Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 10, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | Monster Beverage Corp | ||
Entity Central Index Key | 865,752 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Public Float | $ 27,920,735,052 | ||
Entity Common Stock, Shares Outstanding | 566,619,343 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 377,582 | $ 2,175,417 |
Short-term investments | 220,554 | 744,610 |
Accounts receivable, net | 448,051 | 352,955 |
TCCC Transaction receivable | 125,000 | 125,000 |
Inventories | 161,971 | 156,121 |
Prepaid expenses and other current assets | 32,562 | 26,967 |
Prepaid income taxes | 66,550 | 18,462 |
Total current assets | 1,432,270 | 3,599,532 |
INVESTMENTS | 2,394 | 15,348 |
PROPERTY AND EQUIPMENT, net | 173,343 | 97,354 |
DEFERRED INCOME TAXES | 159,556 | 140,468 |
GOODWILL | 1,331,643 | 1,279,715 |
OTHER INTANGIBLE ASSETS, net | 1,032,635 | 427,986 |
OTHER ASSETS | 21,630 | 10,874 |
Total Assets | 4,153,471 | 5,571,277 |
CURRENT LIABILITIES: | ||
Accounts payable | 193,270 | 144,763 |
Accrued liabilities | 79,526 | 81,786 |
Accrued promotional allowances | 110,237 | 115,530 |
Accrued distributor terminations | 8,184 | 11,018 |
Deferred revenue | 41,672 | 32,271 |
Accrued compensation | 30,043 | 22,159 |
Income taxes payable | 7,657 | 2,750 |
Total current liabilities | 470,589 | 410,277 |
DEFERRED REVENUE | 353,173 | 351,590 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock - $0.005 par value; 1,25,000 shares authorized; 623,201 shares issued and 566,566 outstanding as of December 31, 2016; 621,057 shares issued and 608,700 outstanding as of December 31, 2015 | 3,116 | 3,105 |
Additional paid-in capital | 4,051,245 | 3,989,787 |
Retained earnings | 2,107,548 | 1,394,863 |
Accumulated other comprehensive loss | (23,249) | (21,878) |
Common stock in treasury, at cost; 56,635 shares and 12,357 shares as of December 31, 2016 and December 31, 2015, respectively | (2,808,951) | (556,467) |
Total stockholders' equity | 3,329,709 | 4,809,410 |
Total Liabilities and Stockholders' Equity | $ 4,153,471 | $ 5,571,277 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.005 | $ 0.005 |
Common stock, shares authorized | 1,250,000 | 1,250,000 |
Common stock, shares issued | 623,201 | 621,057 |
Common stock, shares outstanding | 566,566 | 608,700 |
Common stock in treasury, shares | 56,635 | 12,357 |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF INCOME | |||
NET SALES | $ 3,049,393 | $ 2,722,564 | $ 2,464,867 |
COST OF SALES | 1,107,393 | 1,090,263 | 1,125,057 |
GROSS PROFIT | 1,942,000 | 1,632,301 | 1,339,810 |
OPERATING EXPENSES | 856,662 | 900,118 | 592,305 |
GAIN ON SALE OF MONSTER NON-ENERGY (NOTE 2) | 161,470 | ||
OPERATING INCOME | 1,085,338 | 893,653 | 747,505 |
OTHER EXPENSE, NET | 5,653 | 2,105 | 1,717 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 1,079,685 | 891,548 | 745,788 |
PROVISION FOR INCOME TAXES | 367,000 | 344,815 | 262,603 |
NET INCOME | $ 712,685 | $ 546,733 | $ 483,185 |
NET INCOME PER COMMON SHARE: | |||
Basic (in dollars per share) | $ 1.21 | $ 0.97 | $ 0.96 |
Diluted (in dollars per share) | $ 1.19 | $ 0.95 | $ 0.92 |
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: | |||
Basic (in shares) | 587,874 | 566,448 | 501,771 |
Diluted (in shares) | 599,819 | 577,758 | 522,855 |
CONSOLIDATED STATEMENTS OF INC5
CONSOLIDATED STATEMENTS OF INCOME (Parenthetical) | Oct. 14, 2016 |
CONSOLIDATED STATEMENTS OF INCOME | |
Stock split ratio | 3 |
Common stock dividend percentage | 200.00% |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||
Net income, as reported | $ 712,685 | $ 546,733 | $ 483,185 |
Other comprehensive (loss) income: | |||
Change in foreign currency translation adjustment, net of tax | (1,178) | (10,425) | (10,220) |
Available-for-sale investments: | |||
Change in net unrealized losses | (193) | ||
Net change in available-for-sale investments | (193) | ||
Other comprehensive (loss) income | (1,371) | (10,425) | (10,220) |
Comprehensive income | $ 711,314 | $ 536,308 | $ 472,965 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Loss | Treasury stock. | Total |
Balance at Dec. 31, 2013 | $ 3,090 | $ 366,009 | $ 1,847,325 | $ (1,233) | $ (1,222,912) | $ 992,279 |
Balance (in shares) at Dec. 31, 2013 | 618,042 | (117,576) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 28,989 | 28,989 | ||||
Exercise of stock options | $ 15 | 17,153 | 17,168 | |||
Exercise of stock options (in shares) | 2,970 | |||||
Excess tax benefits from share based payment arrangements | 11,924 | 11,924 | ||||
Repurchase of common stock | $ (8,175) | (8,175) | ||||
Repurchase of common stock (in shares) | (270) | |||||
Foreign currency translation | (10,220) | (10,220) | ||||
Net income | 483,185 | 483,185 | ||||
Balance at Dec. 31, 2014 | $ 3,105 | 424,075 | 2,330,510 | (11,453) | $ (1,231,087) | 1,515,150 |
Balance (in shares) at Dec. 31, 2014 | 621,012 | (117,846) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 32,719 | 32,719 | ||||
Exercise of stock options | $ 111 | 49,217 | 49,328 | |||
Exercise of stock options (in shares) | 22,275 | |||||
Issuance of Common Stock | $ 511 | 3,168,624 | 3,169,135 | |||
Issuance of common stock (in shares) | 102,123 | |||||
Excess tax benefits from share based payment arrangements | 314,737 | 314,737 | ||||
Repurchase of common stock | $ (807,967) | $ (807,967) | ||||
Repurchase of common stock (in shares) | (18,864) | |||||
Cancellation of treasury stock | $ (622) | 415 | (1,482,380) | $ 1,482,587 | ||
Cancellation of treasury stock (in shares) | (124,353) | 124,353 | (124,500) | |||
Foreign currency translation | (10,425) | $ (10,425) | ||||
Net income | 546,733 | 546,733 | ||||
Balance at Dec. 31, 2015 | $ 3,105 | 3,989,787 | 1,394,863 | (21,878) | $ (556,467) | 4,809,410 |
Balance (in shares) at Dec. 31, 2015 | 621,057 | (12,357) | ||||
Increase (Decrease) in Stockholders' Equity | ||||||
Stock-based compensation | 45,848 | 45,848 | ||||
Exercise of stock options | $ 11 | 16,441 | 16,452 | |||
Exercise of stock options (in shares) | 2,144 | |||||
Unrealized loss on available-for-sale securities | (193) | (193) | ||||
Excess tax deficiency from share based payment arrangements | (831) | (831) | ||||
Repurchase of common stock | $ (2,252,484) | (2,252,484) | ||||
Repurchase of common stock (in shares) | (44,278) | |||||
Foreign currency translation | (1,178) | (1,178) | ||||
Net income | 712,685 | 712,685 | ||||
Balance at Dec. 31, 2016 | $ 3,116 | $ 4,051,245 | $ 2,107,548 | $ (23,249) | $ (2,808,951) | $ 3,329,709 |
Balance (in shares) at Dec. 31, 2016 | 623,201 | (56,635) |
CONSOLIDATED STATEMENTS OF STO8
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Parenthetical) | Oct. 14, 2016 |
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY | |
Stock split ratio | 3 |
Common stock dividend percentage | 200.00% |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | |||
Net income | $ 712,685 | $ 546,733 | $ 483,185 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 40,845 | 30,860 | 25,651 |
(Gain) loss on disposal of property and equipment | (204) | 193 | (408) |
Gain on sale of Monster Non-Energy | (161,470) | ||
Stock-based compensation | 45,848 | 32,719 | 28,552 |
Loss on put option | 250 | 842 | |
Gain on investments, net | (250) | (801) | |
Deferred income taxes | (19,092) | (181,582) | (9,846) |
Effect on cash of changes in operating assets and liabilities, net of acquisitions and divestitures: | |||
Accounts receivable | (86,382) | (77,331) | (14,290) |
Distributor receivables | (19,981) | 600 | 4,580 |
Inventories | 20,875 | (7,068) | 42,763 |
Prepaid expenses and other current assets | (6,682) | (9,713) | 888 |
Prepaid income taxes | (48,023) | (11,009) | 157 |
Accounts payable | 45,340 | 20,864 | 11,282 |
Accrued liabilities | (2,852) | 43,312 | 3,019 |
Accrued promotional allowances | (3,939) | 7,009 | 20,530 |
Accrued distributor terminations | (3,328) | 11,196 | (2,338) |
Accrued compensation | 8,051 | 4,507 | 3,394 |
Income taxes payable | 4,375 | 311,534 | 8,438 |
Deferred revenue | 13,819 | (38,631) | (8,107) |
Net cash provided by operating activities | 701,355 | 522,723 | 597,491 |
CASH FLOWS FROM INVESTING ACTIVITIES: | |||
Maturities of held-to-maturity investments | 868,304 | 2,089,788 | 710,294 |
Sales of available-for-sale investments | 120,987 | 4,001 | |
Sales of trading investments | 4,160 | 13,075 | |
Proceeds from transfer of distribution rights to TCCC | 179,658 | ||
Proceeds from the sale of Monster Non-Energy | 198,008 | ||
Purchases of AFF assets, net | (688,485) | ||
Proceeds from sale of property and equipment | 807 | 926 | 963 |
Purchases of held-to-maturity investments | (152,050) | (2,033,584) | (1,130,601) |
Purchases of available-for-sale investments | (300,426) | (4,001) | |
Purchases of property and equipment | (99,819) | (35,605) | (27,952) |
Additions to intangibles | (5,518) | (6,888) | (3,411) |
Decrease (increase) in other assets | 7 | (398) | 1,230 |
Net cash (used in) provided by investing activities | (256,193) | 400,066 | (440,403) |
CASH FLOWS FROM FINANCING ACTIVITIES: | |||
Principal payments on debt | (2,359) | (1,083) | (1,619) |
Issuance of common stock | 16,405 | 1,696,661 | 17,168 |
Purchases of common stock held in treasury | (2,252,437) | (807,967) | (8,175) |
Net cash (used in) provided by financing activities | (2,238,391) | 887,611 | 7,374 |
Effect of exchange rate changes on cash and cash equivalents | (4,606) | (5,306) | (5,488) |
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (1,797,835) | 1,805,094 | 158,974 |
CASH AND CASH EQUIVALENTS, beginning of year | 2,175,417 | 370,323 | 211,349 |
CASH AND CASH EQUIVALENTS, end of year | 377,582 | 2,175,417 | 370,323 |
Cash paid during the period for: | |||
Interest | 68 | 29 | 34 |
Income taxes | $ 431,273 | $ 224,928 | $ 267,251 |
CONSOLIDATED STATEMENTS OF CA10
CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Capital leases for the acquisition of promotional vehicles | $ 2.6 | $ 1.5 | $ 0.8 |
Accounts payable for property and equipment purchases | 4.7 | 0.6 | 0.7 |
Net change in accrued liabilities related to intangible addition | $ 3.8 | $ 2.2 | $ 2.2 |
Treasury stock shares cancelled | 124,500,000 | ||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | |||
Number of shares issued for acquisition | 35,400,000 | ||
Amount held in escrow | $ 125 |
ORGANIZATION AND SUMMARY OF SIG
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization – Monster Beverage Corporation (the “Company”) was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries. Stock Split – On October 14, 2016, the Company announced a three-for-one stock split of the Company’s common stock to be effected in the form of a 200% stock dividend. The common stock dividend was issued on November 9, 2016 and the Company’s common stock began trading at the split adjusted price on November 10, 2016. Accordingly, all per share amounts, average common stock outstanding, common stocks outstanding, common stock repurchased and equity based compensation presented in the consolidated financial statements and notes have been adjusted retroactively, where applicable, to reflect the stock split. Stockholders’ equity has been retroactively adjusted, where applicable, to give effect to the stock split for all periods presented by reclassifying the par value of the additional shares issued in connection with the stock split to Common Stock from Retained Earnings and Additional Paid-in Capital. Nature of Operations – The Company develops, markets, sells and distributes energy drink beverages, sodas and/or concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Rehab®, Monster Energy Extra Strength Nitrous Technology®, Java Monster®, Muscle Monster®, Mega Monster Energy®, Punch Monster®, Juice Monster®, M3®, Ubermonster®, BU®, Mutant® Super Soda, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra®, Play® and Power Play®, Gladiator®, Relentless®, Samurai® and BPM®. Through June 12, 2015, the Company also developed, marketed, sold and distributed “alternative” beverage category beverages under the following brand names: Peace Tea®, Hansen’s®, Hansen’s Natural Cane Soda®, Junior Juice®, Blue Sky® and Hubert’s®. These brands were transferred to The Coca-Cola Company (“TCCC”) as part of the TCCC Transaction (as defined and described in Note 2 below). Basis of Presentation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its consolidated subsidiaries. Principles of Consolidation – The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation. Adjustment – Subsequent to the issuance of the Company’s consolidated financial statements on Form 10-Q for the quarterly period ended June 30, 2016, management concluded that its presentation of prepaid 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, deferred income taxes increased by $120.8 million, prepaid income taxes decreased by $16.9 million and income taxes payable decreased by $103.9 million, respectively, in the comparable consolidated statement of cash flows for the year ended December 31, 2015. The adjustment had no impact on total net cash provided by operating activities. Business Combinations – Business acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”. FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination. Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future. Investments – The Company’s investments in debt securities are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive loss as a separate component of stockholders’ equity. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available (see Note 4). Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily impaired if the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference being defined as the “Credit Loss”) or if the fair value of the security is less than the security’s amortized cost basis and the investor intends, or will be required, to sell the security before recovery of the security’s amortized cost basis. If an other-than-temporary impairment exists, the charge to earnings is limited to the amount of Credit Loss if the investor does not intend to sell the security, and will not be required to sell the security, before recovery of the security’s amortized cost basis. Any remaining difference between fair value and amortized cost is recognized in other comprehensive loss, net of applicable taxes. The Company evaluates whether the decline in fair value of its investments is other-than-temporary at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and our intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value. Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its consolidated balance sheets, the Company has presented accounts receivable, net of promotional allowances, only for those customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis. Inventories – Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value). Property and Equipment – Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, and vehicles is based on their estimated useful lives (three to ten years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income. Goodwill – The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will use a two-step process to determine the amount of goodwill impairment. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit’s net assets, other than goodwill, and the fair value of the reporting unit. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the fiscal years ended December 31, 2016, 2015 and 2014 there were no impairments recorded. Other Intangibles – Other Intangibles are comprised primarily of trademarks that represent the Company’s exclusive ownership of the Monster Energy®, ®, Monster Rehab®, Java Monster®, Unleash the Beast®, Monster Energy Extra Strength Nitrous Technology®, Muscle Monster®, Mega Monster Energy®, Punch Monster®, Juice Monster®, M3®, Ubermonster®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra®, Play® and Power Play®, Gladiator®, Relentless®, Samurai® and BPM® trademarks, all used in connection with the manufacture, sale and distribution of beverages. The Company also owns in its own right a number of other trademarks in the United States, as well as in a number of countries around the world. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the fiscal years ended December 31, 2016, 2015 and 2014 there were no impairments recorded. Long-Lived Assets – Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. For the fiscal years ended December 31, 2016, 2015 and 2014, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Foreign Currency Translation and Transactions – The accounts of the Company’s foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive loss in stockholders’ equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive loss in stockholders’ equity. During the years ended December 31, 2016, 2015 and 2014, 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 outstanding as of December 31, 2016 have terms of one month or less. We do 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 FASB ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in other expense, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2016, 2015 and 2014, aggregate foreign currency transaction losses, including the gains or losses on forward currency exchange contracts, amounted to $9.7 million, $5.5 million and $3.4 million, respectively, and have been recorded in other expense, net in the accompanying consolidated statements of income. Revenue Recognition – The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Generally, ownership of and title to the Company’s finished products passes to customers upon delivery of the products to customers. Certain of the Company’s distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, ownership of and title to the Company’s products that are co-packed on the Company’s behalf by those co-packers who are also distributors, passes to such distributors when the Company is notified by them that they have taken transfer or possession of the relevant portion of the Company’s finished goods. Revenue for the Strategic Brands segment is generally recognized when title to the concentrate is transferred to the customer. In particular, title to the concentrate usually passes upon shipment to the customers’ locations, as determined by the specific sales terms of the transactions. Net sales have been determined after deduction of promotional and other allowances in accordance with FASB ASC 605-50. The Company’s promotional and other allowances are calculated based on various programs with its distributors and retail customers, and accruals are established during the year for the anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Amounts received pursuant to new and/or amended distribution agreements entered into with certain distributors, relating to the costs associated with terminating the Company’s prior distributors, are accounted for as revenue ratably over the anticipated life of the respective distribution agreement, generally 20 years. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience. Cost of Sales – Cost of sales consists of the costs of concentrates and/or beverage bases, the costs of raw materials utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company’s finished products and certain quality control costs. Raw materials account for the largest portion of the cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials. Operating Expenses – Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company’s prior distributors, depreciation and other general and administrative costs. Freight-Out Costs – For the years ended December 31, 2016, 2015 and 2014, freight-out costs amounted to $83.6 million, $87.0 million and $92.7 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income. Advertising and Promotional Expenses – The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company’s promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $270.6 million, $209.7 million and $171.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income. Income Taxes – The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Stock-Based Compensation – The Company accounts for stock-based compensation under the provisions of FASB ASC 718. 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. 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. 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. (See Note 14). Net Income Per Common Share – In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable. Concentration of Risk – Certain of the Company’s products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company’s revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production. TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 41%, 43% and 29% of the Company’s net sales for the years ended December 31, 2016, 2015 and 2014, respectively. Credit Risk – The Company sells its products nationally and internationally, primarily to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains and food service customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management’s expectations. Fair Value of Financial Instruments – The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments. Use of Estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts 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 period. Actual results could differ from those estimates. Recent Accounting Pronouncements – In January 2017, the FASB issued ASU No. 2017-01 , “ Business Combinations (Topic 805): Clarifying the Definition of a Business ” , which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2017-01 on its financial position, results of operations and liquidity. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment ” , which eliminates the requirement to calculate the implied fair value of goodwill but rather require an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2017-04 on its financial position, results of operations and liquidity. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”, in an effort to improve the accounting for the income tax consequences of intra-equity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. FASB ASU No. 2016-16 establishes the requirement that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU No. 2016-16 is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of ASU No. 2016-16 on its financial position, results of operations and liquidity. 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 (Topic 718): 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 year ended December 31, 2015 and 2014, net cash provided by operating activities increased and net cash provided by financing activities decreased by $314.8 million and $11.9 million, respectively, as a result of such retrospective adjustment. For the year ended December 31, 2016, the Company recorded $20.8 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 May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, 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 |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 12 Months Ended |
Dec. 31, 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 final fair value allocations of the AFF Transaction consideration: Identifiable Consideration Intangibles - flavor formulas (non-amortizing)¹ $ $ - Intangibles - flavor formulas (amortizing) - Intangibles - customer relationships (amortizing) - Intangibles - trademarks (amortizing) - Intangibles - other (amortizing) - Working capital (excluding inventory) - Inventory - Property and equipment, net - Favorable leases - Goodwill - Cash - Total $ $ 1 Represents proprietary formulas for the Company’s principal products. During the fourth quarter of 2016, the Company identified a measurement period adjustment to the Company’s previous purchase accounting estimates for the AFF Transaction. The adjustments to the estimated values previously disclosed, resulted from the completed assessment of a certain flavor formula. As a result, Intangibles – flavor formulas (non-amortizing) decreased and Goodwill increased by $48.0 million, respectively, from amounts previously reported. 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 final book value of the working capital (excluding inventory) approximates fair value. The Company has determined goodwill in accordance with FASB 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 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 102,121,602 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, as described below, pursuant to an escrow agreement (the “Escrow Agreement”) through June 17, 2016, subject to release upon the achievement of certain 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 December 31, 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. During January 2017, an additional 5% of the target case sales were transitioned to TCCC’s distribution network, resulting in a $62.5 million payment from TCCC to the Company. TCCC will pay directly to the Company the remaining $62.5 million described above dependent upon future target case sale transitions. The Company expects to transition sufficient additional distribution rights to receive the remaining amounts. The following unaudited pro forma combined financial information is presented as if the TCCC Transaction had closed on January 1, 2014: Year Ended December 31, 2015 Pro Forma Adjustments Monster KO Energy² Disposal of Other Pro Forma Net sales $ 2,722,564 $ 138,127 $ (60,778) $ 8,887 $ 2,808,800 Net income 4 Year Ended December 31, 2014 Pro Forma Adjustments Monster KO Energy Disposal of Other Pro Forma Net sales $ 2,464,867 $ 342,432 $ (150,374) $ 19,900 $ 2,676,825 Net income 4 ¹Includes net sales of $143.3 million and net income of $55.2 million (tax affected) related to the acquired KO Energy assets since the date of acquisition, June 12, 2015. ²Includes results through June 12, 2015, the date the TCCC Transaction was finalized. Net income for KO Energy includes only net revenues and direct operating expenses, rather than full “carve-out” financial statements, because such financial information 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. ³Includes results through June 12, 2015. Net income includes gain recognized on the sale of Monster Non-Energy of $161.5 million. 4 The $100.6 million and $218.5 million of net income for KO Energy for the years ended December 31, 2015 and 2014, respectively, are presented before tax. The associated estimated provision for income taxes is included in the “Other” category. Pro-Forma Adjustments – Other include the following: Year Ended Year Ended Net sales: Amortization of deferred revenue $ $ Net income: Amortization of deferred revenue $ $ To record sales commissions To record amortization of definite lived KO Energy intangibles To eliminate TCCC Transaction expenses Estimated provision for income taxes on pro forma adjustments Estimated provision for income taxes on KO Energy income Total $ $ ¹Includes amortization of deferred revenue, sales commissions and amortization of intangibles through June 12, 2015, the date the TCCC Transaction was consummated. 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. |
INVESTMENTS
INVESTMENTS | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS | |
INVESTMENTS | 3. INVESTMENTS The following table summarizes the Company’s investments at: December 31, 2016 Amortized Cost Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ $ - $ - $ $ - $ - Municipal securities - - U.S. government agency securities - - Variable rate demand notes - - - - Long-term: Municipal securities - - Total $ $ - $ $ $ $ - December 31, 2015 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ $ - $ - $ $ - $ - Municipal securities - U.S. government agency securities - - U.S. Treasuries - - Long-term: Municipal securities - - U.S. government agency securities - - Total $ $ $ $ $ $ - During the years ended December 31, 2016 and 2015, realized gains or losses recognized on the sale of investments were not significant. During June 2016, the Company sold a large portion of its held-to-maturity investments prior to maturity in order to fund a portion of a common stock repurchase (see Note 13). As a result, the Company’s remaining held-to-maturity investments of $43.7 million were transferred to available-for-sale effective June 15, 2016. The Company’s investments at December 31, 2016 and 2015 in commercial paper, municipal securities, U.S. government agency securities, U.S. treasuries and/or variable rate demand notes (“VRDNs”) 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: December 31, 2016 December 31, 2015 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ $ $ $ Municipal securities U.S. government agency securities U.S. Treasuries - - Due 1 -10 years: Municipal securities U.S. government agency securities - - Variable rate demand notes - - Due 11 - 20 years: Variable rate demand notes - - Due 21 - 30 years: Variable rate demand notes - - Total $ $ $ $ The Company recognized a net gain through earnings on its trading securities as follows for the years ended: 2016 2015 2014 Gain (loss) on transfer from available-for-sale to trading $ - $ - $ - Gain on trading securities sold - (Loss) gain on trading securities held - - Gain on trading securites $ - $ $ |
FAIR VALUE OF CERTAIN FINANCIAL
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 4. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES FASB ASC 820 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB 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. FASB 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 financial assets that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at: December 31, 2016 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Commercial paper - - Variable rate demand notes - - Municipal securities - - U.S. government agency securities - - Foreign currency derivatives - ) - ) Total $ $ $ - $ Amounts included in: Cash and cash equivalents $ $ $ - $ Short-term investments - - Accounts receivable, net - - Investments - - Accrued liabilities - ) - ) Total $ $ $ - $ December 31, 2015 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Certificates of deposit - - Commercial paper - - U.S. Treasuries - - Municipal securities - - U.S. government agency securities - - Foreign currency derivatives - ) - ) Total $ $ $ - $ Amounts included in: Cash and cash equivalents $ $ $ - $ Short-term investments - - Accounts receivable, net - - Investments - - Accrued liabilities - ) - ) Total $ $ $ - $ 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, VRDNs 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 exchange 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 years ended December 31, 2016 and 2015, and there were no changes in the Company’s valuation techniques. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Dec. 31, 2016 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 5. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the years ended December 31, 2016 and 2015, respectively, 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 entered into by the Company that were outstanding as of December 31, 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 FASB ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in other expense, net, in the 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 consolidated balance sheets consist of the following at: December 31, 2016 Derivatives not designated as hedging instruments under FASB ASC 815-20 Notional Amount Fair Value Balance Sheet Location Assets: Foreign currency exchange contracts: Receive CAD/pay USD $ $ Accounts receivable, net Receive SGD/pay USD Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Receive USD/pay CLP Accounts receivable, net Receive USD/pay COP Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay GBP $ $ Accrued liabilities Receive USD/pay EUR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay BRL Accrued liabilities Receive USD/pay NZD Accrued liabilities December 31, 2015 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ $ Accounts receivable, net Receive USD/pay ZAR Accounts receivable, net Receive USD/pay RUB Accounts receivable, net Receive USD/pay BRL Accounts receivable, net Receive USD/pay COP Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive EUR/pay USD $ $ Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay CAD Accrued liabilities Receive USD/pay JPY Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive SGD/pay USD Accrued liabilities Receive USD/pay NZD Accrued liabilities Receive USD/pay CLP Accrued liabilities The net gain on derivative instruments in the consolidated statements of income were as follows: Amount of gain recognized in income on derivatives Year ended Derivatives not designated as hedging instruments under FASB ASC 815-20 Location of gain recognized in income on derivatives December 31, 2016 December 31, 2015 Foreign currency exchange contracts Other expense, net $ $ |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES | |
INVENTORIES | 6. INVENTORIES Inventories consist of the following at December 31: 2016 2015 Raw materials $ $ Finished goods $ $ |
PROPERTY AND EQUIPMENT, Net
PROPERTY AND EQUIPMENT, Net | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, Net | |
PROPERTY AND EQUIPMENT, Net | 7. PROPERTY AND EQUIPMENT, Net Property and equipment consist of the following at December 31: 2016 2015 Land $ $ Leasehold improvements Furniture and fixtures Office and computer equipment Computer software Equipment Building Vehicles Less: accumulated depreciation and amortization ) ) $ $ Total depreciation and amortization expense recorded was $30.2 million, $27.0 million and $25.3 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
GOODWILL AND OTHER INTANGIBLES
GOODWILL AND OTHER INTANGIBLES ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLES ASSETS | |
GOODWILL AND OTHER INTANGIBLES ASSETS | 8. GOODWILL AND OTHER INTANGIBILES ASSETS The following is a roll-forward of goodwill for the year ended December 31, 2016 by reportable segment: Monster Strategic Other Total Balance at December 31, 2015 $ $ $ - $ Acquisitions - - Balance at December 31, 2016 $ $ $ - $ Intangible assets consist of the following at: December 31, December 31, Amortizing intangibles $ $ Accumulated amortization ) ) Non-amortizing intangibles $ $ During the fourth quarter of 2016, the Company finalized its goodwill allocation by reporting unit in connection with the final AFF Transaction purchase price allocation. 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 $10.6 million, $3.9 million and $0.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. The following is the future estimated amortization expense related to amortizing intangibles as of December 31, 2016: Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter At December 31, 2016, non-amortizing intangibles primarily consist of indefinite-lived tradenames. |
DISTRIBUTION AGREEMENTS
DISTRIBUTION AGREEMENTS | 12 Months Ended |
Dec. 31, 2016 | |
DISTRIBUTION AGREEMENTS | |
DISTRIBUTION AGREEMENTS | 9. DISTRIBUTION AGREEMENTS In accordance with FASB 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. As a result, the Company incurred termination costs of $79.8 million, $224.0 million and ($0.2) million for the years ended December 31, 2016, 2015 and 2014, respectively. Such termination costs have been expensed in full and are included in operating expenses for the years ended December 31, 2016, 2015 and 2014, respectively. 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 $26.1 million, $50.5 million and $7.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Included in the $26.1 million of revenue recognized for the year ended December 31, 2016 was $5.7 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 year ended December 31, 2016. Included in the $50.5 million of revenue recognized for the year ended December 31, 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 year ended December 31, 2015. There was no acceleration of deferred revenue in the year ended December 31, 2014. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
DEBT | |
DEBT | 10. DEBT The Company entered into a credit facility with Comerica Bank (“Comerica”) consisting of a revolving line of credit, which was amended in April 2015, under which the Company may borrow up to $10.0 million of non-collateralized debt. The revolving line of credit is effective through June 1, 2017. Interest on borrowings under the line of credit is based on Comerica’s base (prime) rate minus 1% to 1.5%, or London Interbank Offered Rates plus an additional percentage of 1.25% to 1.75%, depending upon certain financial ratios maintained by the Company. The Company had no outstanding borrowings on this line of credit at December 31, 2016. Under this revolving line of credit, the Company may also issue standby Letters of Credit with an aggregate amount of up to $4.0 million. The fee on the standby Letters of Credit ranges from 1.00% to 1.50% depending upon certain financial ratios maintained by the Company. The Company had no outstanding standby Letters of Credit at December 31, 2016. In December 2016, the Company entered into a credit facility with HSBC Bank (China) Company Limited, Shanghai Branch consisting of a working capital line of credit under which the Company may borrow up to $4.0 million of non-collateralized debt. Interest on borrowings under the line of credit is based on the People’s Bank of China benchmark lending rates multiplied by 1.05. The Company had no outstanding borrowings on this line of credit at December 31, 2016. The Company’s debt of $1.1 million and $0.8 million at December 31, 2016 and 2015, respectively, consisted of capital leases, collateralized by vehicles, payable over 12 months in monthly installments at various effective interest rates, with final payments ending on or before December 31, 2016. At December 31, 2016 and 2015, the assets acquired under capital leases had a net book value of $4.5 million and $3.6 million, net of accumulated depreciation of $4.5 million and $4.4 million, respectively. Interest expense for capital lease obligations amounted to $0.07 million, $0.03 million and $0.03 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES The Company is obligated under various non-cancellable lease agreements providing for office space, warehouse space, and automobiles that expire at various dates through the year 2031. Rent expense under operating leases was $9.9 million, $10.7 million and $6.8 million for the years ended December 31, 2016, 2015 and 2014, respectively. Future minimum rental payments at December 31, 2016 under the operating leases referred to above are as follows: Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter $ Contractual obligations – The Company has the following contractual obligations related primarily to sponsorships and other commitments as of December 31, 2016: Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter - $ Purchase Commitments – The Company has purchase commitments aggregating approximately $47.0 million at December 31, 2016, which represent 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 purchases various raw material items, including, but not limited to, flavors, ingredients, dietary ingredients, containers, milk, glucose, sucralose, cream and protein, from a limited number of resources. An interruption in supply from any of such resources could result in the Company’s inability to produce certain products for limited or possibly extended periods of time. The aggregate value of purchases from suppliers of such limited resources described above for the years ended December 31, 2016, 2015 and 2014 was $205.9 million, $332.0 million and $292.8 million, respectively. 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 has begun construction of an approximately 1,000,000 square-foot building, which it hopes to have LEED certified, 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 of which $33.7 million remained outstanding as of December 31, 2016. Guarantees – The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) certain agreements with the Company’s officers, directors and employees under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship, (ii) certain distribution or purchase agreements under which the Company may have to indemnify the Company’s customers from any claim, liability or loss arising out of any actual or alleged injury or damages suffered in connection with the consumption or purchase of the Company’s products or the use of Company trademarks, and (iii) certain real estate leases, under which the Company may be required to indemnify property owners for liabilities and other claims arising from the Company’s use of the applicable premises. The terms of such obligations vary and typically, a maximum obligation is not explicitly stated. Generally, the Company believes that its insurance coverage is adequate to cover any resulting liabilities or claims. 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. On January 13, 2017, the Court issued an opinion in which it agreed with certain Company arguments regarding the scope of the subpoena and the Attorney General’s investigation, but denied the motion to quash and granted the Attorney General’s cross-motion to compel compliance. 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.” 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. (“UCL”), styled People Of The State Of California ex rel. Dennis Herrera, San Francisco City Attorney v. Monster Beverage Corporation , in San Francisco Superior Court. The City Attorney alleged that the Company (1) mislabeled its products as a dietary supplement, in violation of California’s Sherman Food, Drug, and Cosmetic Law, California Health & Safety Code section 109875, et seq .; (2) is selling an “adulterated” product because caffeine is not generally recognized as safe due to the alleged lack of scientific consensus concerning the safety of the levels of caffeine in the Company’s products; and (3) is engaged in unfair and misleading business practices because its marketing (a) does not disclose the health risks that energy drinks pose for children and teens, (b) fails to warn against and promotes unsafe consumption, (c) implicitly promotes mixing of energy drinks with alcohol or drugs and (d) is deceptive because it includes unsubstantiated claims about the purported special benefits of its “killer” ingredients and “energy blend.” The City Attorney sought a declaration that the Company has engaged in unfair and unlawful business acts and practices in violation of the UCL, an injunction from performing or proposing to perform any acts in violation of the UCL, restitution and civil penalties. 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. The City Attorney and the Company settled the action in January 2017, on terms acceptable to the Company. The settlement does not include any penalty or fine under the UCL; any finding or admission of liability or wrongdoing; or any change to the formulation of Monster Energy® drinks or to whom the drinks may be sold. In consideration for a release of claims and dismissal of the action with prejudice, the Company agreed to maintain various current marketing and labeling practices for its energy drink products through December 31, 2018. Furthermore, from time to time in the normal course of business, the Company is named in other litigation, including consumer class actions, intellectual property litigation and claims from prior 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 December 31, 2016, the Company’s consolidated balance sheet includes accrued loss contingencies of approximately $2.8 million. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12 Months Ended |
Dec. 31, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12. ACCUMULATED OTHER COMPREHENSIVE LOSS The components of accumulated other comprehensive loss are as follows at December 31: 2016 2015 Accumulated net unrealized loss on available-for-sale securities $ $ - Foreign currency translation adjustments, net of tax Total accumulated other comprehensive loss $ $ |
TREASURY STOCK PURCHASE
TREASURY STOCK PURCHASE | 12 Months Ended |
Dec. 31, 2016 | |
TREASURY STOCK PURCHASE | |
TREASURY STOCK PURCHASE | 13. TREASURY STOCK PURCHASE On April 28, 2016, the Company’s 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 this tender offer in May 2016. On June 15, 2016, the Company accepted for payment an aggregate of 38.5 million shares of common stock at a purchase price of $52.00 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 consolidated balance sheet at December 31, 2016. 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 shares of common stock (the “August 2016 Repurchase Plan”). During the year ended December 31, 2016, the Company purchased 5.8 million shares of common stock at an average purchase price of $43.40 per share, for a total amount of $249.9 million (excluding broker commissions), which exhausted the availability under the August 2016 Repurchase Plan. Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016. During the year ended December 31, 2016, 56,820 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 $2.6 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 consolidated balance sheet at December 31, 2016. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 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 December 31, 2016: the Monster Beverage Corporation 2011 Omnibus Incentive Plan (the “2011 Omnibus Incentive Plan”), including the Monster Beverage Deferred Compensation Plan (the “Deferred Compensation Plan”) as a sub plan thereunder, and the 2009 Monster Beverage Corporation Stock Incentive Plan for Non-Employee Directors (the “2009 Directors Plan”). The 2011 Omnibus Incentive Plan permits the granting of options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other stock-based awards up to an aggregate of 43,500,000 shares of the common stock of the Company to employees or consultants of the Company and its subsidiaries. Shares authorized under the 2011 Omnibus Incentive Plan are reduced by 2.16 shares for each share granted or issued with respect to a Full Value Award. A Full Value Award is an award other than an incentive stock option, a non-qualified stock option, or a stock appreciation right, which is settled by the issuance of shares. Options granted under the 2011 Omnibus Incentive Plan may be incentive stock options under Section 422 of the Internal Revenue Code, as amended, or non-qualified stock options. The Compensation Committee of the Board of Directors (the “Compensation Committee”) has sole and exclusive authority to grant stock awards to all employees who are not new hires and to all new hires who are subject to Section 16 of the Exchange Act. The Compensation Committee and the Executive Committee of the Board of Directors (the “Executive Committee”) each independently has the authority to grant stock awards to new hires who are not Section 16 employees. Awards granted by the Executive Committee are not subject to approval or ratification by the Board or the Compensation Committee. Options granted under the 2011 Omnibus Incentive Plan generally vest over a five-year period from the grant date and are generally exercisable up to 10 years after the grant date. As of December 31, 2016, 18,799,813 shares of the Company’s common stock have been granted, net of cancellations, and 21,120,151 shares (as adjusted for Full Value Awards) of the Company’s common stock remain available for grant under the 2011 Omnibus Incentive Plan. In 2016, the Company adopted the Deferred Compensation Plan (as a sub plan to the 2011 Omnibus Incentive Plan), pursuant to which eligible employees may elect to defer cash and/or equity based compensation and to receive the deferred amounts, together with an investment return (positive or negative), either at a pre-determined time in the future or upon termination of their employment with the Company or its subsidiaries or affiliates that are participating employers under the Deferred Compensation Plan, as provided under the Deferred Compensation Plan and in relevant deferral elections. Deferrals under the Deferred Compensation Plan are unfunded and unsecured. As of December 31, 2016, there were no deferrals under the Deferred Compensation Plan. As of February 10, 2017, deferrals under the Deferred Compensation Plan are solely comprised of cash compensation and equity compensation coming due after March, 2018 and are not material in the aggregate. The 2009 Directors Plan permits the granting of options, stock appreciation rights (each, a “SAR”), and other stock-based awards to purchase up to an aggregate of 4,800,000 shares of common stock of the Company to non-employee directors of the Company. The 2009 Directors Plan is administered by the Board of Directors. Each award granted under the 2009 Directors Plan will be evidenced by a written agreement and will contain the terms and conditions that the Board of Directors deems appropriate. The Board of Directors may grant such awards on the last business day prior to the date of the annual meeting of stockholders. Any award granted under the 2009 Directors Plan will vest, with respect to 100% of such award, on the last business day prior to the date of the annual meeting, in the calendar year following the calendar year in which such award is granted. The Board of Directors may determine the exercise price per share of the Company’s common stock under each option, but such price may not be less than 100% of the closing price of the Company’s common stock on the date an option is granted. Option grants may be made under the 2009 Directors Plan for 10 years from June 4, 2009. The Board of Directors may also grant SARs, independently, or in connection with an option grant. The Board of Directors may determine the exercise price per share of the Company’s common stock under each SAR, but such price may not be less than the greater of (i) the fair market value of a share on the date the SAR is granted and (ii) the price of the related option, if the SAR is granted in connection with an option grant. Additionally, the Board of Directors may grant other stock-based awards, which include awards of shares of the Company’s common stock, restricted shares of the Company’s common stock, and awards that are valued based on the fair market value of shares of the Company’s common stock. SARs and other stock-based awards are subject to the general provisions of the 2009 Directors Plan. The Board of Directors may amend or terminate the 2009 Directors Plan at any time. As of December 31, 2016, 286,551 shares of the Company’s common stock had been granted under the 2009 Directors Plan, and 4,513,449 shares of the Company’s common stock remained available for grant. The Company recorded $45.8 million, $32.7 million and $28.6 million of compensation expense relating to stock options, restricted stock awards, SARs and restricted stock units during the years ended December 31, 2016, 2015 and 2014, respectively. The excess tax benefit realized 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 years ended December 31, 2016, 2015 and 2014 was $20.8 million, $314.7 million and $11.9 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 $20.8 million in net income for the year ended December 31, 2016. The excess tax benefits for the years ended December 31, 2015 and 2014 of $314.7 million and $11.9 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 December 31, 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: 2016 2015 2014 Dividend yield Expected volatility Risk-free interest rate Expected term 6.3 Years 5.8 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 $ $ Granted 01/01/16 - 03/31/16 $ Granted 04/01/16 - 06/30/16 $ Granted 07/01/16 - 09/30/16 $ Granted 10/01/16 - 12/31/16 $ Exercised $ Cancelled or forfeited $ Outstanding at December 31, 2016 $ $ Vested and expected to vest in the future at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ The following table summarizes information about stock options outstanding and exercisable at December 31, 2016: Options Outstanding Options Exercisable Range of Exercise Number Weighted Weighted Number Weighted $4.51 - $4.51 $ $ $5.29 - $5.29 $ $ $5.61 - $5.61 $ $ $5.94 - $5.94 $ $ $6.02 - $15.71 $ $ $15.88 - $22.26 $ $ $23.00 - $36.05 $ $ $37.10 - $43.64 $ $ $43.99 - $43.99 $ - $ $44.73 - $53.24 $ $ $ $ The weighted-average grant-date fair value of options granted during the years ended December 31, 2016, 2015 and 2014 was $16.90 per share, $16.73 per share and $10.50 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016, 2015 and 2014 was $70.6 million, $870.1 million and $47.1 million, respectively. Cash received from option exercises under all plans for the years ended December 31, 2016, 2015 and 2014 was approximately $16.4 million, $49.2 million and $17.2 million, respectively. At December 31, 2016, there was $99.6 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 3.1 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. Total cash paid to settle restricted stock unit liabilities and the increase in the liabilities for future cash settlements during the years ended December 31, 2016 and 2015 were not material. The following table summarizes the Company’s activities with respect to non-vested restricted stock units as follows: Number of Weighted Non-vested at January 1, 2016 $ Granted 01/01/16- 03/31/16 $ Granted 04/01/16- 06/30/16 $ Granted 07/01/16- 09/30/16 - $ - Granted 10/01/16- 12/31/16 - $ - Vested $ Forfeited/cancelled $ Non-vested at December 31, 2016 $ The weighted-average grant-date fair value of restricted stock units and restricted stock awards granted during the years ended December 31, 2016, 2015 and 2014 was $44.71, $45.50 and $28.13 per share, respectively. As of December 31, 2016, 0.5 million of restricted stock units are expected to vest. At December 31, 2016, total unrecognized compensation expense relating to non-vested restricted stock awards and non-vested restricted stock units was $13.9 million, which is expected to be recognized over a weighted-average period of 1.6 years. Employee and Non-Employee Share-Based Compensation Expense The table below shows the amounts recognized in the consolidated financial statements for the twelve-months ended December 31, 2016, 2015 and 2014 for share-based compensation related to employees and non-employees. Employee and non-employee share-based compensation expense of $45.8 million for the year ended December 31, 2016 is comprised of $8.0 million that relates to incentive stock options and $37.8 million that relates to non-qualified stock options and restricted units and awards. Employee and non-employee share-based compensation expense of $32.7 million for the year ended December 31, 2015 is comprised of $6.2 million that relates to incentive stock options and $26.5 million that relates to non-qualified stock options and restricted units and awards. Employee and non-employee share-based compensation expense of $28.6 million for the year ended December 31, 2014 is comprised of $4.8 million that relates to incentive stock options and $23.8 million that relates to non-qualified stock options and restricted units and awards. 2016 2015 2014 Operating expenses $ $ $ Total employee and non-employee share-based compensation expense included in income, before income tax Less: Amount of income tax benefit recognized in earnings Amount charged against net income $ $ $ |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
INCOME TAXES | 15. INCOME TAXES The domestic and foreign components of the Company’s income before provision for income taxes are as follows: Year Ended December 31, 2016 2015 2014 Domestic* $ $ $ Foreign* Income before provision for income taxes $ $ $ *After intercompany royalties, management fees and interest charges from the Company’s domestic to foreign entities of $25.6 million, $29.4 million and $34.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. Components of the provision for income taxes are as follows: Year Ended December 31, 2016 2015 2014 Current: Federal $ $ $ State Foreign Deferred: Federal State Foreign Valuation allowance $ $ $ The differences in the total provision for income taxes that would result from applying the 35% federal statutory rate to income before provision for income taxes and the reported provision for income taxes are as follows: Year Ended December 31, 2016 2015 2014 U.S. Federal tax expense at statutory rates $ $ $ State income taxes, net of federal tax benefit Permanent differences Stock Based Compensation Domestic production deduction - Other Foreign rate differential Valuation allowance $ $ $ Major components of the Company’s deferred tax assets (liabilities) at December 31 are as follows: 2016 2015 Deferred Tax Assets: Reserve for sales returns $ $ Reserve for doubtful accounts Reserve for inventory obsolescence Reserve for marketing development fund Capitalization of inventory costs State franchise tax - current Accrued compensation Accrued other liabilities Deferred revenue Stock-based compensation Securities impairment Foreign net operating loss carryforward Prepaid supplies Termination payments Capital loss carryforward Elimination Company Profit - Gain on intercompany transfer Total gross deferred tax assets $ $ Deferred Tax Liabilities: Amortization of trademarks $ $ Intangibles State franchise tax - deferred Other deferred tax liabilities Depreciation Total gross deferred tax liabilities Valuation Allowance Net deferred tax assets $ $ During the years ended December 31, 2016, 2015 and 2014, the Company established full valuation allowances against certain deferred tax assets, resulting from cumulative net operating losses incurred by certain foreign subsidiaries of the Company. The effect of the valuation allowances and the subsequent related impact on the Company’s overall tax rate was to increase (decrease) the Company’s provision for income taxes by $8.9 million, ($0.5) million and ($4.4) million for the years ended December 31, 2016, 2015 and 2014, respectively. At December 31, 2016, the Company had net operating loss carryforwards of approximately $127.3 million. Of this amount, $105.3 million may be carried forward indefinitely. The remaining $22.0 million of net operating loss carryforwards will begin to expire in 2017. The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2016, 2015 and 2014: Gross Unrealized Tax Balance at January 1, 2014 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years - Balance at December 31, 2014 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years Balance at December 31, 2015 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years Balance at December 31, 2016 $ The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2016, the Company had accrued approximately $0.1 million in interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions it would not have a significant impact on the Company’s effective tax rate. It is expected that the amount of unrecognized tax benefit change 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. In October 2016, the Internal Revenue Service (the “IRS”) began its examination of the Company’s U.S. federal income tax returns for the year ended December 31, 2014. In August 2015, the IRS began its examination of the Company’s U.S. federal income tax returns for the years ended December 31, 2012 and 2013. The Company is in various stages of examination with certain states and certain foreign jurisdictions. The 2012, 2013, 2014 and 2015 U.S. federal income tax returns are subject to examination by the IRS. State income tax returns are subject to examination for the 2012 through 2015 tax years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 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 for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands): 2016 2015 2014 Weighted-average shares outstanding: Basic Dilutive securities Diluted For the years ended December 31, 2016, 2015 and 2014, options and awards outstanding totaling 5.7 million shares, 3.0 million shares and 2.1 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. |
EMPLOYEE BENEFIT PLAN
EMPLOYEE BENEFIT PLAN | 12 Months Ended |
Dec. 31, 2016 | |
EMPLOYEE BENEFIT PLAN | |
EMPLOYEE BENEFIT PLAN | 17. EMPLOYEE BENEFIT PLAN Employees of the Company may participate in the Monster Beverage Corporation 401(k) Plan, a defined contribution plan, which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute up to 15% of their pretax salary up to statutory limits. The Company contributes 50% of the employee contribution, up to 6% of each employee’s earnings, which vest 25% each year for four years after the first anniversary date. Matching contributions were $2.0 million, $0.7 million and $0.6 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 18. 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® drinks (previously the Finished Products segment) as well as Mutant® Super Soda drinks, (ii) Strategic Brands segment (“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 segment (“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 drinks primarily to bottlers and full service beverage distributors. In some cases, the Company sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, 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, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold to other bottlers, full service distributors or retailers, including, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, food service customers, drug stores and the military. To a lesser extent, the Company’s Strategic Brands segment generates net operating revenues by selling ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margins than the Strategic Brands segment. Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided for in the Company’s reportable segments as management does not measure or allocate such assets on a segment basis. The net revenues derived from the Company’s reportable segments and other financial information related thereto for the years ended December 31, 2016, 2015 and 2014 are as follows: 2016 2015 2014 Net sales: Monster Energy® Drinks (1) $ $ $ Strategic Brands - Other Corporate and unallocated - - - $ $ $ 2016 2015 2014 Operating Income: Monster Energy® Drinks (1) (2) $ $ $ Strategic Brands - Other (3) Corporate and unallocated $ $ $ 2016 2015 2014 Income before tax: Monster Energy® Drinks (1) (2) $ $ $ Strategic Brands - Other (3) Corporate and unallocated $ $ $ (1) Includes $40.3 million, $62.8 million and $15.0 million for the years ended December 31, 2016, 2015 and 2014, respectively, related to the recognition of deferred revenue. (2) Includes $79.8 million, $224.0 million and ($0.2) million for the years ended December 31, 2016, 2015 and 2014, respectively, related to distributor termination costs. (3) Includes $161.5 million gain on the sale of Monster Non-Energy for the year ended December 31, 2015. 2016 2015 2014 Depreciation and amortization Monster Energy® Drinks $ $ $ Stategic Brands - Other Corporate and unallocated $ $ $ Corporate and unallocated expenses were $228.5 million for the year ended December 31, 2016 and included $128.0 million of payroll costs, of which $45.8 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $66.3 million of professional service expenses, including accounting and legal costs, $6.0 million of insurance costs and $28.2 million of other operating expenses. Corporate and unallocated expenses were $197.5 million for the year ended December 31, 2015 and included $109.8 million of payroll costs, of which $32.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $60.8 million of professional service expenses, including accounting and legal costs, $7.0 million of insurance costs and $19.9 million of other operating expenses. Corporate and unallocated expenses were $164.3 million for the year ended December 31, 2014 and included $86.2 million of payroll costs, of which $28.6 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $43.8 million of professional service expenses, including accounting and legal costs, $7.4 million of insurance costs and $26.9 million of other operating expenses. TCCC, through the TCCC Subsidiaries, accounted for approximately 41%, 43% and 29% of the Company’s net sales for the years ended December 31, 2016, 2015 and 2014, respectively. Net sales to customers outside the United States amounted to $733.7 million, $580.3 million and $534.2 million for the years ended December 31, 2016, 2015 and 2014, respectively. Such sales were approximately 24%, 21% and 22% of net sales for the years ended December 31, 2016, 2015 and 2014, respectively. Goodwill and other intangible assets for the Company’s reportable segments as of December 31, 2016 and 2015 are as follows: 2016 2015 Goodwill and other intangible assets: Monster Energy® Drinks $ $ Strategic Brands Other - Corporate and unallocated - - $ $ |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 19. 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, calculated on sales to the TCCC Affiliates for the years ended December 31, 2016, 2015 and 2014, were $28.2 million, $18.0 million and $1.0 million, respectively. TCCC commissions, calculated 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 years ended December 31, 2016, 2015 and 2014 were $1,259.7 million, $1,151.7 million and $717.6 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 $26.2 million and $16.0 million for the years ended December 31, 2016 and 2015, respectively. Certain TCCC Subsidiaries also contract manufacture certain of the Company’s Monster Energy® brand energy drinks as well as Mutant® Super Soda drinks. Contract manufacturing expenses were $9.6 million, $6.9 million and $6.6 million for the years ended December 31, 2016, 2015 and 2014, respectively. Accounts receivable, accounts payable and accrued promotional allowances related to the TCCC Subsidiaries are as follows at: December 31, December 31, Accounts receivable, net $ $ Accounts payable $ $ Accrued promotional allowances $ $ 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 years ended December 31, 2016, 2015 and 2014 were $1.5 million, $1.9 million and $0.6 million, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 20. SUBSEQUENT EVENTS On February 28, 2017, our Board of Directors authorized a new share repurchase program for the purchase of up to $500.0 million of our outstanding common stock (the “February 2017 Repurchase Plan”). No shares have been repurchased pursuant to the February 2017 Repurchase Plan. |
QUARTERLY FINANCIAL DATA (Unaud
QUARTERLY FINANCIAL DATA (Unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL DATA (Unaudited) | |
QUARTERLY FINANCIAL DATA (Unaudited) | 21. QUARTERLY FINANCIAL DATA (Unaudited) Net Income per Common Net Sales Gross Profit Net Income Basic Diluted Quarter ended: March 31, 2016 $ $ $ $ $ June 30, 2016 $ $ September 30, 2016 $ $ December 31, 2016 $ $ $ $ $ Quarter ended: March 31, 2015 $ $ $ $ $ June 30, 2015 $ $ September 30, 2015 $ $ December 31, 2015 $ $ $ $ $ Certain of the figures reported above may differ from previously reported figures for individual quarters due to rounding. |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | |
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | Description Balance at Charged to Deductions Balance at Allowance for doubtful accounts, sales returns and cash discounts: 2016 $ $ $ $ 2015 $ $ $ $ 2014 $ $ $ $ Allowance on Deferred Tax Assets and Unrecognized Tax Benefits: 2016 $ $ $ - $ 2015 $ $ $ - $ 2014 $ $ $ - $ |
ORGANIZATION AND SUMMARY OF S33
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
ADDITIONS TO SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | Basis of Presentation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its consolidated subsidiaries. |
Principles of Consolidation | Principles of Consolidation – The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation. |
Adjustment | Adjustment – Subsequent to the issuance of the Company’s consolidated financial statements on Form 10-Q for the quarterly period ended June 30, 2016, management concluded that its presentation of prepaid 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, deferred income taxes increased by $120.8 million, prepaid income taxes decreased by $16.9 million and income taxes payable decreased by $103.9 million, respectively, in the comparable consolidated statement of cash flows for the year ended December 31, 2015. The adjustment had no impact on total net cash provided by operating activities. |
Business Combinations | Business Combinations – Business acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”. FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination. |
Cash and Cash Equivalents | Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future. |
Investments | Investments – The Company’s investments in debt securities are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive loss as a separate component of stockholders’ equity. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available (see Note 4). Under FASB ASC 320-10-35, a security is considered to be other-than-temporarily impaired if the present value of cash flows expected to be collected are less than the security’s amortized cost basis (the difference being defined as the “Credit Loss”) or if the fair value of the security is less than the security’s amortized cost basis and the investor intends, or will be required, to sell the security before recovery of the security’s amortized cost basis. If an other-than-temporary impairment exists, the charge to earnings is limited to the amount of Credit Loss if the investor does not intend to sell the security, and will not be required to sell the security, before recovery of the security’s amortized cost basis. Any remaining difference between fair value and amortized cost is recognized in other comprehensive loss, net of applicable taxes. The Company evaluates whether the decline in fair value of its investments is other-than-temporary at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether a loss is temporary include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and our intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value. |
Accounts Receivable | Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its consolidated balance sheets, the Company has presented accounts receivable, net of promotional allowances, only for those customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis. |
Inventories | Inventories – Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value). |
Property and Equipment | Property and Equipment – Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, and vehicles is based on their estimated useful lives (three to ten years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income. |
Goodwill | Goodwill – The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company determines that the fair value is less than the carrying value, the Company will use a two-step process to determine the amount of goodwill impairment. The first step requires comparing the fair value of the reporting unit to its net book value, including goodwill. A potential impairment exists if the fair value of the reporting unit is lower than its net book value. The second step of the process, performed only if a potential impairment exists, involves determining the difference between the fair value of the reporting unit’s net assets, other than goodwill, and the fair value of the reporting unit. An impairment charge is recognized for the excess of the carrying value of goodwill over its implied fair value. For the fiscal years ended December 31, 2016, 2015 and 2014 there were no impairments recorded. |
Other Intangibles | Other Intangibles – Other Intangibles are comprised primarily of trademarks that represent the Company’s exclusive ownership of the Monster Energy®, ®, Monster Rehab®, Java Monster®, Unleash the Beast®, Monster Energy Extra Strength Nitrous Technology®, Muscle Monster®, Mega Monster Energy®, Punch Monster®, Juice Monster®, M3®, Ubermonster®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra®, Play® and Power Play®, Gladiator®, Relentless®, Samurai® and BPM® trademarks, all used in connection with the manufacture, sale and distribution of beverages. The Company also owns in its own right a number of other trademarks in the United States, as well as in a number of countries around the world. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the fiscal years ended December 31, 2016, 2015 and 2014 there were no impairments recorded. |
Long-Lived Assets | Long-Lived Assets – Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. For the fiscal years ended December 31, 2016, 2015 and 2014, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. |
Foreign Currency Translation and Transactions | Foreign Currency Translation and Transactions – The accounts of the Company’s foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive loss in stockholders’ equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive loss in stockholders’ equity. During the years ended December 31, 2016, 2015 and 2014, 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 outstanding as of December 31, 2016 have terms of one month or less. We do 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 FASB ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in other expense, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2016, 2015 and 2014, aggregate foreign currency transaction losses, including the gains or losses on forward currency exchange contracts, amounted to $9.7 million, $5.5 million and $3.4 million, respectively, and have been recorded in other expense, net in the accompanying consolidated statements of income. |
Revenue Recognition | Revenue Recognition – The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Generally, ownership of and title to the Company’s finished products passes to customers upon delivery of the products to customers. Certain of the Company’s distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, ownership of and title to the Company’s products that are co-packed on the Company’s behalf by those co-packers who are also distributors, passes to such distributors when the Company is notified by them that they have taken transfer or possession of the relevant portion of the Company’s finished goods. Revenue for the Strategic Brands segment is generally recognized when title to the concentrate is transferred to the customer. In particular, title to the concentrate usually passes upon shipment to the customers’ locations, as determined by the specific sales terms of the transactions. Net sales have been determined after deduction of promotional and other allowances in accordance with FASB ASC 605-50. The Company’s promotional and other allowances are calculated based on various programs with its distributors and retail customers, and accruals are established during the year for the anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expense and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Amounts received pursuant to new and/or amended distribution agreements entered into with certain distributors, relating to the costs associated with terminating the Company’s prior distributors, are accounted for as revenue ratably over the anticipated life of the respective distribution agreement, generally 20 years. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience. |
Cost of Sales | Cost of Sales – Cost of sales consists of the costs of concentrates and/or beverage bases, the costs of raw materials utilized in the manufacture of products, co-packing fees, repacking fees, in-bound freight charges, as well as certain internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company’s finished products and certain quality control costs. Raw materials account for the largest portion of the cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials. |
Operating Expenses | Operating Expenses – Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company’s prior distributors, depreciation and other general and administrative costs. |
Freight-Out Costs | Freight-Out Costs – For the years ended December 31, 2016, 2015 and 2014, freight-out costs amounted to $83.6 million, $87.0 million and $92.7 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income. |
Advertising and Promotional Expenses | Advertising and Promotional Expenses – The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company’s promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $270.6 million, $209.7 million and $171.5 million for the years ended December 31, 2016, 2015 and 2014, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income. |
Income Taxes | Income Taxes – The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. |
Stock-Based Compensation | Stock-Based Compensation – The Company accounts for stock-based compensation under the provisions of FASB ASC 718. 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. 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. 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. (See Note 14). |
Net Income Per Common Share | Net Income Per Common Share – In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable. |
Concentration of Risk | Concentration of Risk – Certain of the Company’s products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company’s revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production. TCCC, through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 41%, 43% and 29% of the Company’s net sales for the years ended December 31, 2016, 2015 and 2014, respectively. |
Credit Risk | Credit Risk – The Company sells its products nationally and internationally, primarily to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains and food service customers. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management’s expectations. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments – The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments. |
Use of Estimates | Use of Estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts 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 period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements – In January 2017, the FASB issued ASU No. 2017-01 , “ Business Combinations (Topic 805): Clarifying the Definition of a Business ” , which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. This amendment is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2017-01 on its financial position, results of operations and liquidity. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles and Other (Topic 350): Simplifying the Test for Goodwill Impairment ” , which eliminates the requirement to calculate the implied fair value of goodwill but rather require an entity to record an impairment charge based on the excess of a reporting unit’s carrying value over its fair value. This amendment is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of ASU No. 2017-04 on its financial position, results of operations and liquidity. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”, in an effort to improve the accounting for the income tax consequences of intra-equity transfers of assets other than inventory. Current GAAP prohibits the recognition of current and deferred income taxes for an intra-entity asset transfer until the asset has been sold to an outside party. FASB ASU No. 2016-16 establishes the requirement that an entity recognize the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU No. 2016-16 is effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those annual periods. Earlier application is permitted as of the beginning of an interim or annual reporting period, with any adjustments reflected as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact of ASU No. 2016-16 on its financial position, results of operations and liquidity. 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 (Topic 718): 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 year ended December 31, 2015 and 2014, net cash provided by operating activities increased and net cash provided by financing activities decreased by $314.8 million and $11.9 million, respectively, as a result of such retrospective adjustment. For the year ended December 31, 2016, the Company recorded $20.8 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 May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, 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. |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACQUISITIONS AND DIVESTITURES | |
Summary of AFF Transaction consideration allocation | Identifiable Consideration Intangibles - flavor formulas (non-amortizing)¹ $ $ - Intangibles - flavor formulas (amortizing) - Intangibles - customer relationships (amortizing) - Intangibles - trademarks (amortizing) - Intangibles - other (amortizing) - Working capital (excluding inventory) - Inventory - Property and equipment, net - Favorable leases - Goodwill - Cash - Total $ $ 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 | Year Ended December 31, 2015 Pro Forma Adjustments Monster KO Energy² Disposal of Other Pro Forma Net sales $ 2,722,564 $ 138,127 $ (60,778) $ 8,887 $ 2,808,800 Net income 4 Year Ended December 31, 2014 Pro Forma Adjustments Monster KO Energy Disposal of Other Pro Forma Net sales $ 2,464,867 $ 342,432 $ (150,374) $ 19,900 $ 2,676,825 Net income 4 ¹Includes net sales of $143.3 million and net income of $55.2 million (tax affected) related to the acquired KO Energy assets since the date of acquisition, June 12, 2015. ²Includes results through June 12, 2015, the date the TCCC Transaction was finalized. Net income for KO Energy includes only net revenues and direct operating expenses, rather than full “carve-out” financial statements, because such financial information 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. ³Includes results through June 12, 2015. Net income includes gain recognized on the sale of Monster Non-Energy of $161.5 million. 4 The $100.6 million and $218.5 million of net income for KO Energy for the years ended December 31, 2015 and 2014, respectively, are presented before tax. The associated estimated provision for income taxes is included in the “Other” category. |
Schedule of other pro-forma adjustments | Year Ended Year Ended Net sales: Amortization of deferred revenue $ $ Net income: Amortization of deferred revenue $ $ To record sales commissions To record amortization of definite lived KO Energy intangibles To eliminate TCCC Transaction expenses Estimated provision for income taxes on pro forma adjustments Estimated provision for income taxes on KO Energy income Total $ $ ¹Includes amortization of deferred revenue, sales commissions and amortization of intangibles through June 12, 2015, the date the TCCC Transaction was consummated. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVESTMENTS | |
Summary of investments in available-for-sale and held-to-maturity | December 31, 2016 Amortized Cost Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ $ - $ - $ $ - $ - Municipal securities - - U.S. government agency securities - - Variable rate demand notes - - - - Long-term: Municipal securities - - Total $ $ - $ $ $ $ - December 31, 2015 Amortized Cost Gross Gross Fair Continuous Continuous Held-to-Maturity Short-term: Commercial paper $ $ - $ - $ $ - $ - Municipal securities - U.S. government agency securities - - U.S. Treasuries - - Long-term: Municipal securities - - U.S. government agency securities - - Total $ $ $ $ $ $ - |
Summarizes the underlying contractual maturities of the Company's investments | December 31, 2016 December 31, 2015 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ $ $ $ Municipal securities U.S. government agency securities U.S. Treasuries - - Due 1 -10 years: Municipal securities U.S. government agency securities - - Variable rate demand notes - - Due 11 - 20 years: Variable rate demand notes - - Due 21 - 30 years: Variable rate demand notes - - Total $ $ $ $ |
Schedule of net gain (loss) recognized through earnings on trading securities | 2016 2015 2014 Gain (loss) on transfer from available-for-sale to trading $ - $ - $ - Gain on trading securities sold - (Loss) gain on trading securities held - - Gain on trading securites $ - $ $ |
FAIR VALUE OF CERTAIN FINANCI36
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
Schedule of financial assets recorded at fair value on a recurring basis | December 31, 2016 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Commercial paper - - Variable rate demand notes - - Municipal securities - - U.S. government agency securities - - Foreign currency derivatives - ) - ) Total $ $ $ - $ Amounts included in: Cash and cash equivalents $ $ $ - $ Short-term investments - - Accounts receivable, net - - Investments - - Accrued liabilities - ) - ) Total $ $ $ - $ December 31, 2015 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Certificates of deposit - - Commercial paper - - U.S. Treasuries - - Municipal securities - - U.S. government agency securities - - Foreign currency derivatives - ) - ) Total $ $ $ - $ Amounts included in: Cash and cash equivalents $ $ $ - $ Short-term investments - - Accounts receivable, net - - Investments - - Accrued liabilities - ) - ) Total $ $ $ - $ |
DERIVATIVE INSTRUMENTS AND HE37
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Dec. 31, 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 | December 31, 2016 Derivatives not designated as hedging instruments under FASB ASC 815-20 Notional Amount Fair Value Balance Sheet Location Assets: Foreign currency exchange contracts: Receive CAD/pay USD $ $ Accounts receivable, net Receive SGD/pay USD Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Receive USD/pay CLP Accounts receivable, net Receive USD/pay COP Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay GBP $ $ Accrued liabilities Receive USD/pay EUR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay BRL Accrued liabilities Receive USD/pay NZD Accrued liabilities December 31, 2015 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive USD/pay GBP $ $ Accounts receivable, net Receive USD/pay ZAR Accounts receivable, net Receive USD/pay RUB Accounts receivable, net Receive USD/pay BRL Accounts receivable, net Receive USD/pay COP Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive EUR/pay USD $ $ Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay CAD Accrued liabilities Receive USD/pay JPY Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive SGD/pay USD Accrued liabilities Receive USD/pay NZD Accrued liabilities Receive USD/pay CLP Accrued liabilities |
Schedule of net gain on derivative instruments in the condensed consolidated statements of income | Amount of gain recognized in income on derivatives Year ended Derivatives not designated as hedging instruments under FASB ASC 815-20 Location of gain recognized in income on derivatives December 31, 2016 December 31, 2015 Foreign currency exchange contracts Other expense, net $ $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INVENTORIES | |
Schedule of inventories | 2016 2015 Raw materials $ $ Finished goods $ $ |
PROPERTY AND EQUIPMENT, Net (Ta
PROPERTY AND EQUIPMENT, Net (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
PROPERTY AND EQUIPMENT, Net | |
Schedule of property and equipment | 2016 2015 Land $ $ Leasehold improvements Furniture and fixtures Office and computer equipment Computer software Equipment Building Vehicles Less: accumulated depreciation and amortization ) ) $ $ |
GOODWILL AND OTHER INTANGIBLE40
GOODWILL AND OTHER INTANGIBLES ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
GOODWILL AND OTHER INTANGIBLES ASSETS | |
Schedule of Goodwill | Monster Strategic Other Total Balance at December 31, 2015 $ $ $ - $ Acquisitions - - Balance at December 31, 2016 $ $ $ - $ |
Schedule of intangibles | December 31, December 31, Amortizing intangibles $ $ Accumulated amortization ) ) Non-amortizing intangibles $ $ |
Schedule of Intangible assets future amortization expense | Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum rental payments under the operating leases | Future minimum rental payments at December 31, 2016 under the operating leases referred to above are as follows: Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter $ |
Schedule of contractual obligations related primarily to sponsorships and other commitments | Contractual obligations – The Company has the following contractual obligations related primarily to sponsorships and other commitments as of December 31, 2016: Year Ending December 31: 2017 $ 2018 2019 2020 2021 2022 and thereafter - $ |
ACCUMULATED OTHER COMPREHENSI42
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
Changes in accumulated other comprehensive loss by component, after tax | 2016 2015 Accumulated net unrealized loss on available-for-sale securities $ $ - Foreign currency translation adjustments, net of tax Total accumulated other comprehensive loss $ $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
STOCK-BASED COMPENSATION | |
Schedule of weighted-average assumptions used to estimate the fair value of options granted | 2016 2015 2014 Dividend yield Expected volatility Risk-free interest rate Expected term 6.3 Years 5.8 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 $ $ Granted 01/01/16 - 03/31/16 $ Granted 04/01/16 - 06/30/16 $ Granted 07/01/16 - 09/30/16 $ Granted 10/01/16 - 12/31/16 $ Exercised $ Cancelled or forfeited $ Outstanding at December 31, 2016 $ $ Vested and expected to vest in the future at December 31, 2016 $ $ Exercisable at December 31, 2016 $ $ |
Summary of information about stock options outstanding and exercisable | The following table summarizes information about stock options outstanding and exercisable at December 31, 2016: Options Outstanding Options Exercisable Range of Exercise Number Weighted Weighted Number Weighted $4.51 - $4.51 $ $ $5.29 - $5.29 $ $ $5.61 - $5.61 $ $ $5.94 - $5.94 $ $ $6.02 - $15.71 $ $ $15.88 - $22.26 $ $ $23.00 - $36.05 $ $ $37.10 - $43.64 $ $ $43.99 - $43.99 $ - $ $44.73 - $53.24 $ $ $ $ |
Summary of Company's activities with respect to non-vested restricted stock units | Number of Weighted Non-vested at January 1, 2016 $ Granted 01/01/16- 03/31/16 $ Granted 04/01/16- 06/30/16 $ Granted 07/01/16- 09/30/16 - $ - Granted 10/01/16- 12/31/16 - $ - Vested $ Forfeited/cancelled $ Non-vested at December 31, 2016 $ |
Schedule of employee and non-employee share-based compensation expense | 2016 2015 2014 Operating expenses $ $ $ Total employee and non-employee share-based compensation expense included in income, before income tax Less: Amount of income tax benefit recognized in earnings Amount charged against net income $ $ $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
INCOME TAXES | |
Schedule of domestic and foreign components of the Company's income before provision for income taxes | Year Ended December 31, 2016 2015 2014 Domestic* $ $ $ Foreign* Income before provision for income taxes $ $ $ *After intercompany royalties, management fees and interest charges from the Company’s domestic to foreign entities of $25.6 million, $29.4 million and $34.9 million for the years ended December 31, 2016, 2015 and 2014, respectively. |
Components of the provision for income taxes | Year Ended December 31, 2016 2015 2014 Current: Federal $ $ $ State Foreign Deferred: Federal State Foreign Valuation allowance $ $ $ |
Schedule of reconciliation of income taxes computed at statutory federal rate to total income taxes | Year Ended December 31, 2016 2015 2014 U.S. Federal tax expense at statutory rates $ $ $ State income taxes, net of federal tax benefit Permanent differences Stock Based Compensation Domestic production deduction - Other Foreign rate differential Valuation allowance $ $ $ |
Components of the Company's deferred tax assets (liabilities) | 2016 2015 Deferred Tax Assets: Reserve for sales returns $ $ Reserve for doubtful accounts Reserve for inventory obsolescence Reserve for marketing development fund Capitalization of inventory costs State franchise tax - current Accrued compensation Accrued other liabilities Deferred revenue Stock-based compensation Securities impairment Foreign net operating loss carryforward Prepaid supplies Termination payments Capital loss carryforward Elimination Company Profit - Gain on intercompany transfer Total gross deferred tax assets $ $ Deferred Tax Liabilities: Amortization of trademarks $ $ Intangibles State franchise tax - deferred Other deferred tax liabilities Depreciation Total gross deferred tax liabilities Valuation Allowance Net deferred tax assets $ $ |
Schedule of roll-forward of the Company's total gross unrecognized tax benefits, not including interest and penalties | Gross Unrealized Tax Balance at January 1, 2014 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years - Balance at December 31, 2014 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years Balance at December 31, 2015 $ Additions for tax positions related to the current year - Additions for tax positions related to the prior year - Decreases for tax positions related to prior years Balance at December 31, 2016 $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
EARNINGS PER SHARE | |
Schedule of reconciliation of the weighted average shares used in the basic and diluted earnings per common share computations | A reconciliation of the weighted average shares used in the basic and diluted earnings per common share computations for the years ended December 31, 2016, 2015 and 2014 is presented below (in thousands): 2016 2015 2014 Weighted-average shares outstanding: Basic Dilutive securities Diluted |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
SEGMENT INFORMATION | |
Schedule of net revenues and other financial information by segment | 2016 2015 2014 Net sales: Monster Energy® Drinks (1) $ $ $ Strategic Brands - Other Corporate and unallocated - - - $ $ $ 2016 2015 2014 Operating Income: Monster Energy® Drinks (1) (2) $ $ $ Strategic Brands - Other (3) Corporate and unallocated $ $ $ 2016 2015 2014 Income before tax: Monster Energy® Drinks (1) (2) $ $ $ Strategic Brands - Other (3) Corporate and unallocated $ $ $ (1) Includes $40.3 million, $62.8 million and $15.0 million for the years ended December 31, 2016, 2015 and 2014, respectively, related to the recognition of deferred revenue. (2) Includes $79.8 million, $224.0 million and ($0.2) million for the years ended December 31, 2016, 2015 and 2014, respectively, related to distributor termination costs. (3) Includes $161.5 million gain on the sale of Monster Non-Energy for the year ended December 31, 2015. 2016 2015 2014 Depreciation and amortization Monster Energy® Drinks $ $ $ Stategic Brands - Other Corporate and unallocated $ $ $ |
Schedule of goodwill and other intangible assets for the Company's reportable segments | 2016 2015 Goodwill and other intangible assets: Monster Energy® Drinks $ $ Strategic Brands Other - Corporate and unallocated - - $ $ |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSACTIONS | |
Schedule of related party transactions | December 31, December 31, Accounts receivable, net $ $ Accounts payable $ $ Accrued promotional allowances $ $ |
QUARTERLY FINANCIAL DATA (Una48
QUARTERLY FINANCIAL DATA (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
QUARTERLY FINANCIAL DATA (Unaudited) | |
QUARTERLY FINANCIAL DATA (Unaudited) | Net Income per Common Net Sales Gross Profit Net Income Basic Diluted Quarter ended: March 31, 2016 $ $ $ $ $ June 30, 2016 $ $ September 30, 2016 $ $ December 31, 2016 $ $ $ $ $ Quarter ended: March 31, 2015 $ $ $ $ $ June 30, 2015 $ $ September 30, 2015 $ $ December 31, 2015 $ $ $ $ $ |
ORGANIZATION AND SUMMARY OF S49
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Oct. 14, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Stock Split | ||||
Stock split ratio | 3 | |||
Common stock dividend percentage | 200.00% | |||
Adjustment | ||||
Deferred income taxes | $ 159,556 | $ 140,468 | ||
Prepaid income taxes | 66,550 | 18,462 | ||
Income taxes payable | 7,657 | 2,750 | ||
Goodwill | ||||
Impairment of Goodwill | 0 | 0 | $ 0 | |
Intangibles | ||||
Impairment of intangible assets | 0 | 0 | 0 | |
Foreign Currency Translation and Transactions | ||||
Foreign currency transaction losses | $ 9,700 | 5,500 | 3,400 | |
Revenue Recognition | ||||
Distribution Agreement, Revenue Recognition Period | 20 years | |||
Freight-Out Costs | ||||
Freight-out costs | $ 83,600 | 87,000 | 92,700 | |
Advertising and Promotional Expenses | ||||
Advertising and promotional expenses | 270,600 | 209,700 | 171,500 | |
Income Taxes | ||||
Tax benefits recognized for income tax positions where there is less than 50% likelihood that a tax benefit will be sustained | 0 | |||
Accounting Standards Update 2016-09: Simplifying the accounting for share-based compensation | Adjustments for New Accounting Principle | ||||
Recent Accounting Pronouncements | ||||
Net cash provided by operating activities | $ 314,800 | |||
Net cash used in financing activities | $ 11,900 | |||
Excess tax benefit from stock based compensation | $ 20,800 | |||
Minimum | ||||
Income Taxes | ||||
Percentage of likelihood below which no tax benefit is recognized in the financial statements | 50.00% | |||
Maximum | ||||
Income Taxes | ||||
Percentage of likelihood of realization of recognized tax benefit | 50.00% | |||
Coca-Cola Refreshments ("CCR") | ||||
Concentration of Risk | ||||
Percentage of net sales from major customer | 41.00% | 43.00% | 29.00% | |
Sales | Customer concentration | Direct Store Delivery ("DSD") | Coca-Cola Refreshments ("CCR") | ||||
Concentration of Risk | ||||
Percentage of net sales from major customer | 41.00% | 43.00% | 29.00% | |
Property and Equipment | Minimum | ||||
Property and Equipment | ||||
Estimated useful lives of the assets | 3 years | |||
Property and Equipment | Maximum | ||||
Property and Equipment | ||||
Estimated useful lives of the assets | 10 years | |||
Prepaid income taxes, deferred taxes and income taxes payable | ||||
Adjustment | ||||
Deferred income taxes | $ 120,800 | |||
Prepaid income taxes | (16,900) | |||
Income taxes payable | $ (103,900) |
ACQUISITION AND DIVESTITURES -
ACQUISITION AND DIVESTITURES - AFF Transaction (Details) - USD ($) $ in Thousands | Apr. 01, 2016 | Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 |
Identifiable Assets Acquired and Liabilities Assumed | ||||
Goodwill | $ 1,331,643 | $ 1,331,643 | $ 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 | 51,928 | |||
Total | 688,485 | |||
Consideration Transferred | ||||
Cash | 688,485 | |||
Total | 688,485 | |||
Increase in goodwill on account of adjustments | $ 48,000 | |||
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) | $ 570,000 |
ACQUISITIONS AND DIVESTITURES -
ACQUISITIONS AND DIVESTITURES - TCCC Transaction (Details) - Coca-Cola Transaction Asset Transfer Agreement - TCCC $ in Millions | Jun. 12, 2015USD ($)individualshares | Jan. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($)shares |
Noncash or Part Noncash Acquisitions | ||||
Number of shares issued for acquisition | shares | 102,121,602 | 35,400,000 | ||
Ownership interest (as a percent) | 16.70% | |||
Number of individuals appointed as directors | individual | 2 | |||
Cash consideration received | $ 2,150 | |||
Amount held in escrow | 125 | $ 125 | ||
Escrow Release | $ 125 | |||
Percentage of target sales transitioned | 89.00% | |||
Additional percentage of target sales achieved | 5.00% | |||
Funds in Escrow receivable | $ 62.5 | |||
40% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 375 | |||
Percentage of target sales transitioned | 40.00% | |||
50% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 312.5 | |||
Percentage of target sales transitioned | 50.00% | |||
60% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 250 | |||
Percentage of target sales transitioned | 60.00% | |||
70% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 187.5 | |||
Percentage of target sales transitioned | 70.00% | |||
80% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 125 | |||
Percentage of target sales transitioned | 80.00% | |||
90% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Escrow Release | $ 62.5 | |||
Percentage of target sales transitioned | 90.00% | |||
95% Target | ||||
Noncash or Part Noncash Acquisitions | ||||
Percentage of target sales transitioned | 95.00% |
ACQUISITIONS AND DIVESTITURES52
ACQUISITIONS AND DIVESTITURES - Proforma Financial Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 7 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | $ 753,765 | $ 787,954 | $ 827,488 | $ 680,186 | $ 645,432 | $ 756,619 | $ 693,722 | $ 626,791 | $ 3,049,393 | $ 2,722,564 | $ 2,464,867 | |
Net income | $ 172,946 | $ 191,643 | $ 184,219 | $ 163,877 | $ 138,741 | $ 174,574 | $ 229,004 | $ 4,414 | $ 712,685 | 546,733 | 483,185 | |
Gain on sale of Monster Non-Energy | 161,470 | |||||||||||
Pro forma financial information | ||||||||||||
Federal Tax Rates | 38.50% | |||||||||||
Disposal of Monster Non-Energy | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Gain on sale of Monster Non-Energy | $ 161,500 | |||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | 2,722,564 | 2,464,867 | ||||||||||
Net income | 546,733 | 483,185 | ||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Pro Forma | ||||||||||||
Pro forma financial information | ||||||||||||
Net sales | 2,808,800 | 2,676,825 | ||||||||||
Net income | 515,300 | 601,688 | ||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | KO Energy | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | 138,127 | 342,432 | ||||||||||
Net income | 100,575 | 218,456 | ||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Disposal of Monster Non-Energy | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | (60,778) | (150,374) | ||||||||||
Net income | (101,618) | (4,647) | ||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | Other | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | 8,887 | 19,900 | ||||||||||
Net income | (30,390) | (95,306) | ||||||||||
Pro forma financial information | ||||||||||||
Amortization of deferred revenue | 8,887 | 19,900 | ||||||||||
To record sales commissions | (15,470) | (38,352) | ||||||||||
To record amortization of definite lived KO Energy intangibles | (3,126) | (7,000) | ||||||||||
To eliminate TCCC Transaction expenses | 15,495 | 4,824 | ||||||||||
Estimated provision for income taxes on pro forma adjustments | 2,545 | 9,428 | ||||||||||
Estimated provision for income taxes on KO Energy income | (38,721) | (84,106) | ||||||||||
Total | $ (30,390) | $ (95,306) | ||||||||||
Coca-Cola Transaction Asset Transfer Agreement | TCCC | KO Energy | ||||||||||||
Noncash or Part Noncash Acquisitions | ||||||||||||
Net sales | 143,300 | |||||||||||
Net income | $ 55,200 |
INVESTMENTS - HTM & AFS (Detail
INVESTMENTS - HTM & AFS (Details) - USD ($) $ in Thousands | 7 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Available-for-sale | ||
Amortized Cost | $ 223,144 | |
Gross Unrealized Holding Losses | 196 | |
Fair Value | 222,948 | |
Continuous Unrealized Loss Position less than 12 Months | 196 | |
Held-to-Maturity | ||
Amortized Cost | $ 759,958 | |
Gross Unrealized Holding Gains | 63 | |
Gross Unrealized Holding Losses | 296 | |
Fair Value | 759,725 | |
Continuous Unrealized Loss Position less than 12 Months | 296 | |
Remaining held to maturity securities available for sale | 43,700 | |
Short-term | Commercial paper | ||
Available-for-sale | ||
Amortized Cost | 40,382 | |
Fair Value | 40,382 | |
Held-to-Maturity | ||
Amortized Cost | 3,978 | |
Fair Value | 3,978 | |
Short-term | Municipal securities | ||
Available-for-sale | ||
Amortized Cost | 140,379 | |
Gross Unrealized Holding Losses | 181 | |
Fair Value | 140,198 | |
Continuous Unrealized Loss Position less than 12 Months | 181 | |
Held-to-Maturity | ||
Amortized Cost | 709,207 | |
Gross Unrealized Holding Gains | 63 | |
Gross Unrealized Holding Losses | 192 | |
Fair Value | 709,078 | |
Continuous Unrealized Loss Position less than 12 Months | 192 | |
Short-term | U.S. government agency securities | ||
Available-for-sale | ||
Amortized Cost | 26,057 | |
Gross Unrealized Holding Losses | 6 | |
Fair Value | 26,051 | |
Continuous Unrealized Loss Position less than 12 Months | 6 | |
Held-to-Maturity | ||
Amortized Cost | 23,369 | |
Gross Unrealized Holding Losses | 58 | |
Fair Value | 23,311 | |
Continuous Unrealized Loss Position less than 12 Months | 58 | |
Short-term | Variable rate demand notes | ||
Available-for-sale | ||
Amortized Cost | 13,923 | |
Fair Value | 13,923 | |
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 | ||
Available-for-sale | ||
Amortized Cost | 2,403 | |
Gross Unrealized Holding Losses | 9 | |
Fair Value | 2,394 | |
Continuous Unrealized Loss Position less than 12 Months | $ 9 | |
Held-to-Maturity | ||
Amortized Cost | 11,071 | |
Gross Unrealized Holding Losses | 8 | |
Fair Value | 11,063 | |
Continuous Unrealized Loss Position less than 12 Months | 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 | Dec. 31, 2016 | Dec. 31, 2015 |
Investments | ||
Amortized Cost | $ 223,144 | $ 759,958 |
Fair Value | 222,948 | 759,725 |
Commercial paper | Less than 1 year | ||
Investments | ||
Amortized Cost | 40,382 | 3,978 |
Fair Value | 40,382 | 3,978 |
Municipal securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 140,379 | 709,207 |
Fair Value | 140,198 | 709,078 |
Municipal securities | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 2,403 | 11,071 |
Fair Value | 2,394 | 11,063 |
U.S. government agency securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 26,057 | 23,369 |
Fair Value | 26,051 | 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 | 3,917 | |
Fair Value | 3,917 | |
Variable rate demand notes | Due 11 - 20 years | ||
Investments | ||
Amortized Cost | 6,003 | |
Fair Value | 6,003 | |
Variable rate demand notes | Due 21 - 30 years | ||
Investments | ||
Amortized Cost | 4,003 | |
Fair Value | $ 4,003 |
INVESTMENTS - Trading Securitie
INVESTMENTS - Trading Securities (Details) - Auction rate securities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Investments | ||
Gain on trading securities sold | $ 250 | $ 978 |
(Loss) gain on trading securities held | (177) | |
Gain on trading securities | $ 250 | $ 801 |
FAIR VALUE OF CERTAIN FINANCI56
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES - Assets - Recurring Basis (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | $ 377,582 | $ 2,175,417 | $ 370,323 | $ 211,349 |
Short-term investments | 220,554 | 744,610 | ||
Investments | 2,394 | 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 | 377,582 | 2,175,417 | ||
Short-term investments | 220,554 | 744,610 | ||
Accounts receivable, net | 236 | 371 | ||
Investments | 2,394 | 15,348 | ||
Accrued liabilities | (764) | (588) | ||
Assets measured at fair value | 600,002 | 2,935,158 | ||
Cash | 278,972 | 255,723 | ||
Foreign currency derivatives | (528) | (217) | ||
Money market funds | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 76,112 | 664,005 | ||
Certificates of deposit | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 85,007 | |||
Commercial paper | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 47,855 | 430,605 | ||
Variable rate demand notes | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 13,923 | |||
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 | 157,617 | 731,744 | ||
U.S. government agency securities | Total fair value | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 26,051 | 508,256 | ||
Level 1 | ||||
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | 355,084 | 919,728 | ||
Assets measured at fair value | 355,084 | 919,728 | ||
Cash | 278,972 | 255,723 | ||
Level 1 | Money market funds | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 76,112 | 664,005 | ||
Level 2 | ||||
Fair value amounts included in the carrying value of | ||||
Cash and cash equivalents | 22,498 | 1,255,689 | ||
Short-term investments | 220,554 | 744,610 | ||
Accounts receivable, net | 236 | 371 | ||
Investments | 2,394 | 15,348 | ||
Accrued liabilities | (764) | (588) | ||
Assets measured at fair value | 244,918 | 2,015,430 | ||
Foreign currency derivatives | (528) | (217) | ||
Level 2 | Certificates of deposit | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 85,007 | |||
Level 2 | Commercial paper | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 47,855 | 430,605 | ||
Level 2 | Variable rate demand notes | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | 13,923 | |||
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 | 157,617 | 731,744 | ||
Level 2 | U.S. government agency securities | ||||
Fair value amounts included in the carrying value of | ||||
Assets measured at fair value | $ 26,051 | $ 508,256 |
DERIVATIVE INSTRUMENTS AND HE57
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amount and Fair Value (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 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 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 CAD/pay USD | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | $ 22,314 | |
Fair Value, Assets | 173 | |
Derivatives not designated as hedging instruments | Receive SGD/pay USD | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 7,915 | |
Fair Value, Assets | 24 | |
Derivatives not designated as hedging instruments | Receive SGD/pay USD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,837 | |
Fair Value, Liabilities | (30) | |
Derivatives not designated as hedging instruments | Receive NOK/pay USD | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,138 | |
Fair Value, Assets | 28 | |
Derivatives not designated as hedging instruments | Receive USD/pay CLP | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 4,094 | |
Fair Value, Assets | 9 | |
Derivatives not designated as hedging instruments | Receive USD/pay CLP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,519 | |
Fair Value, Liabilities | (12) | |
Derivatives not designated as hedging instruments | Receive USD/pay COP | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,330 | 1,351 |
Fair Value, Assets | 2 | 1 |
Derivatives not designated as hedging instruments | Receive USD/pay GBP | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 18,146 | |
Fair Value, Assets | 168 | |
Derivatives not designated as hedging instruments | Receive USD/pay GBP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 7,718 | |
Fair Value, Liabilities | (57) | |
Derivatives not designated as hedging instruments | Receive USD/pay EUR | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 29,621 | |
Fair Value, Liabilities | (325) | |
Derivatives not designated as hedging instruments | Receive USD/pay AUD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 15,135 | 14,040 |
Fair Value, Liabilities | (74) | (82) |
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) | |
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 ZAR | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 17,411 | |
Fair Value, Assets | 144 | |
Derivatives not designated as hedging instruments | Receive USD/pay ZAR | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 20,405 | |
Fair Value, Liabilities | (296) | |
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 MXN | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 25,864 | 8,122 |
Fair Value, Liabilities | (4) | (15) |
Derivatives not designated as hedging instruments | Receive USD/pay BRL | Accounts receivable, net. | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,478 | |
Fair Value, Assets | 49 | |
Derivatives not designated as hedging instruments | Receive USD/pay BRL | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,138 | |
Fair Value, Liabilities | (3) | |
Derivatives not designated as hedging instruments | Receive USD/pay NZD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 2,076 | 1,978 |
Fair Value, Liabilities | $ (5) | $ (3) |
DERIVATIVE INSTRUMENTS AND HE58
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Nonhedging Designation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Derivatives not designated as hedging instruments | Foreign currency exchange contracts | Other expense, net | ||
Net gain on derivative instruments | ||
Amount of gain recognized in income on derivatives | $ 1,819 | $ 2,503 |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
INVENTORIES | ||
Raw materials | $ 58,658 | $ 52,043 |
Finished goods | 103,313 | 104,078 |
Inventories, net | $ 161,971 | $ 156,121 |
PROPERTY AND EQUIPMENT, Net (De
PROPERTY AND EQUIPMENT, Net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and equipment, net | |||
Property and equipment, gross | $ 283,252 | $ 189,874 | |
Less: accumulated depreciation and amortization | (109,909) | (92,520) | |
Property and equipment, net | 173,343 | 97,354 | |
Total depreciation and amortization expense | 30,200 | 27,000 | $ 25,300 |
Land | |||
Property and equipment, net | |||
Property and equipment, gross | 46,596 | 6,792 | |
Leasehold improvements | |||
Property and equipment, net | |||
Property and equipment, gross | 2,687 | 2,804 | |
Furniture and fixtures | |||
Property and equipment, net | |||
Property and equipment, gross | 3,635 | 3,551 | |
Office and computer equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 11,701 | 11,080 | |
Computer software | |||
Property and equipment, net | |||
Property and equipment, gross | 3,274 | 2,530 | |
Equipment | |||
Property and equipment, net | |||
Property and equipment, gross | 114,230 | 93,465 | |
Building | |||
Property and equipment, net | |||
Property and equipment, gross | 69,547 | 39,848 | |
Vehicles | |||
Property and equipment, net | |||
Property and equipment, gross | $ 31,582 | $ 29,804 |
GOODWILL AND OTHER INTANGIBLE61
GOODWILL AND OTHER INTANGIBLES ASSETS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill | |||
Goodwill, Beginning Balance | $ 1,279,715 | ||
Acquisitions | 51,928 | ||
Goodwill, Ending Balance | 1,331,643 | ||
Amortizing intangibles | 71,290 | $ 35,263 | |
Accumulated amortization | (14,535) | (3,899) | $ 400 |
Amortizing intangibles, net | 56,755 | 31,364 | |
Non-amortizing intangibles | 975,880 | 396,622 | |
Intangible, net | 1,032,635 | 427,986 | |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |||
2,017 | 11,845 | ||
2,018 | 11,845 | ||
2,019 | 11,845 | ||
2,020 | 7,963 | ||
2,021 | 4,721 | ||
2022 and thereafter | 8,536 | ||
Amortizing intangibles, net | $ 56,755 | $ 31,364 | |
Minimum | |||
Goodwill | |||
Useful life of intangible assets | 5 years | ||
Maximum | |||
Goodwill | |||
Useful life of intangible assets | 7 years | ||
Monster Energy Drinks | |||
Goodwill | |||
Goodwill, Beginning Balance | $ 641,716 | ||
Acquisitions | 51,928 | ||
Goodwill, Ending Balance | 693,644 | ||
Strategic Brands | |||
Goodwill | |||
Goodwill, Beginning Balance | 637,999 | ||
Goodwill, Ending Balance | $ 637,999 |
DISTRIBUTION AGREEMENTS (Detail
DISTRIBUTION AGREEMENTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
DISTRIBUTION AGREEMENTS | |||
Termination costs | $ 79,800 | $ 224,000 | $ (200) |
Distribution agreement, revenue recognition period | 20 years | ||
Revenue recognized | $ 26,100 | 50,500 | 7,800 |
Amortization of deferred revenue | $ 5,700 | $ 39,800 | $ 0 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Apr. 30, 2015 | |
Capital lease obligations | ||||
DEBT | ||||
Company debt consisting of capital leases | $ 1,100 | $ 800 | ||
Period over which monthly installments are payable | 12 months | |||
Assets acquired under capital leases | ||||
Interest expenses for capital lease obligations | $ 70 | 30 | $ 30 | |
Capital lease obligations | Assets acquired under capital leases | ||||
Assets acquired under capital leases | ||||
Net book value | 4,500 | 3,600 | ||
Accumulated depreciation | 4,500 | $ 4,400 | ||
Comerica | Line of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 10,000 | |||
Outstanding borrowings | $ 0 | |||
Comerica | Line of credit | Base (prime) rate | ||||
DEBT | ||||
Effective interest rate on borrowing | base (prime) rate | |||
Comerica | Line of credit | Base (prime) rate | Minimum | ||||
DEBT | ||||
Percentage to be subtracted to compute the variable rate on the debt instrument | 1.00% | |||
Comerica | Line of credit | Base (prime) rate | Maximum | ||||
DEBT | ||||
Percentage to be subtracted to compute the variable rate on the debt instrument | 1.50% | |||
Comerica | Line of credit | London Interbank Offered Rates | ||||
DEBT | ||||
Effective interest rate on borrowing | London Interbank Offered Rates | |||
Comerica | Line of credit | London Interbank Offered Rates | Minimum | ||||
DEBT | ||||
Percentage that needs to be added to compute the variable rate on the debt instrument | 1.25% | |||
Comerica | Line of credit | London Interbank Offered Rates | Maximum | ||||
DEBT | ||||
Percentage that needs to be added to compute the variable rate on the debt instrument | 1.75% | |||
Comerica | Standby letters of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 4,000 | |||
Amount outstanding | $ 0 | |||
Comerica | Standby letters of credit | Minimum | ||||
DEBT | ||||
Fee (as a percent) | 1.00% | |||
Comerica | Standby letters of credit | Maximum | ||||
DEBT | ||||
Fee (as a percent) | 1.50% | |||
HSBC China | Line of credit | ||||
DEBT | ||||
Maximum borrowing capacity | $ 4,000 | |||
Amount outstanding | $ 0 | |||
HSBC China | Line of credit | People's Bank of China | ||||
DEBT | ||||
Effective interest rate on borrowing | People's Bank of China | |||
Multiplier for calculating effective rate from benchmark rate | 1.05 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
COMMITMENTS AND CONTINGENCIES | |||
Rental expense under operating leases | $ 9,900 | $ 10,700 | $ 6,800 |
Future minimum rental payments under the operating leases | |||
2,017 | 5,677 | ||
2,018 | 1,777 | ||
2,019 | 1,231 | ||
2,020 | 1,093 | ||
2,021 | 992 | ||
2022 and thereafter | 8,012 | ||
Total | $ 18,782 |
COMMITMENTS AND CONTINGENCIES65
COMMITMENTS AND CONTINGENCIES - Contractual Obligations (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Sep. 30, 2016USD ($)ft²a | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Contractual obligations related primarily to sponsorships and other commitments | ||||
Value of purchases from suppliers of limited resources | $ 205,900 | $ 332,000 | $ 292,800 | |
Land | ||||
Contractual obligations related primarily to sponsorships and other commitments | ||||
Acres of land | a | 49 | |||
Land | Purchase Agreement | ||||
Contractual obligations related primarily to sponsorships and other commitments | ||||
Purchase agreement to acquire real estate property | $ 39,100 | |||
Guaranteed Maximum Purchase Price | $ 36,800 | |||
Guaranteed maximum construction price, remaining amount | 33,700 | |||
Building and Building Improvements | Purchase Agreement | ||||
Contractual obligations related primarily to sponsorships and other commitments | ||||
Area of real estate property | ft² | 1,000,000 | |||
Raw material items | ||||
Contractual obligations related primarily to sponsorships and other commitments | ||||
Purchase Commitments | $ 47,000 | |||
Period over which obligations will be paid | 1 year | |||
Contractual obligations | ||||
Contractual obligations related primarily to sponsorships and other commitments | ||||
2,017 | $ 91,003 | |||
2,018 | 49,133 | |||
2,019 | 8,257 | |||
2,020 | 8,130 | |||
2,021 | 6,750 | |||
Total | $ 163,273 |
COMMITMENTS AND CONTINGENCIES66
COMMITMENTS AND CONTINGENCIES - Loss Contingencies (Details) $ in Millions | Dec. 31, 2016USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Accrued loss contingencies | $ 2.8 |
ACCUMULATED OTHER COMPREHENSI67
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Components of accumulated other comprehensive loss: | ||
Accumulated net unrealized loss on available-for-sale securities | $ 193 | |
Foreign currency translation adjustments, net of tax | 23,056 | $ 21,878 |
Total accumulated other comprehensive loss | $ 23,249 | $ 21,878 |
TREASURY STOCK PURCHASE (Detail
TREASURY STOCK PURCHASE (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 15, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 28, 2016 | Aug. 02, 2016 |
Equity, Class of Treasury Stock | ||||||
Cash paid for repurchase of common stock | $ 2,252,437 | $ 807,967 | $ 8,175 | |||
Number of shares repurchased of common stock from employees in lieu of cash or withholding taxes due | 56,820 | |||||
Cash payment for repurchase of common stock from employees in lieu of cash or withholding taxes due | $ 2,600 | |||||
August 2016 Repurchase Plan | ||||||
Equity, Class of Treasury Stock | ||||||
Stock repurchase program, authorized amount | $ 250,000 | |||||
Common stock repurchased (in shares) | 5,800,000 | |||||
Average purchase price (in dollars per share) | $ 43.40 | |||||
Cash paid for repurchase of common stock | $ 249,900 | |||||
Existing share repurchase program | ||||||
Equity, Class of Treasury Stock | ||||||
Stock repurchase program, authorized amount | $ 2,000,000 | |||||
Common stock repurchased (in shares) | 38,500,000 | |||||
Average purchase price (in dollars per share) | $ 52 | |||||
Cash paid for repurchase of common stock | $ 2,000,000 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock Options (Details) $ in Millions | Jun. 04, 2009 | Dec. 31, 2016USD ($)shares | Sep. 30, 2016shares | Jun. 30, 2016shares | Mar. 31, 2016shares | Dec. 31, 2016USD ($)planshares | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) |
Stock-based compensation | ||||||||
Stock-based compensation plans | plan | 2 | |||||||
Compensation expense on share-based plans | $ | $ 45.8 | $ 32.7 | $ 28.6 | |||||
Stock options | ||||||||
Stock-based compensation | ||||||||
Common stock granted, net of cancellations (in shares) | 1,510,000 | 42,000 | 657,000 | 2,883,000 | ||||
Excess tax benefit realized for tax deductions from non-qualified stock option exercises and disqualifying dispositions of incentive stock options | $ | $ 20.8 | 314.7 | 11.9 | |||||
2011 Omnibus Incentive Plan | ||||||||
Stock-based compensation | ||||||||
Aggregate amount of common stock authorized (in shares) | 43,500,000 | 43,500,000 | ||||||
Reduction in number of shares for each share granted | 2.16 | 2.16 | ||||||
Common stock granted, net of cancellations (in shares) | 18,799,813 | |||||||
Shares available for grant | 21,120,151 | 21,120,151 | ||||||
2011 Omnibus Incentive Plan | Stock options | ||||||||
Stock-based compensation | ||||||||
Vesting period | 5 years | |||||||
2011 Omnibus Incentive Plan | Stock options | Maximum | ||||||||
Stock-based compensation | ||||||||
Tenure of award | 10 years | |||||||
Deferred Compensation Plan | ||||||||
Stock-based compensation | ||||||||
Deferrals | $ | $ 0 | $ 0 | ||||||
2009 Directors Plan | ||||||||
Stock-based compensation | ||||||||
Aggregate amount of common stock authorized (in shares) | 4,800,000 | 4,800,000 | ||||||
Percentage of award vesting on the last business day prior to the date of the annual meeting | 100.00% | |||||||
2009 Directors Plan | Minimum | ||||||||
Stock-based compensation | ||||||||
Percentage of closing price of the company's common stock on the date an option is granted to determine the exercise price | 100.00% | |||||||
2009 Directors Plan | Stock options, non-employee directors | ||||||||
Stock-based compensation | ||||||||
Common stock granted, net of cancellations (in shares) | 286,551 | |||||||
Shares available for grant | 4,513,449 | 4,513,449 | ||||||
The period during which awards can be granted, effective June 4, 2009 | 10 years | |||||||
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 | $ | $ 20.8 | |||||||
Adjustments to additional paid-in-capital, benefit associated with share-based compensation | $ | $ 314.7 | $ 11.9 |
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 | 12 Months Ended | |||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average assumptions used to estimate the fair value of options granted | |||||||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | ||||
Expected volatility (as a percent) | 36.20% | 37.10% | 41.40% | ||||
Risk-free interest rate (as a percent) | 1.57% | 1.57% | 1.55% | ||||
Expected term | 6 years 3 months 18 days | 5 years 9 months 18 days | 5 years 9 months 18 days | ||||
Stock Options, Number of Shares | |||||||
Balance at the beginning of the period (in shares) | 19,770 | 19,770 | |||||
Granted (in shares) | 1,510 | 42 | 657 | 2,883 | |||
Exercised (in shares) | (1,887) | ||||||
Cancelled or forfeited (in shares) | (332) | ||||||
Balance at the end of the period (in shares) | 22,643 | 22,643 | 19,770 | ||||
Vested and expected to vest in the future at the end of the period (in shares) | 21,269 | 21,269 | |||||
Exercisable at the end of the period (in shares) | 12,231 | 12,231 | |||||
Stock options, Weighted-Average Exercise Price Per Share | |||||||
Balance at the beginning of the period (in dollars per share) | $ 16.95 | $ 16.95 | |||||
Granted (in dollars per share) | $ 43.87 | $ 52.60 | $ 46.18 | $ 44.02 | |||
Exercised (in dollars per share) | 8.72 | ||||||
Cancelled or forfeited (in dollars per share) | 33.65 | ||||||
Balance at the end of the period (in dollars per share) | 23.55 | 23.55 | $ 16.95 | ||||
Vested and expected to vest in the future at the end of the period (in dollars per share) | 22.40 | 22.40 | |||||
Exercisable at the end of the period (in dollars per share) | $ 11.26 | $ 11.26 | |||||
Weighted-Average Remaining Contractual Term | |||||||
Balance at the beginning of the period | 5 years 9 months 18 days | 5 years 7 months 6 days | |||||
Balance at the end of the period | 5 years 9 months 18 days | 5 years 7 months 6 days | |||||
Vested and expected to vest in the future at the end of the period | 5 years 7 months 6 days | ||||||
Exercisable at the end of the period | 3 years 7 months 6 days | ||||||
Aggregate Intrinsic Value | |||||||
Balance at the beginning of the period | $ 646,497 | $ 646,497 | |||||
Balance at the end of the period | $ 474,739 | 474,739 | $ 646,497 | ||||
Vested and expected to vest in the future at the end of the period | 470,017 | 470,017 | |||||
Exercisable at the end of the period | $ 404,982 | $ 404,982 |
STOCK-BASED COMPENSATION - Exer
STOCK-BASED COMPENSATION - Exercise Prices (Details) shares in Thousands | 12 Months Ended |
Dec. 31, 2016$ / sharesshares | |
Stock options outstanding and stock options exercisable | |
Stock options outstanding (in shares) | shares | 22,643 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 5 years 9 months 18 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 23.55 |
Options Exercisable (in shares) | shares | 12,231 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 11.26 |
Range of Exercise Prices $4.51 - $4.51 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 4.51 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 4.51 |
Stock options outstanding (in shares) | shares | 52 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 1 year 10 months 24 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 4.51 |
Options Exercisable (in shares) | shares | 52 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 4.51 |
Range of Exercise Prices $5.29 - $5.29 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 5.29 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 5.29 |
Stock options outstanding (in shares) | shares | 3,945 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 1 year 4 months 24 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 5.29 |
Options Exercisable (in shares) | shares | 3,945 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 5.29 |
Range of Exercise Prices $5.61 - $5.61 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 5.61 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 5.61 |
Stock options outstanding (in shares) | shares | 55 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 2 years 1 month 6 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 5.61 |
Options Exercisable (in shares) | shares | 55 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 5.61 |
Range of Exercise Prices $5.94 - $5.94 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 5.94 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 5.94 |
Stock options outstanding (in shares) | shares | 3,427 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 2 years 10 months 24 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 5.94 |
Options Exercisable (in shares) | shares | 3,427 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 5.94 |
Range of Exercise Prices $6.02 - $15.71 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 6.02 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 15.71 |
Stock options outstanding (in shares) | shares | 2,286 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 4 years 10 months 24 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 12.57 |
Options Exercisable (in shares) | shares | 1,440 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 10.73 |
Range of Exercise Prices $15.88 - $22.26 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 15.88 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 22.26 |
Stock options outstanding (in shares) | shares | 2,268 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 6 years 2 months 12 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 18.60 |
Options Exercisable (in shares) | shares | 1,666 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 18.43 |
Range of Exercise Prices $23.00 - $36.05 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 23 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 36.05 |
Stock options outstanding (in shares) | shares | 2,289 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 7 years 2 months 12 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 23.83 |
Options Exercisable (in shares) | shares | 1,075 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 23.45 |
Range of Exercise Prices $37.10 - $43.64 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 37.10 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 43.64 |
Stock options outstanding (in shares) | shares | 2,218 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 9 years 2 months 12 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 41.64 |
Options Exercisable (in shares) | shares | 162 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 37.42 |
Range of Exercise Prices $43.99 - $43.99 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 43.99 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 43.99 |
Stock options outstanding (in shares) | shares | 2,774 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 9 years 1 month 6 days |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 43.99 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | 0 |
Range of Exercise Prices $44.73 - $53.24 | |
Stock options outstanding and stock options exercisable | |
Stock options, range of exercise prices, low end of range (in dollars per share) | 44.73 |
Stock options, range of exercise prices, high end of range (in dollars per share) | $ 53.24 |
Stock options outstanding (in shares) | shares | 3,329 |
Options Outstanding, Weighted Average Remaining Contractual Term (in years) | 8 years 6 months |
Options Outstanding, Weighted Average Exercise Price (in dollars per share) | $ 45.53 |
Options Exercisable (in shares) | shares | 409 |
Options Exercisable, Weighted Average Exercise Price (in dollars per share) | $ 45.15 |
STOCK-BASED COMPENSATION - Equi
STOCK-BASED COMPENSATION - Equity Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Compensation cost charged against income | |||||
Operating expenses | $ 45,848 | $ 32,719 | $ 28,552 | ||
Total employee and non-employee share-based compensation expense included in income, before income tax | 45,848 | 32,719 | 28,552 | ||
Less: Amount of income tax benefit recognized in earnings | (34,909) | (9,058) | (2,932) | ||
Amount charged against net income | 10,939 | 23,661 | 25,620 | ||
Operating expense | |||||
Compensation cost charged against income | |||||
Total employee and non-employee share-based compensation expense included in income, before income tax | $ 45,800 | $ 32,700 | $ 28,600 | ||
Stock options | |||||
Stock-based compensation | |||||
Weighted-average grant-date fair value of options granted (in dollars per share) | $ 16.90 | $ 16.73 | $ 10.50 | ||
Total intrinsic value of options exercised | $ 70,600 | $ 870,100 | $ 47,100 | ||
Cash received from option exercises | 16,400 | $ 49,200 | $ 17,200 | ||
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 99,600 | ||||
Cost expected to be recognized over a weighted-average period | 3 years 1 month 6 days | ||||
Stock units expected to vest (in shares) | 21,269 | ||||
Restricted stock units | |||||
Stock-based compensation | |||||
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 13,900 | ||||
Cost expected to be recognized over a weighted-average period | 1 year 7 months 6 days | ||||
Stock units expected to vest (in shares) | 500 | ||||
Number of Shares | |||||
Non-vested at the beginning of the period (in shares) | 535 | 535 | |||
Granted (in shares) | 36 | 246 | |||
Vested (in shares) | (256) | ||||
Forfeited/cancelled (in shares) | (5) | ||||
Non-vested at the end of the period (in shares) | 556 | 535 | |||
Weighted Average Grant-Date Fair Value | |||||
Non-vested at the beginning of the period (in dollars per share) | $ 33.19 | $ 33.19 | |||
Granted (in dollars per share) | $ 49.65 | $ 43.99 | 44.71 | $ 45.50 | $ 28.13 |
Vested (in dollars per share) | 31.50 | ||||
Forfeited/cancelled (in dollars per share) | 19.42 | ||||
Non-vested at the end of the period (in dollars per share) | $ 39.95 | $ 33.19 | |||
Incentive stock option | |||||
Compensation cost charged against income | |||||
Total employee and non-employee share-based compensation expense included in income, before income tax | $ 8,000 | $ 6,200 | $ 4,800 | ||
Non-Qualified stock option | |||||
Compensation cost charged against income | |||||
Total employee and non-employee share-based compensation expense included in income, before income tax | $ 37,800 | $ 26,500 | $ 23,800 |
INCOME TAXES - Classification a
INCOME TAXES - Classification and Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Domestic and foreign components of company's income before income taxes | |||
Domestic | $ 1,029,763 | $ 859,039 | $ 711,917 |
Foreign | 49,922 | 32,509 | 33,871 |
INCOME BEFORE PROVISION FOR INCOME TAXES | 1,079,685 | 891,548 | 745,788 |
Intercompany royalties, management fees and interest charges from the Company's domestic to foreign entities | 25,600 | 29,400 | 34,900 |
Current: | |||
Federal | 212,283 | 548,018 | 228,348 |
State | 35,756 | 88,671 | 36,633 |
Foreign | 17,171 | 10,634 | 7,467 |
Total current provision | 265,210 | 647,323 | 272,448 |
Deferred: | |||
Federal | 87,360 | (255,422) | (8,473) |
State | 15,254 | (40,446) | (442) |
Foreign | (9,709) | (5,420) | 3,476 |
Total deferred provision | 92,905 | (301,288) | (5,439) |
Valuation allowance | 8,885 | (1,220) | (4,406) |
Total provision for income taxes | $ 367,000 | $ 344,815 | $ 262,603 |
Federal statutory rate (as a percent) | 35.00% | 35.00% | 35.00% |
Reconciliation of income tax expense | |||
U.S. Federal tax expense at statutory rates | $ 377,599 | $ 312,042 | $ 261,025 |
State income taxes, net of federal tax benefit | 33,148 | 31,046 | 23,859 |
Permanent differences | 954 | 5,285 | 2,107 |
Stock Based Compensation | (13,654) | 3,203 | 2,709 |
Domestic production deduction | (21,447) | (20,607) | |
Other | (8,765) | (127) | (1,267) |
Foreign rate differential | (9,720) | (5,414) | (817) |
Valuation allowance | 8,885 | (1,220) | (4,406) |
Total provision for income taxes | $ 367,000 | $ 344,815 | $ 262,603 |
INCOME TAXES - Deferred Taxes (
INCOME TAXES - Deferred Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Deferred Tax Assets: | |||
Reserve for sales returns | $ 149 | $ 242 | |
Reserve for doubtful accounts | 21 | 18 | |
Reserve for inventory obsolescence | 524 | 1,126 | |
Reserve for marketing development fund | 8,065 | 10,118 | |
Capitalization of inventory costs | 2,714 | 1,927 | |
State franchise tax-current | 18,016 | 15,143 | |
Accrued compensation | 1,212 | 1,584 | |
Accrued other liabilities | 1,967 | 1,565 | |
Deferred revenue | 145,319 | 152,777 | |
Stock-based compensation | 31,873 | 24,488 | |
Securities impairment | 17 | 289 | |
Foreign net operating loss carryforward | 29,894 | 26,624 | |
Prepaid supplies | 8,022 | 6,065 | |
Termination payments | 98,244 | 81,896 | |
Capital loss carryforward | 44 | 370 | |
Elimination Company Profit | 2,843 | ||
Gain on intercompany transfer | 7,274 | 7,809 | |
Total gross deferred tax assets | 356,198 | 332,041 | |
Deferred Tax Liabilities: | |||
Amortization of trademarks | (18,663) | (12,078) | |
Intangibles | (131,264) | (134,021) | |
State franchise tax - deferred | (12,946) | (18,359) | |
Other deferred tax liabilities | (957) | (2,381) | |
Depreciation | (6,736) | (7,543) | |
Total gross deferred tax liabilities | (170,566) | (174,382) | |
Valuation Allowance | (26,076) | (17,191) | |
Net deferred tax assets | 159,556 | 140,468 | |
Increase (decrease) to provision for income taxes | 8,900 | $ (500) | $ (4,400) |
Net operating loss carryforwards | 127,300 | ||
Net operating loss carryforwards subject to indefinite carryforward | 105,300 | ||
Net operating loss carryforwards that begin to expire in 2017 | $ 22,000 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefit Rollforward (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Gross unrecognized tax benefits, roll forward | |||
Balance at the beginning of the period | $ 471 | $ 935 | $ 935 |
Decreases for tax positions related to the prior years | (462) | (464) | 0 |
Balance at the end of the period | 9 | $ 471 | $ 935 |
Accrued interest and penalties related to unrecognized tax benefits | $ 100 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Weighted-average shares outstanding: | |||
Basic | 587,874 | 566,448 | 501,771 |
Dilutive securities | 11,945 | 11,310 | 21,084 |
Diluted | 599,819 | 577,758 | 522,855 |
Options and awards outstanding excluded from the calculations as their effect would have been antidilutive (in shares) | 5,700 | 3,000 | 2,100 |
EMPLOYEE BENEFIT PLAN (Details)
EMPLOYEE BENEFIT PLAN (Details) - Employee 401(k) Plan - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Contribution Plan | |||
Employer matching contribution as a percentage of the employee's contribution | 50.00% | ||
Percentage of contribution vested each year | 25.00% | ||
Vesting period of contribution by the company | 4 years | ||
Matching contributions by the company | $ 2 | $ 0.7 | $ 0.6 |
Maximum | |||
Defined Contribution Plan | |||
Annual employee contribution limit as a percent of compensation | 15.00% | ||
Percent of employee's earnings eligible for employer matching contribution | 6.00% |
SEGMENT INFORMATION - Product L
SEGMENT INFORMATION - Product Line (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segment | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Segment information | |||||||||||
Number of reportable segments | segment | 3 | ||||||||||
Number of operating segments | segment | 3 | ||||||||||
Net sales | $ 753,765 | $ 787,954 | $ 827,488 | $ 680,186 | $ 645,432 | $ 756,619 | $ 693,722 | $ 626,791 | $ 3,049,393 | $ 2,722,564 | $ 2,464,867 |
Operating income | 1,085,338 | 893,653 | 747,505 | ||||||||
Income before tax | 1,079,685 | 891,548 | 745,788 | ||||||||
Revenue recognized | 26,100 | 50,500 | 7,800 | ||||||||
Gain on sale of Monster Non-Energy | 161,470 | ||||||||||
Depreciation and amortization | 40,845 | 30,860 | 25,651 | ||||||||
Goodwill and other intangible assets | 2,364,278 | 1,707,701 | 2,364,278 | 1,707,701 | |||||||
Stock-based compensation expense | 45,800 | 32,700 | 28,600 | ||||||||
Corporate and Unallocated | |||||||||||
Segment information | |||||||||||
Operating income | (228,505) | (197,474) | (164,279) | ||||||||
Income before tax | (234,334) | (199,939) | (166,657) | ||||||||
Depreciation and amortization | 6,227 | 5,297 | 5,548 | ||||||||
Payroll costs | 128,000 | 109,800 | 86,200 | ||||||||
Stock-based compensation expense | 45,800 | 32,700 | 28,600 | ||||||||
Professional service expenses | 66,300 | 60,800 | 43,800 | ||||||||
Insurance costs | 6,000 | 7,000 | 7,400 | ||||||||
Other operating expenses | 28,200 | 19,900 | 26,900 | ||||||||
Operating segment | |||||||||||
Segment information | |||||||||||
Net sales | 3,049,393 | 2,722,564 | 2,464,867 | ||||||||
Operating income | 1,085,338 | 893,653 | 747,505 | ||||||||
Income before tax | 1,079,685 | 891,548 | 745,788 | ||||||||
Monster Energy Drinks | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 24,048 | 21,464 | 19,572 | ||||||||
Goodwill and other intangible assets | 1,334,494 | 699,346 | 1,334,494 | 699,346 | |||||||
Monster Energy Drinks | Operating segment | |||||||||||
Segment information | |||||||||||
Net sales | 2,759,862 | 2,518,505 | 2,314,492 | ||||||||
Operating income | 1,148,427 | 836,053 | 904,224 | ||||||||
Income before tax | 1,148,640 | 836,429 | 904,888 | ||||||||
Strategic Brands | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 7,113 | 3,868 | |||||||||
Goodwill and other intangible assets | 1,001,749 | $ 1,008,355 | 1,001,749 | 1,008,355 | |||||||
Strategic Brands | Operating segment | |||||||||||
Segment information | |||||||||||
Net sales | 272,520 | 143,282 | |||||||||
Operating income | 163,121 | 89,841 | |||||||||
Income before tax | 163,084 | 89,825 | |||||||||
Other | |||||||||||
Segment information | |||||||||||
Depreciation and amortization | 3,457 | 231 | 531 | ||||||||
Goodwill and other intangible assets | $ 28,035 | 28,035 | |||||||||
Other | Operating segment | |||||||||||
Segment information | |||||||||||
Net sales | 17,011 | 60,777 | 150,375 | ||||||||
Operating income | 2,295 | 165,233 | 7,560 | ||||||||
Income before tax | 2,295 | 165,233 | 7,557 | ||||||||
Direct Store Delivery ("DSD") | |||||||||||
Segment information | |||||||||||
Revenue recognized | 40,300 | 62,800 | 15,000 | ||||||||
Distribution Agreements Termination Cost | $ 79,800 | $ 224,000 | $ (200) |
SEGMENT INFORMATION - Concentra
SEGMENT INFORMATION - Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Segment information | |||||||||||
Net sales | $ 753,765 | $ 787,954 | $ 827,488 | $ 680,186 | $ 645,432 | $ 756,619 | $ 693,722 | $ 626,791 | $ 3,049,393 | $ 2,722,564 | $ 2,464,867 |
Outside United States | |||||||||||
Segment information | |||||||||||
Net sales | $ 733,700 | $ 580,300 | $ 534,200 | ||||||||
Percentage of net sales to customers | 24.00% | 21.00% | 22.00% | ||||||||
Coca-Cola Refreshments ("CCR") | |||||||||||
Segment information | |||||||||||
Percentage of net sales from major customer | 41.00% | 43.00% | 29.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
TCCC | |||
Related party transactions | |||
Voting interest (as a percent) | 10.00% | ||
Commission expense | $ 28,200 | $ 18,000 | $ 1,000 |
Net sales | 1,259,700 | 1,151,700 | 717,600 |
Purchases from Related Party | 26,200 | 16,000 | |
Manufacturing expenses | 9,600 | 6,900 | 6,600 |
Accounts receivable, net | 151,756 | 172,201 | |
Accounts payable | (41,210) | (58,579) | |
Accrued promotional allowances | $ (27,056) | (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 | $ 1,500 | $ 1,900 | $ 600 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - February 2017 Repurchase Plan - Subsequent event $ in Millions | Feb. 28, 2017USD ($)shares |
Subsequent Events | |
Stock repurchase program, authorized amount | $ | $ 500 |
Common stock repurchased (in shares) | shares | 0 |
QUARTERLY FINANCIAL DATA (Una82
QUARTERLY FINANCIAL DATA (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
QUARTERLY FINANCIAL DATA (Unaudited) | |||||||||||
Net Sales | $ 753,765 | $ 787,954 | $ 827,488 | $ 680,186 | $ 645,432 | $ 756,619 | $ 693,722 | $ 626,791 | $ 3,049,393 | $ 2,722,564 | $ 2,464,867 |
GROSS PROFIT | 498,113 | 502,975 | 517,814 | 423,098 | 403,360 | 465,476 | 394,508 | 368,957 | 1,942,000 | 1,632,301 | 1,339,810 |
NET INCOME | $ 172,946 | $ 191,643 | $ 184,219 | $ 163,877 | $ 138,741 | $ 174,574 | $ 229,004 | $ 4,414 | $ 712,685 | $ 546,733 | $ 483,185 |
EARNINGS PER SHARE | |||||||||||
Income (Loss) from Continuing Operations, Per Basic Share | $ 0.30 | $ 0.34 | $ 0.31 | $ 0.27 | $ 0.23 | $ 0.28 | $ 0.43 | $ 0.01 | $ 1.21 | $ 0.97 | $ 0.96 |
Income (Loss) from Continuing Operations, Per Diluted Share | $ 0.30 | $ 0.33 | $ 0.30 | $ 0.26 | $ 0.22 | $ 0.28 | $ 0.42 | $ 0.01 | $ 1.19 | $ 0.95 | $ 0.92 |
SCHEDULE II - VALUATION AND Q83
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts, sales returns and cash discounts | |||
Changes to valuation allowance | |||
Balance at beginning of period | $ 1,248 | $ 1,704 | $ 2,926 |
Charged to cost and expenses | 7,389 | 8,407 | 2,652 |
Deductions | (7,516) | (8,863) | (3,874) |
Balance at end of period | 1,121 | 1,248 | 1,704 |
Allowance on Deferred Tax Assets and Unrecognized Tax Benefits | |||
Changes to valuation allowance | |||
Balance at beginning of period | 17,846 | 19,786 | 24,130 |
Charged to cost and expenses | 8,240 | (1,940) | (4,344) |
Balance at end of period | $ 26,086 | $ 17,846 | $ 19,786 |