caffeine content to safe levels”; (ii) “Provide adequate warning labels”; (iii) “Cease promoting over-consumption in marketing”; (iv) “Cease use of alcohol and drug references in marketing” and (v) “Cease targeting minors.” (i) The Company Action – On April 29, 2013, the Company and its wholly-owned subsidiary, Monster Energy Company, filed a complaint for declaratory and injunctive relief against the San Francisco City Attorney (the “Company Action”) in United States District Court for the Central District of California (the “Central District Court”), styled Monster Beverage Corp., et al. v. Dennis Herrera (ii) The San Francisco Action – On May 6, 2013, the San Francisco City Attorney filed a complaint for declaratory and injunctive relief, civil penalties and restitution for alleged violation of California’s Unfair Competition Law, Business & Professions Code sections 17200, et seq., styled People Of The State Of California ex rel. Dennis Herrera, San Francisco City Attorney v. Monster Beverage Corporation et. seq After a motion to strike filed by the Company was granted in part, on March 20, 2014, the City Attorney filed an amended complaint, adding allegations supporting the theory for relief as to which the Court had granted the motion to strike. On April 18, 2014, the Company filed a renewed motion to strike, as well as a motion asking the Court to bifurcate and/or stay claims relating to the safety of Monster Energy® brand energy drinks, pending resolution of the ongoing U.S. Food and Drug Administration (“FDA”) investigation of the safety and labeling of food products to which caffeine is added. On May 22, 2014, the Court denied the Company’s motion to strike and motion to bifurcate and/or stay claims relating to safety. On September 5, 2014, the City Attorney filed a second amended complaint, adding Monster Energy Company as a defendant. The Company and Monster Energy Company filed answers to the second amended complaint on October 4, 2014 and November 10, 2014, respectively. Discovery is ongoing. The Court has set the case for a bench trial which is scheduled to take place April 10-21, 2017. The Company denies that it has violated the Unfair Competition Law or any other law and believes that the City Attorney’s claims and demands are preempted and unconstitutional, as alleged in the action the Company filed in the Central District Court. The Company intends to vigorously defend against this lawsuit. At this time, no evaluation of the likelihood of an unfavorable outcome or range of potential loss can be expressed. The actions or investigations described above have not progressed to a point where a reasonably possible range of losses associated with their ultimate outcome can be estimated at this time. If the final resolution of any such litigation or proceedings is unfavorable, the Company’s financial condition, operating results and cash flows could be materially affected. In addition to the above matters, the Company has been named as a defendant in various false advertising putative class actions and in a private attorney general action. In these actions, plaintiffs allege that defendants misleadingly labeled and advertised Monster Energy® brand products that allegedly were ineffective for the advertised benefits (including, but not limited to, an allegation that the products do not hydrate as advertised because they contain caffeine). The plaintiffs further allege that the Monster Energy® brand products at issue are unsafe because they contain one or more ingredients that allegedly could result in illness, injury or death. In connection with these product safety allegations, the plaintiffs claim that the product labels did not provide adequate warnings and/or that the Company did not include sufficiently specific statements with respect to contra-indications and/or adverse reactions associated with the consumption of its energy drink products (including, but not limited to, claims that certain ingredients, when consumed individually or in combination with other ingredients, could result in high blood pressure, palpitations, liver damage or other negative health effects and/or that the products themselves are unsafe). Based on these allegations, the plaintiffs assert claims for violation of state consumer protection statutes, including unfair competition and false advertising statutes, and for breach of warranty and unjust enrichment. In their prayers for relief, the plaintiffs seek, inter alia, compensatory and punitive damages, restitution, attorneys’ fees and, in some cases, injunctive relief. The Company regards these cases and allegations as having no merit. Furthermore, the Company is subject to litigation from time to time in the normal course of business, including intellectual property litigation and claims from terminated distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in the aggregate will likely not have a material adverse effect on the Company’s financial position or results of operations. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, or in the amount of any related insurance reimbursements recorded. As of September 30, 2016, the Company’s condensed consolidated balance sheet includes accrued loss contingencies of approximately $2.1 million. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS. | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12. ACCUMULATED OTHER COMPREHENSIVE LOSS Changes in accumulated other comprehensive loss by component, after tax, for the nine-months ended September 30, 2016 are as follows: Currency Balance at December 31, 2015 $ 21,878 Other comprehensive (gain) before reclassifications - Amounts reclassified from accumulated other comprehensive loss - Net current-period other comprehensive (gain) (7,344) Balance at September 30, 2016 $ 14,534 |
TREASURY STOCK
TREASURY STOCK | 9 Months Ended |
Sep. 30, 2016 | |
TREASURY STOCK | |
TREASURY STOCK | 13. TREASURY STOCK On August 2, 2016, the Company’s Board of Directors authorized a new share repurchase program for the repurchase of up to $250.0 million of the Company’s outstanding common stock (the “August 2016 Repurchase Plan”). From August 2, 2016 to September 30, 2016, no shares had been repurchased under the August 2016 Repurchase Plan. Subsequent to September 30, 2016, the Company purchased 0.1 million shares at an average purchase price of $142.82 per share, pursuant to the August 2016 Repurchase Plan. On April 28, 2016, the Board of Directors authorized the Company to commence a “modified Dutch auction” tender offer to repurchase up to $2.0 billion of its outstanding shares of common stock. The repurchase was authorized under the Company’s existing share repurchase authority and was funded with cash on hand. The Company commenced the tender offer in May 2016. On June 15, 2016, the Company accepted for payment an aggregate of 12,820,512 shares of common stock at a purchase price of $156.00 per share, for a total amount of $2.0 billion (excluding commissions), which exhausted the availability under all previously authorized share repurchase plans. Such shares of common stock are included in common stock in treasury in the accompanying condensed consolidated balance sheet at September 30, 2016. During the three-months ended September 30, 2016, 1,200 shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $0.2 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company’s authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying condensed consolidated balance sheet at September 30, 2016. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED COMPENSATION | |
STOCK-BASED COMPENSATION | 14. STOCK-BASED COMPENSATION The Company has two stock-based compensation plans under which shares were available for grant at September 30, 2016: the Monster Beverage Corporation 2011 Omnibus Incentive Plan and the 2009 Monster Beverage Corporation Stock Incentive Plan for Non-Employee Directors. The Company recorded $12.1 million and $8.9 million of compensation expense relating to outstanding options, restricted stock awards, stock appreciation rights and restricted stock units during the three-months ended September 30, 2016 and 2015, respectively. The Company recorded $33.7 million and $23.7 million of compensation expense relating to outstanding options, restricted stock awards, stock appreciation rights and restricted stock units during the nine-months ended September 30, 2016 and 2015, respectively. The excess tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options, vesting of restricted stock units and restricted stock awards for the three-months ended September 30, 2016 and 2015 was $3.5 million and $3.6 million, respectively. The excess tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options, vesting of restricted stock units and restricted stock awards for the nine-months ended September 30, 2016 and 2015 was $7.1 million and $303.9 million, respectively. As a result of the Company’s early adoption of ASU No. 2016-09 effective January 1, 2016, the Company recorded excess tax benefits of $3.5 million and $7.1 million in net income for the three- and nine-months ended September 30, 2016. The excess tax benefits for the three- and nine-months ended September 30, 2015 of $3.6 million and $303.9 million, respectively, were recorded in additional paid-in-capital. Stock Options Under the Company’s stock-based compensation plans, all stock options granted as of September 30, 2016 were granted at prices based on the fair value of the Company’s common stock on the date of grant. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee’s performance is complete, using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company uses historical data to determine the exercise behavior, volatility and forfeiture rate of the options. The following weighted-average assumptions were used to estimate the fair value of options granted during: Three-Months Ended September 30, Nine-Months Ended September 30, 2016 2015 2016 2015 Dividend yield 0.0% 0.0% 0.0% 0.0% Expected volatility 36.3% 36.7% 36.1% 37.1% Risk-free interest rate 1.1% 1.5% 1.4% 1.6% Expected term 6.4 years 6.1 years 6.3 years 5.8 years Expected Volatility : The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the option. Risk-Free Interest Rate : The risk-free interest rate is based on the U.S. Treasury zero coupon yield curve in effect at the time of grant for the expected term of the option. Expected Term : The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns. The following table summarizes the Company’s activities with respect to its stock option plans as follows: Options Number of Weighted- Weighted- Aggregate Outstanding at January 1, 2016 6,590 $ 50.85 5.6 $ 646,497 Granted 01/01/16 - 03/31/16 961 $ 132.06 Granted 04/01/16 - 06/30/16 219 $ 138.53 Granted 07/01/16 - 09/30/16 14 $ 157.80 Exercised (284) $ 37.34 Cancelled or forfeited (88) $ 98.28 Outstanding at September 30, 2016 7,412 $ 64.14 5.6 $ 613,113 Vested and expected to vest in the future at September 30, 2016 7,011 $ 60.94 5.4 $ 602,318 Exercisable at September 30, 2016 4,359 $ 31.77 3.7 $ 501,457 The weighted-average grant-date fair value of options granted during the three-months ended September 30, 2016 and 2015 was $59.21 per share and $51.14 per share, respectively. The weighted-average grant-date fair value of options granted during the nine-months ended September 30, 2016 and 2015 was $50.82 per share and $50.20 per share, respectively. The total intrinsic value of options exercised during the three-months ended September 30, 2016 and 2015 was $9.1 million and $11.9 million, respectively. The total intrinsic value of options exercised during the nine-months ended September 30, 2016 and 2015 was $30.6 million and $841.5 million, respectively. Cash received from option exercises under all plans for the three-months ended September 30, 2016 and 2015 was approximately $2.4 million and $1.9 million, respectively. Cash received from option exercises under all plans for the nine-months ended September 30, 2016 and 2015 was approximately $10.6 million and $43.6 million, respectively. At September 30, 2016, there was $100.3 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 3.0 years. Restricted Stock Awards and Restricted Stock Units Stock-based compensation cost for restricted stock awards and restricted stock units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit in cash, the award is classified as a liability and revalued at each balance sheet date. The following table summarizes the Company’s activities with respect to non-vested restricted stock awards and non-vested restricted stock units as follows: Number of Weighted Non-vested at January 1, 2016 178 $ 99.58 Granted 01/01/16- 03/31/16 82 $ 131.96 Granted 04/01/16- 06/30/16 12 $ 148.94 Granted 07/01/16- 09/30/16 - $ - Vested (81) $ 95.62 Forfeited/cancelled (1) $ 57.45 Non-vested at September 30, 2016 190 $ 118.68 No restricted stock units or restricted stock awards were granted during the three-months ended September 30, 2016. The weighted-average grant-date fair value of restricted stock units and restricted stock awards granted during the three-months ended September 30, 2015 was $147.36 per share. The weighted-average grant-date fair value of restricted stock units and restricted stock awards granted during the nine-months ended September 30, 2016 and 2015 was $134.14 per share and $136.50 per share, respectively. As of September 30, 2016, 0.2 million of restricted stock units and restricted stock awards are expected to vest over their respective terms. At September 30, 2016, total unrecognized compensation expense relating to non-vested restricted stock awards and non-vested restricted stock units was $16.7 million, which is expected to be recognized over a weighted-average period of 1.8 years. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | 15. INCOME TAXES The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the nine-months ended September 30, 2016: Gross Unrecognized Tax Balance at December 31, 2015 $ 471 Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases related to settlement with taxing authority (462) Balance at September 30, 2016 $ 9 The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s condensed consolidated financial statements. As of September 30, 2016, the Company had no accrued interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions, the resultant impact on the Company’s effective tax rate would not be significant. It is expected that the change in the amount of unrecognized tax benefits within the next 12 months will not be significant. The Company is subject to U.S. federal income tax as well as to income tax in multiple state and foreign jurisdictions. On August 7, 2015, the Internal Revenue Service (the “IRS”) began its examination of the Company’s U.S. federal income tax returns for the years ended December 31, 2012 and 2013. On October 18, 2016, the IRS began its examination of the Company’s U.S. federal income tax return for the year ended December 31, 2014. The Company is in various stages of examination with certain states and certain foreign jurisdictions. The 2012 through 2015 U.S. federal income tax returns are subject to examination by the IRS. State income tax returns are subject to examination for the 2011 through 2015 tax years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 16. EARNINGS PER SHARE A reconciliation of the weighted-average shares used in the basic and diluted earnings per common share computations is presented below: Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Weighted-average shares outstanding: Basic 190,379 205,051 198,073 184,098 Dilutive 4,052 3,043 4,020 4,033 Diluted 194,431 208,094 202,093 188,131 For the three-months ended September 30, 2016 and 2015, options and awards outstanding totaling 1.9 million shares and 1.1 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. For the nine-months ended September 30, 2016 and 2015, options and awards outstanding totaling 1.7 million shares and 0.9 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 17. SEGMENT INFORMATION During the second quarter of 2016, the Company renamed and revised its reportable segments to reflect management’s current view of the business and to align its external financial reporting with its operating and internal financial model. Historical segment information has been revised to reflect the effect of this change. 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® drink products (previously the Finished Products segment) as well as Mutant TM Super Soda drink products, (ii) Strategic Brands (“Strategic Brands”), which include the various energy drink brands acquired from TCCC as a result of the TCCC Transaction (previously the Concentrate segment) and (iii) Other, (“Other”) the principal products of which include the non-energy brands disposed of as a result of the TCCC Transaction as well as certain products acquired as part of the AFF Transaction that are sold to independent third-parties. The Company’s Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged energy drinks to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, 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 and water, which are then filled in authorized containers bearing the Company’s respective trademarks and sold to customers directly (or in some cases through wholesalers or other bottlers). To a lesser extent, the Company’s Strategic Brands segment generates net operating revenues by selling ready-to-drink packaged energy drinks to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, food service customers and the military. 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 nine-months ended September 30, 2016 and 2015 are as follows: Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Net sales: Monster Energy® Drinks (1) $ 710,130 $ 686,684 $ 2,075,511 $ 1,933,467 Strategic Brands 72,138 69,935 207,990 82,913 Other 5,686 - 12,127 60,751 Corporate and unallocated - - - - $ 787,954 $ 756,619 $ 2,295,628 $ 2,077,131 Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Operating Income: Monster Energy® Drinks (1) (2) $ 308,493 $ 289,544 $ 874,822 $ 596,716 Strategic Brands 40,075 45,291 127,169 54,375 Other (3) 1,186 (283) 1,528 165,377 Corporate and unallocated (59,379) (43,114) (169,909) (151,263) $ 290,375 $ 291,438 $ 833,610 $ 665,205 Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Income before tax: Monster Energy® Drinks (1) (2) $ 308,612 $ 289,649 $ 875,024 $ 597,084 Strategic Brands 40,073 45,275 127,141 54,359 Other (3) 1,186 (284) 1,528 165,376 Corporate and unallocated (60,533) (46,564) (170,734) (154,758) $ 289,338 $ 288,076 $ 832,959 $ 662,061 (1) Includes $8.4 million and $8.2 million for the three-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. Includes $28.6 million and $54.7 million for the nine-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. (2) Includes $4.7 million and $2.5 million for the three-months ended September 30, 2016 and 2015, respectively, related to distributor termination costs. Includes $33.4 million and $220.7 million for the nine-months ended September 30, 2016 and 2015, respectively, related to distributor termination costs. (3) Includes $161.5 million gain on the sale of Monster Non-Energy for the nine-months ended September 30, 2015. Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Depreciation and amortization: Monster Energy® Drinks $ 5,974 $ 5,408 $ 17,651 $ 15,556 Strategic Brands 1,777 1,757 5,325 2,102 Other 1,151 - 2,305 232 Corporate and unallocated 1,522 1,341 4,593 3,867 $ 10,424 $ 8,506 $ 29,874 $ 21,757 September 30, December 31, Goodwill and other intangible assets: Monster Energy® Drinks $ 1,331,931 $ 699,346 Strategic Brands 1,003,355 1,008,355 Other 29,170 - Corporate and unallocated - - $ 2,364,456 $ 1,707,701 Corporate and unallocated expenses for the three-months ended September 30, 2016 include $33.2 million of payroll costs, of which $12.1 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $16.9 million attributable to professional service expenses, including accounting and legal costs, and $9.3 million of other operating expenses. Corporate and unallocated expenses for the three-months ended September 30, 2015 include $27.1 million of payroll costs, of which $8.9 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $10.3 million attributable to professional service expenses, including accounting and legal costs, of which $0.3 million was attributable to TCCC Transaction expenses, and $5.7 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2016 include $92.7 million of payroll costs, of which $33.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $52.4 million attributable to professional service expenses, including accounting and legal costs, of which $4.5 million was attributable to AFF Transaction expenses, and $24.8 million of other operating expenses. Corporate and unallocated expenses for the nine-months ended September 30, 2015 include $83.9 million of payroll costs, of which $23.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), as well as $46.6 million attributable to professional service expenses, including accounting and legal costs, of which $15.4 million was attributable to TCCC Transaction expenses, and $20.8 million of other operating expenses. TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 41% and 42% of the Company’s net sales for the three-months ended September 30, 2016 and 2015, respectively. The TCCC Subsidiaries accounted for approximately 43% and 41% of the Company’s net sales for the nine-months ended September 30, 2016 and 2015, respectively. Net sales to customers outside the United States amounted to $190.8 million and $170.6 million for the three-months ended September 30, 2016 and 2015, respectively. Net sales to customers outside the United States amounted to $540.2 million and $435.1 million for the nine-months ended September 30, 2016 and 2015, respectively. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS As a result of the TCCC Transaction, TCCC controls more than 10% of the voting interests of the Company. TCCC, through the TCCC Subsidiaries and through certain of its affiliated companies (the “TCCC Affiliates”) purchases and distributes certain of the Company’s products both domestically and in certain international territories. The Company also pays TCCC a commission based on certain sales within the TCCC distribution network. TCCC commissions, based on sales to the TCCC Affiliates for the three-months ended September 30, 2016 and 2015, were $8.1 million and $7.7 million, respectively. TCCC commissions, based on sales to the TCCC Affiliates for the nine-months ended September 30, 2016 and 2015, were $19.0 million and $9.4 million, respectively. TCCC commissions, based on sales to the TCCC Subsidiaries, are accounted for as a reduction to revenue and are reported in net sales to the TCCC Subsidiaries. Net sales to the TCCC Subsidiaries for the three-months ended September 30, 2016 and 2015 were $321.9 million and $315.9 million, respectively. Net sales to the TCCC Subsidiaries for the nine-months ended September 30, 2016 and 2015 were $981.0 million and $845.8 million, respectively. The Company also purchases concentrates from TCCC which are then sold to both the TCCC Affiliates and the TCCC Subsidiaries. Concentrate purchases from TCCC were $6.2 million and $8.0 million for the three-months ended September 30, 2016 and 2015, respectively. Concentrate purchases from TCCC were $20.9 million and $9.1 million for the nine-months ended September 30, 2016 and 2015, respectively. Certain TCCC Subsidiaries also contract manufacture certain of the Company’s Monster Energy® brand energy drinks as well as Mutant TM Super Sodas. Contract manufacturing expenses were $2.2 million and $1.8 million for the three-months ended September 30, 2016 and 2015, respectively. Contract manufacturing expenses were $6.0 million and $5.3 million for the nine-months ended September 30, 2016 and 2015, respectively. Accounts receivable, accounts payable and accrued promotional allowances related to the TCCC Subsidiaries are as follows at: September 30, December 31, Accounts receivable, net $ 198,245 $ 172,201 Accounts payable $ (67,838) $ (58,579) Accrued promotional allowances $ (33,586) $ (27,544) Two directors and officers of the Company and their families are principal owners of a company that provides promotional materials to the Company. Expenses incurred with such company in connection with promotional materials purchased during the three-months ended September 30, 2016 and 2015 were $0.6 million and $0.3 million, respectively. Expenses incurred with such company in connection with promotional materials purchased during the nine-months ended September 30, 2016 and 2015 were $0.9 million and $1.5 million, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 19. SUBSEQUENT EVENTS On October 11, 2016, the Company filed a Certificate of Amendment to its Amended and Restated Certificate of Incorporation to increase the number of authorized shares of the Company’s common stock, par value $0.005 per share (“Common Stock”), from 240,000,000 shares to 1,250,000,000 shares. On October 14, 2016, the Company announced that its Board of Directors approved a 3-for-1 stock split of its Common Stock to be effected in the form of a 200% stock dividend. The additional shares will be distributed on November 9, 2016 to stockholders of record at the close of business (Eastern Time) on October 26, 2016. The Company anticipates its common stock to begin trading at the split-adjusted price on November 10, 2016. The following pro-forma earnings per share information has been adjusted retroactively to reflect the stock split: Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 NET INCOME $ 191,643 $ 174,574 $ 539,738 $ 407,991 NET INCOME PER COMMON SHARE: Basic $ 0.34 $ 0.28 $ 0.91 $ 0.74 Diluted $ 0.33 $ 0.28 $ 0.89 $ 0.72 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: Basic 571,138 615,153 594,219 552,294 Diluted 583,293 624,282 606,280 564,393 |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACQUISITIONS AND DIVESTITURES | |
Summary of AFF Transaction consideration allocation | Identifiable Consideration Intangibles - flavor formulas (non-amortizing) ¹ $ 618,000 $ - Intangibles - flavor formulas (amortizing) 641 - Intangibles - customer relationships (amortizing) 30,100 - Intangibles - trademarks (amortizing) 500 - Intangibles - other (amortizing) 200 - Working capital (excluding inventory) 1,861 - Inventory 27,600 - Property and equipment, net 1,175 - Favorable leases 4,480 - Goodwill 3,928 - Cash - 688,485 Total $ 688,485 $ 688,485 1 Represents proprietary formulas for the Company’s principal products. |
Summary of amounts in the escrow fund in excess of the applicable amounts | Percentage Transitioned Escrow Release 40% Amounts in excess of $375 million 50% Amounts in excess of $312.5 million 60% Amounts in excess of $250 million 70% Amounts in excess of $187.5 million 80% Amounts in excess of $125 million 90% Amounts in excess of $62.5 million 95% All remaining amounts |
Schedule of pro forma condensed combined financial information | Three-Months Ended September 30, 2015 Pro Forma Adjustments Monster ¹ KO Energy Disposal of Other Pro Forma Net sales $ 756,619 $ - $ - $ - $ 756,619 Net income 174,574 - - 180 174,754 Nine-Months Ended September 30, 2015 Pro Forma Adjustments Monster ² KO Energy ³ Disposal of 4 Other Pro Forma Net sales $ 2,077,131 $ 138,127 $ (60,824) $ 6,803 $ 2,161,237 Net income 407,991 100,575 (101,881) (36,487) 370,198 1 Includes net sales of $69.9 million and net income of $27.4 million (tax affected) related to the acquired KO Energy assets for the three-months ended September 30, 2015. 2 Includes net sales of $82.9 million and net income of $32.9 million (tax affected) related to the acquired KO Energy assets from June 12, 2015 (the date of acquisition) through September 30, 2015. 3 Includes results through June 12, 2015, the date the TCCC Transaction was finalized. The $100.6 million of net income for KO Energy for the nine-months ended September 30, 2015, is presented before tax. The associated estimated provision for income taxes is included in the “Other” category. Net income for KO Energy includes only net revenues and direct operating expenses, rather than full “carve-out” financial statements, because such financial statements would not be meaningful given that it is not possible to provide a meaningful allocation of business unit and corporate costs, interest or tax in respect of KO Energy. 4 Includes results through June 12, 2015. Net income includes the gain recognized on the sale of Monster Non-Energy of $161.5 million. |
Schedule of other pro-forma adjustments | Three-Months Ended Nine-Months Ended Net sales: Amortization of deferred revenue $ - $ 6,803 Net income: Amortization of deferred revenue $ - $ 6,803 To record sales commissions - (15,470) To record amortization of definite lived KO Energy intangibles - (3,126) To eliminate TCCC Transaction expenses 292 15,425 Estimated provision for income taxes on pro forma adjustments (112) (1,398) Estimated provision for income taxes on KO Energy income - (38,721) Total $ 180 $ (36,487) |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INVESTMENTS | |
Summary of investments in held-to-maturity, available-for-sale and trading securities | September 30, 2016 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ 28,318 $ - $ - $ 28,318 $ - $ - Municipal securities 181,843 - 222 181,621 222 - U.S. government agency securities 26,080 1 3 26,078 3 - Long-term: Municipal securities 9,519 - 19 9,500 19 - Available-for-Sale: Short-term: Variable rate demand notes 21,412 - - 21,412 - - Total $ 267,172 $ 1 $ 244 $ 266,929 $ 244 $ - December 31, 2015 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ 3,978 $ - $ - $ 3,978 $ - $ - Municipal securities 709,207 63 192 709,078 192 - U.S. government agency securities 23,369 - 58 23,311 58 - U.S. Treasuries 8,056 - 13 8,043 13 - Long-term: Municipal securities 11,071 - 8 11,063 8 - U.S. government agency securities 4,277 - 25 4,252 25 - Total $ 759,958 $ 63 $ 296 $ 759,725 $ 296 $ - |
Summarizes the underlying contractual maturities of the Company's investments | September 30, 2016 December 31, 2015 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ 28,318 $ 28,318 $ 3,978 $ 3,978 Municipal securities 181,843 181,621 709,207 709,078 U.S. government agency securities 26,080 26,078 23,369 23,311 U.S. Treasuries - - 8,056 8,043 Due 1 -10 years: Municipal securities 9,519 9,500 11,071 11,063 U.S. government agency securities - - 4,277 4,252 Variable rate demand notes 6,003 6,003 - - Due 11 - 20 years: Variable rate demand notes 8,005 8,005 - - Due 21 - 30 years: Variable rate demand notes 4,002 4,002 - - Due 31 - 40 years: Variable rate demand notes 3,402 3,402 - - Total $ 267,172 $ 266,929 $ 759,958 $ 759,725 |
FAIR VALUE OF CERTAIN FINANCI30
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
Schedule of financial assets recorded at fair value on a recurring basis | September 30, 2016 Level 1 Level 2 Level 3 Total Cash $ 267,056 $ - $ - $ 267,056 Money market funds 27,784 - - 27,784 Certificates of deposit - 4,908 - 4,908 Commercial paper - 43,503 - 43,503 Variable rate demand notes - 21,412 - 21,412 Municipal securities - 217,955 - 217,955 U.S. government agency securities - 26,080 - 26,080 Foreign currency derivatives - 105 - 105 Total $ 294,840 $ 313,963 $ - $ 608,803 Amounts included in: Cash and cash equivalents $ 294,840 $ 46,686 $ - $ 341,526 Short-term investments - 257,653 - 257,653 Accounts receivable, net - 231 - 231 Investments - 9,519 - 9,519 Accrued liabilities - (126 ) - (126 ) Total $ 294,840 $ 313,963 $ - $ 608,803 December 31, 2015 Level 1 Level 2 Level 3 Total Cash $ 255,723 $ - $ - $ 255,723 Money market funds 664,005 - - 664,005 Certificates of deposit - 85,007 - 85,007 Commercial paper - 430,605 - 430,605 U.S. Treasuries - 260,035 - 260,035 Municipal securities - 731,744 - 731,744 U.S. government agency securities - 508,256 - 508,256 Foreign currency derivatives - (217 ) - (217 ) Total $ 919,728 $ 2,015,430 $ - $ 2,935,158 Amounts included in: Cash and cash equivalents $ 919,728 $ 1,255,689 $ - $ 2,175,417 Short-term investments - 744,610 - 744,610 Accounts receivable, net - 371 - 371 Investments - 15,348 - 15,348 Accrued liabilities - (588 ) - (588 ) Total $ 919,728 $ 2,015,430 $ - $ 2,935,158 |
DERIVATIVE INSTRUMENTS AND HE31
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
Schedule of notional amount and fair value of all outstanding foreign currency derivative instruments in the condensed consolidated balance sheets | September 30, 2016 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ 16,283 $ 46 Accounts receivable, net Receive EUR/pay USD 30,682 31 Accounts receivable, net Receive USD/pay AUD 17,978 63 Accounts receivable, net Receive USD/pay ZAR 19,861 65 Accounts receivable, net Receive USD/pay BRL 3,046 26 Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive CAD/pay USD $ 20,609 $ (14) Accrued liabilities Receive USD/pay MXN 27,360 (65) Accrued liabilities Receive USD/pay NZD 3,119 (11) Accrued liabilities Receive USD/pay SEK 1,856 (1) Accrued liabilities Receive USD/pay CLP 3,435 (10) Accrued liabilities Receive USD/pay COP 2,041 (21) Accrued liabilities Receive SGD/pay USD 2,571 (4) Accrued liabilities December 31, 2015 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ 18,146 $ 168 Accounts receivable, net Receive USD/pay ZAR 17,411 144 Accounts receivable, net Receive USD/pay RUB 2,173 9 Accounts receivable, net Receive USD/pay BRL 2,478 49 Accounts receivable, net Receive USD/pay COP 1,351 1 Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive EUR/pay USD $ 39,578 $ (429) Accrued liabilities Receive USD/pay AUD 14,040 (82) Accrued liabilities Receive USD/pay CAD 2,804 (15) Accrued liabilities Receive USD/pay JPY 2,495 (2) Accrued liabilities Receive USD/pay MXN 8,122 (15) Accrued liabilities Receive SGD/pay USD 3,837 (30) Accrued liabilities Receive USD/pay NZD 1,978 (3) Accrued liabilities Receive USD/pay CLP 3,519 (12) Accrued liabilities |
Schedule of net gains (losses) on derivative instruments in the condensed consolidated statements of income | Amount of gain (loss) Three-months ended Derivatives not designated as Location of gain (loss) September 30, September 30, Foreign currency exchange contracts Interest and other expense, net $ (882) $ 3,552 Amount of gain (loss) Nine-months ended Derivatives not designated as Location of gain (loss) September 30, September 30, Foreign currency exchange contracts Interest and other expense, net $ (424) $ 1,634 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INVENTORIES | |
Schedule of inventories | September 30, December 31, Raw materials $ 68,860 $ 52,043 Finished goods 98,980 104,078 $ 167,840 $ 156,121 |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | September 30, December 31, Land $ 46,597 $ 6,792 Leasehold improvements 2,726 2,804 Furniture and fixtures 3,607 3,551 Office and computer equipment 11,538 11,080 Computer software 3,203 2,530 Equipment 107,704 93,465 Buildings 41,943 39,848 Vehicles 31,737 29,804 249,055 189,874 Less: accumulated depreciation and amortization (104,430) (92,520) $ 144,625 $ 97,354 |
GOODWILL AND OTHER INTANGIBLE34
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
GOODWILL AND OTHER INTANGIBLE ASSETS. | |
Schedule of Goodwill | Monster Strategic Other Total Balance at December 31, 2015 $ 641,716 $ 637,999 $ - $ 1,279,715 Acquisitions 3,928 - - 3,928 Balance at September 30, 2016 $ 645,644 $ 637,999 $ - $ 1,283,643 |
Schedule of intangibles | September 30, December 31, Amortizing intangibles $ 71,227 $ 35,263 Accumulated amortization (11,574) (3,899) 59,653 31,364 Non-amortizing intangibles 1,021,160 396,622 $ 1,080,813 $ 427,986 |
ACCUMULATED OTHER COMPREHENSI35
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS. | |
Changes in accumulated other comprehensive loss by component, after tax | Currency Balance at December 31, 2015 $ 21,878 Other comprehensive (gain) before reclassifications - Amounts reclassified from accumulated other comprehensive loss - Net current-period other comprehensive (gain) (7,344) Balance at September 30, 2016 $ 14,534 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
STOCK-BASED COMPENSATION | |
Schedule of weighted-average assumptions used to estimate the fair value of options granted | Three-Months Ended September 30, Nine-Months Ended September 30, 2016 2015 2016 2015 Dividend yield 0.0% 0.0% 0.0% 0.0% Expected volatility 36.3% 36.7% 36.1% 37.1% Risk-free interest rate 1.1% 1.5% 1.4% 1.6% Expected term 6.4 years 6.1 years 6.3 years 5.8 years |
Summary of Company's activities with respect to its stock option plans | Options Number of Weighted- Weighted- Aggregate Outstanding at January 1, 2016 6,590 $ 50.85 5.6 $ 646,497 Granted 01/01/16 - 03/31/16 961 $ 132.06 Granted 04/01/16 - 06/30/16 219 $ 138.53 Granted 07/01/16 - 09/30/16 14 $ 157.80 Exercised (284) $ 37.34 Cancelled or forfeited (88) $ 98.28 Outstanding at September 30, 2016 7,412 $ 64.14 5.6 $ 613,113 Vested and expected to vest in the future at September 30, 2016 7,011 $ 60.94 5.4 $ 602,318 Exercisable at September 30, 2016 4,359 $ 31.77 3.7 $ 501,457 |
Summary of Company's activities with respect to non-vested restricted stock awards and non-vested restricted stock units | Number of Weighted Non-vested at January 1, 2016 178 $ 99.58 Granted 01/01/16- 03/31/16 82 $ 131.96 Granted 04/01/16- 06/30/16 12 $ 148.94 Granted 07/01/16- 09/30/16 - $ - Vested (81) $ 95.62 Forfeited/cancelled (1) $ 57.45 Non-vested at September 30, 2016 190 $ 118.68 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
INCOME TAXES | |
Schedule of roll-forward of the Company's total gross unrecognized tax benefits, not including interest and penalties | Gross Unrecognized Tax Balance at December 31, 2015 $ 471 Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases related to settlement with taxing authority (462) Balance at September 30, 2016 $ 9 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
EARNINGS PER SHARE | |
Schedule of reconciliation of the weighted average shares used in the basic and diluted earnings per common share computations | Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Weighted-average shares outstanding: Basic 190,379 205,051 198,073 184,098 Dilutive 4,052 3,043 4,020 4,033 Diluted 194,431 208,094 202,093 188,131 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SEGMENT INFORMATION | |
Schedule of net revenues and other financial information by segment | Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Net sales: Monster Energy® Drinks (1) $ 710,130 $ 686,684 $ 2,075,511 $ 1,933,467 Strategic Brands 72,138 69,935 207,990 82,913 Other 5,686 - 12,127 60,751 Corporate and unallocated - - - - $ 787,954 $ 756,619 $ 2,295,628 $ 2,077,131 Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Operating Income: Monster Energy® Drinks (1) (2) $ 308,493 $ 289,544 $ 874,822 $ 596,716 Strategic Brands 40,075 45,291 127,169 54,375 Other (3) 1,186 (283) 1,528 165,377 Corporate and unallocated (59,379) (43,114) (169,909) (151,263) $ 290,375 $ 291,438 $ 833,610 $ 665,205 Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Income before tax: Monster Energy® Drinks (1) (2) $ 308,612 $ 289,649 $ 875,024 $ 597,084 Strategic Brands 40,073 45,275 127,141 54,359 Other (3) 1,186 (284) 1,528 165,376 Corporate and unallocated (60,533) (46,564) (170,734) (154,758) $ 289,338 $ 288,076 $ 832,959 $ 662,061 (1) Includes $8.4 million and $8.2 million for the three-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. Includes $28.6 million and $54.7 million for the nine-months ended September 30, 2016 and 2015, respectively, related to the recognition of deferred revenue. (2) Includes $4.7 million and $2.5 million for the three-months ended September 30, 2016 and 2015, respectively, related to distributor termination costs. Includes $33.4 million and $220.7 million for the nine-months ended September 30, 2016 and 2015, respectively, related to distributor termination costs. (3) Includes $161.5 million gain on the sale of Monster Non-Energy for the nine-months ended September 30, 2015. Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 Depreciation and amortization: Monster Energy® Drinks $ 5,974 $ 5,408 $ 17,651 $ 15,556 Strategic Brands 1,777 1,757 5,325 2,102 Other 1,151 - 2,305 232 Corporate and unallocated 1,522 1,341 4,593 3,867 $ 10,424 $ 8,506 $ 29,874 $ 21,757 September 30, December 31, Goodwill and other intangible assets: Monster Energy® Drinks $ 1,331,931 $ 699,346 Strategic Brands 1,003,355 1,008,355 Other 29,170 - Corporate and unallocated - - $ 2,364,456 $ 1,707,701 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
RELATED PARTY TRANSACTIONS | |
Schedule of related party transactions | September 30, December 31, Accounts receivable, net $ 198,245 $ 172,201 Accounts payable $ (67,838) $ (58,579) Accrued promotional allowances $ (33,586) $ (27,544) |
SUBSEQUENT EVENTS (Tables)
SUBSEQUENT EVENTS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
SUBSEQUENT EVENTS | |
Schedule of pro forma earnings per share | Three-Months Ended Nine-Months Ended September 30, September 30, 2016 2015 2016 2015 NET INCOME $ 191,643 $ 174,574 $ 539,738 $ 407,991 NET INCOME PER COMMON SHARE: Basic $ 0.34 $ 0.28 $ 0.91 $ 0.74 Diluted $ 0.33 $ 0.28 $ 0.89 $ 0.72 WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: Basic 571,138 615,153 594,219 552,294 Diluted 583,293 624,282 606,280 564,393 |
BASIS OF PRESENTATION (Details)
BASIS OF PRESENTATION (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Change in Accounting Estimate [Line Items] | ||
Prepaid income taxes | $ 155,641 | $ 18,462 |
DEFERRED INCOME TAXES | 142,116 | 140,468 |
Income taxes payable | $ 5,835 | 2,750 |
Prepaid income taxes, deferred taxes and income taxes payable | ||
Change in Accounting Estimate [Line Items] | ||
Prepaid income taxes | 16,900 | |
DEFERRED INCOME TAXES | (120,800) | |
Income taxes payable | $ (103,900) |
ACQUISITION AND DIVESTITURES -
ACQUISITION AND DIVESTITURES - AFF Transaction (Details) - USD ($) $ in Thousands | Apr. 02, 2016 | Sep. 30, 2016 | Dec. 31, 2015 |
Identifiable Assets Acquired and Liabilities Assumed | |||
Goodwill | $ 1,283,643 | $ 1,279,715 | |
Consideration Transferred | |||
Cash | $ 688,485 | ||
American Fruits & Flavors ("AFF") | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Working capital (excluding inventory) | $ 1,861 | ||
Inventories | 27,600 | ||
Property and equipment, net | 1,175 | ||
Favorable leases | 4,480 | ||
Goodwill | 3,928 | ||
Total | 688,485 | ||
Consideration Transferred | |||
Cash | 688,485 | ||
Total | 688,485 | ||
American Fruits & Flavors ("AFF") | Flavor formulas | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Intangibles (amortizing) | 641 | ||
American Fruits & Flavors ("AFF") | Customer relationships | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Intangibles (amortizing) | 30,100 | ||
American Fruits & Flavors ("AFF") | Trademarks | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Intangibles (amortizing) | 500 | ||
American Fruits & Flavors ("AFF") | Other | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Intangibles (amortizing) | 200 | ||
American Fruits & Flavors ("AFF") | Flavor formulas | |||
Identifiable Assets Acquired and Liabilities Assumed | |||
Intangibles (non-amortizing) | $ 618,000 |
ACQUISITIONS AND DIVESTITURES -
ACQUISITIONS AND DIVESTITURES - TCCC Transaction (Details) - Coca-Cola Transaction Asset Transfer Agreement - TCCC $ in Millions | Jun. 12, 2015USD ($)itemshares | Sep. 30, 2016 | Sep. 30, 2015shares |
Noncash or Part Noncash Acquisitions [Line Items] | |||
Number of shares issued for acquisition | shares | 34,040,534 | 11,800,000 | |
Ownership interest (as a percent) | 16.70% | ||
Number of individuals appointed as directors | item | 2 | ||
Cash consideration received | $ 2,150 | ||
Amount held in escrow | $ 125 | ||
Percentage of target sales transitioned | 89.00% | ||
40% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 40.00% | ||
Escrow Release | $ 375 | ||
50% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 50.00% | ||
Escrow Release | $ 312.5 | ||
60% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 60.00% | ||
Escrow Release | $ 250 | ||
70% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 70.00% | ||
Escrow Release | $ 187.5 | ||
80% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 80.00% | ||
Escrow Release | $ 125 | ||
90% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 90.00% | ||
Escrow Release | $ 62.5 | ||
95% Target | |||
Noncash or Part Noncash Acquisitions [Line Items] | |||
Percentage of target sales | 95.00% |
ACQUISITIONS AND DIVESTITURES45
ACQUISITIONS AND DIVESTITURES - Proforma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 4 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | $ 787,954 | $ 756,619 | $ 2,295,628 | $ 2,077,131 | |
Net income | 191,643 | 174,574 | 539,738 | 407,991 | |
Gain on sale of Monster Non-Energy | 161,470 | ||||
Business Acquisition, Pro Forma Information [Abstract] | |||||
Amortization of Intangible Assets | $ 3,000 | 1,800 | $ 7,700 | 2,100 | |
Federal statutory rate (as a percent) | 38.50% | ||||
Disposal of Monster Non-Energy | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Gain on sale of Monster Non-Energy | 161,500 | ||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | 756,619 | 2,077,131 | |||
Net income | 174,574 | 407,991 | |||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Pro Forma | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | 756,619 | 2,161,237 | |||
Net income | 174,754 | 370,198 | |||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | KO Energy | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | $ 82,900 | ||||
Net income | $ 32,900 | ||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Disposal of Monster Non-Energy | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | (60,824) | ||||
Net income | (101,881) | ||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Other | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | 6,803 | ||||
Net income | 180 | (36,487) | |||
Business Acquisition, Pro Forma Information [Abstract] | |||||
Amortization of deferred revenue | 6,803 | ||||
To record sales commissions | (15,470) | ||||
Amortization of Intangible Assets | 3,126 | ||||
To eliminate TCCC Transaction expense | 292 | 15,425 | |||
Estimated provision for income taxes on pro forma adjustments | (112) | (1,398) | |||
Estimated provision for income taxes on KO Energy income | (38,721) | ||||
Total | 180 | (36,487) | |||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | KO Energy | |||||
Noncash or Part Noncash Acquisitions [Line Items] | |||||
Net sales | 69,900 | 138,127 | |||
Net income | $ 27,400 | $ 100,575 |
RECENT ACCOUNTING PRONOUNCEME46
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - Accounting Standards Update 2016-09: Simplifying the accounting for share-based compensation - Adjustments for New Accounting Principle - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |||
Net cash provided by operating activities | $ 303.9 | ||
Net cash used in financing activities | $ 303.9 | ||
Excess tax benefit from stock based compensation | $ 3.5 | $ 7.1 |
INVESTMENTS - HTM & AFS (Detail
INVESTMENTS - HTM & AFS (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Held-to-Maturity | ||
Amortized Cost | $ 267,172 | |
Gross Unrealized Holding Gains | 1 | |
Gross Unrealized Holding Losses | 244 | |
Fair Value | 266,929 | |
Continuous Unrealized Loss Position less than 12 Months | 244 | |
Held to Maturity and Available-for-sale | ||
Held to maturity and available-for-sale securities, Amortized Cost | $ 759,958 | |
Held to maturity and available-for-sale securities, Gross Unrealized Holding Gains | 63 | |
Held to maturity and available-for-sale securities, Gross Unrealized Holding Losses | 296 | |
Held to maturity and available-for-sale securities, Fair Value | 759,725 | |
Held to maturity and available-for-sale securities, Continuous Unrealized Loss Position less than 12 Months | 296 | |
Short-term | Commercial paper | ||
Held-to-Maturity | ||
Amortized Cost | 28,318 | 3,978 |
Fair Value | 28,318 | 3,978 |
Short-term | Municipal securities | ||
Held-to-Maturity | ||
Amortized Cost | 181,843 | 709,207 |
Gross Unrealized Holding Gains | 63 | |
Gross Unrealized Holding Losses | 222 | 192 |
Fair Value | 181,621 | 709,078 |
Continuous Unrealized Loss Position less than 12 Months | 222 | 192 |
Short-term | U.S. government agency securities | ||
Held-to-Maturity | ||
Amortized Cost | 26,080 | 23,369 |
Gross Unrealized Holding Gains | 1 | |
Gross Unrealized Holding Losses | 3 | 58 |
Fair Value | 26,078 | 23,311 |
Continuous Unrealized Loss Position less than 12 Months | 3 | 58 |
Short-term | Variable rate demand notes | ||
Available-for-sale | ||
Amortized Cost | 21,412 | |
Fair Value | 21,412 | |
Short-term | U.S. Treasuries | ||
Held-to-Maturity | ||
Amortized Cost | 8,056 | |
Gross Unrealized Holding Losses | 13 | |
Fair Value | 8,043 | |
Continuous Unrealized Loss Position less than 12 Months | 13 | |
Long-term | Municipal securities | ||
Held-to-Maturity | ||
Amortized Cost | 9,519 | 11,071 |
Gross Unrealized Holding Losses | 19 | 8 |
Fair Value | 9,500 | 11,063 |
Continuous Unrealized Loss Position less than 12 Months | $ 19 | 8 |
Long-term | U.S. government agency securities | ||
Held-to-Maturity | ||
Amortized Cost | 4,277 | |
Gross Unrealized Holding Losses | 25 | |
Fair Value | 4,252 | |
Continuous Unrealized Loss Position less than 12 Months | $ 25 |
INVESTMENTS - Major Type - Matu
INVESTMENTS - Major Type - Maturity Period (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Investments | ||
Amortized Cost | $ 267,172 | $ 759,958 |
Fair Value | 266,929 | 759,725 |
Commercial paper | Less than 1 year | ||
Investments | ||
Amortized Cost | 28,318 | 3,978 |
Fair Value | 28,318 | 3,978 |
Municipal securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 181,843 | 709,207 |
Fair Value | 181,621 | 709,078 |
Municipal securities | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 9,519 | 11,071 |
Fair Value | 9,500 | 11,063 |
U.S. government agency securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 26,080 | 23,369 |
Fair Value | 26,078 | 23,311 |
U.S. government agency securities | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 4,277 | |
Fair Value | 4,252 | |
U.S. Treasuries | Less than 1 year | ||
Investments | ||
Amortized Cost | 8,056 | |
Fair Value | $ 8,043 | |
Variable rate demand notes | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 6,003 | |
Fair Value | 6,003 | |
Variable rate demand notes | Due 11 - 20 years | ||
Investments | ||
Amortized Cost | 8,005 | |
Fair Value | 8,005 | |
Variable rate demand notes | Due 21 - 30 years | ||
Investments | ||
Amortized Cost | 4,002 | |
Fair Value | 4,002 | |
Variable rate demand notes | Due 31 - 40 years | ||
Investments | ||
Amortized Cost | 3,402 | |
Fair Value | $ 3,402 |
FAIR VALUE OF CERTAIN FINANCI49
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES - Assets - Recurring Basis (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | $ 341,526 | $ 2,175,417 | $ 1,240,717 | $ 370,323 |
Short-term investments | 257,653 | 744,610 | ||
Investments | 9,519 | 15,348 | ||
Asset transfers between Level 1 and Level 2 measurements | 0 | 0 | ||
Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | 341,526 | 2,175,417 | ||
Short-term investments | 257,653 | 744,610 | ||
Accounts receivable, net | 231 | 371 | ||
Investments | 9,519 | 15,348 | ||
Accrued liabilities | (126) | (588) | ||
Assets measured at fair value | 608,803 | 2,935,158 | ||
Cash | 267,056 | 255,723 | ||
Foreign currency derivatives | 105 | (217) | ||
Money market funds | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 27,784 | 664,005 | ||
Certificates of deposit | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 4,908 | 85,007 | ||
Commercial paper | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 43,503 | 430,605 | ||
Variable rate demand notes | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 21,412 | |||
U.S. Treasuries | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 260,035 | |||
Municipal securities | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 217,955 | 731,744 | ||
U.S. government agency securities | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 26,080 | 508,256 | ||
Level 1 | ||||
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | 294,840 | 919,728 | ||
Assets measured at fair value | 294,840 | 919,728 | ||
Cash | 267,056 | 255,723 | ||
Level 1 | Money market funds | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 27,784 | 664,005 | ||
Level 2 | ||||
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | 46,686 | 1,255,689 | ||
Short-term investments | 257,653 | 744,610 | ||
Accounts receivable, net | 231 | 371 | ||
Investments | 9,519 | 15,348 | ||
Accrued liabilities | (126) | (588) | ||
Assets measured at fair value | 313,963 | 2,015,430 | ||
Foreign currency derivatives | 105 | (217) | ||
Level 2 | Certificates of deposit | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 4,908 | 85,007 | ||
Level 2 | Commercial paper | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 43,503 | 430,605 | ||
Level 2 | Variable rate demand notes | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 21,412 | |||
Level 2 | U.S. Treasuries | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 260,035 | |||
Level 2 | Municipal securities | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 217,955 | 731,744 | ||
Level 2 | U.S. government agency securities | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | $ 26,080 | $ 508,256 |
DERIVATIVE INSTRUMENTS AND HE50
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amount and Fair Value (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Foreign currency exchange contracts | Maximum | ||
Derivative Instruments and Hedging Activities | ||
Term of derivative instrument | 1 month | |
Derivatives not designated as hedging instruments | Receive USD/pay GBP | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | $ 16,283 | $ 18,146 |
Fair Value, Assets | 46 | 168 |
Derivatives not designated as hedging instruments | Receive EUR/pay USD | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 30,682 | |
Fair Value, Assets | 31 | |
Derivatives not designated as hedging instruments | Receive EUR/pay USD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 39,578 | |
Fair Value, Liabilities | (429) | |
Derivatives not designated as hedging instruments | Receive USD/pay AUD | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 17,978 | |
Fair Value, Assets | 63 | |
Derivatives not designated as hedging instruments | Receive USD/pay AUD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 14,040 | |
Fair Value, Liabilities | (82) | |
Derivatives not designated as hedging instruments | Receive USD/pay ZAR | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 19,861 | 17,411 |
Fair Value, Assets | 65 | 144 |
Derivatives not designated as hedging instruments | Receive USD/pay BRL | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 3,046 | 2,478 |
Fair Value, Assets | 26 | 49 |
Derivatives not designated as hedging instruments | Receive CAD/pay USD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 20,609 | |
Fair Value, Liabilities | (14) | |
Derivatives not designated as hedging instruments | Receive USD/pay MXN | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 27,360 | 8,122 |
Fair Value, Liabilities | (65) | (15) |
Derivatives not designated as hedging instruments | Receive USD/Pay NZD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,119 | 1,978 |
Fair Value, Liabilities | (11) | (3) |
Derivatives not designated as hedging instruments | Receive USD/pay SEK | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 1,856 | |
Fair Value, Liabilities | (1) | |
Derivatives not designated as hedging instruments | Receive USD/pay CLP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,046 | 3,519 |
Fair Value, Liabilities | (10) | (12) |
Derivatives not designated as hedging instruments | Receive USD/pay COP | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 1,351 | |
Fair Value, Assets | 1 | |
Derivatives not designated as hedging instruments | Receive USD/pay COP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,435 | |
Fair Value, Liabilities | (21) | |
Derivatives not designated as hedging instruments | Receive SGD/Pay USD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 2,571 | 3,837 |
Fair Value, Liabilities | $ (4) | (30) |
Derivatives not designated as hedging instruments | Receive USD/pay RUB | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,173 | |
Fair Value, Assets | 9 | |
Derivatives not designated as hedging instruments | Receive USD/pay JPY | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 2,495 | |
Fair Value, Liabilities | (2) | |
Derivatives not designated as hedging instruments | Receive USD/pay CAD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 2,804 | |
Fair Value, Liabilities | $ (15) |
DERIVATIVE INSTRUMENTS AND HE51
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Nonhedging Designation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Derivatives not designated as hedging instruments | Foreign currency exchange contracts | Interest and other expense, net | ||||
Net gains (losses) on derivative instruments | ||||
Amount of gain (loss) recognized in income on derivatives | $ (882) | $ 3,552 | $ (424) | $ 1,634 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
INVENTORIES | ||
Raw materials | $ 68,860 | $ 52,043 |
Finished goods | 98,980 | 104,078 |
Inventories, net | $ 167,840 | $ 156,121 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) $ in Thousands | 1 Months Ended | |
Sep. 30, 2016USD ($)ft²a | Dec. 31, 2015USD ($) | |
Property and equipment, net | ||
Property and equipment, gross | $ 249,055 | $ 189,874 |
Less: accumulated depreciation and amortization | (104,430) | (92,520) |
Property and equipment, net | 144,625 | 97,354 |
Land | ||
Property and equipment, net | ||
Property and equipment, gross | $ 46,597 | 6,792 |
Area of Land | a | 49 | |
Payments to Acquire Land | $ 39,100 | |
Leasehold improvements | ||
Property and equipment, net | ||
Property and equipment, gross | 2,726 | 2,804 |
Furniture and fixtures | ||
Property and equipment, net | ||
Property and equipment, gross | 3,607 | 3,551 |
Office and computer equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 11,538 | 11,080 |
Computer software | ||
Property and equipment, net | ||
Property and equipment, gross | 3,203 | 2,530 |
Equipment | ||
Property and equipment, net | ||
Property and equipment, gross | 107,704 | 93,465 |
Building | ||
Property and equipment, net | ||
Property and equipment, gross | $ 41,943 | 39,848 |
Building | Warehouse and distribution | ||
Property and equipment, net | ||
Area of Land | ft² | 1,000,000 | |
Vehicles | ||
Property and equipment, net | ||
Property and equipment, gross | $ 31,737 | $ 29,804 |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES ASSETS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Goodwill | |||||
Goodwill, Beginning Balance | $ 1,279,715 | ||||
Acquisitions | 3,928 | ||||
Goodwill, Ending Balance | $ 1,283,643 | 1,283,643 | |||
Amortizing intangibles | 71,227 | 71,227 | $ 35,263 | ||
Accumulated amortization | (11,574) | (11,574) | (3,899) | ||
Amortizing intangibles, net | 59,653 | 59,653 | 31,364 | ||
Non-amortizing intangibles | 1,021,160 | 1,021,160 | 396,622 | ||
Intangible, net | 1,080,813 | 1,080,813 | $ 427,986 | ||
Amortization expense | 3,000 | $ 1,800 | $ 7,700 | $ 2,100 | |
Minimum | |||||
Goodwill | |||||
Useful life of intangible assets | 5 years | 5 years | |||
Maximum | |||||
Goodwill | |||||
Useful life of intangible assets | 7 years | 7 years | |||
Monster Energy Drinks | |||||
Goodwill | |||||
Goodwill, Beginning Balance | $ 641,716 | ||||
Acquisitions | 3,928 | ||||
Goodwill, Ending Balance | 645,644 | 645,644 | |||
Strategic Brands | |||||
Goodwill | |||||
Goodwill, Beginning Balance | 637,999 | ||||
Acquisitions | |||||
Goodwill, Ending Balance | $ 637,999 | $ 637,999 |
DISTRIBUTION AGREEMENTS (Detail
DISTRIBUTION AGREEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | 15 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | |
DISTRIBUTION AGREEMENTS | |||||
Termination costs | $ 4.7 | $ 2.5 | $ 33.4 | $ 220.7 | |
Distribution agreement, revenue recognition period | 20 years | ||||
Revenue recognized | 8.4 | 8.2 | $ 28.6 | 54.7 | |
Amortization of deferred revenue | $ 0 | $ 0 | $ 5 | $ 39.8 | $ 0 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) $ in Millions | 1 Months Ended | 9 Months Ended | |
Sep. 30, 2016USD ($)ft²a | Jul. 31, 2016USD ($)ft² | Sep. 30, 2016USD ($)ft²a | |
Commitments and Contingencies | |||
Aggregate contractual obligations | $ 140.9 | $ 140.9 | |
Aggregate operating lease commitments | $ 18.6 | $ 18.6 | |
Land | |||
Commitments and Contingencies | |||
Acres of land | a | 49 | 49 | |
Purchase Agreement | Building and Building Improvements | |||
Commitments and Contingencies | |||
Area of real estate property | ft² | 1,000,000 | 75,425 | 1,000,000 |
Purchase agreement to acquire real estate property | $ 12.6 | ||
Purchase Agreement | Land | |||
Commitments and Contingencies | |||
Acres of land | a | 49 | 49 | |
Purchase agreement to acquire real estate property | $ 39.1 | ||
Guaranteed Maximum Purchase Price | $ 36.8 | ||
Raw material items | |||
Commitments and Contingencies | |||
Purchase Commitments | $ 55 | ||
Period over which obligations will be paid | 1 year |
COMMITMENTS AND CONTINGENCIES57
COMMITMENTS AND CONTINGENCIES - Loss Contingencies (Details) $ in Millions | Sep. 30, 2016USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Accrued loss contingencies | $ 2.1 |
ACCUMULATED OTHER COMPREHENSI58
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Components of accumulated other comprehensive loss: | |
Balance | $ 4,809,410 |
Balance | 3,398,400 |
Currency Translation Losses | |
Components of accumulated other comprehensive loss: | |
Balance | 21,878 |
Net current-period other comprehensive (gain) | (7,344) |
Balance | $ 14,534 |
TREASURY STOCK (Details)
TREASURY STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 15, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | Aug. 02, 2016 | Apr. 28, 2016 |
Equity, Class of Treasury Stock [Line Items] | |||||||
Cash paid for repurchase of common stock | $ 2,002,441 | $ 758,974 | |||||
Number of shares repurchased of common stock from employees in lieu of cash or withholding taxes due | 1,200 | ||||||
Cash payment for repurchase of common stock from employees in lieu of cash or withholding taxes due | $ 200 | ||||||
August 2016 Repurchase Plan | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 250,000 | ||||||
Common stock repurchased (in shares) | 100,000 | 0 | |||||
Average purchase price (in dollars per share) | $ 142.77 | ||||||
Existing share repurchase program | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock repurchase program, authorized amount | $ 2,000,000 | ||||||
Common stock repurchased (in shares) | 12,820,512 | ||||||
Average purchase price (in dollars per share) | $ 156 | ||||||
Cash paid for repurchase of common stock | $ 2,000,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)plan | Sep. 30, 2015USD ($) | |
Stock-based compensation | ||||
Stock-based compensation plans | plan | 2 | |||
Compensation expense on share-based plans | $ 12.1 | $ 8.9 | $ 33.7 | $ 23.7 |
Stock options | ||||
Stock-based compensation | ||||
Excess tax benefit realized for tax deductions from non-qualified stock option exercises and disqualifying dispositions of incentive stock options | 3.5 | 3.6 | 7.1 | 303.9 |
Adjustments for New Accounting Principle | Accounting Standards Update 2016-09: Simplifying the accounting for share-based compensation | ||||
Stock-based compensation | ||||
Excess tax benefit from stock based compensation | $ 3.5 | $ 7.1 | ||
Adjustments to additional paid-in-capital, benefit associated with share-based compensation | $ 3.6 | $ 303.9 |
STOCK-BASED COMPENSATION - Fair
STOCK-BASED COMPENSATION - Fair Value Assumptions (Details) - Stock options - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Weighted-average assumptions used to estimate the fair value of options granted | |||||||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | |||
Expected volatility (as a percent) | 36.30% | 36.70% | 36.10% | 37.10% | |||
Risk-free interest rate (as a percent) | 1.10% | 1.50% | 1.40% | 1.60% | |||
Expected term | 6 years 4 months 24 days | 6 years 1 month 6 days | 6 years 3 months 18 days | 5 years 9 months 18 days | |||
Stock Options, Number of Shares | |||||||
Balance at the beginning of the period (in shares) | 6,590 | 6,590 | |||||
Granted (in shares) | (14) | 219 | 961 | ||||
Exercised (in shares) | (284) | ||||||
Cancelled or forfeited (in shares) | (88) | ||||||
Balance at the end of the period (in shares) | 7,412 | 7,412 | 6,590 | ||||
Vested and expected to vest in the future at the end of the period (in shares) | 7,011 | 7,011 | |||||
Exercisable at the end of the period (in shares) | 4,359 | 4,359 | |||||
Stock options, Weighted-Average Exercise Price Per Share | |||||||
Balance at the beginning of the period (in dollars per share) | $ 50.85 | $ 50.85 | |||||
Granted (in dollars per share) | $ 157.80 | $ 138.53 | $ 132.06 | ||||
Exercised (in dollars per share) | 37.34 | ||||||
Cancelled or forfeited (in dollars per share) | 98.28 | ||||||
Balance at the end of the period (in dollars per share) | 64.14 | 64.14 | $ 50.85 | ||||
Vested and expected to vest in the future at the end of the period (in dollars per share) | 60.94 | 60.94 | |||||
Exercisable at the end of the period (in dollars per share) | $ 31.77 | $ 31.77 | |||||
Weighted-Average Remaining Contractual Term | |||||||
Balance at the beginning of the period | 5 years 7 months 6 days | 5 years 7 months 6 days | |||||
Balance at the end of the period | 5 years 7 months 6 days | 5 years 7 months 6 days | |||||
Vested and expected to vest in the future at the end of the period | 5 years 4 months 24 days | ||||||
Exercisable at the end of the period | 3 years 8 months 12 days | ||||||
Aggregate Intrinsic Value | |||||||
Balance at the beginning of the period | $ 646,497 | $ 646,497 | |||||
Balance at the end of the period | $ 613,113 | 613,113 | $ 646,497 | ||||
Vested and expected to vest in the future at the end of the period | 602,318 | 602,318 | |||||
Exercisable at the end of the period | $ 501,457 | $ 501,457 |
STOCK-BASED COMPENSATION - Equi
STOCK-BASED COMPENSATION - Equity Awards (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock options | ||||||
Stock-based compensation | ||||||
Weighted-average grant-date fair value of options granted (in dollars per share) | $ 59.21 | $ 51.14 | $ 50.82 | $ 50.20 | ||
Total intrinsic value of options exercised | $ 9.1 | $ 11.9 | $ 30.6 | $ 841.5 | ||
Cash received from option exercises | 2.4 | $ 1.9 | 10.6 | $ 43.6 | ||
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 100.3 | $ 100.3 | ||||
Cost expected to be recognized over a weighted-average period | 3 years | |||||
Stock units expected to vest (in shares) | 7,011,000 | 7,011,000 | ||||
Restricted stock units | ||||||
Stock-based compensation | ||||||
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 16.7 | $ 16.7 | ||||
Cost expected to be recognized over a weighted-average period | 1 year 9 months 18 days | |||||
Stock units expected to vest (in shares) | 200,000 | 200,000 | ||||
Number of Shares | ||||||
Non-vested at the beginning of the period (in shares) | 178,000 | 178,000 | ||||
Granted (in shares) | 0 | 12,000 | 82,000 | |||
Vested (in shares) | (81,000) | |||||
Forfeited/cancelled (in shares) | (1,000) | |||||
Non-vested at the end of the period (in shares) | 190,000 | 190,000 | ||||
Weighted Average Grant-Date Fair Value | ||||||
Non-vested at the beginning of the period (in dollars per share) | $ 99.58 | $ 99.58 | ||||
Granted (in dollars per share) | $ 0 | $ 148.94 | $ 131.96 | $ 147.36 | 134.14 | $ 136.50 |
Vested (in dollars per share) | 95.62 | |||||
Forfeited/cancelled (in dollars per share) | 57.45 | |||||
Non-vested at the end of the period (in dollars per share) | $ 118.68 | $ 118.68 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefit Rollforward (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Gross unrecognized tax benefits, roll forward | |
Balance at the beginning of the period | $ 471 |
Decreases related to settlement with taxing authority | (462) |
Balance at the end of the period | $ 9 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Weighted-average shares outstanding: | ||||
Basic | 190,379 | 205,051 | 198,073 | 184,098 |
Dilutive | 4,052 | 3,043 | 4,020 | 4,033 |
Diluted | 194,431 | 208,094 | 202,093 | 188,131 |
Options and awards outstanding excluded from the calculations as their effect would have been antidilutive (in shares) | 1,900 | 1,100 | 1,700 | 900 |
SEGMENT INFORMATION - Product L
SEGMENT INFORMATION - Product Line (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
Segment information | |||||
Number of reportable segments | item | 3 | ||||
Number of operating segments | item | 3 | ||||
Net sales | $ 787,954 | $ 756,619 | $ 2,295,628 | $ 2,077,131 | |
Operating income | 290,375 | 291,438 | 833,610 | 665,205 | |
Income before tax | 289,338 | 288,076 | 832,959 | 662,061 | |
Revenue recognized | 8,400 | 8,200 | 28,600 | 54,700 | |
Gain on sale of Monster Non-Energy | 161,470 | ||||
Depreciation and amortization | 10,424 | 8,506 | 29,874 | 21,757 | |
Goodwill and other intangible assets | 2,364,456 | 2,364,456 | $ 1,707,701 | ||
Stock-based compensation expense | 12,100 | 8,900 | 33,700 | 23,700 | |
Corporate and Unallocated | |||||
Segment information | |||||
Operating income | (59,379) | (43,114) | (169,909) | (151,263) | |
Income before tax | (60,533) | (46,564) | (170,734) | (154,758) | |
Depreciation and amortization | 1,522 | 1,341 | 4,593 | 3,867 | |
Payroll costs | 33,200 | 27,100 | 92,700 | 83,900 | |
Stock-based compensation expense | 12,100 | 8,900 | 33,700 | 23,700 | |
Professional service expenses | 16,900 | 10,000 | 47,900 | 31,200 | |
Other operating expenses | 9,300 | 6,000 | 29,300 | 36,200 | |
Operating segment | |||||
Segment information | |||||
Net sales | 787,954 | 756,619 | 2,295,628 | 2,077,131 | |
Operating income | 290,375 | 291,438 | 833,610 | 665,205 | |
Income before tax | 289,338 | 288,076 | 832,959 | 662,061 | |
Monster Energy Drinks | |||||
Segment information | |||||
Depreciation and amortization | 5,974 | 5,408 | 17,651 | 15,556 | |
Goodwill and other intangible assets | 1,331,931 | 1,331,931 | 699,346 | ||
Monster Energy Drinks | Operating segment | |||||
Segment information | |||||
Net sales | 710,130 | 686,684 | 2,075,511 | 1,933,467 | |
Operating income | 308,493 | 289,544 | 874,822 | 596,716 | |
Income before tax | 308,612 | 289,649 | 875,024 | 597,084 | |
Strategic Brands | |||||
Segment information | |||||
Depreciation and amortization | 1,777 | 1,757 | 5,325 | 2,102 | |
Goodwill and other intangible assets | 1,003,355 | 1,003,355 | $ 1,008,355 | ||
Strategic Brands | Operating segment | |||||
Segment information | |||||
Net sales | 72,138 | 69,935 | 207,990 | 82,913 | |
Operating income | 40,075 | 45,291 | 127,169 | 54,375 | |
Income before tax | 40,073 | 45,275 | 127,141 | 54,359 | |
Other | |||||
Segment information | |||||
Depreciation and amortization | 1,151 | 2,305 | 232 | ||
Goodwill and other intangible assets | 29,170 | 29,170 | |||
Other | Operating segment | |||||
Segment information | |||||
Net sales | 5,686 | 12,127 | 60,751 | ||
Operating income | 1,186 | (283) | 1,528 | 165,377 | |
Income before tax | 1,186 | (284) | 1,528 | 165,376 | |
Direct Store Delivery ("DSD") | |||||
Segment information | |||||
Revenue recognized | 8,400 | 8,200 | 28,600 | 54,700 | |
Distribution Agreements Termination Cost | $ 4,700 | $ 2,500 | $ 33,400 | $ 220,700 |
SEGMENT INFORMATION - Concentra
SEGMENT INFORMATION - Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Segment information | ||||
Net sales | $ 787,954 | $ 756,619 | $ 2,295,628 | $ 2,077,131 |
Outside United States | ||||
Segment information | ||||
Net sales | $ 190,800 | $ 170,600 | $ 540,200 | $ 435,100 |
Coca-Cola Refreshments ("CCR") | ||||
Segment information | ||||
Percentage of net sales from major customer | 41.00% | 42.00% | 43.00% | 41.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)item | Sep. 30, 2015USD ($) | Dec. 31, 2015USD ($) | |
TCCC | |||||
Related party transactions | |||||
Voting interest (as a percent) | 10.00% | 10.00% | |||
Commission expense | $ 8,100 | $ 7,700 | $ 19,000 | $ 9,400 | |
Net sales | 321,900 | 315,900 | 981,000 | 845,800 | |
Purchases from Related Party | 6,200 | 8,000 | 20,900 | 9,100 | |
Manufacturing expenses | 2,200 | 1,800 | 6,000 | 5,300 | |
Accounts receivable, net. | 198,245 | 198,245 | $ 172,201 | ||
Accounts payable | 67,838 | 67,838 | 58,579 | ||
Accrued promotional allowances | 33,586 | $ 33,586 | $ 27,544 | ||
Directors and Officers that provide promotional materials | |||||
Related party transactions | |||||
Number of directors and officers who are principal owners of a company that provides promotional materials | item | 2 | ||||
Expenses incurred in connection with materials or services provided by a related party | $ 600 | $ 300 | $ 900 | $ 1,500 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Oct. 14, 2016 | Oct. 11, 2016shares | Sep. 30, 2016$ / sharesshares | Dec. 31, 2015$ / sharesshares |
Subsequent Events | ||||
Common stock, par value (in dollars per share) | $ / shares | $ 0.005 | $ 0.005 | ||
Common stock, shares authorized | 240,000,000 | 240,000,000 | ||
Common stock dividend percentage | 2 | |||
Subsequent event | ||||
Subsequent Events | ||||
Common stock, shares authorized | 1,250,000,000 | |||
Stock split ratio | 3 | |||
Common stock dividend percentage | 2 |
SUBSEQUENT EVENTS - Pro Forma E
SUBSEQUENT EVENTS - Pro Forma Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
SUBSEQUENT EVENTS | ||||
NET INCOME | $ 191,643 | $ 174,574 | $ 539,738 | $ 407,991 |
Pro forma earnings per share basic | $ 0.34 | $ 0.28 | $ 0.91 | $ 0.74 |
Pro forma earnings per share diluted | $ 0.33 | $ 0.28 | $ 0.89 | $ 0.72 |
Pro forma weighted average shares basic | 571,138 | 615,153 | 594,219 | 552,294 |
Pro forma weighted average shares Diluted | 583,293 | 624,282 | 606,280 | 564,393 |