Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 01, 2018 | |
Document and Entity Information | ||
Entity Registrant Name | Monster Beverage Corp | |
Entity Central Index Key | 865,752 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 552,523,130 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q2 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 659,687 | $ 528,622 |
Short-term investments | 211,093 | 672,933 |
Accounts receivable, net | 592,568 | 449,476 |
Inventories | 275,566 | 255,745 |
Prepaid expenses and other current assets | 57,320 | 40,877 |
Prepaid income taxes | 32,445 | 138,724 |
Total current assets | 1,828,679 | 2,086,377 |
INVESTMENTS | 2,366 | |
PROPERTY AND EQUIPMENT, net | 240,658 | 230,276 |
DEFERRED INCOME TAXES | 85,253 | 92,333 |
GOODWILL | 1,331,643 | 1,331,643 |
OTHER INTANGIBLE ASSETS, net | 1,039,401 | 1,034,085 |
OTHER ASSETS | 16,436 | 13,932 |
Total Assets | 4,542,070 | 4,791,012 |
CURRENT LIABILITIES: | ||
Accounts payable | 267,117 | 245,910 |
Accrued liabilities | 82,191 | 87,475 |
Accrued promotional allowances | 178,193 | 137,998 |
Accrued distributor terminations | 488 | 91 |
Deferred revenue | 43,888 | 43,236 |
Accrued compensation | 26,357 | 34,996 |
Income taxes payable | 15,978 | 10,645 |
Total current liabilities | 614,212 | 560,351 |
DEFERRED REVENUE | 320,259 | 334,354 |
OTHER LIABILITIES | 2,439 | 1,095 |
COMMITMENTS AND CONTINGENCIES (Note 11) | ||
STOCKHOLDERS' EQUITY: | ||
Common stock - $0.005 par value; 1,250,000 shares authorized; 630,330 shares issued and 552,457 shares outstanding as of June 30, 2018; 629,255 shares issued and 566,298 shares outstanding as of December 31, 2017 | 3,152 | 3,146 |
Additional paid-in capital | 4,194,676 | 4,150,628 |
Retained earnings | 3,407,806 | 2,928,226 |
Accumulated other comprehensive loss | (25,196) | (16,659) |
Common stock in treasury, at cost; 77,873 shares and 62,957 shares as of June 30, 2018 and December 31, 2017, respectively | (3,975,278) | (3,170,129) |
Total stockholders' equity | 3,605,160 | 3,895,212 |
Total Liabilities and Stockholders' Equity | $ 4,542,070 | $ 4,791,012 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
CONDENSED 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 | 630,330 | 629,255 |
Common stock, shares outstanding | 552,457 | 566,298 |
Common stock in treasury, shares | 77,873 | 62,957 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF INCOME | ||||
NET SALES | $ 1,015,873 | $ 907,068 | $ 1,866,793 | $ 1,649,214 |
COST OF SALES | 395,615 | 323,571 | 731,279 | 584,843 |
GROSS PROFIT | 620,258 | 583,497 | 1,135,514 | 1,064,371 |
OPERATING EXPENSES | 262,637 | 233,456 | 497,979 | 450,068 |
OPERATING INCOME | 357,621 | 350,041 | 637,535 | 614,303 |
INTEREST and OTHER INCOME (EXPENSE), net | 476 | (2,551) | 2,281 | (1,893) |
INCOME BEFORE PROVISION FOR INCOME TAXES | 358,097 | 347,490 | 639,816 | 612,410 |
PROVISION FOR INCOME TAXES | 87,981 | 124,857 | 153,651 | 211,797 |
NET INCOME | $ 270,116 | $ 222,633 | $ 486,165 | $ 400,613 |
NET INCOME PER COMMON SHARE: | ||||
Basic (in dollars per share) | $ 0.48 | $ 0.39 | $ 0.86 | $ 0.71 |
Diluted (in dollars per share) | $ 0.48 | $ 0.39 | $ 0.85 | $ 0.69 |
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: | ||||
Basic (in shares) | 559,867 | 567,910 | 562,917 | 567,384 |
Diluted (in shares) | 566,352 | 578,020 | 570,231 | 577,719 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income, as reported | $ 270,116 | $ 222,633 | $ 486,165 | $ 400,613 |
Other comprehensive income: | ||||
Change in foreign currency translation adjustment | (11,988) | 5,111 | (9,265) | 6,311 |
Available-for-sale investments: | ||||
Change in net unrealized gains (losses) | 513 | (26) | 728 | 105 |
Net change in available-for-sale investments | 513 | (26) | 728 | 105 |
Other comprehensive (loss) income | (11,475) | 5,085 | (8,537) | 6,416 |
Comprehensive income | $ 258,641 | $ 227,718 | $ 477,628 | $ 407,029 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 486,165 | $ 400,613 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 28,185 | 22,775 |
Gain on disposal of property and equipment | (308) | (436) |
Stock-based compensation | 28,345 | 25,983 |
Deferred income taxes | (76) | 1,862 |
Effect on cash of changes in operating assets and liabilities: | ||
Accounts receivable | (154,369) | (75,178) |
TCCC Transaction receivable | 125,000 | |
Distributor receivables | 5,826 | (1,452) |
Inventories | (22,753) | (24,859) |
Prepaid expenses and other current assets | (15,977) | (8,131) |
Prepaid income taxes | 104,969 | 60,696 |
Accounts payable | 24,684 | 8,784 |
Accrued liabilities | (15,617) | (667) |
Accrued promotional allowances | 43,196 | 25,805 |
Accrued distributor terminations | 398 | (7,917) |
Accrued compensation | (8,413) | (7,225) |
Income taxes payable | 8,043 | (5,362) |
Other liabilities | 1,344 | |
Deferred revenue | (12,342) | (7,069) |
Net cash provided by operating activities | 501,300 | 533,222 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Sales of available-for-sale investments | 807,396 | 172,528 |
Purchases of available-for-sale investments | (342,463) | (286,858) |
Purchases of property and equipment | (34,619) | (40,477) |
Proceeds from sale of property and equipment | 3,590 | 733 |
Decrease (Increase) in intangibles | (42) | 26 |
Increase in other assets | (7,684) | (632) |
Net cash provided by (used in) investing activities | 426,178 | (154,680) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal payments on debt | (972) | (1,334) |
Issuance of common stock | 13,616 | 19,093 |
Purchases of common stock held in treasury | (805,149) | (302) |
Net cash (used in) provided by financing activities | (792,505) | 17,457 |
Effect of exchange rate changes on cash and cash equivalents | (3,908) | 4,074 |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 131,065 | 400,073 |
CASH AND CASH EQUIVALENTS, beginning of period | 528,622 | 377,582 |
CASH AND CASH EQUIVALENTS, end of period | 659,687 | 777,655 |
Cash paid during the period for: | ||
Interest | 28 | 38 |
Income taxes | $ 41,780 | $ 156,039 |
CONDENSED CONSOLIDATED STATEME7
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS (Parenthetical) - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS NON-CASH SUPPLEMENTAL DATA | ||
Capital lease for acquisition of promotional vehicles | $ 0.7 | $ 1.5 |
Accounts payable for property and equipment | 1.5 | 0.3 |
Accrued liabilities for property and equipment | 0.1 | 12.1 |
Accounts payable for other intangible assets | 1.8 | 0 |
Accrued liabilities for other intangible assets | $ 9.5 | $ 6.2 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2018 | |
BASIS OF PRESENTATION | |
BASIS OF PRESENTATION | 1. BASIS OF PRESENTATION Reference is made to the Notes to Consolidated Financial Statements, in Monster Beverage Corporation and Subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2017 (“Form 10-K”) for a summary of significant accounting policies utilized by the Company and its consolidated subsidiaries and other disclosures, which should be read in conjunction with this Quarterly Report on Form 10-Q (“Form 10-Q”). The Company’s condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations applicable to interim financial reporting. They do not include all the information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP. The information set forth in these interim condensed consolidated financial statements for the three- and six-months ended June 30, 2018 and 2017, respectively, is unaudited and reflects all adjustments, which include only normal recurring adjustments and which in the opinion of management are necessary to make the interim condensed consolidated financial statements not misleading. Results of operations for periods covered by this report may not necessarily be indicative of results of operations for the full year. The preparation of financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported 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 periods. Actual results could differ from these estimates. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 2. RECENT ACCOUNTING PRONOUNCEMENTS Recently issued accounting pronouncements not yet adopted In February 2018, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2018-02 (ASU No. 2018-02), “Income Statement - Reporting Comprehensive Income (Topic 220)”, which amends the previous guidance to allow for certain tax effects “stranded” in accumulated other comprehensive income, which are impacted by the Tax Cuts and Jobs Act (the “Tax Reform Act”) , to be reclassified from accumulated other comprehensive income into retained earnings. This amendment pertains only to those items impacted by the new tax law and will not apply to any future tax effects stranded in accumulated other comprehensive income. This standard is effective for fiscal years beginning after December 15, 2018, and allows for early adoption. The Company is currently evaluating the impact of ASU No. 2018-02 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 requires 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 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 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. Recently adopted accounting pronouncements 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-entity 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 recognizes the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. ASU No. 2016-16 was effective for financial statements issued for annual periods beginning after December 15, 2017 and interim periods within those annual periods. The Company adopted ASU No. 2016-16 effective January 1, 2018 on a modified retrospective basis, resulting in a $6.6 million reclassification of the unrecognized income tax effects related to assets transfers that occurred prior to the adoption from deferred income taxes to opening retained earnings. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which superseded previous revenue recognition guidance. ASU No. 2014-09 and its amendments were included in Accounting Standards Codification (“ASC”) 606 “Revenue from Contracts with Customers”. ASC 606 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. The Company adopted ASC 606 effective January 1, 2018, using the modified retrospective approach, with no impact to the opening retained earnings. Results for periods beginning on or after January 1, 2018 are presented under ASC 606, while prior periods are not adjusted and continue to be reported in accordance with the prior accounting guidance under ASC 605 “Revenue Recognition”. See Note 3. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2018 | |
REVENUE RECOGNITION | |
REVENUE RECOGNITION | 3. REVENUE RECOGNITION The Company currently has three operating and reportable segments, (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is comprised of the Company’s Monster Energy® drinks and Mutant® Super Soda drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015, and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits & Flavors LLC, a wholly-owned subsidiary of the Company, to independent third-party customers. The Company’s Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage distributors. In some cases, the Company sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, 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 and full service distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, food service customers, drug stores and the military. To a lesser extent, our Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company’s bottlers/distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, control of the Company’s products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company’s finished goods. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of June 30, 2018 or December 31, 2017. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Distribution expenses to transport the Company’s products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses. There were no changes to the Company’s accounting for variable consideration under ASC 606. Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to the Company’s bottlers/distributors or retail customers including, but not limited to the following: discounts granted off list prices to support price promotions to end-consumers by retailers; reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers; incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; discounted or free products; contractual fees given to the Company’s bottlers/distributors related to sales made by the Company direct to certain customers that fall within the bottlers’/distributors’ sales territories; and certain commissions paid based on sales to the Company’s bottlers/distributors. The Company’s promotional allowance programs with its bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, ranging from one week to one year. The Company’s promotional and other allowances are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established during the year for its anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Upon adoption of ASC 606, commissions paid to TCCC based on sales to certain of the Company’s bottlers/distributors who are (i) consolidated subsidiaries of TCCC (the “TCCC Subsidiaries”), (ii) accounted for under the equity method by TCCC (the “TCCC Related Parties”) and (iii) those not included in (i) or (ii) (the “TCCC Independent Bottlers”) are accounted for as follows: Three- and Six-Months Ended June 30, 2018 Commissions Related To: As Reported Without Adoption of TCCC Subsidiaries Reduction to net sales Reduction to net sales TCCC Related Parties Reduction to net sales Operating expenses TCCC Independent Bottlers Operating expenses Operating expenses The impact of the adoption of ASC 606 on the Company’s condensed consolidated statement of income for the three- and six-months ended June 30, 2018 was as follows: Three-Months Ended June 30, 2018 As Reported Without Adoption Decrease due to Net Sales $ $ $ 1 Operating Expenses $ $ $ 1 Six-Months Ended June 30, 2018 As Reported Without Adoption Decrease due to Net Sales $ $ $ 1 Operating Expenses $ $ $ 1 1 TCCC Commissions based on sales to the TCCC Related Parties. There were no other identified changes to our revenue recognition policies as a result of the adoption of ASC 606. Disaggregation of Revenue The following table disaggregates the Company’s revenue by geographical markets and reportable segments: Three-Months Ended June 30, 2018 Net Sales U.S. and EMEA 1 Asia Pacific Latin Total Monster Energy® Drinks $ $ $ $ $ Strategic Brands Other - - - Total Net Sales $ $ $ $ $ Six-Months Ended June 30, 2018 Net Sales U.S. and EMEA 1 Asia Pacific Latin Total Monster Energy® Drinks $ $ $ $ $ Strategic Brands Other - - - Total Net Sales $ $ $ $ $ 1 Europe, Middle East and Africa (“EMEA”) Contract Liabilities Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of June 30, 2018, the Company had $364.1 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. As of December 31, 2017, the Company had $377.6 million of deferred revenue, which is included in current and long-term deferred revenue in the Company’s condensed consolidated balance sheet. During the three- and six-months ended June 30, 2018, $11.0 million and $22.2 million, respectively, of deferred revenue was recognized in net sales. See Note 10. |
INVESTMENTS
INVESTMENTS | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENTS | |
INVESTMENTS | 4. INVESTMENTS The following table summarizes the Company’s investments at: June 30, 2018 Amortized Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ 15,177 $ - $ - $ 15,177 $ - $ - Municipal securities 149,048 5 56 148,997 56 - U.S. government agency securities 46,982 - 63 46,919 63 - Variable rate demand notes - - - - - - Total $ 211,207 $ 5 $ 119 $ 211,093 $ 119 $ - December 31, 2017 Amortized Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ 81,026 $ - $ - $ 81,026 $ - $ - Certificates of deposit 11,869 - - 11,869 - - Municipal securities 469,604 1 740 468,865 740 - U.S. government agency securities 61,307 - 88 61,219 88 - Variable rate demand notes 49,954 - - 49,954 - - Long-term: U.S. government agency securities 2,369 - 3 2,366 3 - Total $ 676,129 $ 1 $ 831 $ 675,299 $ 831 $ - During the six-months ended June 30, 2018 and 2017, realized gains or losses recognized on the sale of investments were not significant. The Company’s investments at June 30, 2018 and December 31, 2017 in commercial paper, certificates of deposit, municipal securities, U.S. government agency securities 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: June 30, 2018 December 31, 2017 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ 15,177 $ 15,177 $ 81,026 $ Municipal securities 149,048 148,997 469,604 U.S. government agency securities 46,982 46,919 61,307 Certificates of deposit - - 11,869 Due 1 -10 years: U.S. government agency securities - - 2,369 Variable rate demand notes - - 6,366 Due 11 - 20 years: Variable rate demand notes - - 28,377 Due 21 - 30 years: Variable rate demand notes - - 15,211 Total $ 211,207 $ 211,093 $ 676,129 $ |
FAIR VALUE OF CERTAIN FINANCIAL
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | 5. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES ASC 820 provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below. · Level 1: Quoted prices in active markets for identical assets or liabilities. · Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. · Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible. The following tables present the fair value of the Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at: June 30, 2018 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Commercial paper - - 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, 2017 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Certificates of deposit - - Commercial paper - - Variable rate demand notes - - Municipal securities - - U.S. government agency securities - - U.S. Treasuries - - 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, certificates of deposit, VRDNs, U.S. Treasuries 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 six-months ended June 30, 2018 or the year ended December 31, 2017, and there were no changes in the Company’s valuation techniques. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6 Months Ended |
Jun. 30, 2018 | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 6. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the three- and six-months ended June 30, 2018 and the year ended December 31, 2017, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities. All foreign currency exchange contracts of the Company that were outstanding as of June 30, 2018 have terms of one month or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes. The Company has not designated its foreign currency exchange contracts as hedge transactions under ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in interest and other income (expense), net, in the condensed consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. The notional amount and fair value of all outstanding foreign currency derivative instruments in the condensed consolidated balance sheets consist of the following at: June 30, 2018 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive SGD/pay USD $ $ Accounts receivable, net Receive USD/pay NZD Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay EUR $ $ Accrued liabilities Receive USD/pay GBP Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay TRY Accrued liabilities Receive USD/pay COP Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay RUB Accrued liabilities December 31, 2017 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive CAD/pay USD $ $ Accounts receivable, net Receive USD/pay COP Accounts receivable, net Receive USD/pay BRL Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Receive SGD/pay USD Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay EUR $ $ Accrued liabilities Receive USD/pay GBP Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay TRY Accrued liabilities Receive USD/pay NZD Accrued liabilities Receive USD/pay CLP Accrued liabilities The net gains (losses) on derivative instruments in the condensed consolidated statements of income were as follows: Amount of gain (loss) Three-months ended Derivatives not designated as Location of gain (loss) June 30, 2018 June 30, 2017 Foreign currency exchange contracts Interest and other income (expense), net $ $ Amount of gain (loss) Six-months ended Derivatives not designated as Location of gain (loss) June 30, 2018 June 30, 2017 Foreign currency exchange contracts Interest and other income (expense), net $ $ |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2018 | |
INVENTORIES | |
INVENTORIES | 7. INVENTORIES Inventories consist of the following at: June 30, December 31, Raw materials $ $ Finished goods $ $ |
PROPERTY AND EQUIPMENT, NET
PROPERTY AND EQUIPMENT, NET | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT, NET | |
PROPERTY AND EQUIPMENT, NET | 8. PROPERTY AND EQUIPMENT, NET Property and equipment consist of the following at: June 30, 2018 December 31, Land $ $ Leasehold improvements Furniture and fixtures Office and computer equipment Computer software Equipment Buildings Vehicles Less: accumulated depreciation and amortization $ $ Total depreciation and amortization expense recorded was $11.2 million and $8.6 million for the three-months ended June 30, 2018 and 2017, respectively. Total depreciation and amortization expense recorded was $22.2 million and $16.8 million for the six-months ended June 30, 2018 and 2017, respectively. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
GOODWILL AND OTHER INTANGIBLE ASSETS | 9. GOODWILL AND OTHER INTANGIBLE ASSETS The following is a roll-forward of goodwill for the six-months ended June 30, 2018 and 2017 by reportable segment: Monster Strategic Other Total Balance at December 31, 2017 $ $ $ - $ Acquisitions - - - - Balance at June 30, 2018 $ $ $ - $ Monster Strategic Other Total Balance at December 31, 2016 $ $ $ - $ Acquisitions - - - - Balance at June 30, 2017 $ $ $ - $ Intangible assets consist of the following at: June 30, December 31, Amortizing intangibles $ $ Accumulated amortization Non-amortizing intangibles $ $ Amortizing intangibles primarily consist of customer relationships. All amortizing intangibles have been assigned an estimated finite useful life and such intangibles are amortized on a straight-line basis over the number of years that approximate their respective useful lives, generally five to seven years. Total amortization expense recorded was $3.0 million for both the three-months ended June 30, 2018 and 2017. Total amortization expense recorded was $6.0 million for both the six-months ended June 30, 2018 and 2017. |
DISTRIBUTION AGREEMENTS
DISTRIBUTION AGREEMENTS | 6 Months Ended |
Jun. 30, 2018 | |
DISTRIBUTION AGREEMENTS | |
DISTRIBUTION AGREEMENTS | 10. DISTRIBUTION AGREEMENTS In accordance with ASC No. 420 “Exit or Disposal Cost Obligations”, the Company expenses distributor termination costs in the period in which the written notification of termination occurs. The Company incurred termination costs of $5.5 million and $0.2 million for the three-months ended June 30, 2018 and 2017, respectively. The Company incurred termination costs of $12.5 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively. Such termination costs have been expensed in full and are included in operating expenses for the three- and six-months ended June 30, 2018 and 2017. 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 $11.0 million and $10.2 million for the three-months ended June 30, 2018 and 2017, respectively. Revenue recognized was $22.2 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 11. COMMITMENTS AND CONTINGENCIES The Company had purchase commitments aggregating approximately $50.0 million at June 30, 2018, which represented commitments made by the Company and its subsidiaries to various suppliers of raw materials for the production of its products. These obligations vary in terms, but are generally satisfied within one year. The Company had contractual obligations aggregating approximately $154.2 million at June 30, 2018, which related primarily to sponsorships and other marketing activities. The Company had operating lease commitments aggregating approximately $16.3 million at June 30, 2018, which related primarily to warehouse and office space. In February 2018, the working capital line limit for the Company’s credit facility with HSBC Bank (China) Company Limited, Shanghai Branch was increased from $9.0 million to $15.0 million. At June 30, 2018, the interest rate on borrowings under the line of credit was 5.5%. As of June 30, 2018, the Company had $11.2 million outstanding on this line of credit, including interest, which is included in accounts payable in the condensed consolidated balance sheet. Legal Proceedings Litigation — The Company has been named a defendant in 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. 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 June 30, 2018, the Company’s condensed consolidated balance sheet includes accrued loss contingencies of approximately $3.3 million. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 6 Months Ended |
Jun. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | 12. ACCUMULATED OTHER COMPREHENSIVE LOSS Changes in accumulated other comprehensive loss by component, after tax, for the six-months ended June 30, 2018 are as follows: Currency Unrealized Total Balance at December 31, 2017 $ $ $ Other comprehensive loss (gain) before reclassifications Amounts reclassified from accumulated other comprehensive loss (gain) - - - Net current-period other comprehensive loss (gain) Balance at June 30, 2018 $ $ $ |
TREASURY STOCK
TREASURY STOCK | 6 Months Ended |
Jun. 30, 2018 | |
TREASURY STOCK | |
TREASURY STOCK | 13. TREASURY STOCK On February 27, 2018, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $250.0 million of the Company’s outstanding common stock (the “February 2018 Repurchase Program”). During the three-months ended June 30, 2018, the Company purchased 5.0 million shares of common stock at an average purchase price of $49.81 per share, for a total amount of $249.9 million (excluding broker commissions), which exhausted the availability under the February 2018 Repurchase Program. Such shares are included in common stock in treasury in the accompanying condensed consolidated balance sheet at June 30, 2018. On May 29, 2018, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “May 2018 Repurchase Program”). During the three-months ended June 30, 2018, the Company purchased 5.5 million shares of common stock at an average purchase price of $54.78 per share, for a total amount of $303.2 million (excluding broker commissions), under the May 2018 Repurchase Program. Such shares are included in common stock in treasury in the accompanying condensed consolidated balance sheet at June 30, 2018. As of August 9, 2018, $196.7 million remained available for repurchase under the May 2018 Repurchase Program. On August 7, 2018, the Company’s Board of Directors authorized a new repurchase program for the repurchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “August 2018 Repurchase Program”). As of August 9, 2018, $500.0 million remained available for repurchase under the August 2018 Repurchase Program. During the three-months ended June 30, 2018, 504 shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due, for a total amount of $0.03 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company’s authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying condensed consolidated balance sheet at June 30, 2018. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018: 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 Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors (the “2017 Directors Plan”), including the Monster Beverage Deferred Compensation Plan for Non-Employee Directors (the “Non-Employee Director Deferral Plan”) as a sub plan thereunder. The Company recorded $14.9 million and $12.8 million of compensation expense relating to outstanding options and restricted stock units during the three-months ended June 30, 2018 and 2017, respectively. The Company recorded $28.3 million and $26.0 million of compensation expense relating to outstanding options and restricted stock units during the six-months ended June 30, 2018 and 2017, respectively. The excess tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units for the three-months ended June 30, 2018 and 2017 was $1.7 million and $1.9 million, respectively. The excess tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units for the six-months ended June 30, 2018 and 2017 was $4.5 million and $11.3 million, respectively. Stock Options Under the Company’s stock-based compensation plans, all stock options granted as of June 30, 2018 were granted at prices based on the fair value of the Company’s common stock on the date of grant. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee’s performance is complete, using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company uses historical data to determine the exercise behavior, volatility and forfeiture rate of the options. The following weighted-average assumptions were used to estimate the fair value of options granted during: Three-Months Ended June 30, Six-Months Ended June 30, 2018 2017 2018 2017 Dividend yield Expected volatility Risk-free interest rate Expected term 6.1 years 6.1 years 6.1 years 6.1 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 the 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, 2018 $ $ 600,032 Granted 01/01/18 - 03/31/18 $ Granted 04/01/18 - 06/30/18 $ Exercised $ Cancelled or forfeited $ Outstanding at June 30, 2018 $ $ Vested and expected to vest in the future at June 30, 2018 $ $ 451,327 Exercisable at June 30, 2018 $ $ 371,252 The weighted-average grant-date fair value of options granted during the three-months ended June 30, 2018 and 2017 was $20.20 per share and $18.97 per share, respectively. The weighted-average grant-date fair value of options granted during the six-months ended June 30, 2018 and 2017 was $22.51 per share and $18.01 per share, respectively. The total intrinsic value of options exercised during the three-months ended June 30, 2018 and 2017 was $14.7 million and $8.5 million, respectively. The total intrinsic value of options exercised during the six-months ended June 30, 2018 and 2017 was $32.9 million and $40.9 million, respectively. Cash received from option exercises under all plans for the three-months ended June 30, 2018 and 2017 was approximately $7.1 million and $5.5 million, respectively. Cash received from option exercises under all plans for the six-months ended June 30, 2018 and 2017 was approximately $13.6 million and $19.1 million, respectively. At June 30, 2018, there was $121.1 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 3.0 years. Restricted Stock Units The cost of stock-based compensation for restricted stock units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit in cash, the award is classified as a liability and revalued at each balance sheet date. The following table summarizes the Company’s activities with respect to non-vested restricted stock units as follows: Number of Weighted Non-vested at January 1, 2018 $ Granted 01/01/18- 03/31/18 $ Granted 04/01/18- 06/30/18 $ Vested $ Forfeited/cancelled $ Non-vested at June 30, 2018 $ The weighted-average grant-date fair value of restricted stock units granted during the three-months ended June 30, 2018 and 2017 was $52.31 per share and $50.86 per share, respectively. The weighted-average grant-date fair value of restricted stock units granted during the six-months ended June 30, 2018 and 2017 was $57.59 per share and $46.65 per share, respectively. As of June 30, 2018, 0.5 million of restricted stock units are expected to vest over their respective terms. At June 30, 2018, total unrecognized compensation expense relating to non-vested restricted stock units was $22.2 million, which is expected to be recognized over a weighted-average period of 2.1 years. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2018 | |
INCOME TAXES | |
INCOME TAXES | 15. INCOME TAXES On December 22, 2017, the President of the United States signed into law the Tax Reform Act. The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries. The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018. The SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. A company may select between one of three scenarios to determine a reasonable estimate for certain income tax effects arising from the Tax Reform Act. Those scenarios are (i) a final estimate which effectively closes the measurement window; (ii) a reasonable estimate leaving the measurement window open for future revisions; and (iii) no estimate as the law is still being analyzed. The Company was able to provide a reasonable estimate for the revaluation of deferred taxes and the effects of the toll charge on undistributed foreign subsidiary earnings and profits (“E&P”). As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, the Company revalued its net deferred tax assets at December 31, 2017, resulting in a provisional $39.8 million charge included in the provision for income taxes for the year ended December 31, 2017. The Tax Reform Act also provided for a one-time deemed mandatory repatriation of Post-1986 E&P through the year ended December 31, 2017. As a result, the Company recognized a provisional $2.1 million charge in the provision for income taxes for the year ended December 31, 2017 related to such deemed mandatory repatriation. The Company has not made additional measurement window adjustments to these items during the three- and six-months ended June 30, 2018. The Company continues to evaluate the various provisions of the Tax Reform Act, including, the global intangible low-taxed income (“GILTI”) and the foreign derived intangible income (“FDII”) provisions. The ultimate impact of the Tax Reform Act may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, as well as any related actions the Company may take. The measurement window begins in the reporting period that includes the enactment date and ends when an entity has obtained, prepared and analyzed the information needed in order to complete the accounting requirements under ASC Topic 740. The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the six-months ended June 30, 2018: Gross Unrecognized Tax Balance at December 31, 2017 $ Additions for tax positions related to the current year Additions for tax positions related to the prior year Decreases related to settlement with taxing authority Balance at June 30, 2018 $ The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s condensed consolidated financial statements. As of June 30, 2018, the Company had approximately $1.0 million in accrued interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions, the resultant impact on the Company’s effective tax rate would not be significant. It is expected that any change in the amount of unrecognized tax benefits within the next 12 months will not be significant. The Company is subject to U.S. federal income tax as well as to income tax in multiple state and foreign jurisdictions. On October 18, 2016, the IRS began its examination of the Company’s U.S. federal income tax return for the year ended December 31, 2014. On March 27, 2017, the IRS began its examination of the Company’s U.S. federal income tax return for the year ended December 31, 2015. The Company is in various stages of examination with certain states and certain foreign jurisdictions. The Company’s 2014 through 2017 U.S. federal income tax returns are subject to examination by the IRS. The Company’s state income tax returns are subject to examination for the 2013 through 2017 tax years. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2018 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | 16. EARNINGS PER SHARE A reconciliation of the weighted-average shares used in the basic and diluted earnings per common share computations is presented below (in thousands): Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Weighted-average shares outstanding: Basic Dilutive Diluted For the three-months ended June 30, 2018 and 2017, options and awards outstanding totaling 6.4 million shares and 8.8 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. For the six-months ended June 30, 2018 and 2017, options and awards outstanding totaling 2.6 million shares and 8.4 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
SEGMENT INFORMATION | |
SEGMENT INFORMATION | 17. SEGMENT INFORMATION The Company currently has three operating and reportable segments, (i) Monster Energy® Drinks segment, which is comprised of the Company’s Monster Energy® drinks and Mutant® Super Soda drinks, (ii) Strategic Brands segment, which is comprised of the various energy drink brands acquired from TCCC in 2015, and (iii) Other segment, which is comprised of certain products sold by American Fruits & Flavors LLC, a wholly-owned subsidiary of the Company, to independent third-party customers. The Company’s Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged drinks primarily to bottlers and full service beverage distributors. In some cases, the Company sells directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, 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 certain ready-to-drink packaged energy drinks to bottlers and full service beverage distributors. Generally, the Monster Energy® Drinks segment generates higher per case net operating revenues, but lower per case gross profit margins than the Strategic Brands segment. Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided for in the Company’s reportable segments as management does not measure or allocate such assets on a segment basis. The net revenues derived from the Company’s reportable segments and other financial information related thereto for the three- and six-months ended June 30, 2018 and 2017 are as follows: Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Net sales: Monster Energy® Drinks ( ¹ ) $ $ $ $ Strategic Brands Other Corporate and unallocated - - - - $ $ $ $ Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Operating Income: Monster Energy® Drinks ( ¹ ) (2) $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Income before tax: Monster Energy® Drinks ( ¹ ) (2) $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ (1) Includes $11.0 million and $10.2 million for the three-months ended June 30, 2018 and 2017, respectively, related to the recognition of deferred revenue. Includes $22.2 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively, related to the recognition of deferred revenue. (2) Includes $5.5 million and $0.2 million for the three-months ended June 30, 2018 and 2017, respectively, related to distributor termination costs. Includes $12.5 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively, related to distributor termination costs. Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Depreciation and amortization: Monster Energy® Drinks $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ Corporate and unallocated expenses for the three-months ended June 30, 2018 include $44.7 million of payroll costs, of which $14.9 million was attributable to stock-based compensation expenses (see Note 14, “Stock-Based Compensation”), as well as $11.8 million attributable to professional service expenses, including accounting and legal costs, and $11.6 million of other operating expenses. Corporate and unallocated expenses for the three-months ended June 30, 2017 include $38.4 million of payroll costs, of which $12.8 million was attributable to stock-based compensation expenses (see Note 14, “Stock-Based Compensation”), as well as $14.0 million attributable to professional service expenses, including accounting and legal costs, and $8.6 million of other operating expenses. Corporate and unallocated expenses for the six-months ended June 30, 2018 include $87.8 million of payroll costs, of which $28.3 million was attributable to stock-based compensation expenses (see Note 14, “Stock-Based Compensation”), as well as $24.2 million attributable to professional service expenses, including accounting and legal costs, and $21.4 million of other operating expenses. Corporate and unallocated expenses for the six-months ended June 30, 2017 include $76.1 million of payroll costs, of which $26.0 million was attributable to stock-based compensation expenses (see Note 14, “Stock-Based Compensation”), as well as $26.4 million attributable to professional service expenses, including accounting and legal costs, and $17.3 million of other operating expenses. TCCC, through the TCCC Subsidiaries, accounted for approximately 4% and 17% of the Company’s net sales for the three-months ended June 30, 2018 and 2017, respectively. TCCC, through the TCCC Subsidiaries, accounted for approximately 4% and 25% of the Company’s net sales for the six-months ended June 30, 2018 and 2017, respectively. As part of TCCC’s North America Refranchising initiative (the “North America Refranchising”), the territories of certain TCCC Subsidiaries have been transitioned to certain independent TCCC bottlers/distributors and/or TCCC Related Parties. Accordingly, the Company’s percentage of net sales classified as sales to the TCCC Subsidiaries significantly decreased for three- and six-months ended June 30, 2018. CCBCC Operations, LLC accounted for approximately 13% of the Company’s net sales for both the three-months ended June 30, 2018 and 2017. CCBCC Operations, LLC accounted for approximately 13% and 12% of the Company’s net sales for the six-months ended June 30, 2018 and 2017, respectively. Coca-Cola European Partners accounted for approximately 9% of the Company’s net sales for both the three-months ended June 30, 2018 and 2017. Coca-Cola European Partners accounted for approximately 10% and 9% of the Company’s net sales for the six-months ended June 30, 2018 and 2017, respectively. Reyes Coca-Cola Bottling accounted for approximately 12% and 5% of the Company’s net sales for the three-months ended June 30, 2018 and 2017, respectively. Reyes Coca-Cola Bottling accounted for approximately 13% and 4% of the Company’s net sales for the six-months ended June 30, 2018 and 2017, respectively. Net sales to customers outside the United States amounted to $293.8 million and $247.9 million for the three-months ended June 30, 2018 and 2017, respectively. Net sales to customers outside the United States amounted to $535.9 million and $438.8 million for the six-months ended June 30, 2018 and 2017, respectively. Goodwill and other intangible assets for the Company’s reportable segments as of June 30, 2018 and December 31, 2017 are as follows: June 30, December 31, 2018 2017 Goodwill and other intangible assets: Monster Energy® Drinks $ $ Strategic Brands Other Corporate and unallocated - - $ $ |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2018 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | 18. RELATED PARTY TRANSACTIONS TCCC controls approximately 18% of the voting interests of the Company. The TCCC Subsidiaries, the TCCC Related Parties and the TCCC Independent Bottlers, purchase and distribute certain of the Company’s products in certain domestic and international markets. The Company also pays TCCC a commission based on certain sales within the TCCC distribution network. TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, for the three- and six-months ended June 30, 2018 were $13.2 million and $24.5 million, respectively, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Independent Bottlers for the three- and six-months ended June 30, 2018 were $4.3 million and $7.5 million, respectively, and are included in operating expenses. TCCC commissions, based on sales to the TCCC Subsidiaries, for the three- and six-months ended June 30, 2017 were $2.1 million and $5.7 million, respectively, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Related Parties and the TCCC Independent Bottlers, for the three- and six-months ended June 30, 2017 were $12.8 million and $20.7 million, respectively, and are included in operating expenses. Upon adoption of ASC 606, commissions paid to TCCC, based on sales to the TCCC Related Parties, are included as a reduction to net sales. Prior to January 1, 2018, such commissions, based on sales to the TCCC Related Parties, were included in operating expenses. Net sales to the TCCC Subsidiaries for the three-months ended June 30, 2018 and 2017 were $39.6 million and $154.5 million, respectively. Net sales to the TCCC Subsidiaries for the six-months ended June 30, 2018 and 2017 were $74.6 million and $409.7 million, respectively. As part of the North America Refranchising, the territories of certain TCCC Subsidiaries have been transitioned to certain independent TCCC bottlers/distributors and/or TCCC Related Parties. Accordingly, the Company’s net sales classified as sales to the TCCC Subsidiaries significantly decreased for the three- and six-months ended June 30, 2018. The Company also purchases concentrates from TCCC which are then sold to certain of the Company’s bottlers/distributors. Concentrate purchases from TCCC were $11.3 million and $6.6 million for the three-months ended June 30, 2018 and 2017, respectively. Concentrate purchases from TCCC were $14.2 million and $12.5 million for the six-months ended June 30, 2018 and 2017, respectively. Certain TCCC Subsidiaries also contract manufacture certain of the Company’s Monster Energy® brand energy drinks. Such contract manufacturing expenses were $6.4 million and $2.9 million for the three-months ended June 30, 2018 and 2017, respectively. Such contract manufacturing expenses were $11.8 million and $5.1 million for the six-months ended June 30, 2018 and 2017, respectively. Accounts receivable, accounts payable and accrued promotional allowances related to the TCCC Subsidiaries are as follows at: June 30, 2018 December 31, 2017 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 three-months ended June 30, 2018 and 2017 were $0.6 million and $1.2 million, respectively. Expenses incurred with such company in connection with promotional materials purchased during both the six-months ended June 30, 2018 and 2017 were $1.4 million. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Schedule of disaggregation of revenue by geographical markets | Three-Months Ended June 30, 2018 Net Sales U.S. and EMEA 1 Asia Pacific Latin Total Monster Energy® Drinks $ $ $ $ $ Strategic Brands Other - - - Total Net Sales $ $ $ $ $ Six-Months Ended June 30, 2018 Net Sales U.S. and EMEA 1 Asia Pacific Latin Total Monster Energy® Drinks $ $ $ $ $ Strategic Brands Other - - - Total Net Sales $ $ $ $ $ 1 Europe, Middle East and Africa (“EMEA”) |
Accounting Standards Update 2014-09 | |
Schedule of impact of adoption of ASC 606 | Three-Months Ended June 30, 2018 As Reported Without Adoption Decrease due to Net Sales $ $ $ 1 Operating Expenses $ $ $ 1 Six-Months Ended June 30, 2018 As Reported Without Adoption Decrease due to Net Sales $ $ $ 1 Operating Expenses $ $ $ 1 1 TCCC Commissions based on sales to the TCCC Related Parties. There were no other identified changes to our revenue recognition policies as a result of the adoption of ASC 606. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INVESTMENTS | |
Summary of investments in available-for-sale | June 30, 2018 Amortized Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ 15,177 $ - $ - $ 15,177 $ - $ - Municipal securities 149,048 5 56 148,997 56 - U.S. government agency securities 46,982 - 63 46,919 63 - Variable rate demand notes - - - - - - Total $ 211,207 $ 5 $ 119 $ 211,093 $ 119 $ - December 31, 2017 Amortized Gross Gross Fair Continuous Continuous Available-for-sale Short-term: Commercial paper $ 81,026 $ - $ - $ 81,026 $ - $ - Certificates of deposit 11,869 - - 11,869 - - Municipal securities 469,604 1 740 468,865 740 - U.S. government agency securities 61,307 - 88 61,219 88 - Variable rate demand notes 49,954 - - 49,954 - - Long-term: U.S. government agency securities 2,369 - 3 2,366 3 - Total $ 676,129 $ 1 $ 831 $ 675,299 $ 831 $ - |
Summarizes the underlying contractual maturities of the Company's investments | June 30, 2018 December 31, 2017 Amortized Cost Fair Value Amortized Cost Fair Value Less than 1 year: Commercial paper $ 15,177 $ 15,177 $ 81,026 $ Municipal securities 149,048 148,997 469,604 U.S. government agency securities 46,982 46,919 61,307 Certificates of deposit - - 11,869 Due 1 -10 years: U.S. government agency securities - - 2,369 Variable rate demand notes - - 6,366 Due 11 - 20 years: Variable rate demand notes - - 28,377 Due 21 - 30 years: Variable rate demand notes - - 15,211 Total $ 211,207 $ 211,093 $ 676,129 $ |
FAIR VALUE OF CERTAIN FINANCI28
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES | |
Schedule of financial assets and liabilities recorded at fair value on a recurring basis | June 30, 2018 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Commercial paper - - 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, 2017 Level 1 Level 2 Level 3 Total Cash $ $ - $ - $ Money market funds - - Certificates of deposit - - Commercial paper - - Variable rate demand notes - - Municipal securities - - U.S. government agency securities - - U.S. Treasuries - - Foreign currency derivatives - ) - ) Total $ $ $ - $ Amounts included in: Cash and cash equivalents $ $ $ - $ Short-term investments - - Accounts receivable, net - - Investments - - Accrued liabilities - ) - ) Total $ $ $ - $ |
DERIVATIVE INSTRUMENTS AND HE29
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 | June 30, 2018 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive SGD/pay USD $ $ Accounts receivable, net Receive USD/pay NZD Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay EUR $ $ Accrued liabilities Receive USD/pay GBP Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay TRY Accrued liabilities Receive USD/pay COP Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay RUB Accrued liabilities December 31, 2017 Derivatives not designated as Notional Fair Balance Sheet Location Assets: Foreign currency exchange contracts: Receive CAD/pay USD $ $ Accounts receivable, net Receive USD/pay COP Accounts receivable, net Receive USD/pay BRL Accounts receivable, net Receive NOK/pay USD Accounts receivable, net Receive SGD/pay USD Accounts receivable, net Liabilities: Foreign currency exchange contracts: Receive USD/pay EUR $ $ Accrued liabilities Receive USD/pay GBP Accrued liabilities Receive USD/pay ZAR Accrued liabilities Receive USD/pay AUD Accrued liabilities Receive USD/pay MXN Accrued liabilities Receive USD/pay TRY Accrued liabilities Receive USD/pay NZD Accrued liabilities Receive USD/pay CLP Accrued liabilities |
Schedule of net gains (losses) on derivative instruments in the condensed consolidated statements of income | Amount of gain (loss) Three-months ended Derivatives not designated as Location of gain (loss) June 30, 2018 June 30, 2017 Foreign currency exchange contracts Interest and other income (expense), net $ $ Amount of gain (loss) Six-months ended Derivatives not designated as Location of gain (loss) June 30, 2018 June 30, 2017 Foreign currency exchange contracts Interest and other income (expense), net $ $ |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INVENTORIES | |
Schedule of inventories | June 30, December 31, Raw materials $ $ Finished goods $ $ |
PROPERTY AND EQUIPMENT, NET (Ta
PROPERTY AND EQUIPMENT, NET (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
PROPERTY AND EQUIPMENT, NET | |
Schedule of property and equipment | June 30, 2018 December 31, Land $ $ Leasehold improvements Furniture and fixtures Office and computer equipment Computer software Equipment Buildings Vehicles Less: accumulated depreciation and amortization $ $ |
GOODWILL AND OTHER INTANGIBLE32
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of Goodwill | Monster Strategic Other Total Balance at December 31, 2017 $ $ $ - $ Acquisitions - - - - Balance at June 30, 2018 $ $ $ - $ Monster Strategic Other Total Balance at December 31, 2016 $ $ $ - $ Acquisitions - - - - Balance at June 30, 2017 $ $ $ - $ |
Schedule of intangibles | June 30, December 31, Amortizing intangibles $ $ Accumulated amortization Non-amortizing intangibles $ $ |
ACCUMULATED OTHER COMPREHENSI33
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | |
Changes in accumulated other comprehensive loss by component, after tax | Currency Unrealized Total Balance at December 31, 2017 $ $ $ Other comprehensive loss (gain) before reclassifications Amounts reclassified from accumulated other comprehensive loss (gain) - - - Net current-period other comprehensive loss (gain) Balance at June 30, 2018 $ $ $ |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
STOCK-BASED COMPENSATION | |
Schedule of weighted-average assumptions used to estimate the fair value of options granted | Three-Months Ended June 30, Six-Months Ended June 30, 2018 2017 2018 2017 Dividend yield Expected volatility Risk-free interest rate Expected term 6.1 years 6.1 years 6.1 years 6.1 years |
Summary of Company's activities with respect to its stock option plans | Options Number of Weighted- Weighted- Aggregate Outstanding at January 1, 2018 $ $ 600,032 Granted 01/01/18 - 03/31/18 $ Granted 04/01/18 - 06/30/18 $ Exercised $ Cancelled or forfeited $ Outstanding at June 30, 2018 $ $ Vested and expected to vest in the future at June 30, 2018 $ $ 451,327 Exercisable at June 30, 2018 $ $ 371,252 |
Summary of Company's activities with respect to non-vested restricted stock units | Number of Weighted Non-vested at January 1, 2018 $ Granted 01/01/18- 03/31/18 $ Granted 04/01/18- 06/30/18 $ Vested $ Forfeited/cancelled $ Non-vested at June 30, 2018 $ |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
INCOME TAXES | |
Schedule of roll-forward of the Company's total gross unrecognized tax benefits, not including interest and penalties | Gross Unrecognized Tax Balance at December 31, 2017 $ Additions for tax positions related to the current year Additions for tax positions related to the prior year Decreases related to settlement with taxing authority Balance at June 30, 2018 $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
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 is presented below (in thousands): Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Weighted-average shares outstanding: Basic Dilutive Diluted |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
SEGMENT INFORMATION | |
Schedule of net revenues and other financial information by segment | Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Net sales: Monster Energy® Drinks ( ¹ ) $ $ $ $ Strategic Brands Other Corporate and unallocated - - - - $ $ $ $ Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Operating Income: Monster Energy® Drinks ( ¹ ) (2) $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Income before tax: Monster Energy® Drinks ( ¹ ) (2) $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ (1) Includes $11.0 million and $10.2 million for the three-months ended June 30, 2018 and 2017, respectively, related to the recognition of deferred revenue. Includes $22.2 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively, related to the recognition of deferred revenue. (2) Includes $5.5 million and $0.2 million for the three-months ended June 30, 2018 and 2017, respectively, related to distributor termination costs. Includes $12.5 million and $20.1 million for the six-months ended June 30, 2018 and 2017, respectively, related to distributor termination costs. Three-Months Ended Six-Months Ended June 30, June 30, 2018 2017 2018 2017 Depreciation and amortization: Monster Energy® Drinks $ $ $ $ Strategic Brands Other Corporate and unallocated $ $ $ $ |
Schedule of goodwill and other intangible assets for the Company's reportable segments | June 30, December 31, 2018 2017 Goodwill and other intangible assets: Monster Energy® Drinks $ $ Strategic Brands Other Corporate and unallocated - - $ $ |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
RELATED PARTY TRANSACTIONS | |
Schedule of related party transactions | June 30, 2018 December 31, 2017 Accounts receivable, net $ $ Accounts payable $ $ Accrued promotional allowances $ $ |
RECENT ACCOUNTING PRONOUNCEME39
RECENT ACCOUNTING PRONOUNCEMENTS (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Retained earnings | $ 3,407,806 | $ 2,928,226 |
ASU 2016-16 | Adjustment | ||
Deferred income tax | (6,600) | |
Retained earnings | $ 6,600 |
REVENUE RECOGNITION - Impact of
REVENUE RECOGNITION - Impact of adoption of ASC 606 (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)segment | Jun. 30, 2017USD ($) | |
Number of operating segments | segment | 3 | |||
Number of reportable segments | segment | 3 | |||
Net Sales | $ 1,015,873 | $ 1,866,793 | ||
Operating Expenses | 262,637 | $ 233,456 | 497,979 | $ 450,068 |
Without 606 Adoption of ASC 606 | ||||
Net Sales | 1,028,085 | 1,888,945 | ||
Operating Expenses | 274,849 | 520,131 | ||
(Decrease) Increase due to Adoption of ASC606 | ||||
Net Sales | (12,212) | (22,152) | ||
Operating Expenses | $ (12,212) | $ (22,152) |
REVENUE RECOGNITION - Disaggreg
REVENUE RECOGNITION - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Total Net Sales | $ 1,015,873 | $ 1,866,793 | |
Contract Liabilities | |||
Deferred revenue | 364,100 | 364,100 | $ 377,600 |
Deferred revenue recognized in net sales | 11,000 | 22,200 | |
U.S. And Canada | |||
Total Net Sales | 752,719 | 1,385,915 | |
EMEA | |||
Total Net Sales | 161,575 | 291,818 | |
Asia Pacific | |||
Total Net Sales | 66,974 | 119,953 | |
Latin America And Caribbean | |||
Total Net Sales | 34,605 | 69,107 | |
Monster Energy Drinks | |||
Total Net Sales | 929,439 | 1,709,943 | |
Monster Energy Drinks | U.S. And Canada | |||
Total Net Sales | 695,963 | 1,284,778 | |
Monster Energy Drinks | EMEA | |||
Total Net Sales | 138,608 | 249,538 | |
Monster Energy Drinks | Asia Pacific | |||
Total Net Sales | 60,606 | 108,037 | |
Monster Energy Drinks | Latin America And Caribbean | |||
Total Net Sales | 34,262 | 67,590 | |
Strategic Brands | |||
Total Net Sales | 79,811 | 145,570 | |
Strategic Brands | U.S. And Canada | |||
Total Net Sales | 50,133 | 89,857 | |
Strategic Brands | EMEA | |||
Total Net Sales | 22,967 | 42,280 | |
Strategic Brands | Asia Pacific | |||
Total Net Sales | 6,368 | 11,916 | |
Strategic Brands | Latin America And Caribbean | |||
Total Net Sales | 343 | 1,517 | |
Other | |||
Total Net Sales | 6,623 | 11,280 | |
Other | U.S. And Canada | |||
Total Net Sales | $ 6,623 | $ 11,280 |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Available-for-sale | ||
Amortized Cost | $ 211,207 | $ 676,129 |
Gross Unrealized Holding Gains | 5 | 1 |
Gross Unrealized Holding Losses | 119 | 831 |
Fair Value | 211,093 | 675,299 |
Continuous Unrealized Loss Position less than 12 Months | 119 | 831 |
Short-term | Commercial paper | ||
Available-for-sale | ||
Amortized Cost | 15,177 | 81,026 |
Fair Value | 15,177 | 81,026 |
Short-term | Certificates of deposit | ||
Available-for-sale | ||
Amortized Cost | 11,869 | |
Fair Value | 11,869 | |
Short-term | Municipal securities | ||
Available-for-sale | ||
Amortized Cost | 149,048 | 469,604 |
Gross Unrealized Holding Gains | 5 | 1 |
Gross Unrealized Holding Losses | 56 | 740 |
Fair Value | 148,997 | 468,865 |
Continuous Unrealized Loss Position less than 12 Months | 56 | 740 |
Short-term | U.S. government agency securities | ||
Available-for-sale | ||
Amortized Cost | 46,982 | 61,307 |
Gross Unrealized Holding Losses | 63 | 88 |
Fair Value | 46,919 | 61,219 |
Continuous Unrealized Loss Position less than 12 Months | $ 63 | 88 |
Short-term | Variable rate demand notes | ||
Available-for-sale | ||
Amortized Cost | 49,954 | |
Fair Value | 49,954 | |
Long-term | U.S. government agency securities | ||
Available-for-sale | ||
Amortized Cost | 2,369 | |
Gross Unrealized Holding Losses | 3 | |
Fair Value | 2,366 | |
Continuous Unrealized Loss Position less than 12 Months | $ 3 |
INVESTMENTS - Maturity Period (
INVESTMENTS - Maturity Period (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Investments | ||
Amortized Cost | $ 211,207 | $ 676,129 |
Fair Value | 211,093 | 675,299 |
Commercial paper | Less than 1 year | ||
Investments | ||
Amortized Cost | 15,177 | 81,026 |
Fair Value | 15,177 | 81,026 |
Municipal securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 149,048 | 469,604 |
Fair Value | 148,997 | 468,865 |
U.S. government agency securities | Less than 1 year | ||
Investments | ||
Amortized Cost | 46,982 | 61,307 |
Fair Value | $ 46,919 | 61,219 |
U.S. government agency securities | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 2,369 | |
Fair Value | 2,366 | |
Certificates of deposit | Less than 1 year | ||
Investments | ||
Amortized Cost | 11,869 | |
Fair Value | 11,869 | |
Variable rate demand notes | Due 1 - 10 years | ||
Investments | ||
Amortized Cost | 6,366 | |
Fair Value | 6,366 | |
Variable rate demand notes | Due 11 - 20 years | ||
Investments | ||
Amortized Cost | 28,377 | |
Fair Value | 28,377 | |
Variable rate demand notes | Due 21 - 30 years | ||
Investments | ||
Amortized Cost | 15,211 | |
Fair Value | $ 15,211 |
FAIR VALUE OF CERTAIN FINANCI44
FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES - Assets - Recurring Basis (Details) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Fair value of certain financial assets and liabilities | ||
Cash and cash equivalents | $ 659,687 | $ 528,622 |
Short-term investments | 211,093 | 672,933 |
Investments | 2,366 | |
Asset transfers between Level 1 and Level 2 measurements | 0 | 0 |
Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Cash and cash equivalents | 659,687 | 528,622 |
Short-term investments | 211,093 | 672,933 |
Accounts receivable, net | 21 | 95 |
Investments | 2,366 | |
Accrued liabilities | (1,017) | (1,579) |
Assets measured at fair value | 869,784 | 1,202,437 |
Cash | 358,788 | 310,885 |
Foreign currency derivatives | (996) | (1,484) |
Money market funds | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 299,949 | 112,848 |
Certificates of deposit | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 15,720 | |
Commercial paper | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 16,127 | 99,903 |
Variable rate demand notes | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 49,954 | |
Municipal securities | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 148,997 | 529,984 |
U.S. government agency securities | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 46,919 | 81,230 |
U.S. Treasuries | Total fair value | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 3,397 | |
Level 1 | ||
Fair value of certain financial assets and liabilities | ||
Cash and cash equivalents | 658,737 | 423,733 |
Assets measured at fair value | 658,737 | 423,733 |
Cash | 358,788 | 310,885 |
Level 1 | Money market funds | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 299,949 | 112,848 |
Level 2 | ||
Fair value of certain financial assets and liabilities | ||
Cash and cash equivalents | 950 | 104,889 |
Short-term investments | 211,093 | 672,933 |
Accounts receivable, net | 21 | 95 |
Investments | 2,366 | |
Accrued liabilities | (1,017) | (1,579) |
Assets measured at fair value | 211,047 | 778,704 |
Foreign currency derivatives | (996) | (1,484) |
Level 2 | Certificates of deposit | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 15,720 | |
Level 2 | Commercial paper | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 16,127 | 99,903 |
Level 2 | Variable rate demand notes | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 49,954 | |
Level 2 | Municipal securities | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | 148,997 | 529,984 |
Level 2 | U.S. government agency securities | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | $ 46,919 | 81,230 |
Level 2 | U.S. Treasuries | ||
Fair value of certain financial assets and liabilities | ||
Assets measured at fair value | $ 3,397 |
DERIVATIVE INSTRUMENTS AND HE45
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Notional Amount and Fair Value (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2018 | Dec. 31, 2017 | |
Foreign currency exchange contracts | Maximum | ||
Derivative Instruments and Hedging Activities | ||
Term of derivative instrument | 1 month | |
Not designated as hedging instruments | Receive CAD/pay USD | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | $ 4,892 | |
Fair Value, Assets | 61 | |
Not designated as hedging instruments | Receive SGD/pay USD | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | $ 5,279 | 223 |
Fair Value, Assets | 7 | 2 |
Not designated as hedging instruments | Receive NOK/pay USD | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 918 | 1,534 |
Fair Value, Assets | 2 | 18 |
Not designated as hedging instruments | Receive USD/pay BRL | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 1,806 | |
Fair Value, Assets | 1 | |
Not designated as hedging instruments | Receive USD/pay BRL | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,567 | |
Fair Value, Liabilities | (30) | |
Not designated as hedging instruments | Receive USD/pay CLP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 1,112 | |
Fair Value, Liabilities | (8) | |
Not designated as hedging instruments | Receive USD/pay COP | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,803 | |
Fair Value, Assets | 13 | |
Not designated as hedging instruments | Receive USD/pay GBP | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 37,904 | 31,342 |
Fair Value, Liabilities | (129) | (334) |
Not designated as hedging instruments | Receive USD/pay EUR | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 50,572 | 65,131 |
Fair Value, Liabilities | (408) | (642) |
Not designated as hedging instruments | Receive USD/pay AUD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 14,118 | 17,238 |
Fair Value, Liabilities | (82) | (177) |
Not designated as hedging instruments | Receive USD/pay ZAR | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 16,633 | 21,311 |
Fair Value, Liabilities | (192) | (222) |
Not designated as hedging instruments | Receive USD/pay MXN | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 3,035 | 7,720 |
Fair Value, Liabilities | (54) | (126) |
Not designated as hedging instruments | Receive USD/pay NZD | Accounts receivable, net | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Assets | 2,719 | |
Fair Value, Assets | 12 | |
Not designated as hedging instruments | Receive USD/pay NZD | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 1,826 | |
Fair Value, Liabilities | (18) | |
Not designated as hedging instruments | Receive USD/pay TRY | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 5,277 | 5,483 |
Fair Value, Liabilities | (92) | $ (52) |
Not designated as hedging instruments | Receive USD/pay RUB | Accrued liabilities | ||
Derivative Instruments and Hedging Activities | ||
Notional amount, Liabilities | 2,774 | |
Fair Value, Liabilities | $ (30) |
DERIVATIVE INSTRUMENTS AND HE46
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Nonhedging Designation (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Not designated as hedging instruments | Foreign currency exchange contracts | Interest and other income (expense), net | ||||
Net (losses) gains on derivative instruments | ||||
Amount of (loss) gain recognized in income on derivatives | $ 10,393 | $ (4,439) | $ 5,734 | $ (9,467) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
INVENTORIES | ||
Raw materials | $ 89,362 | $ 78,834 |
Finished goods | 186,204 | 176,911 |
Inventories, net | $ 275,566 | $ 255,745 |
PROPERTY AND EQUIPMENT, NET (De
PROPERTY AND EQUIPMENT, NET (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Property and equipment, net | |||||
Property and equipment, gross | $ 397,259 | $ 397,259 | $ 369,086 | ||
Less: accumulated depreciation and amortization | (156,601) | (156,601) | (138,810) | ||
Property and equipment, net | 240,658 | 240,658 | 230,276 | ||
Total depreciation and amortization expense | 11,200 | $ 8,600 | 22,200 | $ 16,800 | |
Land | |||||
Property and equipment, net | |||||
Property and equipment, gross | 44,261 | 44,261 | 47,373 | ||
Leasehold improvements | |||||
Property and equipment, net | |||||
Property and equipment, gross | 3,278 | 3,278 | 3,109 | ||
Furniture and fixtures | |||||
Property and equipment, net | |||||
Property and equipment, gross | 6,732 | 6,732 | 6,461 | ||
Office and computer equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 17,683 | 17,683 | 14,506 | ||
Computer software | |||||
Property and equipment, net | |||||
Property and equipment, gross | 3,334 | 3,334 | 3,650 | ||
Equipment | |||||
Property and equipment, net | |||||
Property and equipment, gross | 165,861 | 165,861 | 148,434 | ||
Buildings | |||||
Property and equipment, net | |||||
Property and equipment, gross | 116,143 | 116,143 | 107,374 | ||
Vehicles | |||||
Property and equipment, net | |||||
Property and equipment, gross | $ 39,967 | $ 39,967 | $ 38,179 |
GOODWILL AND OTHER INTANGIBLE49
GOODWILL AND OTHER INTANGIBLE ASSETS - Goodwill (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 | Jun. 30, 2017 |
Goodwill | |||
Goodwill, Beginning Balance | $ 1,331,643 | $ 1,331,643 | $ 1,331,643 |
Goodwill, Ending Balance | 1,331,643 | 1,331,643 | 1,331,643 |
Monster Energy Drinks | |||
Goodwill | |||
Goodwill, Beginning Balance | 693,644 | 693,644 | 693,644 |
Goodwill, Ending Balance | 693,644 | 693,644 | 693,644 |
Strategic Brands | |||
Goodwill | |||
Goodwill, Beginning Balance | 637,999 | 637,999 | 637,999 |
Goodwill, Ending Balance | $ 637,999 | $ 637,999 | $ 637,999 |
GOODWILL AND OTHER INTANGIBLE50
GOODWILL AND OTHER INTANGIBLE ASSETS - Intangible assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Intangible assets | |||||
Amortizing intangibles | $ 71,355 | $ 71,355 | $ 71,400 | ||
Accumulated amortization | (32,387) | (32,387) | (26,383) | ||
Amortizing intangibles, net | 38,968 | 38,968 | 45,017 | ||
Non-amortizing intangibles | 1,000,433 | 1,000,433 | 989,068 | ||
Intangible, net | 1,039,401 | 1,039,401 | $ 1,034,085 | ||
Amortization of in intangible assets | $ 3,000 | $ 3,000 | $ 6,000 | $ 6,000 | |
Minimum | |||||
Intangible assets | |||||
Useful life of intangible assets | 5 years | ||||
Maximum | |||||
Intangible assets | |||||
Useful life of intangible assets | 7 years |
DISTRIBUTION AGREEMENTS (Detail
DISTRIBUTION AGREEMENTS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
DISTRIBUTION AGREEMENTS | ||||
Termination costs | $ 5.5 | $ 0.2 | $ 12.5 | $ 20.1 |
Distribution agreement (in years) | 20 years | |||
Revenue recognized | $ 11 | $ 10.2 | $ 22.2 | $ 20.1 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Purchase Commitments (Details) $ in Millions | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Purchase Commitments | |
Aggregate contractual obligations | $ 154.2 |
Aggregate operating lease commitments | 16.3 |
Raw materials | |
Purchase Commitments | |
Purchase commitments | $ 50 |
Obligation term ( in years) | 1 year |
COMMITMENTS AND CONTINGENCIES53
COMMITMENTS AND CONTINGENCIES - Line of Credit Facility (Details) - Line of credit - HSBC China - USD ($) $ in Millions | Jun. 30, 2018 | Feb. 28, 2018 | Dec. 31, 2017 |
Commitments and Contingencies | |||
Maximum borrowing capacity | $ 15 | $ 9 | |
Accounts payable | |||
Commitments and Contingencies | |||
Amount outstanding | $ 11.2 | ||
People's Bank of China | |||
Commitments and Contingencies | |||
Interest rate on borrowings | 5.50% |
COMMITMENTS AND CONTINGENCIES54
COMMITMENTS AND CONTINGENCIES - State Attorney General Inquiry (Details) $ in Millions | Jun. 30, 2018USD ($) |
COMMITMENTS AND CONTINGENCIES | |
Accrued loss contingencies | $ 3.3 |
ACCUMULATED OTHER COMPREHENSI55
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Components of accumulated other comprehensive loss: | |
Balance at the beginning of the period | $ 16,659 |
Other comprehensive loss (gain) before reclassifications | 8,537 |
Net current-period other comprehensive loss (gain) | 8,537 |
Balance at the end of the period | 25,196 |
Currency Translation Losses | |
Components of accumulated other comprehensive loss: | |
Balance at the beginning of the period | 15,818 |
Other comprehensive loss (gain) before reclassifications | 9,265 |
Net current-period other comprehensive loss (gain) | 9,265 |
Balance at the end of the period | 25,083 |
Unrealized (Gains) Losses on Available-for-Sale Securities | |
Components of accumulated other comprehensive loss: | |
Balance at the beginning of the period | 841 |
Other comprehensive loss (gain) before reclassifications | (728) |
Net current-period other comprehensive loss (gain) | (728) |
Balance at the end of the period | $ 113 |
TREASURY STOCK (Details)
TREASURY STOCK (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 09, 2017 | Jun. 30, 2018 | Aug. 09, 2018 | Aug. 07, 2018 | May 29, 2018 | Feb. 27, 2018 |
Equity, Class of Treasury Stock | ||||||
Number of shares repurchased of common stock from employees in lieu of cash or withholding taxes due | 504 | |||||
Cash payment for repurchase of common stock from employees in lieu of cash or withholding taxes due | $ 30 | |||||
February 2018 Repurchase Plan | ||||||
Equity, Class of Treasury Stock | ||||||
Stock repurchase program, authorized amount | $ 250,000 | |||||
Common stock repurchased (in shares) | 5,000,000 | |||||
Average purchase price (in dollars per share) | $ 49.81 | |||||
Repurchase price of stock | $ 249,900 | |||||
May 2018 Repurchase Plan | ||||||
Equity, Class of Treasury Stock | ||||||
Stock repurchase program, authorized amount | $ 500,000 | |||||
Common stock repurchased (in shares) | 5,500,000 | |||||
Average purchase price (in dollars per share) | $ 54.78 | |||||
Repurchase price of stock | $ 196,700 | $ 303,200 | ||||
August 2018 Repurchase Plan | ||||||
Equity, Class of Treasury Stock | ||||||
Stock repurchase program, authorized amount | $ 500,000 | |||||
Stock repurchase program, authorized remaining amount | $ 500,000 |
STOCK-BASED COMPENSATION - Plan
STOCK-BASED COMPENSATION - Plans (Details) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)plan | Jun. 30, 2017USD ($) | |
Stock-based compensation | ||||
Stock-based compensation plans | plan | 2 | |||
Compensation expense on share-based plans | $ 14.9 | $ 12.8 | $ 28.3 | $ 26 |
Stock options | ||||
Stock-based compensation | ||||
Excess tax benefit realized for tax deductions from non-qualified stock option exercises and disqualifying dispositions of incentive stock options | $ 1.7 | $ 1.9 | $ 4.5 | $ 11.3 |
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 | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Weighted-average assumptions used to estimate the fair value of options granted | ||||||
Dividend yield (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | ||
Expected volatility (as a percent) | 34.90% | 36.50% | 34.90% | 36.60% | ||
Risk-free interest rate (as a percent) | 2.70% | 1.80% | 2.80% | 2.10% | ||
Expected term | 6 years 1 month 6 days | 6 years 1 month 6 days | 6 years 1 month 6 days | 6 years 1 month 6 days | ||
Stock Options, Number of Shares | ||||||
Balance at the beginning of the period (in shares) | 17,819 | 17,819 | ||||
Granted (in shares) | 360 | 2,615 | ||||
Exercised (in shares) | (814) | |||||
Cancelled or forfeited (in shares) | (216) | |||||
Balance at the end of the period (in shares) | 19,764 | 19,764 | 17,819 | |||
Vested and expected to vest in the future at the end of the period (in shares) | 18,673 | 18,673 | ||||
Exercisable at the end of the period (in shares) | 10,639 | 10,639 | ||||
Stock options, Weighted-Average Exercise Price Per Share | ||||||
Balance at the beginning of the period (in dollars per share) | $ 29.62 | $ 29.62 | ||||
Granted (in dollars per share) | $ 51.72 | $ 58.76 | ||||
Exercised (in dollars per share) | 16.73 | |||||
Cancelled or forfeited (in dollars per share) | 42.60 | |||||
Balance at the end of the period (in dollars per share) | 34.26 | 34.26 | $ 29.62 | |||
Vested and expected to vest in the future at the end of the period (in dollars per share) | 33.32 | 33.32 | ||||
Exercisable at the end of the period (in dollars per share) | $ 22.40 | $ 22.40 | ||||
Weighted-Average Remaining Contractual Term | ||||||
Balance at the beginning of the period | 6 years 2 months 12 days | 6 years 1 month 6 days | ||||
Balance at the end of the period | 6 years 2 months 12 days | 6 years 1 month 6 days | ||||
Vested and expected to vest in the future at the end of the period | 6 years 1 month 6 days | |||||
Exercisable at the end of the period | 4 years 6 months | |||||
Aggregate Intrinsic Value | ||||||
Balance at the beginning of the period | $ 600,032 | $ 600,032 | ||||
Balance at the end of the period | $ 459,527 | 459,527 | $ 600,032 | |||
Vested and expected to vest in the future at the end of the period | 451,327 | 451,327 | ||||
Exercisable at the end of the period | $ 371,252 | $ 371,252 |
STOCK-BASED COMPENSATION - Equi
STOCK-BASED COMPENSATION - Equity Awards (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Stock options | |||||
Stock-based compensation | |||||
Weighted-average grant-date fair value of options granted (in dollars per share) | $ 20.20 | $ 18.97 | $ 22.51 | $ 18.01 | |
Total intrinsic value of options exercised | $ 14.7 | $ 8.5 | $ 32.9 | $ 40.9 | |
Cash received from option exercises | 7.1 | $ 5.5 | 13.6 | $ 19.1 | |
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 121.1 | $ 121.1 | |||
Cost expected to be recognized over a weighted-average period | 3 years | ||||
Stock units expected to vest (in shares) | 18,673 | 18,673 | |||
Restricted stock units | |||||
Stock-based compensation | |||||
Total unrecognized compensation expense related to non-vested shares granted to employees | $ 22.2 | $ 22.2 | |||
Cost expected to be recognized over a weighted-average period | 2 years 1 month 6 days | ||||
Stock units expected to vest (in shares) | 500 | 500 | |||
Number of Shares | |||||
Non-vested at the beginning of the period (in shares) | 530 | 530 | |||
Granted (in shares) | 48 | 221 | |||
Vested (in shares) | (262) | ||||
Forfeited/cancelled (in shares) | (6) | ||||
Non-vested at the end of the period (in shares) | 531 | 531 | |||
Weighted Average Grant-Date Fair Value | |||||
Non-vested at the beginning of the period (in dollars per share) | $ 45.09 | $ 45.09 | |||
Granted (in dollars per share) | $ 52.31 | $ 58.75 | $ 50.86 | 57.59 | $ 46.65 |
Vested (in dollars per share) | 45.36 | ||||
Forfeited/cancelled (in dollars per share) | 32.17 | ||||
Non-vested at the end of the period (in dollars per share) | $ 51.45 | $ 51.45 |
INCOME TAXES - Tax Cuts and Job
INCOME TAXES - Tax Cuts and Jobs Act (Details) - USD ($) $ in Millions | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
INCOME TAXES | ||
Federal statutory rate (as a percent) | 21.00% | 35.00% |
Provisional charge, revaluated net deferred tax assets | $ 39.8 | |
Provision related to deemed mandatory repatriation | $ 2.1 |
INCOME TAXES - Unrecognized Tax
INCOME TAXES - Unrecognized Tax Benefit Rollforward (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2018USD ($) | |
Gross unrecognized tax benefits, roll forward | |
Balance at the beginning of the period | $ 6,540 |
Additions for tax positions related to the current year | 210 |
Additions for tax positions related to the prior year | 1,172 |
Decreases related to settlement with taxing authority | (2,665) |
Balance at the end of the period | 5,257 |
Accrued interest and penalties related to unrecognized tax benefits | $ 1,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Weighted-average shares outstanding: | ||||
Basic | 559,867 | 567,910 | 562,917 | 567,384 |
Dilutive | 6,485 | 10,110 | 7,314 | 10,335 |
Diluted | 566,352 | 578,020 | 570,231 | 577,719 |
Options and awards outstanding excluded from the calculations as their effect would have been antidilutive (in shares) | 6,400 | 8,800 | 2,600 | 8,400 |
SEGMENT INFORMATION - Net Reven
SEGMENT INFORMATION - Net Revenues (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)segment | Jun. 30, 2017USD ($) | |
Segment information | ||||
Number of reportable segments | segment | 3 | |||
Number of operating segments | segment | 3 | |||
Net Sales | $ 1,015,873 | $ 907,068 | $ 1,866,793 | $ 1,649,214 |
Operating income | 357,621 | 350,041 | 637,535 | 614,303 |
Income before tax | 358,097 | 347,490 | 639,816 | 612,410 |
Recognition of deferred revenue | 11,000 | 10,200 | 22,200 | 20,100 |
Corporate and unallocated | ||||
Segment information | ||||
Operating income | (68,099) | (61,075) | (133,460) | (119,766) |
Income before tax | (67,904) | (63,718) | (131,702) | (121,643) |
Monster Energy Drinks | Operating segment | ||||
Segment information | ||||
Net Sales | 929,439 | 815,261 | 1,709,943 | 1,483,831 |
Operating income | 373,103 | 356,223 | 674,805 | 635,654 |
Income before tax | 373,342 | 356,316 | 675,305 | 635,651 |
Recognition of deferred revenue | 11,000 | 10,200 | 22,200 | 20,100 |
Distribution Agreements Termination Cost | 5,500 | 200 | 12,500 | 20,100 |
Strategic Brands | Operating segment | ||||
Segment information | ||||
Net Sales | 79,811 | 85,633 | 145,570 | 153,669 |
Operating income | 50,791 | 53,175 | 93,393 | 95,281 |
Income before tax | 50,833 | 53,174 | 93,416 | 95,268 |
Other | Operating segment | ||||
Segment information | ||||
Net Sales | 6,623 | 6,174 | 11,280 | 11,714 |
Operating income | 1,826 | 1,718 | 2,797 | 3,134 |
Income before tax | $ 1,826 | $ 1,718 | $ 2,797 | $ 3,134 |
SEGMENT INFORMATION - Depreciat
SEGMENT INFORMATION - Depreciation and Amortization (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment information | ||||
Depreciation and amortization | $ 14,194 | $ 11,593 | $ 28,185 | $ 22,775 |
Corporate and unallocated | ||||
Segment information | ||||
Depreciation and amortization | 2,121 | 1,725 | 4,217 | 3,418 |
Monster Energy Drinks | Operating segment | ||||
Segment information | ||||
Depreciation and amortization | 8,960 | 6,873 | 17,770 | 13,413 |
Strategic Brands | Operating segment | ||||
Segment information | ||||
Depreciation and amortization | 1,946 | 1,842 | 3,872 | 3,638 |
Other | Operating segment | ||||
Segment information | ||||
Depreciation and amortization | $ 1,167 | $ 1,153 | $ 2,326 | $ 2,306 |
SEGMENT INFORMATION - Expenses
SEGMENT INFORMATION - Expenses (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment information | ||||
Operating income | $ 357,621 | $ 350,041 | $ 637,535 | $ 614,303 |
Stock-based compensation expense | 14,900 | 12,800 | 28,300 | 26,000 |
Corporate and unallocated | ||||
Segment information | ||||
Operating income | (68,099) | (61,075) | (133,460) | (119,766) |
Payroll costs | 44,700 | 38,400 | 87,800 | 76,100 |
Stock-based compensation expense | 14,900 | 12,800 | 28,300 | 26,000 |
Professional service expenses | 11,800 | 14,000 | 24,200 | 26,400 |
Other operating expenses | $ 11,600 | $ 8,600 | $ 21,400 | $ 17,300 |
SEGMENT INFORMATION - Concentra
SEGMENT INFORMATION - Concentration Risk (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Segment information | ||||
Net Sales | $ 1,015,873 | $ 907,068 | $ 1,866,793 | $ 1,649,214 |
Outside United States | ||||
Segment information | ||||
Net Sales | $ 293,800 | $ 247,900 | $ 535,900 | $ 438,800 |
TCCC | Net Sales | Customer concentration | ||||
Segment information | ||||
Percentage of net sales | 4.00% | 17.00% | 4.00% | 25.00% |
CCBCC Operations, LLC | Net Sales | Customer concentration | ||||
Segment information | ||||
Percentage of net sales | 13.00% | 13.00% | 13.00% | 12.00% |
Coca-Cola European Partners | Net Sales | Customer concentration | ||||
Segment information | ||||
Percentage of net sales | 9.00% | 9.00% | 10.00% | 9.00% |
Reyes Coca-Cola Bottling | Net Sales | Customer concentration | ||||
Segment information | ||||
Percentage of net sales | 12.00% | 5.00% | 13.00% | 4.00% |
SEGMENT INFORMATION - Goodwill
SEGMENT INFORMATION - Goodwill and other intangible assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Dec. 31, 2017 |
Segment information | ||
Goodwill and other intangible assets | $ 2,371,044 | $ 2,365,728 |
Monster Energy Drinks | Operating segment | ||
Segment information | ||
Goodwill and other intangible assets | 1,357,017 | 1,346,648 |
Strategic Brands | Operating segment | ||
Segment information | ||
Goodwill and other intangible assets | 992,800 | 995,582 |
Other | Operating segment | ||
Segment information | ||
Goodwill and other intangible assets | $ 21,227 | $ 23,498 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($)item | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | |
TCCC | |||||
Related party transactions | |||||
Voting interest (as a percent) | 18.00% | 18.00% | |||
Net sales | $ 39,600 | $ 154,500 | $ 74,600 | $ 409,700 | |
Purchases from related party | 11,300 | 6,600 | 14,200 | 12,500 | |
TCCC Subsidiaries and TCCC Related parties | |||||
Related party transactions | |||||
Commission expenses | 13,200 | 24,500 | |||
TCCC Independent Bottlers | |||||
Related party transactions | |||||
Commission expenses | 4,300 | 7,500 | |||
TCCC Subsidiaries | |||||
Related party transactions | |||||
Commission expenses | 2,100 | 5,700 | |||
Accounts receivable, net | 42,337 | 42,337 | $ 32,607 | ||
Accounts payable | (34,368) | (34,368) | (45,465) | ||
Accrued promotional allowances | (9,851) | $ (9,851) | $ (5,884) | ||
TCCC Related parties and TCCC Independent Bottlers | Operating expense | |||||
Related party transactions | |||||
Commission expenses | 12,800 | 20,700 | |||
Principal owners | |||||
Related party transactions | |||||
Number of directors who are principal owners of a company that provides promotional materials | item | 2 | ||||
Expenses incurred in connection with materials or services provided by a related party | 600 | 1,200 | $ 1,400 | 1,400 | |
Monster Energy Drinks | TCCC Subsidiaries | |||||
Related party transactions | |||||
Contract manufacturing expenses | $ 6,400 | $ 2,900 | $ 11,800 | $ 5,100 |