RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2020

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS

19.         RELATED PARTY TRANSACTIONS

TCCC controls approximately 19.3% of the voting interests of the Company. The TCCC Subsidiaries, the TCCC Related Parties and certain TCCC independent bottlers/distributors, purchase and distribute the Company’s products in domestic and certain 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, were $15.7 million and $11.6 million for the three-months ended September 30, 2020 and 2019, respectively, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, were $37.7 million and $39.5 million for the nine-months ended September 30, 2020 and 2019, respectively, and are included as a reduction to net sales.

TCCC commissions, based on sales to certain TCCC independent bottlers/distributors, were $5.5 million and $4.7 million for the three-months ended September 30, 2020 and 2019, respectively, and are included in operating expenses. TCCC commissions, based on sales to certain TCCC independent bottlers/distributors, were $15.2 million and $13.6 million for the nine-months ended September 30, 2020 and 2019, respectively, and are included in operating expenses.

Net sales to the TCCC Subsidiaries for the three-months ended September 30, 2020 and 2019 were $21.5 million and $21.0 million, respectively. Net sales to the TCCC Subsidiaries for the nine-months ended September 30, 2020 and 2019 were $55.2 million and $59.5 million, respectively.

The Company also purchases concentrates from TCCC which are then sold to certain of the Company’s bottlers/distributors. Concentrate purchases from TCCC were $6.8 million and $6.3 million for the three-months ended September 30, 2020 and 2019, respectively. Concentrate purchases from TCCC were $17.6 million and $20.2 million for the nine-months ended September 30, 2020 and 2019, respectively.

Certain TCCC Subsidiaries also contract manufacture certain of the Company’s energy drinks. Such contract manufacturing expenses were $5.1 million and $4.2 million for the three- months ended September 30, 2020 and 2019, respectively. Such contract manufacturing expenses were $11.3 million and $13.1 million for the nine-months ended September 30, 2020 and 2019, respectively.

Accounts receivable, accounts payable, accrued promotional allowances and accrued liabilities related to the TCCC Subsidiaries are as follows at:

	September 30,		December 31,
	2020		2019
Accounts receivable, net	$	47,552	$	21,670
Accounts payable	$	(25,832)	$	(18,217)
Accrued promotional allowances	$	(4,911)	$	(5,321)
Accrued liabilities	$	(32,615)	$	—

One director of the Company through certain trusts, and a family member of one director, are principal owners of a company that provides promotional materials to the Company. Expenses incurred with such company in connection with promotional materials purchased during the three-months ended September 30, 2020 and 2019 were $0.4 million and $0.5 million, respectively. Expenses incurred with such company in connection with promotional materials purchased during the nine-months ended September 30, 2020 and 2019 were $1.9 million and $1.1 million, respectively.

In December 2018, the Company and a director of the Company entered into a 50-50 partnership that purchased land, and real property thereon, in Kona, Hawaii for the purpose of producing coffee products. The Company’s initial 50% contribution of $1.9 million was accounted for as an equity investment. During the three-months ended September 30, 2020, the Company recorded an equity loss of $0.04 million. During the nine-months ended September 30, 2020, the Company recorded an equity loss of $0.3 million. As of September 30, 2020, the Company’s equity investment is $1.6 million and is included in other assets (non-current) in the accompanying condensed consolidated balance sheet.