Monster Beverage (MNST) 10-K risk factor changes: FY2016 vs FY2015

In connection with the TCCC [removed: Transaction,] [added: Transaction and] the [added: accompanying] amended distribution coordination agreements entered into with [removed: TCCC provided for the transition of] [added: TCCC, we have transitioned] third parties’ rights to distribute the Company’s products in most territories in the U.S. to members of TCCC’s distribution network, which consists of owned or controlled bottlers/distributors and independent bottlers/distributors.

[removed: In addition, it is expected that TCCC] [added: As we continue our international expansion, TCCC’s distribution network] will [removed: become] [added: continue its role as] our preferred distribution partner globally.

As a result, we will be reducing our distributor diversification and will be substantially dependent on TCCC’s [added: domestic and] international distribution [removed: platform.][added: platforms.]

As a result, our [removed: sole] focus is in the energy drink [removed: category] [added: category,] and our business has become more vulnerable to adverse changes impacting the energy drink category and business, which could adversely impact our business and the trading price of our common stock.

Following the TCCC Transaction, virtually all of our sales are derived from our energy drinks, [removed: including] [added: including,] in [removed: particular] [added: particular,] our Monster Energy® brand energy drinks.

Our Monster Energy® brand energy drinks represented [removed: 92.5%] [added: 90.1%] of net sales for the year ended December 31, [removed: 2015.][added: 2016.]

Domestically, our energy drinks compete directly with Red Bull, Rockstar, No Fear, Amp, Adrenaline Rush, Venom, [added: VPX] Redline, Xenergy, MiO Energy, Rip It, Starbucks Double Shot, Starbucks Double Shot Energy Plus Coffee, Rockstar Roasted, 5-Hour Energy Shots, Stacker 2, VPX Redline Energy Shots and many other brands.

In addition, certain large [removed: companies] [added: companies,] such as [removed: PepsiCo] [added: PepsiCo,] market and/or distribute products in that market segment, such as Pepsi Max, Mountain Dew, Mountain Dew MDX and Mountain Dew Kickstart.

Internationally, our energy drinks compete with Red Bull, Rockstar, V-Energy, Lucozade, Adrenaline Rush and numerous local and [removed: private label] [added: private-label] brands that usually differ from country to country, such as Hell, Shock, Tiger, Boost, Speed, TNT, Shark, Hot 6, Shark Energy, [added: Dragon, Score, Sting,] Battery, Bullit, Flash Up, Black, Non-Stop, Bomba, Semtex, Vive 100, Dark Dog, Speed, Guaraná, [removed: Sting,] M-150, Lipovitan, Bacchus, Bolt, Mr. Big and a host of other international brands.

Competitive pressures in the energy drink category could impact our [removed: revenues and/or we could experience] [added: revenues, cause] price erosion and/or lower market share, any of which could have a material adverse effect on our business and results of operations.

As a result of the TCCC Transaction, [removed: in certain markets] we have acquired additional brands in the energy drink [removed: category.][added: category in certain markets.]

[removed: We] [added: Although we continue to integrate these brands with our broader energy drink portfolio, we] may encounter difficulties managing different and potentially competing brands in such shared markets, which could adversely impact our business and the trading price of our common stock.

[removed: Immediately following the consummation] [added: As] of [removed: the TCCC Transaction,] [added: February 10, 2017,] TCCC owned common shares of the Company representing approximately [removed: 16.7%] [added: 18.0%] of the total number of the Company’s outstanding common shares.

However, if TCCC were to oppose such a [removed: change in control] [added: change-in-control] transaction, a bidder would be required to secure the support of holders of 62.5% of the Company’s common shares not owned by TCCC (assuming that TCCC increased its ownership [removed: from approximately 16.7%] to 20% of the Company’s common shares) to achieve a vote of a majority of the Company’s outstanding shares for a change-in-control transaction.

In such event, TCCC would receive a termination fee if TCCC terminated the distribution coordination agreements following a change in control of the Company involving certain TCCC competitors, or if the Company terminated following a change in control of the Company involving any [removed: third party.][added: third-party.]

Moreover, TCCC’s ownership of a significant amount of the Company’s outstanding common shares could result in downward pressure on the trading price of the Company’s common shares if TCCC were to sell a large portion of its shares [added: (when permitted to sell)] or as a result of the perception that such a sale might occur.

Legislation has been proposed and/or adopted at the U.S. federal, state and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy drinks [removed: (including] [added: (including,] prohibiting the sale of energy drinks at certain establishments or pursuant to certain governmental programs), limit caffeine content in beverages, require certain product labeling disclosures and/or warnings, impose excise taxes, limit product [removed: size,] [added: size] or impose age restrictions for the sale of energy drinks.

Public health officials and health advocates are increasingly focused on the public health consequences associated with obesity, especially as [removed: the disease] [added: it] affects children, and are seeking legislative change to reduce the consumption of sweetened beverages.

To the extent any such legislation is enacted in one or more jurisdictions where a significant amount of our products are sold individually or in the aggregate, it could result in a reduction in demand [removed: for] [added: for,] or availability [removed: of] [added: of,] our energy [removed: drinks] [added: drinks,] and adversely affect our business, financial condition and results of operations.

The production, distribution and sale in the United States of many of our products are also currently subject to various federal and state regulations, including, but not limited to: the FD&C Act, [removed: including] as amended by the Dietary Supplement Health and Education Act of 1994; the Occupational Safety and Health Act; various environmental statutes; [added: California Proposition 65;] and various other federal, state and local statutes and regulations applicable to the production, transportation, sale, safety, advertising, labeling and ingredients of such products.

If a regulatory authority finds that a current or future product or production run is not in compliance with any of these regulations, we may be fined, or such products may have to be [removed: recalled and/or] [added: recalled,] reformulated and/or have the packaging changed, which could adversely affect our business, financial condition and results of operations.

_We cannot predict the effect of inquiries from and/or actions by attorneys [removed: general and/or] [added: general,] other government agencies and/or quasi-government agencies into the [added: production,] advertising, marketing, promotion, ingredients, usage and/or sale of our energy drink products._

We do not believe that our products are responsible for such wrongful deaths and/or injuries, and intend to vigorously defend [removed: each] [added: any] such [removed: lawsuit.][added: lawsuits.]

We believe that each of these lawsuits is without merit and would not have a material adverse effect on our financial position or results of operations in the event any damages were [added: to be] awarded.

Any of the foregoing matters or other product-related litigation, the threat thereof, or unfavorable media attention arising from pending or threatened product-related [removed: litigation,] [added: litigation] could consume significant financial and managerial [removed: resources,] [added: resources] and result in decreased demand for our products, significant monetary awards against us and injury to our reputation.

_Criticism of our energy drink [removed: products,] [added: products] and/or criticism or a negative perception of energy drinks generally, could adversely affect us._

We believe the overall growth of the energy drink market in the U.S. may have been negatively impacted by the ongoing negative publicity and comments that continue to appear in the media questioning the safety of energy drinks, and suggesting limitations on their ingredients (including [removed: caffeine)] [added: caffeine),] and/or the levels [removed: thereof] [added: thereof,] and/or imposing minimum age restrictions for consumers.

Important factors affecting our ability to compete successfully include the taste and flavor of our products, trade and consumer promotions, rapid and effective development of [removed: new,] [added: new and] unique cutting edge products, attractive and different packaging, branded product advertising and pricing.

Our products also compete with [removed: private label] [added: private-label] brands such as those carried by grocery store chains, convenience store [removed: chains,] [added: chains] and club stores.

[removed: There] [added: Due to competition in the beverage industry, there] can be no assurance that we will not encounter difficulties in maintaining our current [removed: revenues or] [added: revenues,] market share or position [removed: due to competition] in the beverage industry.

In addition, we cannot predict the duration and severity of disruptions in any of our [removed: markets,] [added: markets] or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crisis in [added: African, Asian,] European and other international markets.

In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of taste, quality and [removed: health,] [added: price,] although there can be no assurance of our ability to do so.

Product lifecycles for some beverage [removed: brands and/or] [added: brands,] products and/or packages may be limited to a few years before consumers’ preferences change.

The beverages we currently market are in varying stages of their product [removed: lifecycles] [added: lifecycles,] and there can be no assurance that such beverages will become or remain profitable for us.

[removed: _Operations] [added: _Our continued expansion] outside [added: of] the United States [removed: expose] [added: exposes] us to uncertain conditions and other risks in international markets._

Our gross sales to customers outside of the United States were approximately [added: 25%,] 23% [added: and 23%] of consolidated gross sales for the years ended December 31, [removed: 2015, 2014 and 2013,] [added: 2016, 2015] and [removed: our growth strategy includes further expanding our international business.][added: 2014, respectively.]

[removed: If] [added: As our growth strategy includes further expanding our international business, if] we are unable to continue to expand distribution of our products outside the United States, our growth rate could be adversely affected.

[removed: Our percentage gross profit margins in many international markets are expected to be less than the comparable percentage gross profit margins obtained in the U.S.] We face and will continue to face substantial risks associated with having foreign operations, including: economic and/or political instability in our international markets; restrictions on or costs relating to the repatriation of foreign profits to the United States, including possible taxes and/or withholding obligations on any repatriations; and tariffs and/or trade restrictions.

We [removed: do not directly manufacture our products, but instead] outsource [removed: such] manufacturing [added: of our finished goods] to bottlers and other contract packers.

[removed: In] [added: As a result, in] the event of a disruption and/or delay, we may be unable to procure alternative packing facilities at commercially reasonable rates and/or within a reasonably short time period.

In addition, TCCC has become our preferred distribution partner globally with members of TCCC’s network distributing our products internationally in countries throughout, but not limited to, Africa, Asia, Central and South America, Europe, Mexico and the Middle East.

In addition, our Mutant® Super Soda product line competes directly with Mountain Dew, Mountain Dew MDX and Mountain Dew Kickstart.

These brands comprise the Strategic Brands segment which represents 8.9% of consolidated net sales for the year ended December 31, 2016.

From time to time, government and/or quasi-governmental agencies may investigate the safety of caffeine and energy drinks.

For instance, in January 2013, the FDA announced that it would be investigating the safety of caffeine in food products, particularly its effects on children and adolescents.

Also in January 2013, we received a letter from Representative Edward J.

Markey, Senator Richard J.

Durbin and Senator Richard Blumenthal requesting information from us to enable them to better understand a number of issues relating, in part, to an investigation they said had been launched by the FDA examining energy drinks and potential health risks, particularly for groups of vulnerable individuals, including young people and those with pre-existing cardiac conditions.

We provided a response to their letter.

The Congressmen issued a report and recommendations in April 2013, most of which we had already implemented.

The Congressmen released a follow-up report in January 2015, recommending, inter alia, that the energy drink industry not market to consumers under the age of 18 and not market their products for hydration, and that the FDA develop and release definitions and guidance for this market sector.

In addition, other organizations, such as the European Food Safety Authority, have also published reports, studies, articles and opinions on caffeine and energy drinks.

In July 2012, the Company received a subpoena from the Attorney General for the State of New York in connection with its investigation concerning the Company’s advertising, marketing, promotion, ingredients, usage and sale of its Monster Energy® brand energy drinks.

Production of documents pursuant to that subpoena was completed in approximately May 2014.

On August 6, 2014, the Attorney General for the State of New York issued a second subpoena seeking additional documents and the deposition of a Company employee.

On September 8, 2014, the Company moved to quash the second subpoena in the Supreme Court, New York County.

The motion was fully briefed and was argued on March 17, 2015.

On January 13, 2017, the Court issued an opinion in which it agreed with certain Company arguments regarding the scope of the subpoena and the Attorney General’s investigation, but denied the motion to quash and granted the Attorney General’s cross-motion to compel compliance.

It is unknown what, if any, action the state Attorney General may take against the Company, the relief which may be sought in the event of any such proceeding or whether such proceeding could have a material adverse effect on the Company’s business, financial condition or results of operations.

_Our inability to innovate successfully and to provide new cutting edge products could adversely affect our business and financial results._

Our ability to compete in the highly competitive beverage industry and to achieve our business growth objectives depends, in part, on our ability to develop new flavors, products and packaging.

The success of our innovation, in turn, depends on our ability to identify consumer trends and cater to consumer preferences.

If we are not successful in our innovation activities, our business, financial condition and results of operation could be adversely affected.

We have continued expanding our operations internationally into a variety of new markets, including launches in China and various African and Middle Eastern countries.

Our percentage gross profit margins in many international markets are expected to be less than the comparable percentage gross profit margins obtained in the United States.

Foreign currency transaction losses were $9.7 million and $5.5 million for the years ended December 31, 2016 and 2015, respectively.

Our acquisition of AFF brought our primary flavor supplier in-house for the majority of our Monster Energy® brand energy drinks.

We also procure flavors from other flavor suppliers.

For example, sales of our Java Monster® and Muscle Monster® product lines have been impacted by production capacity constraints resulting from production and maintenance issues with certain of our co-packers.

If we fail to meet our shipping schedules, we could damage our relationships

_Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations_.

We are subject to income taxes in both the U.S. and certain foreign jurisdictions.

Therefore, we may be subjected to audits for multiple tax years in various jurisdictions at once.

At any given time, events may occur which change our expectation about how the audit will be resolved and thus, there could be variability in our quarterly and/or annual tax rates because these events may change our plans for uncertain tax positions.

Future tax legislation, particularly within the U.S., may affect our effective tax rate.

The current U.S. administration has indicated that tax reform is among its top priorities and the U.S. Congress is currently reviewing and/or may in the future review tax legislation proposals.

We do not know how such legislation, if enacted, will affect our business.

not be able to sell our stock at attractive prices.

On February 9, 2015, in accordance with its existing agreements with the applicable third-party distributors, the Company sent notices of termination to certain affected third-party distributors, including the majority of the AB Distributors in the U.S., providing for the termination of their respective distribution agreements, to be effective at various dates beginning in March 2015.

The associated distribution rights were transferred to TCCC’s distribution network in each applicable territory as of the effective date of the termination of the applicable third party’s rights in such territory.

In October 2012, we received a written request for information from the City Attorney for the City and County of San Francisco (the “City Attorney”) concerning our advertising and marketing of our Monster Energy® brand of energy drinks and specifically concerning the safety of our products for consumption by adolescents.

In a subsequent letter, the City Attorney threatened to bring suit against us if we did not agree to take certain steps immediately and, on May 6, 2013, the City Attorney filed a complaint against us for declaratory and injunctive relief, civil penalties and restitution for an alleged violation of California’s Unfair Competition Law.

We deny that we have violated the Unfair Competition Law or any other law and believe that the City Attorney’s claims and demands are preempted and unconstitutional.

We intend to vigorously defend against the lawsuit.

At this time, no evaluation of the likelihood of an unfavorable outcome or range of potential loss can be expressed.

_We rely upon our ongoing relationships with our key flavor suppliers.

If we are unable to source our flavors on acceptable terms from our key suppliers, we could suffer disruptions in our business._

Generally, flavor suppliers hold the proprietary rights to their flavors.

Consequently, we do not have the list of flavor ingredients or formulae for our flavors and certain of our concentrates readily available to us and we may be unable to obtain comparable flavors or concentrates from alternative suppliers on short notice.

If we must replace a flavor supplier, we could experience a temporary disruption in our ability to deliver products to our customers and/or a reduction in demand for our products containing replacement flavors, which could have a material adverse effect on our business and results of operations.

· _Our Business_ – a general description of our [removed: business;] [added: business,] the value drivers of our [removed: business;] [added: business,] and opportunities and risks facing our [removed: Company;][added: Company, stock repurchases, acquisitions and divestitures;]

As of [removed: February 29, 2016,] [added: March 1, 2017,] distribution rights in the U.S. representing approximately [removed: 89%] [added: 94%] of the target case sales have been transitioned to TCCC’s distribution network.

In accordance with [added: FASB] ASC No. 420 “Exit or Disposal Cost Obligations”, [removed: the Company expenses] [added: we expense] distributor termination costs in the period in which the written notification of termination occurs.

[removed: As a result, the Company incurred termination amounts of $224.0] [added: _²Includes $79.8] million, [removed: ($0.2)] [added: $224.0] million and [removed: $10.8] [added: ($0.2)] million for the [removed: year] [added: years] ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively, related to [removed: distribution rights transferred.][added: distributor termination costs._]

Such termination [removed: amounts] [added: costs] have been expensed in full and are included in operating expenses for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013.][added: 2014.]

[removed: In addition, the Company] [added: We] recognized as income [added: $5.7 million and] $39.8 million [removed: in] [added: for] the [removed: first quarter of] [added: years ended December 31, 2016 and] 2015, [added: respectively,] related to the accelerated amortization of the deferred revenue balances associated with certain of [removed: the Company’s] [added: our] prior distributors who were sent notices of termination during the [removed: first quarter of 2015.][added: relevant periods.]

The following table summarizes the selected items discussed above for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013:][added: 2014:]

| Income Statement Items (in thousands): | | [removed: 2015] [added: 2016] | | | [removed: 2014] [added: 2015] | | | [removed: 2013] [added: 2014] | | |

| Accelerated recognition of deferred revenue | | $ | [removed: 39,761] [added: 5,713] | | $ | [removed: \-] [added: 39,761] | | $ | \- | |

| Distributor termination costs | | [removed: 224,000] [added: (79,751)] | | | [removed: (157)] [added: (224,000)] | | | [removed: 10,754] [added: 157] | | |

| TCCC Transaction expenses | | [removed: 15,496] [added: \-] | | | [removed: 4,824] [added: (15,496)] | | | [removed: \-] [added: (4,824)] | | |

| Gain on sale of Monster Non-Energy | | [removed: 161,470] [added: $] | [added: \-] | | [removed: \-] [added: $] | [added: 161,470] | | [removed: \-] [added: $] | [added: \-] | |

| Net Impact on Operating Income | | $ | [removed: (38,265)] [added: (80,077)] | | $ | [removed: (4,667)] [added: (38,265)] | | $ | [removed: (10,754)] [added: (4,667)] | |

We develop, [removed: market] [added: market,] sell and distribute energy drink [removed: beverages] [added: beverages, sodas] and/or concentrates for energy drink beverages, primarily under the following brand names:

| · [removed: M3®] [added: Übermonster®] | · Relentless® |

| · [removed: Übermonster®] [added: BU®] | · Samurai® |

Our Monster Energy® brand energy drinks, which represented [removed: 92.5%, 93.9%] [added: 90.1%, 92.5%] and [removed: 93.2%] [added: 93.9%] of our net sales for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively, primarily include the following:

| · Juice Monster® Pipeline [removed: Punch™] [added: Punch®] | · Java Monster® [removed: Cappuccino] [added: Salted Caramel] |

| · Monster [removed: Energy®] [added: Energy] Absolutely [removed: Zero] [added: Zero®] | · Mega Monster Energy® |

| · [removed: Monster Energy® Import ·] Punch Monster® Baller’s Blend® (formerly Dub Edition) | [removed: · Monster Energy Extra Strength Nitrous] Technology® Super Dry™ |

| · Punch Monster® Mad Dog (formerly Dub Edition) [removed: · Monster Rehab® Tea + Lemonade + Energy] | · Monster Energy Extra Strength Nitrous [removed: Technology® Anti-Gravity®] |

| · Monster Rehab® Green Tea + Energy | · Monster [removed: Energy®] [added: Energy] Zero [removed: Ultra] [added: Ultra®] |

| · Monster Rehab® Tea + Orangeade + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Blue™] [added: Blue®] |

| · Monster Rehab® Tea + Pink Lemonade + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Red™] [added: Red®] |

| · Monster Rehab® Peach Tea + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Black™] [added: Black®] |

| · Muscle Monster® Vanilla | · Monster [removed: Energy®] [added: Energy] Ultra Sunrise® |

| · Muscle Monster® Chocolate | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Citron™] [added: Citron®] |

| · Muscle Monster® [removed: Strawberry · Muscle Monster®] Banana [removed: · Monster Ghost™ M-100™ · Monster Phantom™ M-100™] | · Monster Energy® [removed: Unleaded® · Übermonster® Energy Brew™ · Monster Energy®] Valentino Rossi |

During [removed: 2015,] [added: 2016,] we continued to expand our existing [removed: energy drink] portfolio [added: of drinks] and further develop our distribution markets.

Those products or product lines discontinued [removed: during the year ended December 31, 2015 (other than those disposed of as part of the TCCC Transaction),] [added: in 2016,] either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Our net sales of [removed: $2,722.6] [added: $3,049.4] million for the year ended December 31, [removed: 2015] [added: 2016] represented record annual net sales.

Net sales of our Monster Energy® brand energy drinks were [removed: $2,518.5] [added: $2,747.9] million for the year ended December 31, [removed: 2015,] [added: 2016,] an increase of [removed: $204.0] [added: $229.4] million, or [removed: 79.2%] [added: 70.2%] of our overall increase in net sales for the year ended December 31, [removed: 2015.][added: 2016.]

Net sales of our Strategic Brands acquired as part of the TCCC Transaction were [removed: $143.3] [added: $272.5] million for the year ended December 31, [removed: 2015.][added: 2016.]

[removed: Changes] [added: Net changes] in foreign currency exchange rates had an unfavorable impact on net sales in the [removed: Finished Products] [added: Strategic Brands] segment of approximately [removed: $74.1] [added: $10.2] million for the year ended December 31, 2015, [removed: which was] primarily due to [removed: a stronger U.S. dollar compared to certain local currencies in which we conduct certain of] our [removed: international business.][added: operations in Europe.]

[removed: Changes] [added: Net changes] in foreign currency exchange rates had an unfavorable impact on [removed: net] [added: gross] sales in the [removed: Concentrate] [added: Strategic Brands] segment of approximately $10.2 million for the year ended December 31, 2015, [removed: which was] primarily due to [removed: a stronger U.S. dollar compared to certain local currencies in which we conduct certain of] our [removed: international business.][added: operations in Europe.]

Gross sales to customers outside the United States amounted to [removed: $713.2] [added: $888.7] million, [removed: $657.9] [added: $713.2] million and [removed: $580.6] [added: $657.9] million for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

Such sales were approximately [added: 25%,] 23% [added: and 23%] of gross sales for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013.][added: 2014, respectively.]

[removed: Changes] [added: Net changes] in foreign currency exchange rates had an unfavorable impact on gross sales to customers outside the United States of approximately [removed: 14%, 1%] [added: 3%, 14%] and [removed: 2%] [added: 1%] for the years ended December 31, [added: 2016,] 2015, [removed: 2014,] and [removed: 2013,] [added: 2014,] respectively, [removed: which was] primarily due to [removed: a stronger U.S. dollar compared to certain local currencies] [added: our operations] in [removed: which we conduct certain of] [added: Europe, Mexico, Canada and South Africa, partially offset by] our [removed: international business.][added: operations in Japan.]

Our customers are primarily full service beverage bottlers/distributors, retail grocery and specialty chains, wholesalers, club stores, [removed: drug chains,] mass merchandisers, convenience chains, [removed: health] food [removed: distributors, food] service customers and the military.

[removed: Gross] [added: Percentages of our gross] sales to our various customer types for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] are reflected below.

_Stock Repurchases_

On April 28, 2016, our Board of Directors authorized us to commence a “modified Dutch auction” tender offer to repurchase up to $2.0 billion of our outstanding shares of common stock (the “Auction Stock Repurchase Tender”).

The Auction Stock Repurchase Tender was authorized under our existing share repurchase authority and was funded with cash on hand.

We commenced this tender offer in May 2016.

On June 15, 2016, we accepted for payment an aggregate of 38.5 million shares of common stock at a purchase price of $52.00 per share, for a total amount of $2.0 billion (excluding commissions).

Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

We incurred $1.6 million in stock repurchase expenses for the year ended December 31, 2016 related to the Auction Stock Repurchase Tender.

On August 2, 2016, our Board of Directors authorized a new share repurchase program for the repurchase of up to $250.0 million of our outstanding shares of common stock (the “August 2016 Repurchase Plan”).

During the year ended December 31, 2016, we purchased 5.8 million shares of common stock at an average purchase price of $43.40 per share, for a total amount of $249.9 million (excluding broker commissions), which exhausted the availability under the August 2016 Repurchase Plan.

Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

On April 1, 2016, we completed our acquisition of AFF, in an asset acquisition that brought our primary flavor supplier in-house, secured the intellectual property of our most important flavors in perpetuity and further enhanced our flavor development and global flavor footprint capabilities.

Pursuant to the terms of the AFF Transaction, we purchased AFF for $688.5 million in cash after adjustments.

We accounted for the AFF Transaction in accordance with FASB ASC No. 805 “Business Combinations”.

Inventory purchased under the AFF Transaction was recorded at fair value.

Raw material cost savings from the AFF Transaction were approximately $46.4 million in the year ended December 31, 2016.

However, raw material cost savings were not immediately recognized upon the completion of the AFF Transaction as both the Company’s inventory on hand and inventory acquired as part of the AFF Transaction were recorded at fair value.

As a result, the cost savings were not recognized through cost of goods sold until the end of the second quarter of 2016.

We incurred $4.5 million in AFF Transaction related expenses for the year ended December 31, 2016.

On June 12, 2015, we completed the TCCC Transaction which provided for a long-term strategic relationship in the global energy drink category with TCCC.

As part of the TCCC Transaction, we transitioned certain distribution rights to TCCC’s distribution network.

No accelerated amortization of deferred revenue was recognized for the year ended December 31, 2014.

We incurred $15.5 million and $4.8 million in TCCC Transaction related expenses for the years ended December 31, 2015 and 2014, respectively.

We incurred no TCCC Transaction related expenses for the year ended December 31, 2016.

_Factors Impacting Profitability_

| Stock Repurchase expenses | | $ | (1,556) | | $ | \- | | $ | \- | |

| AFF Transaction expenses | | (4,483) | | | \- | | | \- | | |

| · Mutant® Super Soda | · BPM® |

| · Monster Energy® Import | · Monster Energy Extra Strength Nitrous |

| · Monster Rehab® Tea + Lemonade + Energy | Technology® Anti-Gravity® |

| · Muscle Monster® Strawberry | · Monster Energy Ultra Violet™ |

| · Monster Energy® Gronk | · Übermonster® Energy Brew™ |

We have three operating and reportable segments, (i) Monster Energy® Drinks segment which is comprised of our Monster Energy® drinks as well as Mutant® Super Soda drinks, (ii) Strategic Brands segment which includes the various energy drink brands acquired from TCCC as a result of the TCCC Transaction and (iii) Other segment (“Other”), the principal products of which include the non-energy brands disposed of as a result of the TCCC Transaction as well as the AFF Third-Party Products.

During 2016, we introduced the following products:

· Monster Energy Ultra Violet™ (December 2016).

· Mutant® Super Soda (September 2016).

· Monster Energy® Gronk (February 2016).

· Java Monster® Salted Caramel (January 2016).

Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Monster Energy® Drinks segment of approximately $17.6 million for the year ended December 31, 2016, primarily due to our operations in Europe, Mexico, Canada and South Africa, partially offset by our operations in Japan.

| | | 2016 | | 2015 | | 2014 | |

A decision by any large customer to decrease amounts purchased from us or to cease carrying our products could have a material negative effect on our financial condition and consolidated results of operations.

On June 12, 2015, Old Monster, now a wholly owned subsidiary of the Company, completed the transactions contemplated by the definitive agreements entered into with TCCC on August 14, 2014, which provided for the TCCC Transaction.

Also, on June 12, 2015, Old Monster effected the Holding Company Reorganization, and the Company changed its name from New Laser Corporation to “Monster Beverage Corporation.”

In the Holding Company Reorganization, each Old Monster common share, par value $0.005 per share, outstanding immediately prior to consummation of the Holding Company Reorganization (other than any Old Monster common shares owned by Old Monster immediately prior to the closing of the TCCC Transaction, which were cancelled) was converted automatically into the right to receive one Company common share, par value $0.005 per share.

In addition, upon consummation of the Holding Company Reorganization:

· each unexercised and unexpired stock option then outstanding under any equity compensation plan of Old Monster, whether or not then exercisable, ceased to represent a right to acquire Old Monster common shares and was converted automatically into a right to acquire the same number of Company common shares, on the same terms and conditions as were applicable under such Old Monster stock option; and

· each share of restricted stock and each restricted stock unit of Old Monster granted under all outstanding equity compensation plans ceased to represent or relate to Old Monster common shares and was converted automatically to represent or relate to Company common shares, on the same terms and conditions as were applicable to such Old Monster restricted stock and restricted stock units (including the vesting or other lapse restrictions (without acceleration thereof by virtue of the Holding Company Reorganization and the TCCC Transaction)).

Promptly following the effective time of the Holding Company Reorganization, Old Monster assigned to the Company all obligations of Old Monster under Old Monster’s equity compensation plans and each stock option agreement, restricted stock award agreement, restricted stock unit award agreement and any similar agreement entered into pursuant to such equity compensation plans.

In addition, all obligations of Old Monster under any employment agreements and indemnification agreements were assigned to the Company.

Immediately after the effective time of the Holding Company Reorganization, (1) the Company issued to TCCC the New Issuance and TCCC appointed two individuals to the Company’s Board of Directors, (2) TCCC transferred all of its rights in and to KO Energy to the Company, (3) Old Monster transferred all of its rights in and to Monster Non-Energy to TCCC, (4) the Company and TCCC amended the distribution coordination agreements previously existing between them to govern the transition of third parties’ rights to distribute the Company’s energy products in most territories in the U.S. to members of TCCC’s distribution network, which consists of owned or controlled bottlers/distributors and independent bottlers/distributors, and (5) TCCC and one of its subsidiaries made an aggregate net cash payment to the Company of $2.15 billion, $125.0 million of which is currently held in escrow as described below pursuant to the Escrow Agreement, subject to release upon the achievement of milestones relating to the transition of distribution rights to TCCC’s distribution network.

On the one-year anniversary of the closing of the TCCC Transaction, the then-remaining escrow amount, less an amount sufficient to cover any unresolved claims, will be released to TCCC.

Any amount described above that becomes payable following the one-year anniversary will be paid directly from TCCC to the Company.

As a result, $125 million is currently held in escrow.

The Company expects to transition sufficient additional distribution rights to result in the release of all remaining amounts held in escrow.

Therefore, the Company believes that achievement of the milestones is probable.

| · BU® | · BPM® |

We have three operating and reportable segments, (i) Finished Products, (ii) 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).

During 2015, we introduced the following Monster Energy® brand energy drink products, in addition to the Strategic Brands acquired as part of the TCCC Transaction:

· Monster Energy® Ultra Citron™, a carbonated energy drink which contains zero calories and zero sugar (January 2015).

· Monster Rehab® Peach Tea + Energy (January 2015).

· Juice Monster® Pipeline Punch™ (July 2015).

· Muscle Monster® Banana (July 2015).

· Monster Ghost™ M-100™, an exclusive limited time listing with a convenience customer (July 2015).

· Monster Phantom™ M-100™, an exclusive limited time listing with certain convenience customers (July 2015).

· Monster Rehab® Raspberry Tea + Energy (August 2015).

Our sales and marketing strategy for all our beverages is to focus our efforts on developing brand awareness through image enhancing programs and product sampling.

We use our branded vehicles and other promotional vehicles at events where we offer samples of our products to consumers.

We utilize “push-pull” methods to enhance shelf and display space exposure in sales outlets (including racks, coolers and barrel coolers), advertising, in-store promotions and in-store placement of point-of-sale materials to encourage demand from consumers for our products.

We also support our brands with prize promotions, price promotions, competitions, endorsements from selected public and sports figures, personality endorsements (including from television and other well-known sports personalities), sampling and sponsorship of selected causes, events, athletes and teams.

In-store posters, outdoor posters, print, radio and television advertising (directly and through our sponsorships and endorsements) and coupons may also be used to promote our brands.

We are currently evaluating our future strategy for the positioning of our Strategic Brands.

We believe that one of the keys to success in the beverage industry is differentiation, making our brands and products visually distinctive from other beverages on the shelves of retailers.

We review our products and packaging on an ongoing basis and, where practical, endeavor to make them different, better and unique.

The labels and graphics for many of our products are redesigned from time to time to maximize their visibility and identification, wherever they may be placed in stores, which we will continue to reevaluate from time to time.

All of our beverage products are manufactured by various third party bottlers and co-packers situated throughout the United States and abroad, under separate arrangements with each party.

Furthermore, following the TCCC Transaction, we have a substantial amount of cash and cash equivalents, and we expect that a substantial portion of our cash and cash equivalents will be used to return capital to our shareholders pursuant to share repurchases, which may be effected pursuant to open market transactions, a “modified Dutch auction” tender offer, accelerated share repurchase, privately negotiated transactions or otherwise.

The timing, terms and amount of any such share repurchase will be determined by the Company’s board of directors.

The increase in working capital was primarily the result of cash received in the TCCC Transaction.

| Basic | | $2.90 | | | $2.89 | | | $2.03 | | | 0.2% | | 42.2% | |

| Diluted | | $2.84 | | | $2.77 | | | $1.95 | | | 2.4% | | 41.9% | |

The increase in gross

In the normal course of [removed: business,] [added: business] our financial position is routinely subject to a variety of risks.

The principal market risks (i.e., the risk of loss arising from adverse changes in market rates and prices) to which we are exposed are fluctuations in commodity [added: and other input] prices affecting the costs of our raw materials (including, but not limited to, increases in the costs of juice concentrates, increases in the price of aluminum for cans, as well as [removed: cane] sugar and other sweeteners, glucose, sucrose, milk, cream and protein, all of which are used in some or many of our products), fluctuations in energy and fuel prices, and limited availability of certain raw materials.

We are also subject to market risks with respect to the cost of commodities [added: and other inputs] because our ability to recover increased costs through higher pricing is limited by the competitive environment in which we operate.

Our gross sales to customers outside of the United States were approximately [added: 25% and] 23% of consolidated gross sales for the years ended December 31, [removed: 2015] [added: 2016] and [removed: 2014.][added: 2015, respectively.]

During the year ended December 31, [removed: 2015,] [added: 2016,] we entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities.

All foreign currency exchange contracts entered into by us as of December 31, [removed: 2015] [added: 2016] have terms of one month or less.

We have not designated our foreign currency exchange contracts as hedge transactions under [added: FASB] ASC 815.

We do not consider the potential loss resulting from a hypothetical 10% adverse change in quoted foreign currency exchange rates as of December 31, [removed: 2015] [added: 2016] to be significant.

As of December 31, [removed: 2015,] [added: 2016,] we had [removed: $2,175.4] [added: $377.6] million in cash and cash equivalents and [removed: $760.0] [added: $222.9] million in short-term and long-term investments including U.S. treasuries, certificates of deposit and municipal securities which may have an auction reset feature.

When this report uses the words “the [removed: Company”] [added: Company”,] “we”, [removed: “us”,] [added: “us”] and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires.

[removed: We are] [added: Based in Corona, California, Monster Beverage Corporation is] a holding company and [removed: conduct] [added: conducts] no operating [removed: business] [added: business,] except through [removed: our] [added: its] consolidated subsidiaries.

On June 12, 2015, [removed: Old Monster, now a wholly owned subsidiary of the Company,] [added: we] completed the transactions contemplated by the definitive agreements entered into with The Coca-Cola Company (“TCCC”) on August 14, 2014, which provided for a long-term strategic relationship in the global energy drink category (the “TCCC Transaction”).

As of [removed: February 29, 2016,] [added: March 1, 2017,] distribution rights in the U.S. representing approximately [removed: 89%] [added: 94%] of the target case sales have been transitioned to TCCC’s distribution network.

We have three operating and reportable segments, (i) [removed: Finished Products,] [added: Monster Energy® Drinks segment (“Monster Energy® Drinks”),] which is comprised of our Monster Energy® [removed: drink products (previously comprising the majority of the former Direct Store Delivery segment) (“Finished Products”),] [added: drinks as well as Mutant® Super Soda drinks,] (ii) [removed: Concentrate, the principal products of] [added: Strategic Brands segment (“Strategic Brands”),] which include the [removed: supply of concentrates for the Strategic Brands] [added: various] energy [removed: drinks] [added: drink brands] acquired from TCCC [removed: (“Concentrate”)] [added: as a result of the TCCC Transaction] and (iii) [removed: Other,] [added: Other segment (“Other”),] the principal products of which include the [added: non-energy] brands disposed of as a result of the TCCC [removed: Transaction (previously comprising the majority] [added: Transaction, as well as certain products acquired as part] of the [removed: former Warehouse segment and the Peace Tea® brand) (“Other”).][added: AFF Transaction that are sold to independent third-parties (the “AFF Third-Party Products”).]

Corporate and unallocated amounts that do not relate to a reportable segment [removed: specifically,] [added: specifically] have been allocated to “Corporate and Unallocated.” Our [removed: Finished Products] [added: Monster Energy® Drinks] segment represented [removed: 92.5%, 93.9%] [added: 90.5%, 92.5%] and [removed: 93.2%] [added: 93.9%] of our consolidated net sales for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively.

Our [removed: Concentrate] [added: Strategic Brands] segment represented [added: 8.9% and] 5.3% of our consolidated net sales for the [removed: year] [added: years] ended December 31, [added: 2016 and] 2015 (effectively from June [removed: 12,] [added: 13,] 2015).

Our Other segment represented [removed: 2.2%, 6.1%] [added: 0.6%, 2.2%] and [removed: 6.8%] [added: 6.1%] of our consolidated net sales for the years ended December 31, [added: 2016,] 2015 [removed: (effectively through June 12, 2015), 2014] and [removed: 2013,] [added: 2014,] respectively.

[removed: Our Finished Products segment generates net operating revenues by selling] [added: The] ready-to-drink packaged energy drinks [added: are then sold] to [added: other bottlers,] full service [removed: beverage] distributors, [added: wholesalers, or retailers directly, including,] retail grocery and specialty chains, [removed: wholesalers,] club stores, [removed: drug chains,] mass merchandisers, convenience chains, [removed: health] food [removed: distributors, food] service [removed: customers] [added: customers, drug stores] and the military.

Our [removed: Concentrate] [added: Strategic Brands] segment [added: primarily] generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations.

Generally, the [removed: Finished Products] [added: Monster Energy® Drinks] segment generates higher per case net operating revenues, but lower per case gross profit [removed: margins] [added: margins,] than the [removed: Concentrate] [added: Strategic Brands] segment.

We develop, market, sell and distribute energy drink [removed: beverages] [added: beverages, sodas] and/or concentrates for energy drink beverages, primarily under the following brand names:

| · [removed: M3®] [added: Übermonster®] | · Relentless® |

| · [removed: Übermonster®] [added: BU®] | · Samurai® |

Our Monster Energy® brand energy drinks, which represented [removed: 92.5%, 93.9%] [added: 90.1%, 92.5%] and [removed: 93.2%] [added: 93.9%] of our net sales for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] respectively, primarily include the following:

| · Juice Monster® Pipeline [removed: Punch™] [added: Punch®] | · Java Monster® [removed: Cappuccino] [added: Salted Caramel] |

| · Monster Rehab® Green Tea + Energy | · Monster [removed: Energy®] [added: Energy] Zero [removed: Ultra] [added: Ultra®] |

| · Monster Rehab® Tea + Orangeade + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Blue™] [added: Blue®] |

| · Monster Rehab® Tea + Pink Lemonade + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Red™] [added: Red®] |

| · Monster Rehab® Peach Tea + Energy | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Black™] [added: Black®] |

| · Muscle Monster® Vanilla | · Monster [removed: Energy®] [added: Energy] Ultra Sunrise® |

| · Muscle Monster® Chocolate | · Monster [removed: Energy®] [added: Energy] Ultra [removed: Citron™] [added: Citron®] |

| · Muscle Monster® Strawberry | · Monster [removed: Energy® Unleaded®] [added: Energy Ultra Violet™] |

| · [removed: Muscle Monster® Banana] [added: Monster Energy® Gronk] | · Übermonster® Energy Brew™ |

| · [removed: Monster Ghost™ M-100™] [added: Muscle Monster® Banana] | · Monster Energy® Valentino Rossi |

The “alternative” beverage category combines [removed: non-carbonated] [added: non-carbonated,] ready-to-drink iced teas, lemonades, juice cocktails, single-serve juices and fruit beverages, ready-to-drink dairy and coffee drinks, energy drinks, sports [removed: drinks,] [added: drinks] and single-serve still water (flavored, unflavored and enhanced) with “new age” beverages, including sodas that are considered natural, sparkling juices and flavored sparkling beverages.

According to Beverage Marketing Corporation, domestic U.S. wholesale sales in [removed: 2015] [added: 2016] for the “alternative” beverage category of the market are estimated at approximately [removed: $42.5] [added: $48.5] billion, representing an increase of approximately [removed: 9.6%] [added: 7.7%] over the estimated domestic U.S. wholesale sales in [removed: 2014] [added: 2015] of approximately [removed: $38.8] [added: $45.0] billion.

In the 1930s, Hubert Hansen and his sons started a business [removed: to sell] [added: selling] fresh non-pasteurized juices in Los Angeles, California.

In 1992, [removed: we] [added: Hansen Natural Corporation] acquired the Hansen’s® brand natural soda and apple juice business from CCC.

[removed: 2015] [added: 2016] Product Introductions

During [removed: 2015,] [added: 2016,] we continued to expand our existing [removed: energy drink] portfolio [added: of drinks] and further develop our distribution markets.

Those products or product lines discontinued in [removed: 2015 (other than those disposed of as part of the TCCC Transaction),] [added: 2016,] either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

Products – [removed: Finished Products] [added: Other] Segment

We offer the following energy drinks under the Monster Energy® drink product line: Monster Energy®, Lo-Carb Monster Energy®, Monster Assault®, Juice Monster® Khaos®, Juice Monster® Ripper®, Juice Monster® Pipeline [removed: Punch™,] [added: Punch®,] Monster Energy® Absolutely Zero, Monster Energy® Import, Punch Monster® Baller’s Blend®, Punch Monster® Mad Dog, [removed: Monster Ghost™ M-100™, Monster Phantom™ M-100™,] Mega Monster Energy®, M3® Monster Energy® Super Concentrate energy drinks, Übermonster® Energy Brew™, Monster [removed: Energy®] [added: Energy] Zero [removed: Ultra,] [added: Ultra®,] Monster [removed: Energy®] [added: Energy] Ultra [removed: Blue™,] [added: Blue®,] Monster [removed: Energy®] [added: Energy] Ultra [removed: Red™,] [added: Red®,] Monster [removed: Energy®] [added: Energy] Ultra [removed: Black™,] [added: Black®,] Monster [removed: Energy®] [added: Energy] Ultra Sunrise®, Monster [removed: Energy®] [added: Energy] Ultra [removed: Citron™,] [added: Citron®,] Monster [added: Energy Ultra Violet™, Monster] Energy® [removed: Unleaded®] [added: Gronk] and Monster Energy® Valentino Rossi.

We offer the following coffee + energy drinks under the Java Monster® product line: Java Monster® Kona Blend, Java Monster® Loca Moca®, Java Monster® Mean Bean®, Java Monster® Vanilla Light, Java Monster® Irish Blend® and Java Monster® [removed: Cappuccino.][added: Salted Caramel.]

Products – [removed: Concentrate] [added: Strategic Brands] Segment

We offer the following energy drinks under the Burn® product line: Original, [added: Blue,] Zero, [removed: Berry,] [added: Cherry,] Lemon [added: Ice, Apple Kiwi] and [removed: Blue Refresh.][added: Passion Punch.]

We offer the following energy drinks under the BPM® product line: Focus [added: Berry Red] and [removed: Hydrate.][added: Hydrate Citrus Green.]

We offer the following energy drinks under the Full Throttle® product line: [removed: Citrus, Agave] [added: Citrus] and [removed: Berry.][added: Blue Agave.]

We offer the following energy drinks under the Mother_®_ product line: Original, Sugar Free, Frosty Berry, Green Storm, [removed: Surge] Orange [added: Surge] and Revive.

The Company’s subsidiaries primarily develop and market energy drinks as well as Mutant® Super Soda drinks.

Stock Split

On October 14, 2016, we announced a three-for-one stock split of the Company’s common stock (“the Stock Split”), to be effected in the form of a 200% stock dividend.

The common stock dividend was issued on November 9, 2016 and the Company’s common stock began trading at the split adjusted price on November 10, 2016.

Accordingly, all per share amounts, average common stock outstanding, common stock outstanding, common stock repurchased and equity based compensation presented in this Form 10-K have been adjusted retroactively, where applicable, to reflect the stock split.

Stock Repurchases

On April 28, 2016, our Board of Directors authorized us to commence a “modified Dutch auction” tender offer to repurchase up to $2.0 billion of our outstanding shares of common stock (the “Auction Stock Repurchase Tender”).

The Auction Stock Repurchase Tender was authorized under our existing share repurchase authority and was funded with cash on hand.

We commenced this tender offer in May 2016.

On June 15, 2016, we accepted for payment an aggregate of 38.5 million shares of common stock at a purchase price of $52.00 per share, for a total amount of $2.0 billion (excluding commissions), which exhausted the availability under all previously authorized share repurchase plans.

Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

On August 2, 2016, our Board of Directors authorized a new share repurchase program for the repurchase of up to $250.0 million of our outstanding shares of common stock (the “August 2016 Repurchase Plan”).

During the year ended December 31, 2016, we purchased 5.8 million shares of common stock at an average purchase price of $43.40 per share, for a total amount of $249.9 million (excluding broker commissions), which exhausted the availability under the August 2016 Repurchase Plan.

Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

On February 28, 2017, our Board of Directors authorized a new share repurchase program for the purchase of up to $500.0 million of our outstanding shares of common stock (the “February 2017 Repurchase Plan”).

No shares have been repurchased pursuant to the February 2017 Repurchase Plan.

On April 1, 2016, we completed our acquisition of flavor supplier and long-time business partner American Fruits & Flavors (“AFF”), in an asset acquisition that brought our primary flavor supplier in-house, secured the intellectual property of our most important flavors in perpetuity and further enhanced our flavor development and global flavor footprint capabilities (the “AFF Transaction”).

Pursuant to the terms of the AFF Transaction, we purchased AFF for $688.5 million in cash after adjustments.

We accounted for the AFF Transaction in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”.

(See Note 2 “Acquisitions and Divestitures” in the notes to the consolidated financial statements).

(See Note 2 “Acquisitions and Divestitures” in the notes to the consolidated financial statements).

Our Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged drinks primarily to bottlers and full service beverage distributors.

In some cases, we sell directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, food service customers and the military.

Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks.

To a lesser extent, our Strategic Brands segment generates net operating revenues by selling ready-to-drink packaged energy drinks to bottlers and full service beverage distributors.

| · Mutant® Super Soda | · BPM® |

During 2016, we introduced the following products:

· Monster Energy Ultra Violet™ (December 2016).

· Mutant® Super Soda (September 2016).

· Monster Energy® Gronk (February 2016).

· Java Monster® Salted Caramel (January 2016).

Products – Monster Energy® Drinks Segment

Mutant® Super Soda Drinks:

Mutant® – a line of carbonated ‘super sodas’.

We offer the following sodas under the Mutant® Super Soda product line: Mutant® Super Soda and Mutant® Red Dawn Super Soda.

AFF Third-Party Products:

We sell a limited number of products acquired as part of the AFF Transaction to independent third-party customers.

Non-Energy Drinks Disposed of as part of the TCCC Transaction (sales through June 12, 2015):

The AFF Transaction brought our primary flavor supplier in-house, secured the intellectual property of our most important flavors in perpetuity and further enhanced our flavor development and global flavor footprint capabilities for our Monster Energy® Drinks segment.

We also source flavors from other suppliers.

As a result of the TCCC Transaction (as defined and described below), Monster Beverage 1990 Corporation (formerly Monster Beverage Corporation) (“Old Monster”) effected a holding company reorganization on June 12, 2015, pursuant to which it became a wholly owned subsidiary of New Laser Corporation, which then changed its name to “Monster Beverage Corporation”.

Also, on June 12, 2015, Old Monster effected a holding company reorganization in connection with the TCCC Transaction by merging New Laser Merger Corp., a wholly owned subsidiary of the Company into Old Monster, with Old Monster surviving as a wholly owned subsidiary of the Company (the “Holding Company Reorganization”), and the Company changed its name from New Laser Corporation to “Monster Beverage Corporation.”

In the Holding Company Reorganization, each Old Monster common share, par value $0.005 per share, outstanding immediately prior to consummation of the Holding Company Reorganization (other than any Old Monster common shares owned by Old Monster immediately prior to the closing of the TCCC Transaction, which were cancelled) was converted automatically into the right to receive one Company common share, par value $0.005 per share.

In addition, upon consummation of the Holding Company Reorganization:

· each unexercised and unexpired stock option then outstanding under any equity compensation plan of Old Monster, whether or not then exercisable, ceased to represent a right to acquire Old Monster common shares and was converted automatically into a right to acquire the same number of Company common shares, on the same terms and conditions as were applicable under such Old Monster stock option; and

· each share of restricted stock and each restricted stock unit of Old Monster granted under all outstanding equity compensation plans ceased to represent or relate to Old Monster common shares and was converted automatically to represent or relate to Company common shares, on the same terms and conditions as were applicable to such Old Monster restricted stock and restricted stock units (including the vesting or other lapse restrictions (without acceleration thereof by virtue of the Holding Company Reorganization and the TCCC Transaction)).

Promptly following the effective time of the Holding Company Reorganization, Old Monster assigned to the Company all obligations of Old Monster under Old Monster’s equity compensation plans and each stock option agreement, restricted stock award agreement, restricted stock unit award agreement and any similar agreement entered into pursuant to such equity compensation plans.

In addition, all obligations of Old Monster under any employment agreements and indemnification agreements were assigned to the Company.

Immediately after the effective time of the Holding Company Reorganization, (1) the Company issued to TCCC 34,040,534 newly issued Company common shares representing approximately 16.7% of the total number of outstanding Company common shares (after giving effect to such issuance) (the “New Issuance”) and TCCC appointed two individuals to the Company’s Board of Directors, (2) TCCC transferred all of its rights in and to TCCC’s worldwide energy drink business (“KO Energy”) including NOS®, Full Throttle®, Burn®, Mother®, Play®, Power Play®, Relentless®, Nalu® and other brands (the “Strategic Brands”) to the Company, (3) Old Monster transferred all of its rights in and to its non-energy drink business (“Monster Non-Energy”) to TCCC, (4) the Company and TCCC amended the distribution coordination agreements previously existing between them to govern the transition of third parties’ rights to distribute the Company’s energy products in most territories in the U.S. to members of TCCC’s distribution network, which consists of owned or controlled bottlers/distributors and independent bottlers/distributors, and (5) TCCC and one of its subsidiaries made an aggregate net cash payment to the Company of $2.15 billion, $125.0 million of which is currently held in escrow, subject to release upon the achievement of milestones relating to the transition of distribution rights to TCCC’s distribution network.

On the one-year anniversary of the closing of the TCCC Transaction, the then-remaining escrow amount, less an amount sufficient to cover any unresolved claims, will be released to TCCC.

Any amount described above that becomes payable following the one-year anniversary will be paid directly from TCCC to the Company.

As a result, $125 million is currently held in escrow.

The Company expects to transition sufficient additional distribution rights to release all remaining amounts held in escrow.

Therefore, the Company believes that achievement of the milestones is probable.

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.

As a result, the Company incurred termination amounts of $224.0 million for the year ended December 31, 2015 related to the distribution rights transferred to TCCC’s distribution network.

Such termination amounts have been expensed in full and are included in operating expenses for the year ended December 31, 2015.

In addition, the Company recognized as income $39.8 million in the first quarter of 2015, related to the accelerated amortization of the deferred revenue balances associated with certain of the Company’s prior distributors who were sent notices of termination during the first quarter of 2015.

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 management’s 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.

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).

| · BU® | · BPM® |

| · Monster Phantom™ M-100™ | |

During 2015, we introduced the following Monster Energy® brand energy drink products, in addition to the Strategic Brands acquired as part of the TCCC Transaction:

· Monster Energy® Ultra Citron™, a carbonated energy drink which contains zero calories and zero sugar (January 2015).

· Monster Rehab® Peach Tea + Energy (January 2015).

· Juice Monster® Pipeline Punch™ (July 2015).

· Muscle Monster® Banana (July 2015).

· Monster Ghost™ M-100™, an exclusive limited time listing with a convenience customer (July 2015).

· Monster Phantom™ M-100™, an exclusive limited time listing with certain convenience customers (July 2015).

· Monster Rehab® Raspberry Tea + Energy (August 2015).

Products – Other Segment (sales through June 12, 2015)

_Peace Tea® Iced Teas and Juice Drinks_ - a line of ready-to-drink iced teas and juice drinks.

_Hansen’s® Brand Sodas -_ Hansen’s® brand sodas have been a leading natural soda brand on the West Coast of the United States for more than 35 years and are made with natural flavors.

Hansen’s® brand sodas, sweetened with cane sugar, and Hansen’s® Diet Sodas, sweetened with Splenda® no calorie sweetener and Acesulfame-K, contain no preservatives, sodium, or caffeine.

_Blue Sky_® _Products -_ Blue Sky® products contain no preservatives, artificial sweeteners or caffeine (other than our Blue Sky® energy drinks) and are made with natural flavors.

_Hansen’s_® _Energy Drinks -_ Hansen’s® Energy Drinks competed in the “functional” beverage category, namely, beverages that provide a benefit in addition to simply delivering refreshment.

_Hansen’s® Juice Products -_ The juice product line contains 100% juice and 120% of the United States Recommended Daily Allowances for vitamin C.

_Hansen’s® Aseptic Juices –_ The line of aseptically packed boxed juice products, includes our dual-branded multi-vitamin 100% juice line, which is sold in conjunction with Costco Wholesale Corporation.

_Hubert’s® Lemonades -_ Hubert’s® Lemonade is a line of premium ready-to-drink lemonades available in a variety of flavors.

The Company has been named a defendant in [removed: various] [added: numerous] personal injury lawsuits, claiming that the death or other serious injury of the plaintiffs was caused by consumption of Monster Energy® brand energy drinks.

_San Francisco City Attorney Litigation_ – On October 31, 2012, the Company received a written request for information from the City Attorney for the City and County of San Francisco concerning the Company’s advertising and marketing of its Monster Energy® brand energy drinks and specifically [removed: concerning the safety of its products for consumption by adolescents.]

In a letter dated March 29, 2013, the San Francisco City Attorney threatened to bring suit against the Company if it did not agree to take the following five steps immediately: (i) “Reformulate its products to lower the caffeine content to safe [removed: levels” -] [added: levels”;] (ii) “Provide adequate warning labels”; (iii) “Cease promoting over-consumption in marketing”; (iv) “Cease use of alcohol and drug references in [removed: marketing”;] [added: marketing”] and (v) “Cease targeting minors.”

[removed: (ii) The San Francisco Action –] On May 6, 2013, the San Francisco City Attorney filed a complaint for declaratory and injunctive relief, civil penalties and restitution for alleged violation of California’s Unfair Competition Law, Business & Professions Code sections 17200, _et [removed: seq.,] [added: seq._ (“UCL”),] styled [removed: People] [added: _People] Of The State Of California ex rel.

Monster Beverage Corporation_, in San Francisco Superior [removed: Court (the “San Francisco Action”).][added: Court.]

[removed: seq.;] [added: The City Attorney alleged that the Company (1) mislabeled its products as a dietary supplement, in violation of California’s Sherman Food, Drug, and Cosmetic Law, California Health & Safety Code section 109875, _et seq_.;] (2) is selling an “adulterated” product because caffeine is not generally recognized as safe due to the alleged lack of scientific consensus concerning the safety of the levels of caffeine in the Company’s products; and (3) is engaged in unfair and misleading business practices because its marketing (a) does not disclose the health risks that energy drinks pose for children and [removed: teens;] [added: teens,] (b) fails to warn against and promotes unsafe [removed: consumption;] [added: consumption,] (c) implicitly promotes mixing of energy drinks with alcohol or [removed: drugs;] [added: drugs] and (d) is deceptive because it includes unsubstantiated claims about the purported special benefits of its “killer” ingredients and “energy blend.” The City Attorney sought a declaration that the Company has engaged in unfair and unlawful business acts and practices in violation of the [removed: Unfair Competition Law;] [added: UCL,] an injunction from performing or proposing to perform any acts in violation of the [removed: Unfair Competition Law; restitution;] [added: UCL, restitution] and civil penalties.

Furthermore, [removed: the Company is subject to litigation] from time to time in the normal course of business, [added: the Company is named in other litigation,] including [added: consumer class actions,] intellectual property litigation and claims from [removed: terminated] [added: prior] distributors.

As of December 31, [removed: 2015,] [added: 2016,] the Company’s consolidated balance sheet includes accrued loss contingencies of approximately $2.8 million.

On January 13, 2017, the Court issued an opinion in which it agreed with certain Company arguments regarding the scope of the subpoena and the Attorney General’s investigation, but denied the motion to quash and granted the Attorney General’s cross-motion to compel compliance.

concerning the safety of its products for consumption by adolescents.

The City Attorney and the Company settled the action in January 2017, on terms acceptable to the Company.

The settlement does not include any penalty or fine under the UCL; any finding or admission of liability or wrongdoing; or any change to the formulation of Monster Energy® drinks or to whom the drinks may be sold.

In consideration for a release of claims and dismissal of the action with prejudice, the Company agreed to maintain various current marketing and labeling practices for its energy drink products through December 31, 2018.

No decision has been rendered.

(i) The Company Action – On April 29, 2013, the Company and its wholly owned subsidiary, Monster Energy Company, filed a complaint for declaratory and injunctive relief against the San Francisco City Attorney (the “Company Action”) in United States District Court for the Central District of California (the “Central District Court”), styled _Monster Beverage Corp., et al.

v.

Dennis Herrera_.

The Company sought a declaration from the Central District Court that the San Francisco City Attorney’s investigation and demands are impermissible and preempted, subject to the doctrine of primary jurisdiction, are unconstitutional in that they violate the First and Fourteenth Amendments’ prohibitions against compelled speech, content-based speech and commercial speech, are impermissibly void-for-vagueness, and/or violate the Commerce Clause.

On June 3, 2013, the City Attorney filed a motion to dismiss the Company Action, arguing in part that the complaint should be dismissed in light of the San Francisco Action (described below) filed on May 6, 2013.

On August 22, 2013, the Central District Court granted in part and denied in part the City Attorney’s motion.

On October 17, 2013, the City Attorney filed a renewed motion to dismiss the Company Action and on December 16, 2013, the Central District Court granted the City Attorney’s renewed motion, dismissing the Company Action.

The Company filed a Notice of Appeal to the Ninth Circuit on December 18, 2013.

The appeal is fully briefed and is set for argument on April 7, 2016.

The City Attorney alleges that the Company (1) mislabeled its products as a dietary supplement, in violation of California’s Sherman Food, Drug and Cosmetic Law, California Health & Safety Code sections 109875 et.

After a motion to strike filed by the Company was granted in part, on March 20, 2014, the City Attorney filed an amended complaint, adding allegations supporting the theory for relief as to which the Court had granted the motion to strike.

On April 18, 2014, the Company filed a renewed motion to strike, as well as a motion asking the Court to bifurcate and/or stay claims relating to the safety of Monster Energy® brand energy drinks, pending resolution of the ongoing FDA investigation of the safety and labeling of food products to which caffeine is added.

On May 22, 2014, the Court denied the Company’s motion to strike and motion to bifurcate and/or stay claims relating to safety.

Discovery is ongoing.

The Court has set the case for a bench trial for April 10-17, 2017.

The Company denies that it has violated the Unfair Competition Law or any other law and believes that the City Attorney’s claims and demands are preempted and unconstitutional, as alleged in the action the Company filed in the Central District Court.

The Company intends to vigorously defend against this lawsuit.

At this time, no evaluation of the likelihood of an unfavorable outcome or range of potential loss can be expressed.

The actions or investigations described above have not progressed to a point where a reasonably possible range of losses associated with their ultimate outcome can be estimated at this time.

If the final resolution of any such litigation or proceedings is unfavorable, the Company’s financial condition, operating results and cash flows could be materially affected.

In addition to the above matters, the Company has been named as a defendant in various false advertising putative class actions and in a private attorney general action.

In these actions, plaintiffs allege that defendants misleadingly labeled and advertised Monster Energy® brand products that allegedly were ineffective for the advertised benefits (including, but not limited to, an allegation that the products do not hydrate as advertised because they contain caffeine).

The plaintiffs further allege that the Monster Energy® brand products at issue are unsafe because they contain one or more ingredients that allegedly could result in illness, injury or death.

In connection with these product safety allegations, the plaintiffs claim that the product labels did not provide adequate warnings and/or that the Company did not include sufficiently specific statements with respect to contra-indications and/or adverse reactions associated with the consumption of its energy drink products (including, but not limited to, claims that certain ingredients, when consumed individually or in combination with other ingredients, could result in high blood pressure, palpitations, liver damage or other negative health effects and/or that the products themselves are unsafe).

Based on these allegations, the plaintiffs assert claims for violation of state consumer protection statutes, including unfair competition and false advertising statutes, and for breach of warranty and unjust enrichment.

In their prayers for relief, the plaintiffs seek, inter alia, compensatory and punitive damages, restitution, attorneys’ fees, and, in some cases, injunctive relief.

The Company regards these cases and allegations as having no merit.

For the fiscal year ended December 31, [removed: 2015][added: 2016]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was [removed: $24,970,779,420] [added: $27,920,735,052] computed by reference to the closing sale price for such stock on the NASDAQ Global Select Market on June 30, [removed: 2015,] [added: 2016,] the last business day of the registrant’s most recently completed second fiscal quarter.

The number of shares of the registrant’s common stock, $0.005 par value per share (being the only class of common stock of the registrant), outstanding on February [removed: 4, 2016] [added: 10, 2017] was [removed: 202,919,837] [added: 566,619,343] shares.

Portions of the registrant’s Definitive Proxy Statement to be filed subsequent to the date hereof with the Commission pursuant to Regulation 14A in connection with the registrant’s [removed: 2016] [added: 2017] Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, [removed: 2015.][added: 2016.]

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| [removed: [6.](#ITEM6_SELECTEDFINANCIALDATA_041131)] [added: [6.](#ITEM6_SELECTEDFINANCIALDATA_110743)] | [added: |] [Selected Financial [removed: Data](#ITEM6_SELECTEDFINANCIALDATA_041131)] [added: Data](#ITEM6_SELECTEDFINANCIALDATA_110743)] | | [removed: 37] [added: 36] |

| [removed: [7.](#ITEM7_MANAGEMENTSDISCUSSIONANDAN_012246)] [added: [7.](#ITEM7_MANAGEMENTSDISCUSSIONANDA_110808)] | [added: |] [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ITEM7_MANAGEMENTSDISCUSSIONANDAN_012246)] [added: Operations](#ITEM7_MANAGEMENTSDISCUSSIONANDA_110808)] | | [removed: 38] [added: 37] |

| [removed: [7A.](#ITEM7A_QUANTITATIVEANDQUALITATIV_022124)] [added: [7A.](#ITEM7A_QUANTITATIVEANDQUALITATIV_013156)] | [added: |] [Quantitative and Qualitative Disclosures about Market [removed: Risk](#ITEM7A_QUANTITATIVEANDQUALITATIV_022124)] [added: Risk](#ITEM7A_QUANTITATIVEANDQUALITATIV_013156)] | | [removed: 63] [added: 64] |

| [removed: [8.](#ITEM8_FINANCIALSTATEMENTSANDSUPP_022134)] [added: [8.](#ITEM8_FINANCIALSTATEME_013204)] | [added: |] [Financial Statements and Supplementary [removed: Data](#ITEM8_FINANCIALSTATEMENTSANDSUPP_022134)] [added: Data](#ITEM8_FINANCIALSTATEME_013204)] | | [removed: 64] [added: 65] |

| [removed: [9.](#ITEM9_022137)] [added: [9.](#ITEM9_CHANGESINANDDISAGREE_013206)] | [added: |] [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ITEM9_022137)] [added: Disclosure](#ITEM9_CHANGESINANDDISAGREE_013206)] | | [removed: 64] [added: 65] |

| [removed: [9A.](#ITEM9A_CONTROLSANDPROCEDURES_022138)] [added: [9A.](#ITEM9A_CONTROLSANDPROCEDURES_013209)] | [added: |] [Controls and [removed: Procedures](#ITEM9A_CONTROLSANDPROCEDURES_022138)] [added: Procedures](#ITEM9A_CONTROLSANDPROCEDURES_013209)] | | [removed: 64] [added: 65] |

| [removed: [9B.](#ITEM9B_OTHERINFORMATION_064412)] [added: [9B.](#ITEM9B_OTHER_015527)] | [added: |] [Other [removed: Information](#ITEM9B_OTHERINFORMATION_064412)] [added: Information](#ITEM9B_OTHER_015527)] | | [removed: 66] [added: 67] |

| [PART [removed: III](#PARTIII_064415] [added: III](#PARTIII_015528] "Click to goto ") | | | | [added: |]

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| [removed: [11.](#ITEM11_EXECUTIVECOMPENSATION_064550)] [added: [11.](#ITEM11_EXECUTIVECOMPENSATION_015539)] | [added: |] [Executive [removed: Compensation](#ITEM11_EXECUTIVECOMPENSATION_064550)] [added: Compensation](#ITEM11_EXECUTIVECOMPENSATION_015539)] | | [removed: 66] [added: 67] |

| [removed: [12.](#ITEM12_064602)] [added: [12.](#ITEM12_SECURITYOWNERS_015542)] | [added: |] [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ITEM12_064602)] [added: Matters](#ITEM12_SECURITYOWNERS_015542)] | | [removed: 66] [added: 67] |

| [removed: [13.](#ITEM13_075443)] [added: [13.](#ITEM13_CERTAINRELATIONSHIPSAN_015610)] | [added: |] [Certain Relationships and Related Transactions, and Director [removed: Independence](#ITEM13_075443)] [added: Independence](#ITEM13_CERTAINRELATIONSHIPSAN_015610)] | | [removed: 67] [added: 68] |

| [removed: [14.](#ITEM14_PRINCIPALACCOUNTINGFEESAN_064712)] [added: [14.](#ITEM14_PRINCIPALACCOUNT_015612)] | [added: |] [Principal Accounting Fees and [removed: Services](#ITEM14_PRINCIPALACCOUNTINGFEESAN_064712)] [added: Services](#ITEM14_PRINCIPALACCOUNT_015612)] | | [removed: 67] [added: 68] |

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10-K 1 a17-4132_110k.htm 10-K

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10-K 1 a15-23471_110k.htm 10-K

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Our owned corporate headquarters are located at 1 Monster Way, Corona, California 92879, and consists of an approximately 141,000 square-foot, [removed: free standing,] [added: free-standing,] six-story building.

As a result of our sustainability efforts, we [removed: are seeking] [added: continue to pursue] ENERGY STAR certification for our corporate [removed: headquarters shortly.][added: headquarters.]

[removed: During February] [added: In September] 2016, we [removed: entered into an agreement to acquire] [added: completed the acquisition of] approximately 49 acres of land, located in Rialto, CA, for a purchase price of approximately [removed: $39] [added: $39.1] million.

[removed: If we ultimately acquire the land, we intend to build] [added: We have begun construction of] an approximately 1,000,000 square-foot [removed: building,] [added: warehouse,] which we hope to have LEED certified, to replace our current leased warehouse and distribution [removed: space] [added: facilities located] in Corona, CA.

In November 2016, we acquired an approximately 75,426 square foot, free-standing, three-story office building, including the real property thereunder and improvements thereon, located in Corona, CA adjacent to our current corporate headquarters, for a purchase price of approximately $12.6 million.

We intend to complete any necessary improvements and occupy the building as an extension of our existing corporate headquarters at some time in the future.

We have entered into an approximately $36.8 million guaranteed maximum price construction contract for the construction of the building, of which $33.7 million remained outstanding as of December 31, 2016.

The purchase is subject to various conditions precedent that must be satisfied prior to the closing.

As of February [removed: 4, 2016,] [added: 10, 2017,] there were [removed: 202,919,837] [added: 566,619,343] shares of the Company’s common stock outstanding held by approximately [removed: 236] [added: 223] holders of record.

| Year Ended December 31, [removed: 2014] [added: 2016] | | High | | | Low | | |

On [removed: April 7, 2013, the Company’s] [added: August 2, 2016, our] Board of Directors authorized a new share repurchase program for the repurchase of up to [removed: $200.0] [added: $250.0] million of the Company’s outstanding [added: shares of] common stock (the [removed: “April 2013] [added: “August 2016] Repurchase Plan”).

During the year ended December 31, [removed: 2015, the Company] [added: 2016, we] purchased [removed: 1.1] [added: 5.8] million shares of common stock at an average purchase price of [removed: $134.71] [added: $43.40] per share, for a total amount of [removed: $145.7] [added: $249.9] million (excluding broker commissions), which exhausted the availability under the [removed: April 2013] [added: August 2016] Repurchase Plan.

During the year ended December 31, [removed: 2015, 3.3 million] [added: 2016, 56,820] shares [added: of common stock] were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of [removed: $412.3] [added: $2.6] million.

While such purchases are considered common stock repurchases, they are not counted as purchases against [removed: the Company’s] [added: our] authorized share repurchase [removed: programs, including the September 2015 Repurchase Plan or the April 2013 Repurchase Plan.][added: programs.]

[removed: Shares purchased subsequent to the TCCC Transaction] [added: Such shares of common stock] are included in common stock in treasury in the accompanying [removed: condensed] consolidated balance sheet at December 31, [removed: 2015.][added: 2016.]

The following tabular summary reflects the Company’s repurchase activity during the quarter ended December 31, [removed: 2015.][added: 2016:]

| Period | | Total Number of Shares Purchased | | Average Price per Share¹ | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (In thousands)² | | [added: |]

The following table sets forth information as of December 31, [removed: 2015] [added: 2016] with respect to shares of our common stock that may be issued under our equity compensation plans.

[removed: ][added: ]

Cumulative total return assumes an initial investment of $100 on December 31, [removed: 2010.][added: 2011.]

On October 14, 2016, the Company announced a three-for-one stock split of the Company’s common stock to be effected in the form of a 200% stock dividend.

The common stock dividend was issued on November 9, 2016 and the Company’s common stock began trading at the split adjusted price on November 10, 2016.

(See Note 1 – “Organization and Summary of Significant Accounting Policies” for additional information”).

| First Quarter | | $ | 49.79 | | $ | 37.69 | |

| Second Quarter | | $ | 53.62 | | $ | 40.30 | |

| Third Quarter | | $ | 55.50 | | $ | 47.44 | |

| Fourth Quarter | | $ | 50.63 | | $ | 40.64 | |

| First Quarter | | $ | 47.97 | | $ | 35.59 | |

| Second Quarter | | $ | 48.23 | | $ | 41.39 | |

| Third Quarter | | $ | 51.94 | | $ | 38.54 | |

| Fourth Quarter | | $ | 53.50 | | $ | 42.45 | |

On April 28, 2016, our Board of Directors authorized the Company to commence the Auction Stock Repurchase Tender to repurchase up to $2.0 billion of its outstanding shares of common stock.

The Auction Stock Repurchase Tender was authorized under the Company’s existing share repurchase authority and was funded with cash on hand.

We commenced this tender offer in May 2016.

On June 15, 2016, we accepted for payment an aggregate of 38.5 million shares of common stock at a purchase price of $52.00 per share, for a total amount of $2.0 billion (excluding commissions), which exhausted the availability under all previously authorized share repurchase plans.

We incurred $1.6 million in stock repurchase expenses for the year ended December 31, 2016 related to the Auction Stock Repurchase Tender.

Such shares of common stock are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2016.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Oct 1 – Oct 31, 2016 | | 385,401 | | $ 47.61 | | 385,401 | | $ | 231,650 | |

| Nov 1 – Nov 30, 2016 | | 4,653,071 | | $ 42.98 | | 4,653,071 | | $ | 31,597 | |

| Dec 1 – Dec 31, 2016 | | 720,620 | | $ 43.83 | | 720,620 | | $ | \- | |

| Equity compensation plans approved by stockholders | | 23,199,548 | | $23.55 | | 23,633,600 | |

| Total | | 23,199,548 | | $23.55 | | 25,633,600 | |

| First Quarter | | $ | 143.90 | | $ | 106.77 | |

| Second Quarter | | $ | 144.69 | | $ | 124.18 | |

| Third Quarter | | $ | 155.83 | | $ | 115.62 | |

| Fourth Quarter | | $ | 160.50 | | $ | 127.34 | |

| First Quarter | | $ | 75.63 | | $ | 66.31 | |

| Second Quarter | | $ | 73.38 | | $ | 63.00 | |

| Third Quarter | | $ | 94.93 | | $ | 63.82 | |

| Fourth Quarter | | $ | 113.50 | | $ | 89.56 | |

On June 12, 2015, as part of the TCCC Transaction, the Company cancelled 41.5 million shares of treasury stock owned by the Company.

The cancelled stock had a carrying value of approximately $1,482.6 million.

The Company’s accounting policy upon the formal retirement of treasury stock is to deduct its par value from common stock and to reflect any excess of cost over par as a deduction from retained earnings.

On September 11, 2015, the Company’s Board of Directors authorized a new share repurchase program for the repurchase of up to $500.0 million of the Company’s outstanding common stock (the “September 2015 Repurchase Plan”).

During the year ended December 31, 2015, the Company purchased 1.9 million shares of common stock at an average purchase price of $134.26 per share, for a total amount of $250.0 million (excluding broker commissions), under the September 2015 Repurchase Plan.

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Oct 1 - Oct 31 | | 61,100 | | $ 134.12 | | 61,100 | | $ 250,007 | |

| Equity compensation plans approved by stockholders | | 6,768,423 | | $50.87 | | 10,321,921 | |

| Total | | 6,768,423 | | $50.87 | | 10,321,921 | |

The consolidated statements of operations data set forth below with respect to each of the fiscal years ended December 31, [removed: 2013] [added: 2014] through [removed: 2015] [added: 2016] and the balance sheet data as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] are derived from our audited consolidated financial statements included herein, and should be read in conjunction with those financial statements and notes thereto, and with Management’s Discussion and Analysis of Financial Condition and Results of Operations included as Part II, Item 7 of this Annual Report on Form 10-K.

The consolidated statements of operations data for the fiscal years ended December 31, [removed: 2012] [added: 2013] and [removed: 2011] [added: 2012] and the balance sheet data as of December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011] [added: 2012] are derived from the Company’s audited consolidated financial statements not included herein.

| (in thousands, except per share information) | | [added: 2016 | | |] 2015 | | | 2014 | | | 2013 | | | 2012 | | | [removed: 2011 | | |]

| Net sales¹ | | $ | [removed: 2,722,564] [added: 3,049,393] | | $ | [removed: 2,464,867] [added: 2,722,564] | | $ | [removed: 2,246,428] [added: 2,464,867] | | $ | [removed: 2,060,702] [added: 2,246,428] | | $ | [removed: 1,703,230] [added: 2,060,702] | |

| Gross profit¹ | | $ | [removed: 1,632,301] [added: 1,942,000] | | $ | [removed: 1,339,810] [added: 1,632,301] | | $ | [removed: 1,172,931] [added: 1,339,810] | | $ | [removed: 1,065,656] [added: 1,172,931] | | $ | [removed: 894,309] [added: 1,065,656] | |

| Gross profit as a percentage to net sales | | [added: 63.7% | | |] 60.0% | | | 54.4% | | | 52.2% | | | 51.7% | | | [removed: 52.5% | | |]

| Operating income² | | $ | [removed: 893,653] [added: 1,085,338] | | $ | [removed: 747,505] [added: 893,653] | | $ | [removed: 572,916] [added: 747,505] | | $ | [removed: 550,623] [added: 572,916] | | $ | [removed: 456,423] [added: 550,623] | |

| Net income | | $ | [removed: 546,733] [added: 712,685] | | $ | [removed: 483,185] [added: 546,733] | | $ | [removed: 338,661] [added: 483,185] | | $ | [removed: 340,020] [added: 338,661] | | $ | [removed: 286,219] [added: 340,020] | |

| Cash, cash equivalents and investments | | $ | [removed: 2,175,417] [added: 600,530] | | $ | [removed: 1,194,397] [added: 2,935,375] | | $ | [removed: 623,388] [added: 1,194,397] | | $ | [removed: 340,949] [added: 623,388] | | $ | [removed: 793,807] [added: 340,949] | |

| Total assets | | $ | [removed: 5,675,189] [added: 4,153,471] | | $ | [removed: 1,938,875] [added: 5,571,277] | | $ | [removed: 1,420,509] [added: 1,938,875] | | $ | [removed: 1,043,325] [added: 1,420,509] | | $ | [removed: 1,362,399] [added: 1,043,325] | |

| Stockholders’ equity | | $ | [removed: 4,809,410] [added: 3,329,709] | | $ | [removed: 1,515,150] [added: 4,809,410] | | $ | [removed: 992,279] [added: 1,515,150] | | $ | [removed: 644,397] [added: 992,279] | | $ | [removed: 979,158] [added: 644,397] | |

_¹__Includes [added: $40.3 million,] $62.8 million, $15.0 million, $14.8 [removed: million, $13.2] million and [removed: $13.0] [added: $13.2] million for the years ended December 31, [added: 2016,] 2015, 2014, [removed: 2013, 2012] [added: 2013] and [removed: 2011,] [added: 2012,] respectively, related to the recognition of deferred revenue.

Included in the [added: $40.3 million and the] $62.8 million recognition of deferred revenue for the [removed: year] [added: years] ended December 31, [added: 2016 and] 2015, [added: respectively,] is [added: $5.7 million and] $39.8 million related to the accelerated amortization of the deferred revenue balances associated with certain of the Company’s prior distributors who were sent notices of termination during the [removed: first quarter of 2015._][added: relevant periods._]

_²Includes [added: $79.8 million,] $224.0 million, ($0.2) million, $10.8 [removed: million, $1.5] million and [removed: $1.1] [added: $1.5] million for the years ended December 31, [added: 2016,] 2015, 2014, [removed: 2013, 2012] [added: 2013] and [removed: 2011,] [added: 2012,] respectively, related to expenditures attributable to the costs associated with terminating existing distributors._

| Basic | | $ | 1.21 | | $ | 0.97 | | $ | 0.96 | | $ | 0.68 | | $ | 0.65 | |

| Diluted | | $ | 1.19 | | $ | 0.95 | | $ | 0.92 | | $ | 0.65 | | $ | 0.62 | |

| Basic | | $ | 2.90 | | $ | 2.89 | | $ | 2.03 | | $ | 1.96 | | $ | 1.62 | |

| Diluted | | $ | 2.84 | | $ | 2.77 | | $ | 1.95 | | $ | 1.86 | | $ | 1.53 | |

The information required to be furnished in response to this ITEM 8 follows the signature page and Index to Exhibits hereto at pages [removed: 73] [added: 70] through [removed: 120.][added: 106.]

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on the framework in _Internal Control – Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on our management’s evaluation under the framework in _Internal Control - Integrated Framework (2013)_, our management concluded that our internal control over financial reporting was effective as of December 31, [removed: 2015.][added: 2016.]

Our internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation report, which is included herein.

_Changes in Internal Control Over Financial Reporting_ – There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, [removed: 2015,] [added: 2016,] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have audited the internal control over financial reporting of Monster Beverage Corporation and subsidiaries (the “Company”) as of December 31, [removed: 2015,] [added: 2016,] based on criteria established in _Internal Control — Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2015,] [added: 2016,] based on the criteria established in _Internal Control — Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, [removed: 2015] [added: 2016] of the Company and our report dated [removed: February 29, 2016] [added: March 1, 2017] expressed an unqualified opinion on those financial statements and financial statement schedule.

March 1, 2017

February 29, 2016

The information required by this item regarding our directors is included under the caption “Proposal One – Election of Directors” in our Proxy Statement for our [removed: 2015] [added: 2017] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, [removed: 2015] [added: 2016] (the [removed: “2016] [added: “2017] Proxy Statement”) and is incorporated herein by reference.

Information concerning compliance with Section 16(a) of the Exchange Act is included under the caption “Section 16(a) Beneficial Ownership Reporting Compliance” in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

Information concerning the Audit Committee and the Audit Committee Financial expert is reported under the caption “Audit Committee; Report of the Audit Committee; Duties and Responsibilities” in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

Information concerning the compensation of our directors and executive officers and Compensation Committee Interlocks and Insider Participation is reported under the captions “Compensation Discussion and Analysis,” and “Compensation Committee,” respectively, in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

Information concerning the beneficial ownership of the Company’s Common Stock of (a) those persons known to the Company to be the beneficial owners of more than 5% of the Company’s common stock; (b) each of the Company’s directors and nominees for director; and (c) the Company’s executive officers and all of the Company’s current directors and executive officers as a group is reported under the caption “Principal Stockholders and Security Ownership of Management” in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

Information concerning certain relationships and related transactions is reported under the caption “Certain Relationships and Related Transactions and Director Independence” in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

Information concerning our accountant fees and our Audit Committee’s pre-approval of audit and permissible non-audit services of independent auditors is reported under the captions “Principal Accounting Firm Fees” and “Pre-Approval of Audit and Non-Audit Services,” respectively, in our [removed: 2016] [added: 2017] Proxy Statement and is incorporated herein by reference.

| | [Report of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_053947] [added: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_024831] "Click to goto ") | 73 |

| | [Consolidated Balance Sheets as of December 31, [removed: 2015] [added: 2016] and [removed: 2014](#CONSOLIDATEDBALANCESHEETS_072318] [added: 2015](#CONSOLIDATEDBALANCESHEETS_044957] "Click to goto ") | 74 |

| | [Consolidated Statements of Income for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#CONSOLIDATEDSTATEMENTSOFINCOME_072321] [added: 2014](#CONSOLIDATEDSTATEMENTSOFINCOME_045001] "Click to goto ") | 75 |

| | [Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#CONSOLIDATEDSTATEMENTSOFCOMPREHE_072324] [added: 2014](#COMPREHENSIVEINCO_045008] "Click to goto ") | 76 |

| | [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#CONSOLIDATEDSTATEMENTSOFSTOCKHOL_074022] [added: 2014](#STATEMENTSOFSTOCKHOLDE_045123] "Click to goto ") | 77 |

| | [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#CONSOLIDATEDSTATEMENTSOFCASHFLOW_080029] [added: 2014](#CASHFLOWS_045152] "Click to goto ") | 78 |

| | [Notes to Consolidated Financial [removed: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTAT_084543] [added: Statements](#NOTESTOCONSOLIDATEDFINANCIA_045159] "Click to goto ") | 80 |

| | [Valuation and Qualifying Accounts for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#SCHEDULEIIVALUATIONANDQUALIFYING_043808] [added: 2014](#SCHEDULEIIVALUATIONANDQUALIFYING_045337] "Click to goto ") | [removed: 120] [added: 116] |

| /s/ RODNEY C. SACKS | Rodney C. Sacks | Date: [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ RODNEY C. SACKS | | Chairman of the Board of | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ HILTON H. SCHLOSBERG | | Vice Chairman of the Board of | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ NORMAN C. EPSTEIN | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ MARK J. HALL | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ GARY P. FAYARD | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ BENJAMIN M. POLK | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ SYDNEY SELATI | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ HAROLD C. TABER, JR. | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ MARK S. VIDERGAUZ | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| /s/ KATHY N WALLER | | Director | | [removed: February 29, 2016] [added: March 1, 2017] |

| 3.1 | Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to our Form [removed: 8-K] [added: 10-K] dated [removed: June 18, 2015).] [added: November 7, 2016).] |

| [removed: 10.5+] [added: 10.6+] | Stock Option Agreement between Hansen Natural Corporation and [removed: Harold Taber] [added: Rodney C. Sacks] (made as of [removed: November 11, 2005)] [added: June 2, 2008)] (incorporated by reference to Exhibit [removed: 10.42] [added: 10.44] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| [removed: 10.6+] [added: 10.8+] | Stock Option Agreement between Hansen Natural Corporation and Hilton H. Schlosberg (made as of [removed: November 11, 2005)] [added: June 2, 2008)] (incorporated by reference to Exhibit [removed: 10.46] [added: 10.45] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| 10.7+ | [added: Amendment to] Stock Option Agreement between Hansen Natural Corporation and Rodney C. Sacks (made as of [removed: November 11, 2005)] [added: August 2, 2008)] (incorporated by reference to Exhibit [removed: 10.47] [added: 10.44A] to our Form 10-K dated March [removed: 15, 2006).] [added: 1, 2010).] |

| [removed: 10.8+] [added: 10.5+] | Hansen Natural Corporation 2001 Amended and Restated Stock Option Plan (incorporated by reference to Exhibit A to our Proxy Statement dated September 25, 2007). |

| [removed: 10.9] [added: 10.18+] | [removed: Business Loan] Agreement between [removed: Hansen Beverage] [added: the] Company and [removed: Comerica Bank] [added: Mark Hall, dated March 12, 2015] (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated [removed: August 9, 2007).] [added: May 11, 2015).] |

| [removed: 10.12+] [added: 10.11+] | Stock Option Agreement between Hansen Natural Corporation and Rodney C. Sacks (made as of [removed: June 2, 2008)] [added: December 1, 2009)] (incorporated by reference to Exhibit [removed: 10.44] [added: 10.51] to our Form 10-K dated March 1, 2010). |

| [removed: 10.13A+] [added: 10.9+] | Amendment to Stock Option Agreement between Hansen Natural Corporation and [removed: Rodney C. Sacks] [added: Hilton H. Schlosberg] (made as of August 2, 2008) (incorporated by reference to Exhibit [removed: 10.44A] [added: 10.45A] to our Form 10-K dated March 1, 2010). |

| [removed: 10.14+] [added: 10.12+] | Stock Option Agreement between Hansen Natural Corporation and Hilton H. Schlosberg (made as of [removed: June 2, 2008)] [added: December 1, 2009)] (incorporated by reference to [removed: Exhibit 10.45] [added: exhibit 10.52] to our Form 10-K dated March 1, 2010). |

| [removed: 10.15A+] [added: 10.13+] | [removed: Amendment to] Stock Option Agreement between Hansen Natural Corporation and [removed: Hilton H. Schlosberg] [added: Mark J. Hall] (made as of [removed: August 2, 2008)] [added: December 1, 2009)] (incorporated by reference to Exhibit [removed: 10.45A] [added: 10.53] to our Form 10-K dated March 1, 2010). |

| [removed: 10.16+] [added: 10.14+] | Stock Option Agreement between Hansen Natural Corporation and [removed: Thomas] [added: Mark] J. [removed: Kelly] [added: Hall] (made as of [removed: June 2, 2008)] [added: December 1, 2010)] (incorporated by reference to Exhibit [removed: 10.47] [added: 10.54] to our Form 10-K dated March 1, [removed: 2010).] [added: 2011).] |

| [removed: 10.17+] [added: 10.10+] | 2009 Hansen Natural Corporation Stock Incentive Plan for Non-Employee Directors (incorporated by reference to Exhibit A to our Proxy Statement dated April 24, 2009). |

| 10.19+ | [removed: Stock Option] [added: Employment] Agreement between [removed: Hansen Natural] [added: Monster Beverage] Corporation and Rodney C. Sacks [removed: (made as of December 1, 2009)] (incorporated by reference to Exhibit [removed: 10.51] [added: 10.1] to our Form [removed: 10-K] [added: 8-K] dated March [removed: 1, 2010).] [added: 19, 2014).] |

| 10.20+ | [removed: Stock Option] [added: Employment] Agreement between [removed: Hansen Natural] [added: Monster Beverage] Corporation and Hilton H. Schlosberg [removed: (made as of December 1, 2009)] (incorporated by reference to [removed: exhibit 10.52] [added: Exhibit 10.2] to our Form [removed: 10-K] [added: 8-K] dated March [removed: 1, 2010).] [added: 19, 2014).] |

| [removed: 10.25+] [added: 10.15+] | Form of Restricted Stock Unit Agreement pursuant to the 2009 Hansen Natural Corporation Stock Incentive Plan for Non-Employee Directors (incorporated by reference to Exhibit [removed: 10.55] [added: 10.1] to our Form 10-K dated [removed: March 1, 2011).] [added: August 5, 2016).] |

| [removed: 10.26+] [added: 10.16+] | Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated August 9, 2011). |

| [removed: 10.27+] [added: 10.17+] | Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K dated May 24, 2011). |

| 101* | The following materials from Monster Beverage Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2014] [added: 2016] are furnished herewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, [removed: 2015] [added: 2016] and [removed: 2014,] [added: 2015,] (ii) the Consolidated Statements of Income for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] (iii) the Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] (iv) Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] (v) Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013,] [added: 2014,] and (vi) the Notes to Consolidated Financial Statements. |

| [Report of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_053947] [added: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_024831] "Click to goto ") | 73 |

| [Consolidated Balance Sheets as of December 31, [removed: 2015] [added: 2016] and [removed: 2014](#CONSOLIDATEDBALANCESHEETS_072318] [added: 2015](#CONSOLIDATEDBALANCESHEETS_044957] "Click to goto ") | 74 |

| [Consolidated Statements of Income for the years ended December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013](#CONSOLIDATEDSTATEMENTSOFINCOME_072321] [added: 2014](#CONSOLIDATEDSTATEMENTSOFINCOME_045001] "Click to goto ") | 75 |

| 10.21+ | Monster Beverage Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 4.1 to our Form S-8 dated December 27, 2016). |

March 1, 2017

| | | 2016 | | | 2015 | | |

| Cash and cash equivalents | | $ | 377,582 | | $ | 2,175,417 | |

| Total current assets | | 1,432,270 | | | 3,599,532 | | |

| DEFERRED INCOME TAXES | | 159,556 | | | 140,468 | | |

| Total Assets | | $ | 4,153,471 | | $ | 5,571,277 | |

| Income taxes payable | | 7,657 | | | 2,750 | | |

| Total current liabilities | | 470,589 | | | 410,277 | | |

| | | | | | | | |

| Common stock - $0.005 par value; 1,250,000 shares authorized; 623,201 shares issued and 566,566 shares outstanding as of December 31, 2016; 621,057 shares issued and 608,700 shares outstanding as of December 31, 2015 | | 3,116 | | | 3,105 | | |

| Additional paid-in capital | | 4,051,245 | | | 3,989,787 | | |

| Total Liabilities and Stockholders’ Equity | | $ | 4,153,471 | | $ | 5,571,277 | |

_¹ Stock Split - On October 14, 2016, the Company announced a three-for-one stock split of its common stock to be effected in the form of a 200% stock dividend.

The stock dividend was issued on November 9, 2016.

The accompanying consolidated financial statements and notes thereto have been updated to reflect the stock split.

See Note 1 for additional information._

| Basic | | $ | 1.21 | | $ | 0.97 | | $ | 0.96 |

| Diluted | | $ | 1.19 | | $ | 0.95 | | $ | 0.92 |

| Basic | | 587,874 | | | 566,448 | | | 501,771 | |

| Diluted | | 599,819 | | | 577,758 | | | 522,855 | |

_¹ Stock Split - On October 14, 2016, the Company announced a three-for-one stock split of its common stock to be effected in the form of a 200% stock dividend.

The stock dividend was issued on November 9, 2016.

The accompanying consolidated financial statements and notes thereto have been updated to reflect the stock split.

See Note 1 for additional information._

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| Balance, January 1, 2014 | | 618,042 | | $ | 3,090 | | $ | 366,009 | | $ | 1,847,325 | | $ | (1,233) | | (117,576) | | $ | (1,222,912) | | $ | 992,279 | |

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| 10.10 | Monster Energy International Distribution Agreement, dated October 3, 2008, between Tauranga Ltd, trading as Monster Energy, and Coca-Cola Enterprises Inc. (incorporated by reference to exhibit 10.5 to our Form 10-Q dated November 10, 2008). |

| 10.11 | Monster Energy Belgium Distribution Agreement, dated October 3, 2008, between Tauranga Ltd, trading as Monster Energy, and Coca-Cola Enterprises Inc. (incorporated by reference to Exhibit 10.6 to our Form 10-Q dated November 10, 2008). |

| 10.18+ | Stock Option Agreement between Hansen Natural Corporation and Thomas J. Kelly (made as of June 1, 2009) (incorporated by reference to Exhibit 10.49 to our Form 10-K dated March 1, 2010). |

| 10.21+ | Stock Option Agreement between Hansen Natural Corporation and Mark J. Hall (made as of December 1, 2009) (incorporated by reference to Exhibit 10.53 to our Form 10-K dated March 1, 2010). |

| 10.22+ | Stock Option Agreement between Hansen Natural Corporation and Thomas J. Kelly (made as of December 1, 2009) (incorporated by reference to Exhibit 10.55 to our Form 10-K dated March 1, 2010). |

| 10.23+ | Stock Option Agreement between Hansen Natural Corporation and Thomas J. Kelly (made as of December 1, 2010) (incorporated by reference to Exhibit 10.53 to our Form 10-K dated March 1, 2011). |

| 10.24+ | Stock Option Agreement between Hansen Natural Corporation and Mark J. Hall (made as of December 1, 2010) (incorporated by reference to Exhibit 10.54 to our Form 10-K dated March 1, 2011). |

| 10.28+ | Agreement between the Company and Mark Hall, dated March 12, 2015 (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated May 11, 2015). |

| 10.29+ | Employment Agreement between Monster Beverage Corporation and Rodney C. Sacks (incorporated by reference to Exhibit 10.1 to our Form 8-K dated March 19, 2014). |

| 10.30+ | Employment Agreement between Monster Beverage Corporation and Hilton H. Schlosberg (incorporated by reference to Exhibit 10.2 to our Form 8-K dated March 19, 2014). |

February 29, 2016

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

| --- | --- | --- | --- | --- | --- | --- |

| Intangibles held-for-sale, net | | \- | | | 18,079 | |

| Total current assets | | 3,582,602 | | | 1,653,154 | |

| | | | | | | |

| DEFERRED INCOME TAXES | | 261,310 | | | 94,381 | |

| Total Assets | | $ | 5,675,189 | | $ | 1,938,875 |

| Income taxes payable | | 106,662 | | | 5,848 | |

| Total current liabilities | | 514,189 | | | 355,716 | |

| Common stock - $0.005 par value; 240,000 shares authorized; 207,019 shares issued and 202,900 shares outstanding as of December 31, 2015; 207,004 shares issued and 167,722 shares outstanding as of December 31, 2014 | | 1,035 | | | 1,035 | |

| Additional paid-in capital | | 3,991,857 | | | 426,145 | |

| Total Liabilities and Stockholders’ Equity | | $ | 5,675,189 | | $ | 1,938,875 |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Basic | | $ | 2.90 | | $ | 2.89 | | $ | 2.03 |

| Diluted | | $ | 2.84 | | $ | 2.77 | | $ | 1.95 |

| Basic | | 188,816 | | | 167,257 | | | 166,679 | |

| Diluted | | 192,586 | | | 174,285 | | | 173,387 | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

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| Balance, January 1, 2013 | | 203,759 | | $ | 1,019 | | $ | 287,953 | | $ | 1,508,664 | | $ | 2,074 | | | (37,983) | | $ | (1,155,313) | | $ | 644,397 | |

| Exercise of stock options | | 2,255 | | 11 | | | 21,240 | | | \- | | | \- | | | \- | | | \- | | | 21,251 | | |

| Reclassification adjustment for net gains included in net income | | \- | | \- | | | \- | | | \- | | | (1,525) | | | \- | | | \- | | | (1,525) | | |

| Net income | | \- | | \- | | | \- | | | 338,661 | | | \- | | | \- | | | \- | | | 338,661 | | |

| Balance, December 31, 2013 | | 206,014 | | $ | 1,030 | | $ | 368,069 | | $ | 1,847,325 | | $ | (1,233) | | (39,192) | | | $ | (1,222,912) | | $ | 992,279 | |

| Repurchase of common stock | | \- | | \- | | | \- | | | \- | | | \- | | | (6,288) | | | (807,967) | | | (807,967) | | |

| Excess tax benefit from stock-based compensation | | (314,737) | | | (11,924) | | | (30,348) | |

| Net cash provided by operating activities | | 207,986 | | | 585,567 | | | 342,033 | |

| Excess tax benefit from stock-based compensation | | 314,737 | | | 11,924 | | | 30,348 | |