Monster Beverage (MNST) 10-K risk factor changes: FY2018 vs FY2017

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

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

As we continue our international expansion, [added: we expect] TCCC’s distribution network [removed: will] [added: to] continue [removed: its role] as our preferred distribution partner globally.

While we believe that [removed: this will] [added: these agreements] incentivize TCCC to take steps to [removed: assure] [added: ensure] that our products receive the appropriate attention in the TCCC distribution system, there can be no assurance of this as [added: disagreements as to the interpretation of the provisions in such agreements may arise and] TCCC is a much larger company with many strategic priorities.

Moreover, it is [removed: also] possible that we may fail to recognize the expected benefits of the new distribution arrangements regardless of TCCC’s priorities or the priorities of the members of TCCC’s distribution system.

Virtually all of our sales are derived from our energy drinks, including our Monster Energy® brand energy drinks and our Strategic [removed: Brands] [added: Brand energy drinks] acquired from TCCC in 2015.

Our Monster Energy® brand energy drinks and Strategic Brands represented [removed: 90.1%] [added: 91.7%] and [removed: 8.9%] [added: 7.5%] of net sales, respectively, for the year ended December 31, [removed: 2017.][added: 2018.]

Domestically, our energy drinks compete directly with Red Bull, Rockstar, Amp, Venom, VPX Redline, Xenergy, MiO Energy, Rip It, Starbucks [removed: Double Shot,] [added: Doubleshot,] Starbucks [removed: Double Shot] [added: Doubleshot] Energy Plus Coffee, Rockstar Roasted, 5-Hour Energy Shots, Stacker 2, VPX Bang, V8+ Energy, [removed: Uptime, hi*ball] [added: UPTIME, hi*ball, CELSIUS, C4] and many other brands.

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

Our Java [added: Monster®, Espresso] Monster® and [removed: Espresso MonsterTM] [added: Caffé Monster®] product lines compete directly with Starbucks Frappuccino, Starbucks [removed: Double Shot,] [added: Doubleshot,] Starbucks [removed: Double Shot] [added: Doubleshot] Energy Plus Coffee and other Starbucks coffee drinks, Rockstar Roasted, Dunkin Donuts, Gold Peak Tea, Stok, High Brew, [added: McCafé,] hi*ball and International Delight.

Our Muscle Monster® product line competes directly with Muscle Milk, Core Power, Premier Protein, Kellogg’s Special K Protein, Bolthouse Farms Protein, EAS [removed: AdvantEdge,] [added: AdvantEDGE, EAS Myoplex,] Gatorade G Series 03 Recover, [removed: 5-Hour, Power Bar] [added: 5-Hour] and [removed: EAS Myoplex.][added: PowerBar.]

The Strategic Brands acquired from TCCC in 2015 represented [removed: 8.9%] [added: 7.5%] of consolidated net sales for the year ended December 31, [removed: 2017.][added: 2018.]

As of February [removed: 12, 2018,] [added: 20, 2019,] TCCC owned common shares of the Company representing approximately [removed: 18%] [added: 19%] of the total number of the Company’s outstanding common shares.

To the extent any such legislation is enacted in one or more jurisdictions where a significant amount of our products are [removed: sold] [added: sold,] individually or in the aggregate, it could result in a reduction in demand for, or availability of, our energy 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; the Occupational Safety and Health Act; various environmental statutes; [added: data privacy laws;] 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.

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

An unfavorable report on the health effects of caffeine, [removed: such as those related to obesity,] or criticism or negative publicity regarding the caffeine content and/or any other ingredients in our products or energy drinks generally, including product safety concerns, could have an adverse effect on our business, financial condition and results of operations.

Our products compete with all liquid refreshments and in some cases with products of much larger and substantially better financed competitors, including the products of numerous nationally and internationally known producers such as TCCC, PepsiCo, Red Bull [removed: Gmbh] [added: GmbH] and [removed: the DPS Group.][added: KDP.]

Global economic [removed: uncertainties] [added: uncertainties, including foreign currency exchange rates,] affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities.

In addition, we cannot predict the duration and severity of disruptions in any of our 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 [removed: crisis] [added: crises] in African, Asian, European and other international markets.

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

Our gross sales to customers outside of the United States were approximately [removed: 28%, 25%] [added: 31%, 28%] and [removed: 23%] [added: 25%] of consolidated gross sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

We face and will continue to face substantial risks associated with having foreign operations, [removed: including;] [added: including:] economic and/or political instability in our international markets; [added: unfavorable foreign currency exchange rates;] 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.

Foreign currency transaction losses were [removed: $3.3] [added: $4.0] million, [removed: $9.7] [added: $3.3] million and [removed: $5.5] [added: $9.7] million for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

If we are unable to maintain good relationships with our bottlers and contract [removed: packers and/or] [added: packers_ _and/or] their ability to manufacture our products becomes constrained or unavailable to us, our business could suffer._

Our acquisition of AFF [added: in 2016] brought our primary flavor supplier in-house for the majority of our Monster Energy® brand energy drinks.

In addition, there are limited alternative packing facilities in our domestic and international markets with adequate capacity and/or suitable equipment for many of our products, including [added: certain of] our Monster Energy® brand energy drinks, our Muscle Monster® product line, our Java Monster® product line, our Espresso [removed: MonsterTM] [added: Monster®] product line, our Monster Hydro® product line and certain of our other products.

While this short-term disruption in production did not significantly affect our revenues, a lengthy disruption or delay in the production of any [added: of] our products could significantly adversely affect our revenues from such products because alternative co-packing facilities in the United States and abroad with adequate long-term capacity may not be available for such products either at commercially reasonable rates and/or costs and/or within a reasonably short time period, if at all.

Unilateral decisions could be taken by our bottlers/distributors, convenience and gas chains, grocery chains, specialty chain stores, club stores and other [removed: customers,] [added: customers] to discontinue carrying certain or all of our products that they are carrying at any time, which could cause our business to suffer.

The TCCC North American Bottlers, Coca-Cola European Partners, Coca-Cola [removed: Hellenic] [added: Hellenic, Coca-Cola FEMSA, Coca-Cola Amatil, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa] and Coca-Cola [removed: FEMSA] [added: İçecek] are our primary domestic and international distributors of our products.

As a result, if we are unable to maintain good relationships with the TCCC North American Bottlers, Coca-Cola European Partners, Coca-Cola [removed: Hellenic and/or] [added: Hellenic,] Coca-Cola FEMSA, [added: Coca-Cola Amatil, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa and/or Coca-Cola İçecek,] or if the TCCC North American Bottlers, Coca-Cola European Partners, Coca-Cola [removed: Hellenic] [added: Hellenic, Coca-Cola FEMSA, Coca-Cola Amatil, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa] and/or Coca-Cola [removed: FEMSA] [added: İçecek] do not effectively focus on marketing, promoting, selling and distributing our products, sales of our products could be adversely affected.

TCCC, through the TCCC Subsidiaries, accounted for approximately [removed: 18%, 41%] [added: 3%, 18%] and [removed: 43%] [added: 41%] of our net sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

A decision by certain TCCC North American Bottlers (including CCBCC Operations, [removed: LLC),] [added: LLC and Reyes] Coca-Cola [added: Bottling), Coca-Cola] European Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, [added: Coca-Cola Amatil, Swire Coca-Cola (China), COFCO Coca-Cola, Coca-Cola Beverages Africa, Coca-Cola İçecek,] Wal-Mart, Inc. (including Sam’s Club), or any other large customer to decrease the amount purchased from us or to cease carrying our products could have a material adverse effect on our financial condition and consolidated results of operations.

If our brands prove to be less attractive to our existing bottlers and distributors, if we fail to attract additional bottlers and distributors, and/or our [removed: bottlers and/or distributors] [added: bottlers/distributors] do not market, promote and distribute our products effectively, our business, financial condition and results of operations could be adversely affected.

The principal raw materials used by us are aluminum cans, sleek aluminum cans, aluminum Cap Cans, aluminum cans with re-sealable ends, PET plastic bottles, [removed: PET plastic cans,] glass bottles, [added: caps,] flavors, juice concentrates, glucose, sugar, sucralose, milk, cream, protein, [added: coffee, tea,] dietary ingredients and other packaging materials, the costs and availability of which are subject to fluctuations.

In addition, certain of our co-packing arrangements allow such co-packers to increase their [removed: charges] [added: fees] based on certain of their own cost increases.

[removed: We] [added: Although we] generally do not use hedging agreements or alternative instruments to manage the risks associated with securing sufficient ingredients or raw materials, [removed: although we do,] from time to time, [added: we, through our aluminum can suppliers,] enter into purchase agreements for [removed: a significant portion] [added: the purchase] of [added: aluminum, as well as enter into purchase agreements for portions of] our annual anticipated requirements for certain [added: of our other] raw materials such as [removed: aluminum cans,] glucose, sugar and sucralose.

If we materially underestimate demand for our products or are unable to secure sufficient ingredients or raw materials including, but not limited to, aluminum cans, aluminum Cap Cans, sleek aluminum cans, aluminum cans with re-sealable ends, PET plastic bottles, [removed: PET plastic cans,] glass bottles, [added: caps,] labels, sucralose, flavors, dietary ingredients, juice concentrates, certain sweeteners, coffee, tea, protein and packaging materials or experience difficulties with our co-packing arrangements, including production shortages or quality issues, we might not be able to satisfy demand on a short-term basis.

In some cases, we are able to fix the prices of certain packaging supplies and/or [removed: commodities for a reasonable period.]

We regard our trademarks, [removed: copyrights,] [added: copyrights] and similar intellectual property as critical to our success and attempt to protect such intellectual property through registration and enforcement actions.

TCCC has a substantial equity investment in the Company.

The Company, TCCC and certain affiliates are parties to various agreements in which TCCC and certain affiliates have agreed, subject to certain exceptions, not to compete in the energy drink category in certain territories prior to the termination of the applicable distribution coordination agreement with TCCC.

The Company’s distribution agreements with TCCC distributors also provide, subject to certain exceptions, that the applicable distributor will not distribute competitive energy drink products.

On October 31, 2018, the Company and TCCC mutually agreed to submit an issue to the American Arbitration Association (“AAA”) in order to obtain clarification of an exception to a provision under various agreements preventing TCCC from competing in the energy drink category.

TCCC has developed three energy products that it believes it may market under such exception, relating to the Coca-Cola brand.

We expect a decision will be reached during the second quarter of 2019.

In addition, TCCC has indicated that it has suspended the proposed launch of such products until April 2019.

While we believe that the exception does not apply to this situation, there can be no assurances that the arbitration will resolve in our favor.

As the relief sought is limited, no reasonable possible range of losses, if any, can be estimated.

In addition, if TCCC proceeds with the launch of such products, there can be no assurances that we will not encounter difficulties in maintaining our current revenues, market share or position in the energy drink category in such territories, which could adversely affect our business and operating results.

Eastroc Super Drink, Carabao, Power Horse, XL, Crazy Tiger, Effect, Missile, NOCCO, Adrenaline Rush and a host of other international brands.

Our Monster Hydro® product line competes directly with Vitamin Water, Sparkling Ice, Bai, Propel, Vita Coco, Lucozade and BODYARMOR.

In March 2018, we entered into an agreement extending TCCC’s right to nominate two directors to serve until June 2019.

The rapid growth in sales through e-commerce retailers, e-commerce websites, mobile commerce applications and subscription services, may result in a shift away from physical retail operations to digital channels.

Unfavorable economic conditions and financial uncertainties in our major international markets, including uncertainties surrounding the United Kingdom’s impending withdrawal from the European Union, commonly referred to as “Brexit,” and increases in tariffs that may result, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers’ purchasing power, thereby reducing demand for our products.

Product lifecycles for some beverage brands, products and/or

Additionally, as shopping patterns are being affected by the digital evolution, with customers embracing shopping by way of mobile device applications, e-commerce retailers and e-commerce websites or platforms, we may be unable to address or anticipate changes in consumer shopping preferences.

_Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses._

As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions.

We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions.

This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets.

If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty’s liquidity or applicable laws governing insolvency and bankruptcy proceedings.

Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition.

In addition, recently there has been a consolidation of co-packers.

If we are unable to maintain good relationships with our largest co-packers, or if our costs of co-packing increase, our business, financial condition and results of operations could be adversely affected.

For certain flavors purchased from third-party suppliers and used in a limited number of our Monster Energy® brand energy drinks and/or our Strategic Brands energy drinks, these third-party flavor suppliers own the proprietary rights to certain of their flavor formulas.

We do not have possession of the list of such flavor ingredients or formulas used in the production of certain of our products and certain of our blended concentrates, and we may be unable to obtain comparable flavors or concentrates from alternative suppliers on short notice.

Our third-party flavor suppliers generally do not make such flavors and/or blended concentrates available to other third party customers.

We have identified alternative suppliers for certain of the ingredients contained in many of our beverages.

However, industry-wide shortages of certain flavors, fruits and fruit juices, coffee, tea, dairy-based products, dietary ingredients and sweeteners have been, and could from

time to time in the future be, encountered, which could interfere with and/or delay production of certain of our products.

In 2018, the United States imposed tariffs on steel and aluminum as well as on goods imported from China and certain other countries.

Additional tariffs imposed by the United States on a broader range of imports, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs.

commodities for a reasonable period.

_Negative publicity (whether or not warranted) concerning product safety or quality, human and workplace rights, obesity or other issues could damage our brand image and corporate reputation, and may cause our business to suffer._

In addition, from time to time, there are public policy endeavors that are either directly related to our products and packaging or to our business.

These public policy debates can occasionally be the subject of backlash from advocacy groups that have a differing point of view and could result in adverse media and consumer reaction, including product boycotts.

Similarly, our sponsorship relationships could subject us to negative publicity as a result of actual or alleged misconduct by individuals or entities associated with organizations we sponsor or support.

Likewise, campaigns by activists connecting us, or our supply chain, with human and workplace rights issues could adversely impact our corporate image and reputation.

We have made a number of commitments to respect human rights, including through our Human Rights Policy, Supplier Code of Conduct, Code of Business Conduct and Ethics and our grievance procedures.

Also in connection with the TCCC Transaction, TCCC made a substantial equity investment in the Company and has agreed, subject to certain exceptions, not to compete in the energy drink category in Europe through June 2018 and in certain other territories through June 2020.

Internationally, our energy drinks compete with Red Bull, Rockstar, V-Energy, Lucozade and

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

For example, in July 2012, we received a subpoena from the New York State Attorney General in connection with an investigation relating to the advertising, marketing, promotion, ingredients, usage and sale of our Monster Energy® brand energy drinks.

We cannot predict the outcome of this inquiry and what, if any, effect it may have on our business, financial condition or results of operations.

In July 2012, we received a subpoena from the Attorney General for the State of New York in connection with an investigation relating to the advertising, marketing, promotion, ingredients, usage and sale of our Monster Energy® brand energy drinks.

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.

We have complied with both subpoenas.

If economic conditions deteriorate, our industry, business and results of operations could be materially and adversely affected.

_If we are unable to maintain our brand image or product quality, our business may suffer._

While we have provided a provisional estimate of the effect of the Tax Reform Act in our financial statements, in particular as it relates to the reduction of our net deferred tax assets, actual amounts may vary materially from these estimates due to a number of uncertainties and factors, including further analysis and clarification of the Tax Reform Act that cannot be reasonably estimated at this time.

See “Forward-Looking Statements” and “Part [removed: I.][added: I, Item 1A – Risk Factors.”]

[removed: We incurred distributor termination costs of $35.4] [added: _3_ _Includes $26.6] million, [removed: $79.8] [added: $35.4] million and [removed: $224.0] [added: $79.8] million for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015, respectively.][added: 2016, respectively, related to distributor termination costs._]

The following table [removed: summarizes the selected items discussed above] [added: sets forth key statistics] for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015:][added: 2016, respectively.]

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

Our net sales of [removed: $3,369.0 million] [added: $3.81 billion] for the year ended December 31, [removed: 2017] [added: 2018] represented record annual net sales.

Net sales of our Monster Energy® brand energy drinks were [removed: $3,035.2 million for the year ended December 31, 2017, an increase of $287.4 million, or 89.9% of our overall increase in net sales] [added: $3.49 billion] for the year ended December 31, [removed: 2017.][added: 2018.]

Net sales of our Strategic Brands [removed: acquired as part of the TCCC Transaction] were [removed: $299.8] [added: $285.8] million for the year ended December 31, [removed: 2017.][added: 2018.]

Net changes in foreign currency exchange rates had [removed: an unfavorable] [added: a favorable] impact on net sales in the Monster Energy® Drinks segment of approximately [removed: $7.6] [added: $14.6] million for the year ended December 31, [removed: 2017.][added: 2018.]

Net changes in foreign currency exchange rates had a favorable impact on net sales in the Strategic Brands segment of approximately [removed: $3.7] [added: $0.2] million for the year ended December 31, [removed: 2017.][added: 2018.]

Gross sales to customers outside the United States amounted to [removed: $1,094.8 million, $888.7 million] [added: $1.36 billion, $1.09 billion] and [removed: $713.2] [added: $888.7] million for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

Such sales were approximately [removed: 28%, 25%] [added: 31%, 28%] and [removed: 23%] [added: 25%] of gross sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

Net changes in foreign currency exchange rates had [removed: an unfavorable] [added: a favorable] impact on [removed: gross] [added: net] sales [removed: to customers outside the United States] of approximately [removed: 1%, 3% and 14%] [added: $14.8 million] for the [removed: years] [added: year] ended December 31, [removed: 2017, 2016, and 2015, respectively.][added: 2018.]

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

Percentages of our gross sales to our various customer types for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015] [added: 2016] are reflected below.

| | | [removed: 2017] [added: 2018] | | [removed: 2016] | [added: 2017] | [removed: 2015] | | [added: 2016 | | | 2015 | | | 2014 | |]

| U.S. full service bottlers/distributors | | [removed: 63%] [added: 61%] | | [removed: 65%] [added: 63%] | | 65% | [removed: |]

| International full service bottlers/distributors | | [removed: 28% |] [added: 31%] | [removed: 25%] | [added: 28%] | [removed: 23%] | [added: 25%] |

| Club stores and mass merchandisers | | [removed: 7% |] [added: 6%] | [removed: 8%] | [added: 7%] | [removed: 9%] | [added: 8%] |

| Retail grocery, specialty chains and wholesalers | | 1% | | 1% | | [removed: 2% |] [added: 1%] |

| Other | | 1% | | 1% | | 1% | [removed: |]

Our customers include [removed: the TCCC North American Bottlers (including] [added: Coca-Cola Refreshments USA, Inc., Coca-Cola Refreshments Canada Company (Coca-Cola Canada Bottling Limited from September 28, 2018), Coca-Cola Bottling Company,] CCBCC Operations, [removed: LLC),] [added: LLC, United Bottling Contracts Company, LLC, Reyes] Coca-Cola [added: Bottling, Great Lakes Coca-Cola Bottling, Coca-Cola Southwest Beverages LLC, Coca-Cola of Northern New England, Swire Coca-Cola, USA, Liberty Coca-Cola Beverages, Coca-Cola] European Partners, Coca-Cola Hellenic, Coca-Cola FEMSA, Coca-Cola Amatil, Swire Coca-Cola [removed: group in China,] [added: (China),] COFCO [removed: Coca-Cola group in China,] [added: Coca-Cola,] Coca-Cola Beverages Africa, Coca-Cola [removed: Içecek] [added: İçecek and certain other TCCC network bottlers,] Asahi Soft Drinks, Co., Ltd., Kalil Bottling Group, Wal-Mart, Inc. (including Sam’s Club), Costco Wholesale [removed: Corporation,] [added: Corporation and] Big Geyser, Inc. [added: 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 [removed: select AB Distributors.][added: consolidated results of operations.]

TCCC, through [removed: the TCCC Subsidiaries,] [added: certain consolidated subsidiaries (the “TCCC Subsidiaries”),] accounted for approximately [removed: 18%, 41%] [added: 3%, 18%] and [removed: 43%] [added: 41%] of our net sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

As part of [removed: the] [added: TCCC’s] North America [removed: Refranchising,] [added: Refranchising initiative (the “North America Refranchising”),] the territories of certain TCCC Subsidiaries have been transitioned to certain [removed: independent/non wholly-owned] [added: independent] TCCC [removed: bottler/distributors.][added: bottlers/distributors and/or TCCC Related Parties.]

Accordingly, our percentage of net sales [removed: classified as sales] to the TCCC Subsidiaries [added: significantly] decreased for the year ended December 31, [removed: 2017.][added: 2018.]

CCBCC Operations, LLC accounted for approximately 13%, [removed: 9%] [added: 13%] and [removed: 6%] [added: 9%] of our net sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

We continue to broaden our family of [removed: products.][added: products to provide more alternatives to consumers.]

These measurements will continue to be a key management focus in [removed: 2017] [added: 2019] and beyond [removed: (See] [added: (See] “Part II, Item 7 – Results of Operations – Results of Operations for the Year Ended December 31, [removed: 2017] [added: 2018,] Compared to the Year Ended December 31, [removed: 2016”).][added: 2017”).]

As of December 31, [removed: 2017,] [added: 2018,] the Company had working capital of [removed: $1,526.0 million] [added: $1.20 billion] compared to [removed: $961.7 million] [added: $1.53 billion] as of December 31, [removed: 2016.][added: 2017.]

For the year ended December 31, [removed: 2017,] [added: 2018,] our net cash provided by operating activities was approximately [removed: $987.7 million] [added: $1.16 billion] as compared to [removed: $701.4] [added: $987.7] million for the year ended December 31, [removed: 2016.][added: 2017.]

Principal uses of cash flows in [removed: 2017,] [added: 2018,] were purchases of investments, [added: repurchase of our common stock,] development of our Monster Energy® brand internationally and [removed: acquisition] [added: acquisitions] of [removed: real] property and [removed: other property and] equipment.

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

[added: Furthermore, our growth strategy includes] expanding our international business, which exposes us to risks inherent in conducting international operations, including the risks associated with foreign currency exchange rate fluctuations.

Our commitment to consumers begins with our broad product line and a wide selection of diet, light and low calorie beverages within our energy drink product [removed: line.][added: lines.]

[removed: |] · [removed: |] the risks associated with the realization of benefits from [removed: the TCCC Transaction; |][added: our relationship with TCCC;]

[removed: |] · [removed: |] changes in consumer preferences and demand for our products; [removed: |]

[removed: |] · [removed: |] economic uncertainty in the United States, Europe and other countries in which we operate; [removed: |]

[removed: |] · [removed: |] the risks associated with foreign currency exchange rate fluctuations; [removed: |]

[removed: |] · [removed: |] maintenance of our brand [removed: image and] [added: image,] product [removed: quality; |][added: quality and corporate reputation;]

[removed: |] · [removed: |] increasing concern over various [added: environmental, human rights and] health matters, including obesity, caffeine consumption and energy drinks generally, and changes in regulation and consumer preferences in response to those concerns; [removed: |]

[removed: |] · [removed: |] profitable expansion and growth of our family of brands in the competitive market place (See “Part I, Item 1 – Business – Competition” and “Part I, Item 1 – Business – Sales and Marketing”); [removed: |]

| · Monster Energy® · Monster Energy Ultra® · Monster Rehab® · Monster MAXX® · Java Monster® · Muscle Monster® · Espresso Monster® · Punch Monster® · Juice Monster® · Monster Hydro® · Caffé Monster® · Predator® · Live+ | | · NOS® · Full Throttle® · Burn® · Mother® · Nalu® · Ultra Energy® · Play® and Power Play(stylized)® · Relentless® · BPM® · BU® · Gladiator® · Samurai® · Mutant® |

Net sales for the year ended December 31, 2018 were negatively impacted by approximately $42.2 million as a result of the adoption of Accounting Standards Codification (“ASC”) 606.

Under ASC 606, commissions paid to TCCC, based on sales to certain of the Company’s TCCC bottlers/distributors that TCCC consolidates, or to the TCCC Related Parties, are included as a reduction to net sales.

Prior to January 1, 2018, commissions based on sales to the TCCC Related Parties, were included in operating expenses.

| | | 2018 | | 2017 | | 2016 |

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

Reyes Coca-Cola Bottling accounted for approximately 12%, 6% and 2% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Coca-Cola European Partners accounted for approximately 10%, 9% and 9% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

One or more of our products are distributed in approximately 155 countries and territories worldwide.

The decrease in working capital was primarily the result of the $1.34 billion of repurchases of our common stock during the year ended December 31, 2018.

· the relationship risks associated with the arbitration with TCCC;

· the outcome of our arbitration proceedings with TCCC, including TCCC developing and distributing additional energy products;

· the impact of Brexit on our business in Europe and the United Kingdom; and

· domestic and international growth potential of our products;

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

| Net sales1,2 | | $ | 3,807,183 | | $ | | 3,369,045 | | $ | 3,049,393 | | | 13.0% | | 10.5% |

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_2_ _Net sales were negatively impacted by approximately $42.2 million for the year ended December 31, 2018 as a result of the adoption of ASC 606._

_4_ _Without the adoption of ASC 606, an additional $42.2 million of commissions would have been included in operating expenses for the year ended December 31, 2018 (such commissions are included as a reduction to net sales)._

Net sales for the year ended December 31, 2018 were negatively impacted by approximately $42.2 million as a result of the adoption of ASC 606.

Net sales for the Monster Energy® Drinks segment for the year ended December 31, 2018 were negatively impacted by approximately $17.4 million as a result of the adoption of ASC 606.

Net sales for the Strategic Brands segment for the year ended December 31, 2018 were negatively impacted by approximately $24.9 million as a result of the adoption of ASC 606.

Without the adoption of ASC 606, the overall average net sales per case increased to $9.31 for the year ended December 31, 2018, as compared to average net sales per case of $9.30 for the year ended December 31, 2017.

Gross profit as a percentage of net sales, excluding the impact of ASC 606, was 60.7% for the year ended December 31, 2018.

The decrease in gross profit as a percentage of net sales was primarily attributable to (i) increases in certain input costs, principally aluminum cans, freight in and other input costs; (ii) domestic product sales mix (iii) geographical sales mix, as a result of our international sales increasing as a percentage of total net sales (our foreign operations generally have lower gross profit margins); (iv) the $42.2 million of commissions accounted for as a reduction to net sales due to the adoption of ASC 606; and (v) increases in promotional allowances as a percentage of gross sales.

Total operating expenses were $1.01 billion for the year ended December 31, 2018, an increase of approximately $72.9 million, or 7.8% higher than total operating expenses of $938.9 million for the year ended December 31, 2017.

The increase in operating expenses was primarily due to increased out-bound freight and warehouse costs of $38.5 million, increased payroll expenses of $28.6 million (of which $4.8 million was related to an increase in stock-based compensation), increased expenditures of $14.8 million for sponsorships and endorsements, and increased expenditures of $12.1 million for other marketing expenses.

Without the adoption of ASC 606, an additional $42.2 million of commissions would have been included in operating expenses for the year ended December 31, 2018 (such commissions are included as a reduction to net sales).

Operating income for the Other segment was $5.4 million for the year ended December 31, 2018, a decrease of approximately $0.2 million, or 4.0% lower than operating income of $5.6 million for the year ended December 31, 2017.

Provision for income taxes was $300.3 million for the year ended December 31, 2018, a decrease of $80.7 million, or 21.2% lower than the provision for income taxes of $380.9 million for the year ended December 31, 2017.

The decrease in the effective tax rate was primarily due to the reduction in the U.S. federal statutory tax rate as a result of the Tax Reform Act signed into law on December 22, 2017 (before considering the potential impact of further clarification of certain matters related to the Tax Reform Act), and to a reduction in certain foreign income that is subject to U.S. taxation.

Item 1A – Risk Factors.”

_Acquisitions and Divestitures_

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.

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

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.

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

Such termination costs have been expensed in full and are included in operating expenses for the years ended December 31, 2017, 2016 and 2015.

We recognized as income $0.6 million, $5.7 million and $39.8 million for the years ended December 31, 2017, 2016 and 2015, respectively, related to the accelerated amortization of the deferred revenue balances associated with certain of our prior distributors who were sent notices of termination during the relevant periods.

We incurred $15.5 million in TCCC Transaction related expenses for the year ended December 31, 2015.

We incurred no TCCC Transaction related expenses for the years ended December 31, 2017 and 2016.

_Factors Impacting Profitability_

| Income Statement Items (in thousands): | | 2017 | | | 2016 | | | 2015 | | |

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

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| Included in Net Sales: | | | | | | | | | | |

| Accelerated recognition of deferred revenue | | $ | 585 | | $ | 5,713 | | $ | 39,761 | |

| Included in Operating Expenses: | | | | | | | | | | |

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

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

| Distributor termination costs | | (35,410) | | | (79,751) | | | (224,000) | | |

| TCCC Transaction expenses | | \- | | | \- | | | (15,496) | | |

| Gain on sale of Monster Non-Energy | | $ | \- | | $ | \- | | $ | 161,470 | |

| Net Impact on Operating Income | | $ | (34,825) | | $ | (80,077) | | $ | (38,265) | |

On December 22, 2017, the President of the United States signed into law the Tax Reform Act.

The legislation significantly changes U.S. tax law by, among other things, lowering corporate income tax rates, implementing a territorial tax system and imposing a repatriation tax on deemed repatriated earnings of foreign subsidiaries.

The Tax Reform Act permanently reduces the U.S. corporate income tax rate from a maximum of 35% to a flat 21% rate, effective January 1, 2018.

As a result of the reduction in the U.S. corporate income tax rate from 35% to 21% under the Tax Reform Act, we revalued our net deferred tax assets at December 31, 2017, resulting in a provisional $39.8 million charge included in the provision for income taxes for the year ended December 31, 2017.

The Tax Reform Act also provided for a one-time deemed mandatory repatriation of Post-1986 undistributed foreign subsidiary earnings and profits (“E&P”) through the year ended December 31, 2017.

As a result, we recognized a provisional $2.1 million charge in the provision for income taxes for the year ended December 31, 2017 related to the deemed mandatory repatriation.

| · Monster Energy® | · NOS® |

| --- | --- |

| · Monster Energy Ultra® | · Full Throttle® |

| · Monster Rehab® | · Burn® |

| · Monster Energy Extra Strength Nitrous Technology® | · Mother® |

| · Java Monster® | · Nalu® |

| · Muscle Monster® | · Ultra Energy® |

| · Espresso MonsterTM | · Play® and Power Play(stylized)® |

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 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 sugar and other sweeteners, glucose, sucrose, milk, [removed: cream and] [added: cream,] protein, [added: coffee and tea,] 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 do not use derivative financial instruments to protect ourselves from fluctuations in interest rates and [added: generally] do not hedge against fluctuations in commodity prices.

Our gross sales to customers outside of the United States were approximately [removed: 28%] [added: 31%] and [removed: 25%] [added: 28%] of consolidated gross sales for the years ended December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] respectively.

During the year ended December 31, [removed: 2017,] [added: 2018,] 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: 2017] [added: 2018] have terms of [removed: one month] [added: three months] or less.

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: 2017] [added: 2018] to be significant.

As of December 31, [removed: 2017,] [added: 2018,] we had [removed: $528.6] [added: $637.5] million in cash and cash equivalents and [removed: $675.3] [added: $320.7] million in short-term [removed: and long-term] investments including certificates of deposit, commercial paper, U.S. government agency securities, [added: U.S. treasuries,] variable rate demand notes and municipal securities (which may have an auction reset feature).

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

We have three operating and reportable [removed: segments,] [added: segments:] (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is comprised of our Monster Energy® drinks, [removed: Monster Hydro® energy drinks and Mutant® Super Soda drinks,] (ii) Strategic Brands segment (“Strategic Brands”), which is comprised [added: primarily] of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 [removed: (the “TCCC Transaction”) (see Note 2 “Acquisitions and Divestitures” in the notes to the consolidated financial statements)] [added: as well as our Predator® energy drinks] and (iii) Other segment (“Other”), [removed: the principal products of] which [removed: include the non-energy brands disposed of as a result] [added: is comprised] of [removed: the TCCC Transaction (effectively from January 1, 2015 to June 12, 2015), as well as] certain [removed: products, acquired as part of our] [added: products sold by] American Fruits [removed: &] [added: and] Flavors [added: LLC] (“AFF”) [removed: asset acquisition in 2016 (the “AFF Transaction”) (see Note 2 “Acquisitions and Divestitures” in the notes to] [added: (a wholly-owned subsidiary of] the [removed: consolidated financial statements), that are sold by AFF] [added: Company)] to independent third-party customers [removed: (the “AFF] [added: (“AFF] Third-Party [removed: Products”) (effectively from April 1, 2016).][added: Products”).]

Corporate and unallocated amounts that do not specifically relate to a reportable segment have been allocated to “Corporate and [removed: Unallocated.” Our Monster Energy® Drinks segment represented 90.5%, 90.5% and 92.5% of our consolidated net sales for the years ended December 31, 2017, 2016 and 2015, respectively.][added: unallocated.”]

[removed: Our Other segment represented 0.6%, 0.6%] [added: TCCC, through certain consolidated subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 3%, 18%] and [removed: 2.2%] [added: 41%] of our [removed: consolidated] net sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively.

Our Monster Energy® Drinks segment [added: primarily] generates net operating revenues by selling ready-to-drink packaged energy 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, drug stores, [removed: food service] [added: foodservice] customers and the military.

The ready-to-drink packaged energy drinks are then sold to other [removed: bottlers and] [added: bottlers,] full service distributors [removed: and to] [added: or retailers, including,] retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, [removed: food service] [added: foodservice] customers, drug stores and the military.

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

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

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

[removed: |] · Java Monster® [removed: | · Nalu® |][added: Swiss Chocolate]

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

[removed: | · Espresso MonsterTM | · Play® and] [added: _Play__®_ _and] Power [removed: Play(stylized)® |][added: Play(stylized)__®_ – a line of carbonated energy drinks.]

[removed: |] · Monster Hydro® [removed: | · Gladiator® |][added: Blue Ice®]

Our Monster Energy® brand energy drinks, which represented [removed: 90.1%,] [added: 91.7%,] 90.1% and [removed: 92.5%] [added: 90.1%] of our net sales for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] respectively, primarily include the following energy drinks1:

[removed: |] · [removed: Juice Monster® Ripper® | · Java] [added: Caffé] Monster® Salted Caramel [removed: |]

[removed: |] · Juice Monster® [removed: Pipeline Punch® | · ÜbermonsterTM] [added: Pacific Punch] Energy [removed: BrewTM |][added: + Juice]

[removed: |] · Monster Rehab® [removed: Green] [added: White Dragon] Tea + Energy [removed: | · Monster Energy Ultra Blue® |]

According to Beverage Marketing Corporation, domestic U.S. wholesale sales in [removed: 2017] [added: 2018] for the “alternative” beverage category of the market are estimated at approximately [removed: $52.6] [added: $55.5] billion, representing an increase of approximately [removed: 5.6%] [added: 6.7%] over estimated domestic U.S. wholesale sales in [removed: 2016] [added: 2017] of approximately [removed: $49.8] [added: $52.0] billion.

In 2015, [removed: as part of the TCCC Transaction,] we acquired the Strategic Brands from TCCC and disposed of our non-energy drink business.

[removed: 2017] [added: 2018] Product Introductions

During [removed: 2017,] [added: 2018,] we continued to expand our existing portfolio of drinks and further develop our distribution markets.

During [removed: 2017,] [added: 2018,] we introduced the following products:

In the normal course of [removed: business] [added: business,] we discontinue certain products and/or product lines.

Those products or product lines discontinued in [removed: 2017,] [added: 2018,] either individually or in aggregate, did not have a material adverse impact on our financial position, results of operations or liquidity.

We offer the following energy drinks under the Monster Energy® drink product line: Monster Energy®, Lo-Carb Monster Energy®, Monster Assault®, Monster Energy® [removed: Fury,] [added: Fury®,] Juice Monster® Khaos®, Juice Monster® Ripper®, Juice Monster® Pipeline Punch®, Juice Monster® Mango [removed: Loco,] [added: LocoTM, Juice Monster® Pacific PunchTM,] Monster Energy® Absolutely Zero, Monster Energy® Import, [added: Monster Energy® Export,] Punch Monster® Baller’s Blend®, Punch Monster® Mad Dog, [removed: Mega Monster Energy®, M3(stylized)®] [added: M3(stylized)®,] Monster Energy® Super Concentrate, [removed: Übermonster® Energy Brew™,] Monster [added: MuleTM, Monster Cuba LibreTM, Monster] Energy Zero Ultra®, Monster Energy Ultra Blue®, Monster Energy Ultra Red®, Monster Energy Ultra Black®, Monster Energy Ultra Sunrise®, Monster Energy Ultra Citron®, Monster Energy Ultra Violet®, Monster Energy® Gronk, Monster Energy® Valentino Rossi and Monster Energy® Lewis Hamilton 44.

_Java Monster_® _Coffee + Energy Drinks_ [removed: -] [added: –] a line of non-carbonated dairy based coffee + energy drinks.

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 [removed: Blend® and] [added: Blend®,] Java Monster® Salted [removed: Caramel.][added: Caramel and Java Monster® Swiss Chocolate.]

_Muscle Monster_® _Energy Shakes_ [removed: -] [added: –] a line of non-carbonated energy shakes containing 25-grams of protein.

_Monster [added: MAXX®] Energy [removed: Extra Strength Nitrous Technology_® _Energy] Drinks_ [removed: -] [added: –] a line of carbonated energy drinks containing nitrous oxide.

We offer the following energy drinks under the Monster [removed: Energy Extra Strength Nitrous Technology®] [added: MAXX®] product line: Super [removed: Dry™] [added: Dry, Eclipse] and [removed: Anti Gravity®.][added: Solaris.]

_Monster Rehab® Tea + Energy Drinks_ [removed: -] [added: –] a line of non-carbonated energy drinks with electrolytes.

We offer the following tea + energy drinks under the Monster Rehab® drink line: Monster Rehab® Tea + Lemonade + Energy, Monster Rehab® Raspberry Tea + Energy, Monster Rehab® Tea + Orangeade + Energy, Monster Rehab® [added: Peach] Tea + [removed: Pink Lemonade +] Energy and Monster [removed: Rehab Peach®] [added: Rehab® White Dragon] Tea + Energy.

_Espresso [removed: Monster__TM_ _Espresso] [added: Monster® Espresso] + Energy Drinks_ [removed: -] [added: –] a line of non-carbonated dairy based espresso + energy drinks.

We offer the following espresso + energy drinks under the Espresso [removed: MonsterTM] [added: Monster®] product line: Espresso and Cream and Vanilla Espresso.

We offer the following [removed: sodas] [added: affordable energy drinks] under the Mutant® [removed: Super Soda] [added: Energy] product line: Mutant® [removed: Super Soda,] [added: Energy Drink,] Mutant® [removed: Red Dawn Super Soda] [added: Energy Drink – Gold Strike®] and Mutant® [removed: Super Soda White Lightning.][added: Energy Drink – Red Dawn®.]

[removed: Monster Hydro® -] [added: _Monster Hydro®_ –] a line of non-carbonated, lightly sweetened refreshment + energy drinks.

We offer the following refreshment + energy drinks under the Monster Hydro® product line: Tropical [removed: Thunder,] [added: Thunder®,] Mean [removed: Green and] [added: Green®,] Manic [removed: Melon.][added: Melon®, Purple Passion®, Blue Ice® and Zero Sugar.]

_BPM®_ [removed: -] [added: –] a line of carbonated energy drinks.

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

| · Monster Energy® · Monster Energy Ultra® · Monster Rehab® · Monster MAXX® · Java Monster® · Muscle Monster® · Espresso Monster® · Punch Monster® · Juice Monster® · Monster Hydro® · Caffé Monster® · Predator® · Live+ | | · NOS® · Full Throttle® · Burn® · Mother® · Nalu® · Ultra Energy® · Play® and Power Play(stylized)® · Relentless® · BPM® · BU® · Gladiator® · Samurai® · Mutant® |

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

| · Monster Energy® · Lo-Carb Monster Energy® · Monster Assault® · Monster Energy Absolutely Zero® · Juice Monster® Khaos® · Juice Monster® Ripper® · Juice Monster® Pipeline Punch® · Juice Monster® Mango LocoTM · Juice Monster® Pacific PunchTM · Punch Monster® Baller’s Blend® · Monster Cuba LibreTM · Monster Energy® Import · Monster Energy® Export · Monster Rehab® Tea + Lemonade + Energy · Monster Rehab® Raspberry Tea + Energy · Monster Rehab® Tea + Orangeade + Energy · Monster Rehab® Peach Tea + Energy · Monster Rehab® White Dragon Tea + Energy · Muscle Monster® Vanilla | | · Java Monster® Kona Blend · Java Monster® Loca Moca® · Java Monster® Mean Bean® · Java Monster® Vanilla Light · Java Monster® Irish Blend® · Java Monster® Salted Caramel · Java Monster® Swiss Chocolate · Monster MAXX® Super Dry · Monster MAXX® Eclipse · Monster MAXX® Solaris · Monster Energy® Fury® · M3(stylized)® Monster Energy® Super Concentrate · Monster Energy Zero Ultra® · Monster Energy Ultra Blue® · Monster Energy Ultra Red® · Monster Energy Ultra Black® · Monster Energy Ultra Sunrise® · Monster Energy Ultra Citron® |

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

| · Muscle Monster® Chocolate · Monster Hydro® Mean Green® · Monster Hydro® Manic Melon® · Monster Hydro® Tropical Thunder® · Monster Hydro® Purple Passion® · Monster Hydro® Blue Ice® · Monster Hydro® Zero Sugar® · Monster Energy® Gronk · Monster MuleTM | | · Monster Energy Ultra Violet® · Monster Energy® Valentino Rossi · Monster Energy® Lewis Hamilton 44 · Caffé Monster® Vanilla · Caffé Monster® Salted Caramel · Caffé Monster® Mocha · Espresso Monster® Espresso and Cream · Espresso Monster® Vanilla Espresso |

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

· BPM® Zero Orange

· Burn® Mango

· Caffé Monster® Mocha

· Caffé Monster® Vanilla

· Live+ Ascend®

· Live+ Ignite®

· Live+ Persist®

· Monster Cuba LibreTM (Japan)

· Monster Hydro® Purple Passion®

· Monster Hydro® Zero Sugar

· Monster MAXX® Eclipse

· Monster MAXX® Solaris

· Monster MuleTM (limited distribution)

· Mother® Passion

· Mutant® Energy Drink

· Mutant® Energy Drink – Gold Strike®

· Mutant® Energy Drink – Red Dawn®

· Nalu® Passion

· Play® Mango

· Predator® Gold Strike®

· Relentless® Mango

_Caffé Monster__®_ _Energy Coffee Drinks –_ a line of non-carbonated, 100% Arabica coffee, reduced fat, dairy based energy coffee drinks.

We offer the following energy coffee drinks under the Caffé Monster® product line: Vanilla, Salted Caramel and Mocha.

Mutant® Energy:

_Mutant® Energy_ – a line of affordable carbonated energy drinks.

We offer the following energy drinks under the Live+ product line: Ascend®, Ignite® & Persist®.

_Predator__®_ – a line of affordable carbonated energy drinks.

We offer the following energy drinks under the Predator Energy product line: Gold Strike.

AFF develops and manufactures the primary flavors for our Monster Energy® Drinks segment.

As of December 31, 2018, all distribution territories in the U.S. have been transitioned to TCCC network bottlers, except for those territories serviced by Big Geyser, Inc. and the Kalil Bottling Group.

AFF is the primary flavor supplier for our Monster Energy® brand energy drinks.

Our Monster Hydro® product line competes directly with Vitamin Water, Sparkling Ice, Bai, Propel, Vita Coco, Lucozade and BODYARMOR.

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

Coca-Cola European Partners accounted for approximately 10%, 9% and 9% of the Company’s net sales for the years ended December 31, 2018, 2017 and 2016, respectively.

Our Strategic Brands segment represented 8.9%, 8.9%, 5.3% of our consolidated net sales for the years ended December 31, 2017, 2016 and 2015 (effectively from June 13, 2015).

For financial information about our reporting segments and geographic areas, refer to Note 18 of Notes to the Consolidated Financial Statements set forth in “Part II, Item 8 – Financial Statements and Supplementary Data” of this report, incorporated herein by reference.

| · Monster Energy® | · NOS® |

| --- | --- |

| · Monster Energy Ultra® | · Full Throttle® |

| · Monster Rehab® | · Burn® |

| · Monster Energy Extra Strength Nitrous Technology® | · Mother® |

| · Punch Monster® | · Relentless® |

| · Juice Monster® | · BPM® |

| · Übermonster® | · BU® |

| · Caffé MonsterTM | · Samurai® |

| · Mutant® Super Soda | |

| · Monster Energy® | · Java Monster® Kona Blend |

| · Lo-Carb Monster Energy® | · Java Monster® Loca Moca® |

| · Monster Assault® | · Java Monster® Mean Bean® |

| · Monster Energy Absolutely Zero® | · Java Monster® Vanilla Light |

| · Juice Monster® Khaos® | · Java Monster® Irish Blend® |

| · Juice Monster® Mango Loco · Monster Energy® Import | · Monster Energy Extra Strength Nitrous Technology® Super Dry™ |

| · Monster Energy® Export · Punch Monster® Baller’s Blend® (formerly Dub Edition) | · Monster Energy Extra Strength Nitrous Technology® Anti-Gravity® |

| · Punch Monster® Mad Dog (formerly Dub Edition) · Monster Rehab® Tea + Lemonade + Energy | · M3(stylized)® Monster Energy® Super Concentrate |

| · Monster Rehab® Raspberry Tea + Energy (formerly Rojo) | · Monster Energy Zero Ultra® |

| · Monster Rehab® Tea + Orangeade + Energy | · Monster Energy Ultra Red® |

| · Monster Rehab® Tea + Pink Lemonade + Energy | · Monster Energy Ultra Black® |

| · Monster Rehab® Peach Tea + Energy | · Monster Energy Ultra Sunrise® |

| · Muscle Monster® Vanilla | · Monster Energy Ultra Citron® |

| · Muscle Monster® Chocolate | · Monster Energy Ultra Violet® |

| · Monster Hydro® Mean Green® | · Monster Energy® Valentino Rossi |

| · Monster Hydro® Manic Melon® | · Monster Energy® Lewis Hamilton 44 |

| · Monster Hydro® Tropical Thunder® | · Monster Energy® Gronk |

| · Espresso MonsterTM Espresso and Cream | · Monster Energy® Fury |

| · Espresso MonsterTM Vanilla Espresso | |

Acquisitions and Divestitures

On April 1, 2016, we completed the AFF Transaction resulting in our acquisition of flavor supplier and long-time business partner 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.

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

On June 12, 2015, we completed the TCCC Transaction contemplated by the definitive agreements entered into with TCCC on August 14, 2014, which provided for a long-term strategic relationship in the global energy drink category.

This business eventually became Hansen’s Juices, Inc., which subsequently became known as The Fresh Juice Company of California, Inc. (“FJC”).

FJC retained the right to market and sell fresh non-pasteurized juices under the Hansen’s® trademark.

In 1999, we acquired all of FJC’s rights to manufacture, sell and distribute fresh non-pasteurized juice products under the Hansen’s® trademark together with certain additional rights.

· Espresso MonsterTM Espresso and Cream (October 2017)

As of December 31, [removed: 2017,] [added: 2018,] the Company’s [removed: condensed] consolidated balance sheet includes accrued loss contingencies of approximately [removed: $1.9] [added: $0.06] million.

The Company, TCCC and certain affiliates are parties to various agreements setting forth, among other things, provisions relating to TCCC’s equity holding in the Company and the terms on which the Company’s energy products are distributed globally by members of TCCC’s distribution network.

Among other provisions, the agreements restrict TCCC from competing in the energy drink category in certain territories prior to the termination of the applicable distribution coordination agreement with TCCC, with certain exceptions.

TCCC has developed three energy products that it believes it may market under the exception relating to the Coca-Cola brand.

The Company believes that the exception does not apply to this situation.

By mutual agreement to obtain clarification, the issue was submitted to AAA arbitration on October 31, 2018.

We expect a decision will be reached during the second quarter of 2019.

TCCC has indicated that it has suspended the proposed launch of such products until April 2019.

As the relief sought is limited, no reasonable possible range of losses, if any, can be estimated.

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

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

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

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

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

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

The Company has complied with the second subpoena.

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.

For the fiscal year ended December 31, [removed: 2017][added: 2018]

| Common Stock, [removed: $.005] [added: $0.005] par value per share | | Nasdaq Global Select Market |

Indicate by check mark whether the registrant has submitted electronically [removed: and posted on its corporate Web site, if any,] every Interactive Data File required to be submitted [removed: and posted] pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit [removed: and post] such files).

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K [added: (§ 229.405 of this chapter)] is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, [removed: or] a smaller reporting [added: company, or an emerging growth] company.

See definitions of “large accelerated filer,” “accelerated filer,” [removed: and] “smaller reporting company” [added: and “emerging growth company”] in Rule 12b-2 of the Exchange [removed: Act.][added: Act:]

| [removed: (Do not check if a smaller reporting company) | |] Emerging growth company ¨ | [added: | |]

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange [removed: Act.) Yes ¨ No þ][added: Act.).]

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was [removed: $25,779,806,546] [added: $28,771,940,302] computed by reference to the closing sale price for such stock on the NASDAQ Global Select Market on June 30, [removed: 2017,] [added: 2018,] 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: 12, 2018] [added: 20, 2019] was [removed: 566,402,748] [added: 543,148,169] 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: 2018] [added: 2019] Annual Meeting of Stockholders are incorporated by reference into Part III of this Report.

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| [removed: [1.](#ITEM1_BUSINESS_013618) | [Business](#ITEM1_BUSINESS_013618)] [added: [1.](#ITEM1_BUSINESS_104914)] | [added: [Business](#ITEM1_BUSINESS_104914)] | 3 |

| [removed: [1A.](#ITEM1A_RISKFACTORS_123344)] [added: [1A.](#ITEM1A_RISKFACTORS_110925)] | [Risk [removed: Factors](#ITEM1A_RISKFACTORS_123344) |] [added: Factors](#ITEM1A_RISKFACTORS_110925)] | [removed: 19] [added: 18] |

| [removed: [1B.](#ITEM1B_UNRESOLVEDSTAFFCOMMENTS_125559)] [added: [1B.](#ITEM1B_UNRESOLVEDSTAFFCOMMENTS_111828)] | [Unresolved Staff [removed: Comments](#ITEM1B_UNRESOLVEDSTAFFCOMMENTS_125559) |] [added: Comments](#ITEM1B_UNRESOLVEDSTAFFCOMMENTS_111828)] | [removed: 31] [added: 32] |

| [removed: [2.](#ITEM2_PROPERTIES_125609) | [Properties](#ITEM2_PROPERTIES_125609)] [added: [2.](#ITEM2_PROPERTIES_111830)] | [added: [Properties](#ITEM2_PROPERTIES_111830)] | [removed: 31] [added: 32] |

| [removed: [3.](#ITEM3_LEGALPROCEEDINGS_125641)] [added: [3.](#ITEM3_LEGALPROCEEDINGS_111832)] | [Legal [removed: Proceedings](#ITEM3_LEGALPROCEEDINGS_125641) |] [added: Proceedings](#ITEM3_LEGALPROCEEDINGS_111832)] | [removed: 31] [added: 32] |

| [removed: [4.](#ITEM4_MINESAFETYDISCLOSURES_125820)] [added: [4.](#ITEM4_MINESAFETYDISCLOSURES_111854)] | [Mine Safety [removed: Disclosures](#ITEM4_MINESAFETYDISCLOSURES_125820) |] [added: Disclosures](#ITEM4_MINESAFETYDISCLOSURES_111854)] | [removed: 32] [added: 33] |

| [removed: [5.](#ITEM5_MARKETFORTHE_125912)] [added: [5.](#ITEM5__112030)] | [Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ITEM5_MARKETFORTHE_125912) |] [added: Securities](#ITEM5__112030)] | [removed: 32] [added: 33] |

| [removed: [6.](#ITEM6_SELECTEDFINANCIALDATA_123601)] [added: [6.](#ITEM6_SELECTEDFINANCIALDATA_113548)] | [Selected Financial [removed: Data](#ITEM6_SELECTEDFINANCIALDATA_123601) |] [added: Data](#ITEM6_SELECTEDFINANCIALDATA_113548)] | [removed: 35] [added: 36] |

| [removed: [7.](#ITEM7_MANAGEMENTSDISCUSSIONANDAN_020127)] [added: [7.](#ITEM7__113948)] | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ITEM7_MANAGEMENTSDISCUSSIONANDAN_020127) |] [added: Operations](#ITEM7__113948)] | [removed: 36] [added: 37] |

| [removed: [7A.](#ITEM7A_QUANTITATIVEANDQUALITATIV_010957)] [added: [7A.](#ITEM7A_QUANTITATIVEANDQUALITATIV_124235)] | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#ITEM7A_QUANTITATIVEANDQUALITATIV_010957) |] [added: Risk](#ITEM7A_QUANTITATIVEANDQUALITATIV_124235)] | [removed: 63] [added: 62] |

| [removed: [8.](#ITEM8_FINANCIALSTATEMENTSANDSUPP_011000)] [added: [8.](#ITEM8_FINANCIALSTATEMENTSANDSUPP_124246)] | [Financial Statements and Supplementary [removed: Data](#ITEM8_FINANCIALSTATEMENTSANDSUPP_011000) |] [added: Data](#ITEM8_FINANCIALSTATEMENTSANDSUPP_124246)] | [removed: 64] [added: 63] |

| [removed: [9.](#ITEM9_CHANGESINANDDISAGREEMENTSW_011002)] [added: [9.](#ITEM9__124249)] | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ITEM9_CHANGESINANDDISAGREEMENTSW_011002) |] [added: Disclosure](#ITEM9__124249)] | [removed: 64] [added: 63] |

| [removed: [9A.](#ITEM9A_CONTROLSANDPROCEDURES_011003)] [added: [9A.](#ITEM9A_CONTROLSANDPROCEDURES_124253)] | [Controls and [removed: Procedures](#ITEM9A_CONTROLSANDPROCEDURES_011003) |] [added: Procedures](#ITEM9A_CONTROLSANDPROCEDURES_124253)] | [removed: 64] [added: 63] |

| [removed: [9B.](#ITEM9B_OTHERINFORMATION_015437)] [added: [9B.](#ITEM9B_OTHERINFORMATION_124452)] | [Other [removed: Information](#ITEM9B_OTHERINFORMATION_015437) |] [added: Information](#ITEM9B_OTHERINFORMATION_124452)] | [removed: 67] [added: 66] |

| [removed: [PART III](#PARTIII_015645)] | [removed: |] [added: [PART III](#PARTIII_124503 "Click to goto ")] | |

| [removed: [10.](#ITEM10_DIRECTORSEXECUTIVEOFFICER_015444)] [added: [10.](#ITEM10_DIRECTORSEXECUTIVEOFFICER_124504)] | [Directors, Executive Officers and Corporate [removed: Governance](#ITEM10_DIRECTORSEXECUTIVEOFFICER_015444) |] [added: Governance](#ITEM10_DIRECTORSEXECUTIVEOFFICER_124504)] | [removed: 67] [added: 66] |

| [removed: [11.](#ITEM11_EXECUTIVECOMPENSATION_015450)] [added: [11.](#ITEM11_EXECUTIVECOMPENSATION_124519)] | [Executive [removed: Compensation](#ITEM11_EXECUTIVECOMPENSATION_015450) |] [added: Compensation](#ITEM11_EXECUTIVECOMPENSATION_124519)] | [removed: 67] [added: 66] |

| [removed: [12.](#ITEM12_SECURITYOWNERSHIPOFCERTAI_015623)] [added: [12.](#ITEM12_SECURITYOWNERSHIPOFCERTAI_124521)] | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ITEM12_SECURITYOWNERSHIPOFCERTAI_015623) |] [added: Matters](#ITEM12_SECURITYOWNERSHIPOFCERTAI_124521)] | [removed: 67] [added: 66] |

| [removed: [13.](#ITEM13_CERTAINRELATIONSHIPSANDRE_015633)] [added: [13.](#ITEM13_CE_124538)] | [Certain Relationships and Related Transactions, and Director [removed: Independence](#ITEM13_CERTAINRELATIONSHIPSANDRE_015633) |] [added: Independence](#ITEM13_CE_124538)] | [removed: 68] [added: 67] |

| [removed: [14.](#ITEM14_PRINCIPALACCOUNTINGFEESAN_015658)] [added: [14.](#ITEM14_PRINCIPALACCOUNTINGFEESAN_124539)] | [Principal Accounting Fees and [removed: Services](#ITEM14_PRINCIPALACCOUNTINGFEESAN_015658) |] [added: Services](#ITEM14_PRINCIPALACCOUNTINGFEESAN_124539)] | [removed: 68] [added: 67] |

| [removed: [15.](#ITEM15_EXHIBITSANDFINANCIALSTATE_015706)] [added: [15.](#ITEM15_EXHIBITSANDFINANCIALSTATE_124542)] | [Exhibits and Financial Statement [removed: Schedules](#ITEM15_EXHIBITSANDFINANCIALSTATE_015706) |] [added: Schedules](#ITEM15_EXHIBITSANDFINANCIALSTATE_124542)] | [removed: 68] [added: 67] |

| [removed: [16.](#ITEM16_FORM10KSUMMARY_015708)] [added: [16.](#ITEM16_FORM10KSUMMARY_124659)] | [Form 10-K [removed: Summary](#ITEM16_FORM10KSUMMARY_015708) |] [added: Summary](#ITEM16_FORM10KSUMMARY_124659)] | 68 |

10-K 1 a19-30117_110k.htm 10-K

Yes ¨ No þ

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10-K 1 a18-1123_110k.htm 10-K

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| [PART II](#PARTII_125854) | | | |

| [PART IV](#PARTIV_015705) | | | |

| | [Signatures](#SIGNATURES_015734) | | 71 |

Our owned corporate headquarters are located at 1 Monster Way, Corona, California 92879, consisting of [added: (i)] an approximately 141,000 square-foot, free-standing, six-story building (ENERGY STAR [removed: certified)] [added: certified), (ii) an approximately 147,625 square-foot three-story parking structure] and [added: storage facility, which houses our approximately 14,000 square-foot quality control laboratory, and (iii)] an adjacent approximately 75,426 square foot, free-standing, three-story building (pursuing ENERGY STAR certification).

Our owned Southern California warehouse is located in Rialto, California, consisting of an approximately 1,000,000 square-foot building which is LEED certified.

In September 2016, we completed the acquisition of approximately 49 acres of land, located in Rialto, CA, for a purchase price of approximately $39.1 million.

In the fourth quarter of 2017, we completed the construction of an approximately 1,000,000 square-foot building (the “Rialto Warehouse”) on this land, which we anticipate will be LEED certified, to replace our leased warehouses and distribution facilities located in Corona, CA.

We entered into an approximately $38.1 million guaranteed maximum price construction contract for the construction of the building, of which $4.6 million remained outstanding as of December 31, 2017.

During the three-months ended September 30, 2017, we transitioned our Southern California warehouse and distribution operations to the Rialto Warehouse, which was fully operational by December 31, 2017.

[removed: On July 5, 2007, the] [added: The] Company’s common stock [removed: began trading] [added: trades] on the Nasdaq Global Select Market under the same symbol, [removed: “HANS”.][added: “MNST”.]

As of February [removed: 12, 2018,] [added: 20, 2019,] there were [removed: 566,402,748] [added: 543,148,169] shares of the Company’s common stock outstanding held by approximately [removed: 213] [added: 198] holders of record.

During the year ended December 31, [removed: 2017,] [added: 2018,] the Company purchased [removed: 4.6] [added: 4.3] million shares of common stock at an average purchase price of [removed: $54.91] [added: $57.74] per share, for a total amount of $249.9 million (excluding broker commissions), under the February 2017 Repurchase [added: Plan, which exhausted the availability under the February 2017 Repurchase] Plan.

On February 27, 2018, [removed: our] [added: the Company’s] Board of Directors authorized a [removed: new] share repurchase program for the purchase of up to $250.0 million of the Company’s outstanding common stock (the “February 2018 Repurchase [removed: Plan”).][added: Program”).]

During the year ended December 31, [removed: 2017, 1.8 million] [added: 2018, 34,976] shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of [removed: $111.2] [added: $2.1] million.

Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, [removed: 2017.][added: 2018.]

The following tabular summary reflects the Company’s repurchase activity during the quarter ended December 31, [removed: 2017:][added: 2018:]

| Period | | Total Number of Shares Purchased | | Average Price per Share¹ | | [added: |] 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 | | |

[removed: ][added: ]

Cumulative total return assumes an initial investment of $100 on December 31, [removed: 2012.][added: 2013.]

The Company’s [removed: current] self-selected peer group is comprised of TCCC, [removed: DPS] [added: Dr Pepper Snapple] Group, [removed: National Beverage Corporation, Jones Soda Company and PepsiCo] Inc. [removed: The Company’s former self-selected peer group is comprised of TCCC, DPS Group,] [added: (through July 9, 2018),] National Beverage Corporation, Jones Soda Company and [removed: Cott Corporation (Cott Corporation’s carbonated soft drink and juice business was sold in 2018).][added: PepsiCo.]

During the year ended December 31, 2018, the Company purchased 5.0 million shares of common stock at an average purchase price of $49.81 per share, for a total amount of $249.9 million (excluding broker commissions), which exhausted the availability under the February 2018 Repurchase Program.

Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2018.

On May 29, 2018, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “May 2018 Repurchase Plan”).

During the year ended December 31, 2018, the Company purchased 9.0 million shares of common stock at an average purchase price of $55.55 per share, for a total amount of $499.9 million (excluding broker commissions), under the May 2018 Repurchase Plan, which exhausted the availability under the May 2018 Repurchase Plan.

Such shares are included in the common stock in treasury in the accompanying consolidated balance sheet at December 31, 2018.

On August 7, 2018, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “August 2018 Repurchase Plan”).

During the year ended December 31, 2018, the Company purchased 6.0 million shares of common stock at an average purchase price of $57.11 per share, for a total amount of $340.3 million (excluding broker commissions), under the August 2018 Repurchase Plan.

Such shares are included in the common stock in treasury in the accompanying consolidated balance sheet at December 31, 2018.

As a result of purchases of our common stock in January 2019 and February 2019, as of February 26, 2019, $20.6 million remained available for repurchase under the August 2018 Repurchase Plan.

Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2018.

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

| Nov 1 – Nov 30, 2018 | | 4,812,896 | | $ | 57.41 | | 4,812,896 | | $ | 420,288 | |

| Dec 1 – Dec 31, 2018 | | 4,607,630 | | $ | 56.56 | | 4,607,630 | | $ | 159,612 | |

The Company’s common stock began trading in the over-the-counter market on November 8, 1990 and was subsequently quoted on the Nasdaq Capital Market under the symbol “HANS”.

On January 5, 2012, stockholders of the Company approved the Company’s name change from Hansen Natural Corporation to Monster Beverage Corporation.

In addition, on January 9, 2012, the Company’s common stock began trading under the symbol “MNST”.

The following table sets forth high and low per share sales price of our common stock for the periods indicated:

| Year Ended December 31, 2017 | | High | | | Low | | |

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

| First Quarter | | $ | 48.94 | | $ | 41.02 | |

| Second Quarter | | $ | 52.41 | | $ | 44.35 | |

| Third Quarter | | $ | 57.25 | | $ | 49.03 | |

| Fourth Quarter | | $ | 64.79 | | $ | 54.80 | |

| | | | | | | | |

| Year Ended December 31, 2016 | | High | | | Low | | |

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

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

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

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

The per share sales prices of our common stock set forth above represent bid quotations between dealers, do not include retail markups, mark-downs or commissions and bid quotations may not necessarily represent actual transactions and “real time” sale prices.

The source of the bid information is the NASDAQ Stock Market, Inc.

As $250.0 million remains available for grant under the February 2017 Repurchase Plan, the aggregate amount available to repurchase the Company’s common stock is currently $500.0 million.

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

| Oct 1 – Oct 31, 2017 | | 20,129 | | $ 54.99 | | 20,129 | | $ | 250,000 | |

| | | | | | | | | | | |

Equity Compensation Plan Information

The following table sets forth information as of December 31, 2017 with respect to shares of our common stock that may be issued under our equity compensation plans.

| Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | Weighted-average exercise price of outstanding options, warrants and rights (b) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |

| Equity compensation plans approved by stockholders | | 18,348,024 | | $29.62 | | 20,877,908 | |

| Equity compensation plans not approved by stockholders | | \- | | \- | | \- | |

| Total | | 18,348,024 | | $29.62 | | 20,877,908 | |

The consolidated statements of operations data set forth below with respect to each of the fiscal years ended December 31, [removed: 2015] [added: 2016] through [removed: 2017] [added: 2018] and the balance sheet data as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] 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: 2014] [added: 2015] and [removed: 2013] [added: 2014] and the balance sheet data as of December 31, [removed: 2015, 2014] [added: 2016, 2015] and [removed: 2013] [added: 2014] are derived from the Company’s audited consolidated financial statements not included herein.

| (in thousands, except per share information) | | [added: 2018 | | |] 2017 | | | 2016 | | | 2015 | | | 2014 | | [removed: | 2013 | | |]

| Net [removed: sales1] [added: sales1,2] | | $ | [removed: 3,369,045] [added: 3,807,183] | | $ | [removed: 3,049,393] [added: 3,369,045] | | $ | [removed: 2,722,564] [added: 3,049,393] | | $ | [removed: 2,464,867] [added: 2,722,564] | | $ | [removed: 2,246,428 |] [added: 2,464,867] |

| Gross [removed: profit1] [added: profit1,2] | | $ | [removed: 2,137,690] [added: 2,295,375] | | $ | [removed: 1,942,000] [added: 2,137,690] | | $ | [removed: 1,632,301] [added: 1,942,000] | | $ | [removed: 1,339,810] [added: 1,632,301] | | $ | [removed: 1,172,931 |] [added: 1,339,810] |

| Gross profit as a percentage to net sales | | [added: 60.3% | | |] 63.5% | | | 63.7% | | | 60.0% | | | 54.4% | | [removed: | 52.2% | | |]

| Operating [removed: income1,2] [added: income1,3] | | $ | [removed: 1,198,787] [added: 1,283,619] | | $ | [removed: 1,085,338] [added: 1,198,787] | | $ | [removed: 893,653] [added: 1,085,338] | | $ | [removed: 747,505] [added: 893,653] | | $ | [removed: 572,916 |] [added: 747,505] |

| Net [removed: income1,2] [added: income1,3] | | $ | [removed: 820,678] [added: 993,004] | | $ | [removed: 712,685] [added: 820,678] | | $ | [removed: 546,733] [added: 712,685] | | $ | [removed: 483,185] [added: 546,733] | | $ | [removed: 338,661 |] [added: 483,185] |

| Net income per common share: | | | | | | | | | | | | | | | | [removed: |]

| Basic | | $ | [removed: 1.45] [added: 1.78] | | $ | [removed: 1.21] [added: 1.45] | | $ | [removed: 0.97] [added: 1.21] | | $ | [removed: 0.96] [added: 0.97] | | $ | [removed: 0.68 |] [added: 0.96] |

| Diluted | | $ | [removed: 1.42] [added: 1.76] | | $ | [removed: 1.19] [added: 1.42] | | $ | [removed: 0.95] [added: 1.19] | | $ | [removed: 0.92] [added: 0.95] | | $ | [removed: 0.65 |] [added: 0.92] |

| Cash, cash equivalents and investments | | $ | [removed: 1,203,921] [added: 958,163] | | $ | [removed: 600,530] [added: 1,203,921] | | $ | [removed: 2,935,375] [added: 600,530] | | $ | [removed: 1,194,397] [added: 2,935,375] | | $ | [removed: 623,388 |] [added: 1,194,397] |

| Total assets | | $ | [removed: 4,791,012] [added: 4,526,891] | | $ | [removed: 4,153,471] [added: 4,791,012] | | $ | [removed: 5,571,277] [added: 4,153,471] | | $ | [removed: 1,938,875] [added: 5,571,277] | | $ | [removed: 1,420,509 |] [added: 1,938,875] |

| Stockholders’ equity | | $ | [removed: 3,895,212] [added: 3,610,901] | | $ | [removed: 3,329,709] [added: 3,895,212] | | $ | [removed: 4,809,410] [added: 3,329,709] | | $ | [removed: 1,515,150] [added: 4,809,410] | | $ | [removed: 992,279 |] [added: 1,515,150] |

[removed: _¹__Includes] [added: _¹_ _Includes $44.3 million,] $43.4 million, $40.3 million, $62.8 [removed: million, $15.0] million and [removed: $14.8] [added: $15.0] million for the years ended December 31, [added: 2018,] 2017, 2016, [removed: 2015, 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively, related to the recognition of deferred [removed: revenue.][added: revenue._]

[removed: _²Includes] [added: _3_ _Includes $26.6 million,] $35.4 million, $79.8 million, $224.0 [removed: million, ($0.2)] million and [removed: $10.8] [added: ($0.2)] million for the years ended December 31, [added: 2018,] 2017, 2016, [removed: 2015, 2014] [added: 2015] and [removed: 2013,] [added: 2014,] respectively, related to expenditures attributable to the costs associated with terminating existing distributors._

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

_2_ _Net sales and gross profit were negatively impacted by approximately $42.2 million for the year ended December 31, 2018 as a result of the adoption of ASC 606._

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Included in the $43.4 million, $40.3 million and $62.8 million recognition of deferred revenue for the years ended December 31, 2017, 2016 and 2015, respectively, is $0.6 million, $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 relevant periods._

The information required to be furnished in response to this [removed: ITEM] [added: Item] 8 follows the signature page and Index to Exhibits hereto at pages 72 through [removed: 116.][added: 115.]

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: 2017,] [added: 2018,] 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: 2017.][added: 2018.]

Our internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] 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: 2017,] [added: 2018,] based on criteria established in _Internal Control —Integrated Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (COSO).][added: (“COSO”).]

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in _Internal Control — Integrated Framework (2013)_ issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (PCAOB),] [added: (“PCAOB”),] the consolidated financial statements and financial statement schedule as of and for the year ended December 31, [removed: 2017,] [added: 2018,] of the Company and our report dated [removed: March 1, 2018,] [added: February 28, 2019,] expressed an unqualified opinion on those financial statements and financial statement schedule.

February 28, 2019

March 1, 2018

On February [removed: 27, 2018,] [added: 26, 2019,] our Board of Directors authorized a new share repurchase program for the purchase of up to [removed: $250.0] [added: $500.0] million of the Company’s outstanding common stock (the “February [removed: 2018] [added: 2019] Repurchase Plan”).

[removed: As $250.0 million remains available for grant under the February 2017 Repurchase Plan, the] [added: The] aggregate amount available to repurchase the Company’s common stock is currently [removed: $500.0] [added: $520.6] million.

As of February 26, 2019, $20.6 million remained available for grant under the August 2018 Repurchase Plan.

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: 2017] [added: 2019] Annual Meeting of Stockholders to be filed with the SEC within 120 days after the end of the fiscal year ended December 31, [removed: 2017] [added: 2018] (the [removed: “2018] [added: “2019] 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: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

Information concerning the Audit Committee and the Audit Committee Financial [removed: expert] [added: Expert] is reported under the caption “Audit Committee; Report of the Audit Committee; Duties and Responsibilities” in our [removed: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

We have adopted a Code of Business Conduct and Ethics that applies to all our directors, officers (including our principal executive officer, principal financial officer, principal accounting officer and controllers) and [removed: employees and is available at http://investors.monsterbevcorp.com/governance.cfm.][added: employees.]

The Code of Business Conduct and Ethics and any amendment thereto, as well as any waivers that are required to be disclosed by the rules of the SEC or NASDAQ, may be obtained at [added: http://investors.monsterbevcorp.com/governance.cfm or at] no cost to you by writing or telephoning us at the following address or telephone number:

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: 2018] [added: 2019] 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: 2018] [added: 2019] 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: 2018] [added: 2019] 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: 2018] [added: 2019] Proxy Statement and is incorporated herein by reference.

| (a) | [added: |] The following documents are filed as a part of this Form 10-K: | | [added: |]

| | [added: |] [Report of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_022329] [added: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_012629] "Click to goto ") | [removed: 73] | [added: 72 |]

| | [added: |] Financial Statements: | | [added: |]

| | [added: |] [Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016](#CONSOLIDATEDBALANCESHEETS_022115] [added: 2017](#CONSOLIDATEDBALANCESHEETS_012647] "Click to goto ") | [removed: 74] | [added: 73 |]

| | [added: |] [Consolidated Statements of Income for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFINCOME_022120] [added: 2016](#CONSOLIDATEDSTATEMENTSOFINCOME_012707] "Click to goto ") | [removed: 75] | [added: 74 |]

| | [added: |] [Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFCOMPREHE_022123] [added: 2016](#CONSOLIDATEDSTATEMENTSOFCOMPREHE_012729] "Click to goto ") | [removed: 76] | [added: 75 |]

| | [added: |] [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFSTOCKHOL_024942] [added: 2016](#CONSOLIDATEDSTATEMENTSOFSTOCKHOL_013802] "Click to goto ") | [removed: 77] | [added: 76 |]

| | [added: |] [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFCASHFLOW_025046] [added: 2016](#CONSOLIDATEDSTATEMENTSOFCASHFLOW_012840] "Click to goto ") | [removed: 78] | [added: 77 |]

| | [added: |] [Notes to Consolidated Financial [removed: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTAT_030330] [added: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTAT_015017] "Click to goto ") | [removed: 80] | [added: 79 |]

| | [removed: [Valuation] [added: | [Financial Statement Schedule: Valuation] and Qualifying Accounts for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#SCHEDULEIIVALUATIONANDQUALIFYING_092511] [added: 2016](#SCHEDULEIIVALUATIONANDQUALIFYING_040036] "Click to goto ") | [removed: 116] | [added: 115 |]

| | [added: |] Exhibits: | | [added: |]

| | [added: |] The Exhibits listed in the Index of Exhibits, which appears immediately preceding the signature page and is incorporated herein by reference, as filed as part of this Form 10-K. | | [added: |]

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| | Financial Statement Schedule: | |

| 3.1 | [Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to our Form [removed: 10-K] [added: 10-Q] dated November 7, 2016).](http://www.sec.gov/Archives/edgar/data/865752/000110465916155163/a16-20895_1ex3d1.htm) |

| 3.2 | [removed: [Amended] [added: [Second Amended] and Restated Bylaws of the Company (incorporated by reference to Exhibit 3.2 to our Form 8-K dated [removed: June 18, 2015).](http://www.sec.gov/Archives/edgar/data/865752/000110465915046213/a15-14144_1ex3d2.htm)] [added: April 16, 2018).](http://www.sec.gov/Archives/edgar/data/865752/000110465918024237/a18-10038_1ex3d2.htm)] |

| 10.5+ | [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 10.1 to our Form [removed: 10-K] [added: 10-Q] dated August 5, 2016).](http://www.sec.gov/Archives/edgar/data/865752/000110465916137481/a16-15122_1ex10d1.htm) |

| [removed: 10.10+*] [added: 10.10+] | [Form of Stock Option [removed: Agreement](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d10.htm#EXHIBIT10_10_071135 "Click] [added: Agreement (incorporated by reference] to [removed: goto ")] [added: Exhibit 10.10 to our Form 10-K dated March 1, 2018).](http://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d10.htm)] |

| [removed: 10.11+*] [added: 10.11+] | [Form of Stock Option Agreement of Chief Executive Officer and President and Chief Financial [removed: Officer](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d11.htm#EXHIBIT10_11_071159 "Click] [added: Officer (incorporated by reference] to [removed: goto ")] [added: Exhibit 10.11 to our Form 10-K dated March 1, 2018).](http://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d11.htm)] |

| [removed: 10.14+*] [added: 10.14+] | [Amended and Restated Monster Beverage Corporation Deferred Compensation [removed: Plan.](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d14.htm#EXHIBIT10_14_071240 "Click] [added: Plan (incorporated by reference] to [removed: goto ")] [added: Exhibit 10.14 to our Form 10-K dated March 1, 2018).](http://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex10d14.htm)] |

| 21* | [removed: [Subsidiaries](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex21.htm#EXHIBIT21_071302] [added: [Subsidiaries](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex21.htm#EXHIBIT21_121546] "Click to goto ") |

| 23* | [Consent of Independent Registered Public Accounting [removed: Firm](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex23.htm#EXHIBIT23_050339] [added: Firm](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex23.htm#EXHIBIT23_040516] "Click to goto ") |

| 31.1* | [Certification by CEO pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 [removed: *](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex31d1.htm#EXHIBIT31_1_115242] [added: *](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex31d1.htm#EXHIBIT31_1_033200] "Click to goto ") |

| 31.2* | [Certification by CFO pursuant to Rule 13A-14(a) or 15D-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 [removed: *](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex31d2.htm#EXHIBIT31_2_120356] [added: *](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex31d2.htm#EXHIBIT31_2_033815] "Click to goto ") |

| 32.1* | [Certification by CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 [removed: *](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex32d1.htm#EXHIBIT32_1_120741] [added: *](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex32d1.htm#EXHIBIT32_1_033937] "Click to goto ") |

| 32.2* | [Certification by CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 [removed: *](https://www.sec.gov/Archives/edgar/data/865752/000110465918014057/a18-1123_1ex32d2.htm#EXHIBIT32_2_120927] [added: *](https://www.sec.gov/Archives/edgar/data/865752/000110465919011581/a19-30117_1ex32d2.htm#EXHIBIT32_2_034452] "Click to goto ") |

| 101* | The following materials from Monster Beverage Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2017] [added: 2018] are furnished herewith, formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] (ii) the Consolidated Statements of Income for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] (iii) [removed: the] Consolidated Statements of [removed: Stockholders’ Equity] [added: Comprehensive Income] for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] (iv) [added: the] Consolidated Statements of [removed: Comprehensive Income] [added: Stockholders’ Equity] for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] (v) Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015,] [added: 2016,] and (vi) the Notes to Consolidated Financial Statements. |

[removed: +] [added: \+] Management contract or compensatory plans or arrangements.

[added: |] MONSTER BEVERAGE CORPORATION [added: | | |]

| /s/ RODNEY C. SACKS | Rodney C. Sacks | Date: [removed: March 1, 2018] [added: February 28, 2019] |

| [removed: Rodney] [added: /s/ RODNEY] C. [removed: Sacks] [added: SACKS] | | [added: Chairman of the Board of] Directors and Chief Executive Officer (principal executive officer) | | [added: February 28, 2019] |

| [removed: Hilton] [added: /s/ HILTON] H. [removed: Schlosberg] [added: SCHLOSBERG] | | [added: Vice Chairman of the Board of] Directors, President, Chief Operating Officer, Chief Financial Officer and Secretary (principal financial officer, controller and principal accounting officer) | | [added: February 28, 2019] |

| /s/ NORMAN C. EPSTEIN | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ MARK J. HALL | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ GARY P. FAYARD | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ BENJAMIN M. POLK | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ SYDNEY SELATI | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ HAROLD C. TABER, JR. | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ MARK S. VIDERGAUZ | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| /s/ KATHY [removed: N] [added: N.] WALLER | | Director | | [removed: March 1, 2018] [added: February 28, 2019] |

| [Report of Independent Registered Public Accounting [removed: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_022329] [added: Firm](#REPORTOFINDEPENDENTREGISTEREDPUB_012629] "Click to goto ") | [removed: 73] [added: 72] |

| [Consolidated Balance Sheets as of December 31, [removed: 2017] [added: 2018] and [removed: 2016](#CONSOLIDATEDBALANCESHEETS_022115] [added: 2017](#CONSOLIDATEDBALANCESHEETS_012647] "Click to goto ") | [removed: 74] [added: 73] |

| [Consolidated Statements of Income for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFINCOME_022120] [added: 2016](#CONSOLIDATEDSTATEMENTSOFINCOME_012707] "Click to goto ") | [removed: 75] [added: 74] |

| [Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFCOMPREHE_022123] [added: 2016](#CONSOLIDATEDSTATEMENTSOFCOMPREHE_012729] "Click to goto ") | [removed: 76] [added: 75] |

| [Consolidated Statements of Stockholders’ Equity for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFSTOCKHOL_024942] [added: 2016](#CONSOLIDATEDSTATEMENTSOFSTOCKHOL_013802] "Click to goto ") | [removed: 77] [added: 76] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#CONSOLIDATEDSTATEMENTSOFCASHFLOW_025046] [added: 2016](#CONSOLIDATEDSTATEMENTSOFCASHFLOW_012840] "Click to goto ") | [removed: 78] [added: 77] |

| [Notes to Consolidated Financial [removed: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTAT_030330] [added: Statements](#NOTESTOCONSOLIDATEDFINANCIALSTAT_015017] "Click to goto ") | [removed: 80] [added: 79] |

| [Financial Statement Schedule – Valuation and Qualifying Accounts for the years ended December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015](#SCHEDULEIIVALUATIONANDQUALIFYING_092511] [added: 2016](#SCHEDULEIIVALUATIONANDQUALIFYING_040036] "Click to goto ") | [removed: 116] [added: 115] |

We have audited the accompanying consolidated balance sheets of Monster Beverage Corporation and subsidiaries (the “Company”) as of December 31, [removed: 2017 and 2016,] [added: 2018] and [added: 2017,] the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows, for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2017] [added: 2018] and [removed: 2016,] [added: 2017,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2017,] [added: 2018,] in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) [removed: (PCAOB),] [added: (“PCAOB”),] the Company’s internal control over financial reporting as of December 31, [removed: 2017,] [added: 2018,] based on criteria established in _Internal [removed: Control—Integrated] [added: Control–Integrated] Framework (2013)_ issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated [removed: March 1, 2018,] [added: February 28, 2019,] expressed an unqualified opinion on the Company’s internal control over financial reporting.

AS OF DECEMBER 31, [removed: 2017] [added: 2018] AND [removed: 2016] [added: 2017] (In Thousands, Except Par Value)

| | | [added: 2018 | | |] 2017 | | | 2016 | | [removed: |]

| ASSETS | | | | | | | [removed: |]

| 2.1.1 | [Amendment to Transaction Agreement, dated as of March 16, 2018, by and among Monster Beverage Corporation, New Laser Corporation, New Laser Merger Corp., The Coca-Cola Company and European Refreshments (incorporated by reference to Exhibit 2.1 to our Form 8-K dated March 20, 2018).](http://www.sec.gov/Archives/edgar/data/865752/000110465918018960/a18-8560_1ex2d1.htm) |

| | | |

| Rodney C. Sacks | | | | |

| Hilton H. Schlosberg | | | | |

February 28, 2019

| Cash and cash equivalents | | $ | 637,513 | | $ | 528,622 |

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FOR THE YEARS ENDED DECEMBER 31, 2018, 2017 AND 2016 (In Thousands)

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| /s/ RODNEY C. SACKS | | Chairman of the Board of | | March 1, 2018 |

| /s/ HILTON H. SCHLOSBERG | | Vice Chairman of the Board of | | March 1, 2018 |

| | |

March 1, 2018

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| GAIN ON SALE OF MONSTER NON-ENERGY (NOTE 2) | | – | | | – | | | | 161,470 | |

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| Balance, January 1, 2015 | | 621,012 | | $ | 3,105 | | $ | 424,075 | | $ | 2,330,510 | | $ | (11,453) | | (117,846) | | $ | (1,231,087) | | $ | 1,515,150 | |

| Exercise of stock options | | 22,275 | | 111 | | | 49,217 | | | \- | | | \- | | | \- | | \- | | | 49,328 | | |

| Issuance of common stock | | 102,123 | | 511 | | | 3,168,624 | | | \- | | | \- | | | \- | | \- | | | 3,169,135 | | |

| Repurchase of common stock | | \- | | \- | | | \- | | | \- | | | \- | | | (18,864) | | (807,967) | | | (807,967) | | |

| Cancellation of treasury stock | | (124,353) | | (622) | | | 415 | | | (1,482,380) | | | \- | | | 124,353 | | 1,482,587 | | | \- | | |

| Net income | | \- | | \- | | | \- | | | 546,733 | | | \- | | | \- | | \- | | | 546,733 | | |

| Reversal of excess tax benefits from share based payment arrangements | | \- | | \- | | | (5,495) | | | \- | | | \- | | | \- | | \- | | | (5,495) | | |

| | | 2017 | | | 2016 | | | 2015 | |

| Gain on sale of Monster Non-Energy | | – | | | – | | | (161,470) | |

| Loss on put option | | – | | | – | | | 250 | |

| Gain on investments, net | | – | | | – | | | (250) | |

| TCCC Transaction receivable | | 125,000 | | | – | | | – | |

| Sales of trading investments | | – | | | – | | | 4,160 | |

| Proceeds from the transfer of distribution rights to TCCC | | – | | | – | | | 179,658 | |

| Proceeds from the sale of Monster Non-Energy | | – | | | – | | | 198,008 | |

| CASH AND CASH EQUIVALENTS, beginning of year | | 377,582 | | | 2,175,417 | | | 370,323 | |

During the year ended December 31, 2015, the Company issued 35.4 million shares of the Company’s common stock in exchange for KO Energy.

During the year ended December 31, 2015, in connection with the TCCC Transaction (as defined in Note 2), $125.0 million relating to the transfer of certain distribution rights was deposited into escrow pending certain transition milestones.

During the year ended December 31, 2015, the Company cancelled 124.5 million shares of treasury stock.

Amounts previously recorded as treasury stock were netted against common stock and retained earnings.

Through June 12, 2015, the Company also developed, marketed, sold and distributed “alternative” beverage category beverages under the following brand names: Peace Tea®, Hansen’s®, Hansen’s Natural Cane Soda®, Junior Juice®, Blue Sky® and Hubert’s®.

These brands were transferred to The Coca-Cola Company (“TCCC”) as part of the TCCC Transaction (as defined and described in Note 2 below).

_Revenue Recognition_ – The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured.

Generally, ownership of and title to the Company’s finished products passes to customers upon delivery of the products to customers.

Revenue for the Strategic Brands segment is generally recognized when title to the concentrate is transferred to the customer.

In particular, title to the concentrate usually passes upon shipment to the customers’ locations, as determined by the specific sales terms of the transactions.

Net sales have been determined after deduction of promotional and other allowances in accordance with FASB ASC 605-50.