SEGMENT INFORMATION

12 Months Ended

Dec. 31, 2015

SEGMENT INFORMATION

SEGMENT INFORMATION

18.SEGMENT INFORMATION

In the second quarter of 2015, as a result of the acquisitions and divestitures in connection with the TCCC Transaction, the Company revised its reportable segments to reflect managements’ current view of the business and to align its external financial reporting with its new operating and internal financial reporting model. Historical segment information has been revised to reflect the effect of this change.

The Company has three operating and reportable segments, (i) Finished Products, which is comprised of the Company’s Monster Energy® drink products (previously comprising the majority of the former Direct Store Delivery segment) (“Finished Products”), (ii) Concentrate, the principal products of which include the various energy drink brands acquired from TCCC as a result of the TCCC Transaction  (“Concentrate”) and (iii) Other, the principal products of which include the brands disposed of as a result of the TCCC Transaction (previously comprising the majority of the former Warehouse segment and the Peace Tea® brand) (“Other”).

The Company’s Finished Products segment generates net operating revenues by selling ready-to-drink packaged energy drinks to full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, drug chains, mass merchandisers, convenience chains, health food distributors, food service customers and the military.

The Company’s Concentrate segment generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners and water, which are then filled in authorized containers bearing the Company’s respective trademarks and sold to customers directly (or in some cases through wholesalers or other bottlers).

Generally, the Finished Products segment generates higher per case net operating revenues, but lower per case gross profit margins than the Concentrate segment.

Corporate and unallocated amounts that do not relate to a reportable segment have been allocated to “Corporate & Unallocated.” No asset information, other than goodwill and other intangible assets, has been provided for in the Company’s reportable segments as management does not measure or allocate such assets on a segment basis.

The net revenues derived from the Company’s reportable segments and other financial information related thereto for the years ended December 31, 2015, 2014 and 2013 are as follows:

	2015		2014		2013
Net sales:
Finished Products(1)	$	2,518,505	$	2,314,492	$	2,094,387
Concentrate	143,282		-		-
Other	60,777		150,375		152,041
Corporate and unallocated	-		-		-
	$	2,722,564	$	2,464,867	$	2,246,428

	2015		2014		2013
Operating Income:
Finished Products(1) (2)	$	836,053	$	904,224	$	728,298
Concentrate	89,841		-		-
Other(3)	165,233		7,560		(3,124)
Corporate and unallocated	(197,474)		(164,279)		(152,258)
	$	893,653	$	747,505	$	572,916

	2015		2014		2013
Income before tax:
Finished Products(1) (2)	$	836,429	$	904,888	$	729,053
Concentrate	89,825		-		-
Other(3)	165,233		7,557		(3,125)
Corporate and unallocated	(199,939)		(166,657)		(162,034)
	$	891,548	$	745,788	$	563,894

(1) Includes $62.8 million, $15.0 million and $14.8 million for the years ended December 31, 2015, 2014 and 2013, respectively, related to the recognition of deferred revenue.

(2) Includes $224.0 million, ($0.2) million and $10.8 million for the years ended December 31, 2015, 2014 and 2013, respectively, related to distributor termination costs.

(3) Includes $161.5 million gain on the sale of Monster Non-Energy for the year ended December 31, 2015.

	2015		2014		2013
Depreciation and amortization
Finished Products	$	21,464	$	19,572	$	18,888
Concentrate	3,868		-		-
Other	231		531		423
Corporate and unallocated	5,297		5,548		3,451
	$	30,860	$	25,651	$	22,762

Corporate and unallocated expenses were $197.5 million for the year ended December 31, 2015 and included $109.8 million of payroll costs, of which $32.7 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $60.8 million of professional service expenses, including accounting and legal costs, $7.0 million of insurance costs and $19.9 million of other operating expenses. Corporate and unallocated expenses were $164.3 million for the year ended December 31, 2014 and included $86.2 million of payroll costs, of which $28.6 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $43.8 million of professional service expenses, including accounting and legal costs, $7.4 million of insurance costs and $26.9 million of other operating expenses. Corporate and unallocated expenses were $152.3 million for the year ended December 31, 2013 and included $82.5 million of payroll costs, of which $28.8 million was attributable to stock-based compensation expense (see Note 14, “Stock-Based Compensation”), $38.7 million of professional service expenses, including accounting and legal costs, and $31.1 million of other operating expenses.

TCCC, through the TCCC Subsidiaries, accounted for approximately 42%, 29% and 29% of the Company’s net sales for the years ended December 31, 2015, 2014 and 2013, respectively.

Net sales to customers outside the United States amounted to $580.3 million, $534.2 million and $467.2 million for the years ended December 31, 2015, 2014 and 2013, respectively.  Such sales were approximately 21.3%, 21.7% and 20.8% of net sales for the years ended December 31, 2015, 2014 and 2013, respectively.

Goodwill and other intangible assets for the Company’s reportable segments as of December 31, 2015 and 2014 are as follows:

	December 31, 2015		December 31, 2014
Goodwill and other intangible assets:
Finished Products	$	699,346	$	50,748
Concentrate	1,008,355		-
Other	-		18,079
Corporate and unallocated	-		-
	$	1,707,701	$	68,827