Item 16. FORM 10-K SUMMARY

None

​

INDEX TO EXHIBITS

The following designated exhibits, as indicated below, are either filed or furnished, as applicable herewith or have heretofore been filed or furnished with the Securities and Exchange Commission under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

2.1	Transaction Agreement, dated as of August 14, 2014, 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 August 18, 2014).
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).
2.2	Asset Transfer Agreement, dated as of August 14, 2014, by and among Monster Beverage Corporation, New Laser Corporation and The Coca-Cola Company (incorporated by reference to Exhibit 2.2 to our Form 8-K dated August 18, 2014).
3.1	Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to our Form 10-K dated November 7, 2016).
3.2	Second Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 to our Form 8-K dated April 16, 2018).
4.1	Description of Common Stock (incorporated by reference to Exhibit 4.1 to our Form 10-K dated February 28, 2020).
10.1	Amended and Restated Distribution Coordination Agreement, dated as of June 12, 2015, between Monster Energy Company and The Coca-Cola Company (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated August 10, 2015).
10.2	Amended and Restated International Distribution Coordination Agreement, dated as of June 12, 2015, between Monster Energy Ltd. and Monster Energy Company and The Coca-Cola Company (incorporated by reference to Exhibit 10.2 to our Form 10-Q dated August 10, 2015).
10.3	Form of Indemnification Agreement (to be provided by Monster Beverage Corporation to its directors and officers) (incorporated by reference to Exhibit 10.1 to our Form 8-K dated June 11, 2019).
10.4+	Form of Restricted Stock Unit Agreement pursuant to the Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 10.4 to our Form 10-K dated March 1, 2021).
10.5+	Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated August 9, 2011).
10.6+	Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 8-K dated May 24, 2011).
10.7+	Employment Agreement between Monster Beverage Corporation and Rodney C. Sacks (incorporated by reference to Exhibit 10.1 to our Form 8-K dated March 19, 2014).
10.8+	Employment Agreement between Monster Beverage Corporation and Hilton H. Schlosberg (incorporated by reference to Exhibit 10.2 to our Form 8-K dated March 19, 2014).
10.9+	Form of Stock Option Agreement for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.10 to our Form 10-K dated March 1, 2018).
10.10+	Form of Stock Option Agreement of Co-Chief Executive Officers for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.11 to our Form 10-K dated March 1, 2018).
10.11+	Form of 2020 Annual Incentive Award Agreement for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated May 11, 2020).
10.12+	Form of Performance Share Unit Award Agreement for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to our Form 10-Q dated May 11, 2020).
10.13+	Form of Restricted Stock Unit Agreement for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.13 to our Form 10-K dated March 1, 2021).

10.14+	Form of Restricted Stock Unit Agreement of Co-Chief Executive Officers for grants under the Monster Beverage Corporation 2011 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.14 to our Form 10-K dated March 1, 2021).
10.15+	Monster Beverage Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Appendix A to our Definitive Proxy Statement on Schedule 14A, filed April 21, 2020).
10.16+	Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors as Amended and Restated on February 23, 2022 (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated May 6, 2022).
10.17+	Monster Beverage Corporation Deferred Compensation Plan for Non-Employee Directors (incorporated by reference to Exhibit 4.2 to our Form S-8 dated June 21, 2017).
10.18+	Amended and Restated Monster Beverage Corporation Deferred Compensation Plan (incorporated by reference to Exhibit 10.14 to our Form 10-K dated March 1, 2018).
10.19+	Form of Stock Option Award Agreement for grants under the Monster Beverage Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.1 to our Form 10-Q dated May 7, 2021).
10.20+	Form of Annual Incentive Award Agreement for grants under the Monster Beverage Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.2 to our Form 10-Q dated May 7, 2021).
10.21+	Form of Performance Share Unit Award Agreement for grants under the Monster Beverage Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.3 to our Form 10-Q dated May 7, 2021).
10.22+	Form of Restricted Stock Unit Award Agreement for grants under the Monster Beverage Corporation 2020 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.4 to our Form 10-Q dated May 7, 2021).
16.1	Letter from Deloitte & Touche LLP to the Securities and Exchange Commission dated January 13, 2023 (incorporated by reference to Exhibit 16.1 to our Form 8-K dated January 13, 2023).
21*	Subsidiaries
23*	Consent of Independent Registered Public Accounting Firm
31.1*	Certification by Co-Chief Executive Officer 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
31.2*	Certification by Co-Chief Executive Officer 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
31.3*	Certification by Chief Financial Officer 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
32.1*	Certification by Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*	Certification by Co-Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.3*	Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following materials from Monster Beverage Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 are furnished herewith, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of December 31, 2022 and 2021, (ii) Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020, (iii) Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020, (iv) Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022, 2021 and 2020, (v) Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020, and (vi) Notes to Consolidated Financial Statements.
104*	The cover page from Monster Beverage Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language) and contained in Exhibit 101.

​

*	Filed herewith.

+	Management contract or compensatory plans or arrangements.

​

SIGNATURES

Pursuant to the requirements of Sections 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MONSTER BEVERAGE CORPORATION

/s/ RODNEY C. SACKS		Rodney C. Sacks		Date: March 1, 2023
​	​	Chairman of the Board of	​	​
​	​	Directors and Co-Chief	​	​
​	​	Executive Officer	​	​
​	​	​	​	​
/s/ HILTON H. SCHLOSBERG	​	Hilton H. Schlosberg	​	Date: March 1, 2023
​	​	Vice Chairman of the Board of	​	​
​	​	Directors and Co-Chief	​	​
​	​	Executive Officer	​	​

​

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated.

Signature		Title		Date
​	​	​	​	​
/s/ RODNEY C. SACKS	​	Chairman of the Board of	​	March 1, 2023
Rodney C. Sacks	​	Directors and Co-Chief Executive	​	​
​	​	Officer (principal executive officer)	​	​
​	​	​	​	​
/s/ HILTON H. SCHLOSBERG	​	Vice Chairman of the Board of Directors	​	March 1, 2023
Hilton H. Schlosberg	​	and Co-Chief Executive Officer (principal	​	​
​	​	executive officer)	​	​
​	​	​	​	​
/s/ THOMAS J. KELLY	​	Chief Financial Officer (principal financial	​	March 1, 2023
Thomas J. Kelly	​	officer, principal accounting officer)	​	​
​	​	​	​	​
/s/ ANA DEMEL	​	Director	​	March 1, 2023
Ana Demel	​	​	​	​
​	​	​	​	​
/s/ JAMES L. DINKINS	​	Director	​	March 1, 2023
James L. Dinkins	​	​	​	​
​	​	​	​	​
/s/ GARY P. FAYARD	​	Director	​	March 1, 2023
Gary P. Fayard	​	​	​	​
​	​	​	​	​
/s/ MARK J. HALL	​	Director	​	March 1, 2023
Mark J. Hall	​	​	​	​
​	​	​	​	​
/s/ TIFFANY M. HALL	​	Director	​	March 1, 2023
Tiffany M. Hall	​	​	​	​
​	​	​	​	​
/s/ JEANNE P. JACKSON	​	Director	​	March 1, 2023
Jeanne P. Jackson	​	​	​	​
​	​	​	​	​
/s/ STEVEN G. PIZULA	​	Director	​	March 1, 2023
Steven G. Pizula	​	​	​	​
​	​	​	​	​
/s/ MARK S. VIDERGAUZ	​	Director	​	March 1, 2023
Mark S. Vidergauz	​	​	​	​

​

​

​

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

​

​
​	Page
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES	​
​	​
Report of Independent Registered Public Accounting Firm	78
​	​
Consolidated Balance Sheets as of December 31, 2022 and 2021	81
​	​
Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020	82
​	​
Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020	83
​	​
Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022, 2021 and 2020	84
​	​
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020	85
​	​
Notes to Consolidated Financial Statements	87
​	​
Financial Statement Schedule – Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020	125

​

​

​

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

​

To the Board of Directors and Stockholders of

Monster Beverage Corporation

Corona, California

​

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Monster Beverage Corporation and subsidiaries (the “Company”) as of December 31, 2022 and 2021, 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, 2022, 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, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, 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) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control–Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the Audit Committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Accrued Promotional Allowances — Refer to Note 3 to the financial statements

Critical Audit Matter Description

The Company’s promotional and other allowances are calculated based on various programs with its bottlers/distributors and retail customers, and accruals are established at the time of the initial product sale for the Company’s anticipated liabilities. These accruals are based on agreed-upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Promotional and other allowances for the Company’s energy drink products primarily include consideration given to its non-alcohol bottlers/distributors or retail customers, including, but not limited to, the following: (i) discounts granted off list prices to support price promotions to end consumers by retailers; (ii) reimbursements given to bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances, and other fees for both new and existing products; (iii) agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing, and promotional activities; (iv) agreed share of slotting, shelf space allowances, and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to bottlers/distributors related to sales made by the Company directly to certain customers that fall within the bottlers’/distributors’ sales territories; and (viii) certain commissions paid based on sales to bottlers/distributors. The promotional programs for the Company’s energy drink products are of varying durations, typically ranging from one week to one year based on the agreed-upon terms. The nature of such programs is determined on a per retail customer basis, and in certain instances, the same program is set for multiple retail customers. The promotional expenditures are recorded as a reduction to net sales in the period the underlying sale occurs. Total promotional expenditures included as a reduction to net sales were $990.6 million for the year ended December 31, 2022, and accrued promotional allowances were $255.6 million as of December 31, 2022.

We identified accrued promotional allowances as a critical audit matter because of the extent and subjective nature of management judgment required with respect to estimating consumer participation and/or distributor and retail customer performance levels and future promotional claims, which required a high degree of auditor judgement and an increased extent of effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures over accrued promotional allowances for energy drink products, with respect to management’s judgment regarding levels of consumer participation and/or distributor and retail customer performance levels and future promotional claims, included the following, among others:

	●	We tested the effectiveness of controls over accrued promotional allowances, including those controls pertaining to management’s estimation of future promotional claims.

	●	We selected a sample of accrued promotional allowances recorded for specific distributors and retail customers and sent confirmation requests of the accrual recorded and key terms of the agreement directly to the distributor or retail customer. We compared the confirmation response to the accrued amount recorded by the Company. In instances of nonreplies to our confirmation request from the distributor or retail customer, we performed alternative procedures as follows: (1) developing an expectation of the accrual using current-year claim and payment data, and/or (2) vouching known claim submissions, unpaid as of period-end, to underlying supporting documentation.

	●	We tested the promotional expenditure amount recorded as a reduction to net sales and assessed the reasonableness of management’s estimate by developing an expectation of the amount, based on historical promotional expenditure amounts recorded as a percentage of sales, and compared our expectation to the recorded promotional expenditure amount.

	●	We performed inquiries with the Company’s sales and marketing personnel to corroborate our understanding of new and existing promotional programs that may alter the relationship between gross billings and promotional allowances, as such programs are considered by management when estimating future promotional claims.

	●	We evaluated management’s ability to estimate promotional allowances by comparing the actual promotional allowances subsequently paid to the original estimates of management.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California

March 1, 2023

We have served as the Company’s auditor since 1991.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

AS OF DECEMBER 31, 2022 AND 2021 (In Thousands, Except Par Value)

​	​	​	​	​	​	​
​	​	December 31,		​	December 31,
​		2022			2021
ASSETS	​	​	​	​	​	​
CURRENT ASSETS:	​	​	​	​	​	​
Cash and cash equivalents	​	$	1,307,141	​	$	1,326,462
Short-term investments	​		1,362,314			1,749,727
Accounts receivable, net	​		1,016,203			896,658
Inventories	​		935,631			593,357
Prepaid expenses and other current assets	​		109,823			82,668
Prepaid income taxes	​		33,785			33,238
Total current assets	​		4,764,897			4,682,110
​	​	​	​	​	​	​
INVESTMENTS	​		61,443			99,419
PROPERTY AND EQUIPMENT, net	​		516,897			313,753
DEFERRED INCOME TAXES	​		177,039			225,221
GOODWILL	​		1,417,941			1,331,643
OTHER INTANGIBLE ASSETS, net	​		1,220,410			1,072,386
OTHER ASSETS	​		134,478			80,252
Total Assets	​	$	8,293,105		$	7,804,784
​	​	​	​	​	​	​
LIABILITIES AND STOCKHOLDERS’ EQUITY	​	​	​	​	​	​
CURRENT LIABILITIES:	​	​	​	​	​	​
Accounts payable	​	$	444,265		$	404,263
Accrued liabilities	​		172,991			210,964
Accrued promotional allowances	​		255,631			211,461
Deferred revenue	​		43,311			42,530
Accrued compensation	​		72,463			65,459
Income taxes payable	​		13,317			30,399
Total current liabilities	​		1,001,978			965,076
​	​	​	​	​	​	​
DEFERRED REVENUE	​		223,800			243,249
​	​	​	​	​	​	​
OTHER LIABILITIES	​	​	42,286	​	​	29,508
​	​	​	​	​	​	​
COMMITMENTS AND CONTINGENCIES (Note 13)	​	​	​	​	​	​
​	​	​	​	​	​	​
STOCKHOLDERS’ EQUITY:	​	​	​	​	​	​
Common stock - $0.005 par value; 1,250,000 shares authorized; 641,844 shares issued and 522,300 shares outstanding as of December 31, 2022; 640,043 shares issued and 529,323 shares outstanding as of December 31, 2021	​	​	3,209	​	​	3,200
Additional paid-in capital	​		4,780,013			4,652,620
Retained earnings	​		9,001,173			7,809,549
Accumulated other comprehensive loss	​		(159,073)			(69,165)
Common stock in treasury, at cost; 119,544 shares and 110,720 shares as of December 31, 2022 and December 31, 2021, respectively	​		(6,600,281)			(5,829,253)
Total stockholders’ equity	​		7,025,041			6,566,951
Total Liabilities and Stockholders’ Equity	​	$	8,293,105		$	7,804,784

​

See accompanying notes to consolidated financial statements.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

(In Thousands, Except Per Share Amounts)

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
​	​	​	​	​	​	​	​	​	​
NET SALES	​	$	6,311,050	​	$	5,541,352	​	$	4,598,638
​	​	​	​	​	​	​	​	​	​
COST OF SALES	​		3,136,483	​		2,432,839	​		1,874,758
​	​	​	​	​	​	​	​	​	​
GROSS PROFIT	​		3,174,567	​		3,108,513	​		2,723,880
​	​	​	​	​	​	​	​	​	​
OPERATING EXPENSES	​		1,589,846	​		1,311,046	​		1,090,727
​	​	​	​	​	​	​	​	​	​
OPERATING INCOME	​		1,584,721	​		1,797,467	​		1,633,153
​	​	​	​	​	​	​	​	​	​
OTHER (EXPENSE) INCOME , NET	​		(12,757)	​		3,952	​		(6,996)
​	​	​	​	​	​	​	​	​	​
INCOME BEFORE PROVISION FOR INCOME TAXES	​		1,571,964	​		1,801,419	​		1,626,157
​	​	​	​	​	​	​	​	​	​
PROVISION FOR INCOME TAXES	​	​	380,340	​	​	423,944	​	​	216,563
​	​	​	​	​	​	​	​	​	​
NET INCOME	​	$	1,191,624	​	$	1,377,475	​	$	1,409,594
​	​	​	​	​	​	​	​	​	​
NET INCOME PER COMMON SHARE:	​	​	​	​	​	​	​	​	​
Basic	​	$	2.26	​	$	2.61	​	$	2.66
Diluted	​	$	2.23	​	$	2.57	​	$	2.64
​	​	​	​	​	​	​	​	​	​
WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:	​	​	​	​	​	​	​	​	​
Basic	​		526,779	​		528,763	​		529,639
Diluted	​		533,221	​		535,639	​		534,807

​

See accompanying notes to consolidated financial statements.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Net income, as reported	​	$	1,191,624	​	$	1,377,475	​	$	1,409,594
Other comprehensive income (loss):	​	​	​	​	​	​	​	​	​
Change in foreign currency translation adjustment, net of tax	​		(85,021)	​		(71,158)	​		35,531
Available-for-sale investments:	​	​	​	​	​	​	​	​	​
Change in net unrealized losses	​		(4,887)	​		(1,041)	​		(110)
Reclassification adjustment for net gains included in net income	​		—	​		—	​		—
Net change in available-for-sale investments	​		(4,887)	​		(1,041)	​		(110)
Other comprehensive income (loss)	​		(89,908)	​		(72,199)	​		35,421
Comprehensive income	​	$	1,101,716	​	$	1,305,276	​	$	1,445,015

​

See accompanying notes to consolidated financial statements.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	Accumulated		​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	Other		​	​	​	​	​	​	Total
​	​	Common Stock				​	Additional		​	Retained		​	Comprehensive		​	Treasury Stock				​	Stockholders’
​		Shares		Amount			Paid-in Capital			Earnings			(Loss) Income			Shares		Amount			Equity
Balance, January 1, 2020		636,460		$	3,182		$	4,397,511		$	5,022,480		$	(32,387)		(99,762)		$	(5,219,505)		$	4,171,281
Stock-based compensation		—	​	​	—	​	​	67,546	​	​	—	​	​	—	​	—	​	​	—	​	​	67,546
Exercise of stock options		2,202	​	​	11	​	​	72,925	​	​	—	​	​	—	​	—	​	​	—	​	​	72,936
Unrealized loss on available-for-sale securities		—	​		—	​		—	​		—	​		(110)		—	​		—	​		(110)
Repurchase of common stock		—	​	​	—	​	​	—	​	​	—	​	​	—	​	(10,803)	​	​	(595,918)	​	​	(595,918)
Foreign currency translation		—	​	​	—	​	​	—	​	​	—	​	​	35,531	​	—	​	​	—	​	​	35,531
Net income		—	​	​	—	​	​	—	​	​	1,409,594	​	​	—	​	—	​	​	—	​	​	1,409,594
Balance, December 31, 2020	​	638,662	​	$	3,193	​	$	4,537,982	​	$	6,432,074	​	$	3,034	​	(110,565)	​	$	(5,815,423)	​	$	5,160,860
Stock-based compensation		—	​	​	—	​	​	68,922	​	​	—	​	​	—	​	—	​	​	—	​	​	68,922
Exercise of stock options		1,381	​	​	7	​	​	45,716	​	​	—	​	​	—	​	—	​	​	—	​	​	45,723
Unrealized loss on available-for-sale securities		—	​	​	—	​	​	—	​	​	—	​	​	(1,041)	​	—	​	​	—	​	​	(1,041)
Repurchase of common stock		—	​	​	—	​	​	—	​	​	—	​	​	—	​	(155)	​	​	(13,830)	​	​	(13,830)
Foreign currency translation		—	​	​	—	​	​	—	​	​	—	​	​	(71,158)	​	—	​	​	—	​	​	(71,158)
Net income		—	​	​	—	​	​	—	​	​	1,377,475	​	​	—	​	—	​	​	—	​	​	1,377,475
Balance, December 31, 2021		640,043		$	3,200		$	4,652,620		$	7,809,549		$	(69,165)	​	(110,720)		$	(5,829,253)		$	6,566,951
Stock-based compensation	​	—	​	​	—	​	​	63,387	​	​	—	​	​	—	​	—	​	​	—	​	​	63,387
Exercise of stock options	​	1,801	​	​	9	​	​	64,006	​	​	—	​	​	—	​	—	​	​	—	​	​	64,015
Unrealized loss on available-for-sale securities	​	—	​	​	—	​	​	—	​	​	—	​	​	(4,887)	​	—	​	​	—	​	​	(4,887)
Repurchase of common stock	​	—	​	​	—	​	​	—	​	​	—	​	​	—	​	(8,824)	​	​	(771,028)	​	​	(771,028)
Foreign currency translation	​	—	​	​	—	​	​	—	​	​	—	​	​	(85,021)	​	—	​	​	—	​	​	(85,021)
Net income		—	​	​	—	​	​	—	​	​	1,191,624	​	​	—	​	—	​	​	—	​	​	1,191,624
Balance, December 31, 2022		641,844	​	$	3,209	​	$	4,780,013	​	$	9,001,173	​	$	(159,073)	​	(119,544)	​	$	(6,600,281)	​	$	7,025,041

​

See accompanying notes to consolidated financial statements.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:	​	​	​	​	​	​	​	​	​
Net income	​	$	1,191,624	​	$	1,377,475	​	$	1,409,594
Adjustments to reconcile net income to net cash provided by operating activities:	​	​	​	​	​	​	​	​	​
Depreciation and amortization	​		61,241	​		50,155	​		57,030
Non-cash lease expense	​	​	7,337	​	​	4,107	​	​	3,943
Gain on disposal of property and equipment	​		(185)	​	​	(1,013)	​	​	(350)
Loss on impairment of intangibles	​	​	2,200	​	​	—	​	​	8,700
Stock-based compensation	​		64,109	​		70,483	​		70,289
Deferred income taxes	​		48,182	​	​	16,429	​	​	(156,873)
Effect on cash of changes in operating assets and liabilities net of acquisition:	​	​	​	​	​	​	​	​	​
Accounts receivable	​		(128,981)	​		(254,228)	​		(119,672)
Inventories	​		(347,712)	​		(277,793)	​		30,304
Prepaid expenses and other assets	​		(38,268)	​		(29,341)	​		1,024
Prepaid income taxes	​		(4,439)	​		(10,919)	​		5,516
Accounts payable	​		49,765	​		114,297	​		18,696
Accrued liabilities	​		(30,419)	​		71,586	​		26,113
Accrued promotional allowances	​		50,821	​		31,498	​		13,762
Accrued compensation	​		3,729	​		7,950	​		7,501
Income taxes payable	​		(16,860)	​		7,221	​		10,422
Other liabilities	​	​	(4,540)	​	​	492	​	​	(356)
Deferred revenue	​		(19,905)	​		(22,658)	​		(21,480)
Net cash provided by operating activities	​		887,699	​		1,155,741	​		1,364,163
​	​	​	​	​	​	​	​	​	​
CASH FLOWS FROM INVESTING ACTIVITIES:	​	​	​	​	​	​	​	​	​
Sales of available-for-sale investments	​		2,252,355	​		1,488,599	​		920,196
Purchases of available-for-sale investments	​	​	(1,847,067)	​	​	(2,413,143)	​	​	(1,299,981)
Acquisition of CANarchy, net of cash	​		(329,472)	​		—	​		—
Purchases of property and equipment	​		(188,726)	​		(43,868)	​		(48,722)
Proceeds from sale of property and equipment	​		1,313	​		1,328	​		993
Additions to intangibles	​		(23,427)	​		(13,585)	​		(18,550)
Increase in other assets	​		(26,343)	​		(11,353)	​		(26,423)
Net cash used in investing activities	​		(161,367)	​		(992,022)	​		(472,487)
​	​	​	​	​	​	​	​	​	​
CASH FLOWS FROM FINANCING ACTIVITIES:	​	​	​	​	​	​	​	​	​
Borrowings (payments) on debt	​		75	​		2,928	​		(3,086)
Issuance of common stock	​		64,015	​		45,723	​		72,936
Purchases of common stock held in treasury	​		(771,028)	​		(13,830)	​		(595,918)
Net cash (used in) provided by financing activities	​		(706,938)	​		34,821	​		(526,068)
​	​	​	​	​	​	​	​	​	​
Effect of exchange rate changes on cash and cash equivalents	​		(38,715)	​		(52,491)	​		16,848
​	​	​	​	​	​	​	​	​	​
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	​		(19,321)	​		146,049	​		382,456
CASH AND CASH EQUIVALENTS, beginning of year	​		1,326,462	​		1,180,413	​		797,957
CASH AND CASH EQUIVALENTS, end of year	​	$	1,307,141	​	$	1,326,462	​	$	1,180,413
​	​	​	​	​	​	​	​	​	​
SUPPLEMENTAL INFORMATION:	​	​	​	​	​	​	​	​	​
Cash paid during the year for:	​	​	​	​	​	​	​	​	​
Interest	​	$	431	​	$	134	​	$	44
Income taxes	​	$	379,998	​	$	420,521	​	$	355,509

​

See accompanying notes to consolidated financial statements.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

​

SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS:

​

Included in accrued liabilities as of December 31, 2022, 2021 and 2020 were $9.4 million, $14.0 million and $9.8 million, respectively, related to net additions to other intangible assets.

Accounts payable included equipment purchases of $2.9 million, $0.6 million and $0.6 million as of December 31, 2022, 2021 and 2020, respectively.

Accounts receivable included sales of available-for-sale short-term investments of $15.2 million as of December 31, 2022. No sales of available-for-sale investments were included in accounts receivable as of December 31, 2021 and 2020.

See accompanying notes to consolidated financial statements.

​

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization – Monster Beverage Corporation (the “Company”) was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries.

Nature of Operations – The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, Monster Hydro® Energy Water, Monster Hydro® Super Sport, Monster Super Fuel®, Monster Dragon Tea®, Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel, Reign Storm®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Live+®, Predator®, Fury® and True North®.

The Company also develops, markets, sells and distributes craft beers, flavored malt beverages (“FMBs”) and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale’s Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands.

Basis of Presentation – The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and include the accounts of the Company and its consolidated subsidiaries.

Amounts previously classified in certain property and equipment balances totaling $20.1 million as of December 31, 2021 have been reclassified to assets under construction to conform to presentation as of December 31, 2022. See Note 9.

Principles of Consolidation – The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation.

Business Combinations – Business acquisitions are accounted for in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805 “Business Combinations”. FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree’s results are included in the Company’s consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination.

Cash and Cash Equivalents – The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Investments – The Company’s investments in debt securities are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive income (loss) as a separate component of stockholders’ equity. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. Under FASB ASC 326-30-35, a security is considered to be impaired if the fair value of the security is less than its amortized cost basis. Where the decline in fair value below the amortized cost basis has resulted from a credit loss, the Company will record an impairment relating to credit losses through an allowance for credit losses. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income (loss), net of applicable taxes. The Company evaluates whether the decline in fair value of its investments has resulted from credit loss or other factors at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer’s financial condition and, if applicable, information on the guarantors’ financial condition. Factors considered in determining whether an impairment has resulted from credit loss or other factors include the length of time and extent to which the investment’s fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company’s intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.

Accounts Receivable – The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer’s inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company’s recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its consolidated balance sheets, the Company has presented accounts receivable, net of promotional allowances, only for those customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis.

Inventories – Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value).

Property and Equipment – Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, real property and vehicles is based on their estimated useful lives (three to thirty years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.

Goodwill – The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit’s fair value. For the years ended December 31, 2022, 2021 and 2020 there were no goodwill impairments recorded and there are no accumulated impairment balances.

Other Intangibles – Other Intangibles are comprised primarily of trademarks that represent the Company’s exclusive ownership of the Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Tea®, Unleash the Beast!®, Monster Rehab®, Java Monster®, Muscle Monster®, Espresso Monster®, Punch Monster®, Juice Monster®, Monster Hydro®, Monster HydroSport Super Fuel®, Monster Super Fuel®, Reign Total Body Fuel®, Reign Inferno®, Predator®, Fury®, True North®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin®, Dale’s®, Mama’s Little Yella Pils®, Hop Rising® and The Beast UnleashedTM trademarks, all used in connection with the manufacture, sale and distribution of beverages. The Company also owns a number of other trademarks, flavors and formulas in the United States, as well as in a number of countries around the world. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the years ended December 31, 2022 and 2020, impairment charges of $2.2 million and $8.7 million, respectively, were recorded to indefinite-lived intangibles. For the year ended December 31, 2021, no impairments were recorded.

We presently have more than 17,500 registered trademarks and pending applications in various countries worldwide, and we apply for new trademarks on an ongoing basis. We regard our trademarks, service marks, copyrights, domain names, trade dress and other intellectual property as very important to our business. We consider Monster®, Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Iced Tea®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Hydro® (stylized), Monster HydroSport Super Fuel®, Hydro Super Sport®, Monster Super Fuel®, Espresso Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, True North®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale’s Pale Ale®, Dallas Blonde®, Wild Basin®, Dale’s®, Mama’s Little Yella Pils®, Hop Rising® and The Beast UnleashedTM to be our core trademarks. We also own the intellectual property of our most important flavors for certain of our Monster Energy® Brand energy drinks in perpetuity.

Leases – See Note 4.

Long-Lived Assets – Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

using the present value of the future cash flows discounted at a rate commensurate with management’s estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management’s best estimate of assumptions concerning expected future conditions. For the years ended December 31, 2022, 2021 and 2020, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.

Foreign Currency Translation and Transactions – The accounts of the Company’s foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders’ equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders’ equity. During the years ended December 31, 2022, 2021 and 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries non-functional currency denominated assets and liabilities. All foreign currency exchange contracts outstanding as of December 31, 2022 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.

The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2022, 2021 and 2020, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($37.9) million, $0.3 million and ($11.2) million, respectively, and have been recorded in other (expense) income, net, in the accompanying consolidated statements of income.

Revenue Recognition – See Note 3.

Cost of Sales – Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company’s finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.

Operating Expenses – Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company’s prior distributors, depreciation and other general and administrative costs.

Freight-Out Costs – For the years ended December 31, 2022, 2021 and 2020, freight-out costs amounted to $249.2 million, $213.9 million and $134.1 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Advertising and Promotional Expenses – The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company’s promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to the periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $460.7 million, $417.6 million and $345.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income.

Income Taxes – The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.

The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company’s evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.

Stock-Based Compensation – The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee’s performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16.

Net Income Per Common Share – In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Concentration of Risk – Certain of the Company’s products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company’s revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.

The Coca-Cola Company (“TCCC”), through certain wholly-owned subsidiaries (the “TCCC Subsidiaries”), accounted for approximately 2% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020.

Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 10% and 11% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Coca-Cola Europacific Partners accounted for approximately 13%, 12% and 10% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Credit Risk – The Company sells its products nationally and internationally, primarily to bottlers and full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management’s expectations.

Fair Value of Financial Instruments – The carrying value of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments.

Use of Estimates – The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements – In October 2021, the FASB issued Accounting Standards Update (“ASU”) No. 2021-08, “Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)”. ASU No. 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company adopted ASU No. 2021-08 on January 1, 2023, which did not have a material impact on the Company’s financial position, results of operations and liquidity.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

2. ACQUISITIONS

On February 17, 2022, the Company completed its acquisition of CANarchy Craft Brewery Collective LLC (“CANarchy”), a craft beer and hard seltzer company, for $329.5 million in cash (net of cash acquired), after certain working capital adjustments (the “CANarchy Transaction”). The CANarchy Transaction facilitates the Company’s entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale’s Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, the Wasatch® family of brands including Apricot Hefeweizen, as well as certain other brands (collectively the “CANarchy Brands”) to the Company’s beverage portfolio. The transaction did not include CANarchy’s stand-alone restaurants. The Company’s organizational structure for its existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team.

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

The following table summarizes the final fair value allocations of the CANarchy Transaction:

​

​	​	​	​	​	​	​
​	​	Identifiable		​	​	​
​	​	Assets Acquired		​	​	​
​	​	and Liabilities		​	​	Consideration
​		Assumed			Transferred
Intangibles - trademarks (non-amortizing)	​	$	89,500	​	$	—
Intangibles - customer relationships (amortizing)		​	54,500		​	—
Intangibles - permits (non-amortizing)		​	6,000		​	—
Property and equipment		​	81,285		​	—
Inventory		​	18,300		​	—
Right-of-use assets		​	12,836		​	—
Operating lease liabilities		​	(12,836)		​	—
Working capital (excluding inventory)		​	(5,640)		​	—
Other		​	(770)		​	—
Goodwill		​	86,298		​	—
Cash		​	3,248		​	332,721
Total	​	$	332,721	​	$	332,721

​

During the fourth quarter of 2022, the Company identified a measurement period adjustment to the Company’s previous purchase accounting estimates for the CANarchy Transaction. The adjustments to the estimated values previously disclosed, resulted from the completed assessment of certain trademarks. As a result, Intangibles – trademarks (non-amortizing) decreased and Goodwill increased by $5.0 million, respectively, from amounts previously reported.

The Company determined the fair values as follows:

●Trademarks – relief-from-royalty method of the income approach

●Customer relationships – distributor method of the income approach

●Permits – with-and-without method of the income approach

●Property and equipment – cost approach

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

●Inventory – comparative sales method and replacement cost method

The book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.

The Company has determined goodwill in accordance with ASC 805, which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date.

For tax purposes, the CANarchy Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the CANarchy assets, net, equal to the purchase price.

In accordance with Regulation S-X, pro forma unaudited condensed financial information for the CANarchy Transaction has not been provided as the impact of the transaction on the Company’s financial position, results of operations and liquidity was not material.

On May 5, 2022, the Company acquired certain real property and equipment in Norwalk, California for a purchase price of $62.5 million. The acquisition was treated as an asset acquisition for accounting purposes. The fair value allocations include $50.6 million for land, $10.0 million for building and $1.9 million for equipment. The Company intends to utilize the property as a manufacturing facility for certain of its products.

​

3. REVENUE RECOGNITION

Revenues are accounted for in accordance with ASC 606 “Revenue from Contracts with Consumers”. The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster_®_ Tour WaterTM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as the Company’s affordable energy brands, (iii) Alcohol Brands segment (“Alcohol Brands”), which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast UnleashedTM FMBs and (iv) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).

The Company’s Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors (“bottlers/distributors”). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

The Company’s Strategic Brands segment primarily generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The Company’s Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.

The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company’s bottlers/distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, control of the Company’s products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company’s finished goods. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2022 and 2021.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Distribution expenses to transport the Company’s products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company’s energy drink products, primarily include consideration given to the Company’s non-alcohol bottlers/distributors or retail customers including, but not limited to the following:

	●	discounts granted off list prices to support price promotions to end-consumers by retailers;

	●	reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;

	●	the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities;

	●	the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers;

	●	incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals;

	●	discounted or free products;

	●	contractual fees given to the Company’s bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors’ sales territories; and

	●	commissions to TCCC based on the Company’s sales to wholly-owned subsidiaries of TCCC (the “TCCC Subsidiaries”) and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the “TCCC Related Parties”).

The Company’s promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, typically ranging from one week to one year. The Company’s promotional and other allowances for its energy drink products are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company’s anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.

Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.

The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company’s trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

Disaggregation of Revenue

The following table disaggregates the Company’s revenue by geographical markets and reportable segments:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31, 2022
​	​	​	​	​	​	​	​	​	​	​	Latin		​	​	​
​	​	​	​	​	​	​	​	​	​	​	America		​	​	​
​	​	U.S. and		​	​	​	​	​	​	​	and		​	​	​
Net Sales		Canada			EMEA1			Asia Pacific			Caribbean			Total
Monster Energy® Drinks	​	$	3,806,351	​	$	1,105,302	​	$	426,800	​	$	494,758	​	$	5,833,211
Strategic Brands	​		184,844	​		123,440	​		29,386	​		15,820	​		353,490
Alcohol Brands2	​	​	101,405	​	​	—	​	​	—	​	​	—	​	​	101,405
Other	​		22,944	​		—	​		—	​		—	​		22,944
Total Net Sales	​	$	4,115,544	​	$	1,228,742	​	$	456,186	​	$	510,578	​	$	6,311,050

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31, 2021
​	​	​	​	​	​	​	​	​	​	​	Latin		​	​	​
​	​	​	​	​	​	​	​	​	​	​	America		​	​	​
​	​	U.S. and		​	​	​	​	​	​	​	and		​	​	​
Net Sales		Canada			EMEA1			Asia Pacific			Caribbean			Total
Monster Energy® Drinks	​	$	3,455,704	​	$	1,004,005	​	$	446,023	​	$	314,941	​	$	5,220,673
Strategic Brands	​		158,390	​		99,423	​		26,811	​		10,138	​		294,762
Other	​		25,917	​		—	​		—	​		—	​		25,917
Total Net Sales	​	$	3,640,011	​	$	1,103,428	​	$	472,834	​	$	325,079	​	$	5,541,352

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31, 2020
​		​	​		​	​		​	​		Latin			​	​
​	​	​	​	​	​	​	​	​	​	​	America		​		​
​	​	U.S. and		​	​	​	​	​	​	​	and		​		​
Net Sales	​	Canada		​	EMEA1		​	Asia Pacific		​	Caribbean		​	Total
Monster Energy® Drinks	​	$	3,020,667	​	$	675,045	​	$	400,317	​	$	209,217	​	$	4,305,246
Strategic Brands	​	​	166,861	​	​	70,782	​	​	23,475	​	​	5,236	​	​	266,354
Other	​	​	27,038	​	​	—	​	​	—	​	​	—	​	​	27,038
Total Net Sales	​	$	3,214,566	​	$	745,827	​	$	423,792	​	$	214,453	​	$	4,598,638

​

1_Europe, Middle East and Africa (“EMEA”)_

2_Effectively from February 17, 2022 to December 31, 2022_

Contract Liabilities

Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2022 and 2021, the Company had $267.1 million and $285.8 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company’s accompanying consolidated balance sheet. During the years ended December 31, 2022, 2021 and 2020, $40.0 million, $41.5 million and $42.1 million, respectively, of deferred revenue, was recognized in net sales. See Note 11.

​

4. LEASES

The Company leases identified assets comprised of real estate and equipment. Real estate leases consist primarily of office and warehouse space and equipment leases consist of vehicles and warehouse equipment. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company’s assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component’s relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately.

Leases are classified as either finance leases or operating leases based on criteria in ASC 842, “Leases”. The Company’s operating leases are comprised of real estate and warehouse equipment, and the Company’s finance leases are comprised of vehicles.

Right-of-use (“ROU”) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company’s leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Certain of the Company’s real estate leases contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at the lease

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

commencement date. Additional payments based on the change in an index or rate, or payments based on a change in the Company’s portion of real estate taxes and insurance, are recorded as a period expense when incurred.

Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statement of income. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset’s estimated useful life and is included in operating expenses in the consolidated statement of income. Interest expense on finance leases is calculated using the amortized cost basis and is included in other (expense) income, net in the consolidated statement of income.

The Company’s leases have remaining lease terms of less than one year to 11 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less.

The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows:

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Operating lease cost		$	8,641	​	$	4,614		$	4,637
​	​	​	​	​	​	​	​	​	​
Short-term lease cost	​	​	3,705	​		5,218	​		3,408
​	​	​	​	​	​	​	​	​	​
Variable lease cost	​	​	773	​		710	​		719
​	​	​	​	​	​	​	​	​	​
Finance leases:	​	​	​	​		​	​		​
Amortization of ROU assets	​	​	545	​		546	​		626
Interest on lease liabilities	​	​	24	​		19	​		39
Finance lease cost	​	​	569	​		565	​		665
​	​	​	​	​	​	​	​	​	​
Total lease cost	​	$	13,688	​	$	11,107	​	$	9,429

​

Supplemental cash flow information for the years ended December 31, 2022, 2021 and 2020 were as follows:

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Cash paid for amounts included in the measurement of lease liabilities:	​	​		​	​		​	​
Operating cash flows from operating leases	​	$	8,164	​	$	4,123	​	$	3,982
Operating cash flows from finance leases	​		24	​		19	​		39
Financing cash flows from finance leases	​		2,091	​		2,698	​		3,086
​	​	​	​	​	​	​	​	​	​
ROU assets obtained in exchange for lease obligations:	​		​	​		​	​		​
Finance leases	​		1,897	​		2,878	​		2,417
Operating leases	​		22,962	​		4,313	​		3,003

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

ROU assets for operating and finance leases recognized in the accompanying consolidated balance sheets were comprised of the following at:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2022
​		Real Estate			Equipment			Total			Balance Sheet Location
Operating leases	​	$	37,682	​	$	330	​	$	38,012		Other Assets
Finance leases	​		—	​		1,598	​		1,598		Property and Equipment, net

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2021
​		Real Estate			Equipment			Total			Balance Sheet Location
Operating leases	​	$	22,518	​	$	639	​	$	23,157		Other Assets
Finance leases	​		—	​		2,646	​		2,646		Property and Equipment, net

​

Operating and finance lease liabilities recognized in the consolidated balance sheets were as follows at:

​

​	​	​	​	​	​	​
​	​	December 31, 2022
​		Operating Leases			Finance Leases
Accrued liabilities	​	$	7,747	​	$	757
Other liabilities	​		29,586	​		41
Total	​	$	37,333	​	$	798

​

​	​	​	​	​	​	​
​	​	December 31, 2021
​		Operating Leases			Finance Leases
Accrued liabilities	​	$	3,990	​	$	960
Other liabilities	​		17,389	​		41
Total	​	$	21,379	​	$	1,001

​

The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows at:

​

​	​	​	​	​	​
​	​	December 31, 2022			​
​		Operating Leases		Finance Leases
Weighted-average remaining lease term (years)		6.7		0.8	​
Weighted-average discount rate		3.4	%	3.6	%

​

​	​	​	​	​	​
​	​	December 31, 2021			​
​		Operating Leases		Finance Leases	​
Weighted-average remaining lease term (years)		8.1	​	0.7	​
Weighted-average discount rate		3.5	%	1.3	%

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The following table reconciles the undiscounted future lease payments for operating and finance leases to the operating and finance leases recorded in the consolidated balance sheet at December 31, 2022:

​

​	​	​	​	​	​	​
​		Undiscounted Future Lease Payments
​	​	Operating Leases			Finance Leases
2023	​	$	8,854	​	$	769
2024	​		7,324	​		23
2025	​		5,242	​		17
2026	​		4,182	​		2
2027	​	​	4,060	​	​	—
2028 and thereafter	​		12,349	​		—
Total lease payments	​		42,011	​		811
Less imputed interest	​		(4,678)	​		(13)
Total	​	$	37,333	​	$	798

​

As of December 31, 2022, the Company had an additional operating lease for office and warehouse space that had not yet commenced of $1.1 million. This operating lease will commence in 2023 with a term of four years. As of December 31, 2022, the Company did not have any significant additional finance leases that had not yet commenced.

​

5. INVESTMENTS

The following table summarizes the Company’s investments at:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Continuous		​	Continuous
​	​	​	​	​	Gross		​	Gross		​	​	​	​	Unrealized		​	Unrealized
​	​	​	​	​	Unrealized		​	Unrealized		​	​	​	​	Loss Position		​	Loss Position
​	​	Amortized		​	Holding		​	Holding		​	Fair		​	less than 12		​	greater than
December 31, 2022		Cost			Gains			Losses			Value			Months			12 Months
Available-for-sale	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Short-term:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial paper	​	$	197,712	​	$	1	​	$	4	​	$	197,709	​	$	4	​	$	—
Certificates of deposit	​	​	10,078	​	​	—	​	​	—	​	​	10,078	​	​	—	​	​	—
Municipal securities	​		211,791	​	​	60	​	​	612	​	​	211,239	​	​	612	​	​	—
U.S. government agency securities	​		109,697	​		3	​		715	​		108,985	​		715	​		—
U.S. treasuries	​	​	838,825	​		17	​		4,539	​		834,303	​		4,539	​		—
Long-term:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government agency securities	​	​	2,016	​	​	—	​	​	3	​	​	2,013	​	​	3	​	​	—
U.S. treasuries	​	​	53,215	​	​	20	​	​	71	​	​	53,164	​	​	71	​	​	—
Variable rate demand notes	​	​	6,266	​	​	—	​	​	—	​	​	6,266	​	​	—	​	​	—
Total	​	$	1,429,600	​	$	101	​	$	5,944	​	$	1,423,757	​	$	5,944	​	$	—

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​	​	Continuous		​	Continuous
​	​	​	​	​	Gross		​	Gross		​	​	​	​	Unrealized		​	Unrealized
​	​	​	​	​	Unrealized		​	Unrealized		​	​	​	​	Loss Position		​	Loss Position
​	​	Amortized		​	Holding		​	Holding		​	Fair		​	less than 12		​	greater than
December 31, 2021		Cost			Gains			Losses			Value			Months			12 Months
Available-for-sale	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Short-term:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Commercial paper	​	$	334,077	​	$	—	​	$	—	​	$	334,077	​	$	—	​	$	—
Certificates of deposit	​	​	44,502	​	​	—	​	​	—	​	​	44,502	​	​	—	​	​	—
Municipal securities	​		666	​		—	​		—	​		666	​		—	​		—
U.S. government agency securities	​		62,687	​		—	​		26	​		62,661	​		26	​		—
U.S. treasuries	​	​	1,308,536	​	​	2	​	​	717	​	​	1,307,821	​	​	717	​	​	—
Long-term:	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
U.S. government agency securities	​	​	12,500	​	​	—	​	​	24	​	​	12,476	​	​	24	​	​	—
U.S. treasuries	​	​	87,133	​	​	—	​	​	190	​	​	86,943	​	​	190	​	​	—
Total	​	$	1,850,101	​	$	2	​	$	957	​	$	1,849,146	​	$	957	​	$	—

​

During the years ended December 31, 2022, 2021 and 2020, realized gains or losses recognized on the sale of investments were not significant.

The Company’s investments at December 31, 2022 and 2021 carried investment grade credit ratings. Variable rate demand notes (“VRDNs”) are floating rate municipal bonds with embedded put options that allow the bondholder to sell the security at par plus accrued interest. All of the put options are secured by a pledged liquidity source. While they are classified as marketable investment securities, the put option allows the VRDNs to be liquidated at par on a same day, or more generally, on a seven-day settlement basis.

The following table summarizes the underlying contractual maturities of the Company’s investments at:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	December 31, 2022					​	December 31, 2021
​		Amortized Cost			Fair Value			Amortized Cost			Fair Value
Less than 1 year:	​	​	​	​	​	​	​	​	​	​	​	​
Commercial paper	​	$	197,712	​	$	197,710		$	334,077	​	$	334,077
Municipal securities	​		211,791	​		211,239			666	​		666
U.S. government agency securities	​		109,697	​		108,985			62,687	​		62,661
Certificates of deposit	​		10,078	​		10,078			44,502	​		44,502
U.S. treasuries	​	​	838,825	​	​	834,302	​	​	1,308,536	​	​	1,307,821
Due 1 - 10 years:	​	​	​	​	​	​	​	​	​	​	​	​
U.S. treasuries	​	​	53,215	​	​	53,164	​	​	87,133	​	​	86,943
U.S. government agency securities	​		2,016	​		2,013			12,500	​		12,476
Variable rate demand notes	​	​	4,862	​	​	4,862	​	​	—	​	​	—
Due 11 - 20 years:	​	​	​	​	​	​	​	​	​	​	​	​
Variable rate demand notes	​		1,404	​		1,404			—	​		—
Total	​	$	1,429,600	​	$	1,423,757		$	1,850,101	​	$	1,849,146

​

​

6. FAIR VALUE OF CERTAIN FINANCIAL ASSETS AND LIABILITIES

ASC 820, “Fair Value Measurement”, provides a framework for measuring fair value and requires disclosures regarding fair value measurements. ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 also

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs, where available. The three levels of inputs required by the standard that the Company uses to measure fair value are summarized below.

	●	Level 1: Quoted prices in active markets for identical assets or liabilities.

​

	●	Level 2: Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

​

	●	Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

​

ASC 820 requires the use of observable market inputs (quoted market prices) when measuring fair value and requires a Level 1 quoted price to be used to measure fair value whenever possible.

The following tables present the fair value of Company’s financial assets and liabilities that are recorded at fair value on a recurring basis, segregated among the appropriate levels within the fair value hierarchy at:

​

​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2022		Level 1			Level 2			Level 3			Total
Cash	​	$	1,132,509	​	$	—	​	$	—	​	$	1,132,509
Money market funds	​		121,444	​		—	​		—	​		121,444
Certificates of deposit	​	​	—	​	​	10,078	​	​	—	​	​	10,078
Commercial paper	​		—	​		225,067	​		—	​		225,067
Variable rate demand notes	​	​	—	​	​	6,266	​	​	—	​	​	6,266
Municipal securities	​		—	​		213,798	​		—	​		213,798
U.S. government agency securities	​		—	​		113,357	​		—	​		113,357
U.S. treasuries	​	​	—	​	​	908,379	​	​	—	​	​	908,379
Foreign currency derivatives	​		—	​		(3,733)	​		—	​		(3,733)
Total	​	$	1,253,953	​	$	1,473,212	​	$	—	​	$	2,727,165
​	​	​	​	​	​	​	​	​	​	​	​	​
Amounts included in:	​	​	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	1,253,953	​	$	53,188	​	$	—	​	$	1,307,141
Short-term investments	​		—	​		1,362,314	​		—	​		1,362,314
Accounts receivable, net	​		—	​		965	​		—	​		965
Investments	​		—	​		61,443	​		—	​		61,443
Accrued liabilities	​		—	​		(4,698)	​		—	​		(4,698)
Total	​	$	1,253,953	​	$	1,473,212	​	$	—	​	$	2,727,165

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
December 31, 2021		Level 1			Level 2			Level 3			Total
Cash	​	$	749,089	​	$	—	​	$	—	​	$	749,089
Money market funds	​		440,826	​		—	​		—	​		440,826
Certificates of deposit	​	​	—	​	​	44,502	​	​	—	​	​	44,502
Commercial paper	​		—	​		335,477	​		—	​		335,477
Municipal securities	​		—	​		2,428	​		—	​		2,428
U.S. government agency securities	​		—	​		75,137	​		—	​		75,137
U.S. treasuries	​	​	—	​	​	1,528,149	​	​	—	​	​	1,528,149
Foreign currency derivatives	​		—	​		(278)	​		—	​		(278)
Total	​	$	1,189,915	​	$	1,985,415	​	$	—	​	$	3,175,330
​	​	​	​	​	​	​	​	​	​	​	​	​
Amounts included in:	​	​	​	​	​	​	​	​	​	​	​	​
Cash and cash equivalents	​	$	1,189,915	​	$	136,547	​	$	—	​	$	1,326,462
Short-term investments	​		—	​		1,749,727	​		—	​		1,749,727
Accounts receivable, net	​		—	​		654	​		—	​		654
Investments	​		—	​		99,419	​		—	​		99,419
Accrued liabilities	​		—	​		(932)	​		—	​		(932)
Total	​	$	1,189,915	​	$	1,985,415	​	$	—	​	$	3,175,330

​

All of the Company’s short-term and long-term investments are classified within Level 1 or Level 2 of the fair value hierarchy. The Company’s valuation of its Level 1 investments is based on quoted market prices in active markets for identical securities. The Company’s valuation of its Level 2 investments is based on other observable inputs, specifically a market approach which utilizes valuation models, pricing systems, mathematical tools and other relevant information for the same or similar securities. The Company’s valuation of its Level 2 foreign currency exchange contracts is based on quoted market prices of the same or similar instruments, adjusted for counterparty risk. There were no transfers between Level 1 and Level 2 measurements during the years ended December 31, 2022 and 2021, and there were no changes in the Company’s valuation techniques.

​

7. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations. During the years ended December 31, 2022, 2021 and 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries’ non-functional currency denominated assets and liabilities. All foreign currency exchange contracts of the Company that were outstanding as of December 31, 2022 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.

The Company has not designated its foreign currency exchange contracts as hedge transactions under ASC 815, “Derivatives and Hedging”. Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The notional amount and fair value of all outstanding foreign currency derivative instruments in the consolidated balance sheets consist of the following at:

​

​	​	​	​	​	​	​	​	​
December 31, 2022
Derivatives not designated as	​	​	​	​	​	​	​	​
hedging instruments under	​	Notional		​	Fair		​	​
ASC 815		Amount			Value			Balance Sheet Location
Assets:	​	​	​	​	​	​	​	​
Foreign currency exchange contracts:	​	​	​	​	​	​	​	​
Receive SGD/pay USD	​	$	15,883	​	$	398		Accounts receivable, net
Receive CAD/pay USD	​	​	34,467	​	​	106	​	Accounts receivable, net
Receive USD/pay MXN	​		12,430	​		88		Accounts receivable, net
Receive USD/pay GBP	​	​	43,551	​	​	118	​	Accounts receivable, net
Receive RSD/pay USD	​	​	3,513	​	​	112	​	Accounts receivable, net
Receive GBP/pay USD	​	​	34,716	​	​	100	​	Accounts receivable, net
Receive GBP/pay USD	​	​	4,321	​	​	31	​	Accounts receivable, net
Receive USD/pay COP	​	​	11,570	​	​	12	​	Accounts receivable, net
​	​	​	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​	​	​
Foreign currency exchange contracts:	​	​	​	​	​	​	​	​
Receive USD/pay CLP	​	$	43,071	​	$	(2,549)		Accrued liabilities
Receive USD/pay EUR	​	​	40,592	​		(1,377)	​	Accrued liabilities
Receive USD/pay CNY	​	​	12,460	​		(362)		Accrued liabilities
Receive USD/pay EUR	​	​	34,714	​	​	(295)	​	Accrued liabilities
Receive USD/pay NZD	​	​	4,093	​		(91)		Accrued liabilities
Receive USD/pay AUD	​	​	1,271	​		(23)		Accrued liabilities
Receive USD/pay ZAR	​	​	3,124	​		(1)		Accrued liabilities

​

​	​	​	​	​	​	​	​	​
December 31, 2021
Derivatives not designated as	​	​	​	​	​	​	​	​
hedging instruments under	​	Notional		​	Fair		​	​
ASC 815		Amount			Value			Balance Sheet Location
Assets:	​	​	​	​	​	​	​	​
Foreign currency exchange contracts:	​	​	​	​	​	​	​	​
Receive SGD/pay USD	​	$	16,544	​	$	297		Accounts receivable, net
Receive USD/pay COP	​	​	9,754	​	​	296	​	Accounts receivable, net
Receive RSD/pay USD	​		9,837	​		46		Accounts receivable, net
Receive USD/pay RUB	​	​	7,175	​	​	15	​	Accounts receivable, net
​	​	​	​	​	​	​	​	​
Liabilities:	​	​	​	​	​	​	​	​
Foreign currency exchange contracts:	​	​	​	​	​	​	​	​
Receive USD/pay GBP	​	$	29,929	​	$	(666)		Accrued liabilities
Receive USD/pay AUD	​	​	2,602	​		(88)	​	Accrued liabilities
Receive USD/pay CNY	​	​	12,230	​	​	(74)	​	Accrued liabilities
Receive USD/pay NZD	​	​	2,693	​	​	(45)	​	Accrued liabilities
Receive USD/pay EUR	​	​	3,045	​	​	(29)	​	Accrued liabilities
Receive USD/pay ZAR	​	​	4,140	​		(21)		Accrued liabilities
Receive USD/pay DKK	​	​	1,461	​	​	(9)	​	Accrued liabilities

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The net loss on derivative instruments in the consolidated statements of income was as follows:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	Amount of loss
​	​	​	​	recognized in income on
​	​	​	​	derivatives
Derivatives not designated as	​	Location of loss	​	Year ended
hedging instruments under	​	recognized in income on	​	December 31,		​	December 31,		​	December 31,
ASC 815		derivatives		2022			2021			2020
Foreign currency exchange contracts		Other (expense) income, net		$	6,893		$	5,445		$	3,317

​

​

8. INVENTORIES

Inventories consist of the following at December 31:

​

​	​	​	​	​	​	​
​		2022			2021
Raw materials	​	$	467,392	​	$	349,865
Work in process	​	​	1,688	​	​	—
Finished goods	​		466,551	​		243,492
​	​	$	935,631	​	$	593,357

​

​

9. PROPERTY AND EQUIPMENT, Net

Property and equipment consist of the following at December 31:

​

​	​	​	​	​	​	​
​		2022			2021
Land	​	$	139,798	​	$	85,455
Leasehold improvements	​		31,327	​		11,795
Furniture and fixtures	​		9,286	​		8,274
Office and computer equipment	​		22,386	​		21,601
Computer software	​		5,906	​		7,409
Equipment	​		244,739	​		189,820
Buildings	​		163,885	​		148,971
Vehicles	​	​	49,175	​	​	45,088
Assets under construction	​		83,553	​		20,125
​	​		750,055	​		538,538
Less: accumulated depreciation and amortization	​		(233,158)	​		(224,785)
​	​	$	516,897	​	$	313,753

​

Total depreciation and amortization expense recorded was $53.7 million, $45.7 million and $49.3 million for the years ended December 31, 2022, 2021 and 2020, respectively. Assets under construction are not depreciated until in service date.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

10. GOODWILL AND OTHER INTANGIBLE ASSETS

The following is a roll-forward of goodwill for the years ended December 31, 2022 and 2021 by reportable segment:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Monster		​	​	​	​	​	​	​	​	​	​	​	​
​	​	Energy®		​	Strategic		​	Alcohol		​	​	​	​	​	​
​		Drinks			Brands			Brands			Other			Total
Balance at December 31, 2021	​	$	693,644	​	$	637,999	​	$	—	​	$	—	​	$	1,331,643
Acquisitions	​		—	​		—	​		86,298	​		—	​		86,298
Balance at December 31, 2022	​	$	693,644	​	$	637,999	​	$	86,298	​	$	—	​	$	1,417,941

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Monster		​	​	​	​	​	​	​	​	​	​	​	​
​	​	Energy®		​	Strategic		​	Alcohol		​	​	​	​	​	​
​		Drinks			Brands			Brands			Other			Total
Balance at December 31, 2020	​	$	693,644	​	$	637,999	​	$	—	​	$	—	​	$	1,331,643
Acquisitions	​		—	​		—	​		—	​		—	​		—
Balance at December 31, 2021	​	$	693,644	​	$	637,999	​	$	—	​	$	—	​	$	1,331,643

​

Intangible assets consist of the following at:

​

​	​	​	​	​	​	​
​		December 31,			December 31,
​		2022			2021
Amortizing intangibles	​	$	121,378	​	$	66,872
Accumulated amortization	​		(68,790)	​		(61,227)
​	​		52,588	​		5,645
Non-amortizing intangibles	​		1,167,822	​		1,066,741
​	​	$	1,220,410	​	$	1,072,386

​

Amortizing intangibles primarily consist of customer relationships. All amortizing intangibles have been assigned an estimated finite useful life and such intangibles are amortized on a straight-line basis over the number of years that approximate their respective useful lives, generally five to fifteen years. Total amortization expense recorded was $7.6 million, $4.4 million and $7.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. For the years ended December 31, 2022 and 2020, impairment charges of $2.2 million and $8.7 million, respectively, were recorded to non-amortizing intangibles. For the year ended December 31, 2021, no intangible impairments were recorded.

The following is the future estimated amortization expense related to amortizing intangibles as of December 31, 2022:

​

​	​	​	​
Year Ending December 31:		​	​
​	​	​	​
2023		$	4,745
2024	​	​	3,648
2025	​	​	3,647
2026	​	​	3,647
2027	​	​	3,647
2028 and thereafter	​	​	33,254
​	​	$	52,588

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

At December 31, 2022, non-amortizing intangibles primarily consist of indefinite-lived tradenames, flavors and formulas.

​

11. DISTRIBUTION AGREEMENTS

In accordance with ASC 420 “Exit or Disposal Cost Obligations”, the Company expenses distributor termination costs in the period in which the written notification of termination occurs. The Company incurred no termination costs for the year ended December 31, 2022. The Company incurred termination costs of $5.3 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively. Such termination costs have been expensed in full and are included in operating expenses in the consolidated statements of income for the years ended December 31, 2021 and 2020.

In the normal course of business, amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors, relating to the costs associated with terminating agreements with the Company’s prior distributors, are accounted for as deferred revenue and are recognized as revenue ratably over the anticipated life of the respective distribution agreement, generally 20 years. Revenue recognized was $21.4 million, $21.5 million and $21.4 million for the years ended December 31, 2022, 2021 and 2020, respectively.

​

12. DEBT

The Company entered into a credit facility with Comerica Bank (“Comerica”) consisting of a revolving line of credit, which was amended in April 2020, under which the Company may borrow up to $10.0 million of non-collateralized debt. The revolving line of credit is effective through June 1, 2025. Interest on borrowings under the line of credit is based on Comerica’s base (prime) rate minus 1.00% to 1.50%, or London Interbank Offered Rates plus an additional percentage of 1.25% to 1.75%, depending upon certain financial ratios maintained by the Company. The Company had no outstanding borrowings on this line of credit at December 31, 2022. Under this revolving line of credit, the Company may also issue standby Letters of Credit with an aggregate amount of up to $4.0 million. The fee on the standby Letters of Credit ranges from 1.00% to 1.50% depending upon certain financial ratios maintained by the Company. The Company had no outstanding standby Letters of Credit at December 31, 2022.

The Company has a credit facility with HSBC Bank (China) Company Limited, Shanghai Branch, of $15.0 million. At December 31, 2022, the interest rate on borrowings under the line of credit was 5.5%. As of December 31, 2022, $7.8 million was outstanding on this line of credit.

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

13. COMMITMENTS AND CONTINGENCIES

Contractual Obligations – The Company had the following contractual obligations related primarily to sponsorships and other marketing activities as of December 31, 2022:

​

​	​	​	​
Year Ending December 31:		​
​	​	​	​
2023		$	239,350
2024	​	​	51,162
2025	​	​	14,153
2026	​	​	9,586
2027	​	​	—
2028 and thereafter	​	​	—
​		$	314,251

​

Purchase Commitments – The Company had purchase commitments aggregating approximately $328.0 million at December 31, 2022, which represented commitments made by the Company and its subsidiaries to various suppliers of raw materials for the production of its products. These obligations vary in terms, but are generally satisfied within one year.

The Company purchases various raw material items, including, but not limited to, flavors, ingredients, supplement ingredients, containers, milk, glucose, sucralose and cream, from a limited number of suppliers. An interruption in supply from any of such resources could result in the Company’s inability to produce certain products for limited or possibly extended periods of time. The aggregate value of purchases from suppliers of such limited resources described above for the years ended December 31, 2022, 2021 and 2020 was $666.1 million, $698.0 million and $401.8 million, respectively.

Guarantees – The Company from time to time enters into certain types of contracts that contingently require the Company to indemnify parties against third-party claims. These contracts primarily relate to: (i) certain agreements with the Company’s officers, directors and employees under which the Company may be required to indemnify such persons for liabilities arising out of their employment relationship, (ii) certain distribution or purchase agreements under which the Company may have to indemnify the Company’s customers from any claim, liability or loss arising out of any actual or alleged injury or damages suffered in connection with the consumption or purchase of the Company’s products or the use of Company trademarks, and (iii) certain real estate leases, under which the Company may be required to indemnify property owners for liabilities and other claims arising from the Company’s use of the applicable premises. The terms of such obligations vary and typically, a maximum obligation is not explicitly stated. Generally, the Company believes that its insurance coverage is adequate to cover any resulting liabilities or claims.

Litigation – From time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company’s financial position or results of operations.

The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 2022 and 2021, no loss contingencies were included in the Company’s accompanying consolidated balance sheets.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

On September 29, 2022, a jury in the U.S. District Court for the Central District of California (the “District Court”) awarded Monster Energy Company (“MEC”) approximately $293 million in damages in its false advertising and trade secrets case against Vital Pharmaceuticals, Inc. (“VPX”), the maker of Bang Energy. The jury found VPX and its chief executive officer to have falsely advertised the “Super Creatine” ingredient of Bang Energy and to have acted willfully and deliberately in violating the federal Lanham Act. The jury also found that VPX stole trade secrets and interfered with MEC’s contracts over shelf space with certain key vendors. The parties are currently briefing post-verdict issues, including MEC’s motion for a permanent injunction relating to “Super Creatine” and request for enhanced and punitive damages.

In April 2022, MEC and Orange Bang, Inc. (“Orange Bang”) filed a joint motion in the District Court to confirm a final arbitration award against VPX that awarded MEC and Orange Bang $175.0 million and a 5% royalty on all future sales of VPX’s Bang Energy drink and other Bang-branded products as well as certain fees and costs. Pursuant to the terms of the agreement between MEC and Orange Bang, the award and future royalties will, after accounting for MEC’s expended fees and costs, be shared equally between MEC and Orange Bang. The arbitration arose from a settlement agreement that VPX entered into in 2010 with Orange Bang, a family-owned beverage business. Pursuant to the terms of that agreement, VPX is only permitted to use the Bang mark on “creatine-based” products or on Bang products that are marketed and sold only in the vitamin and dietary supplement sections of stores. On September 29, 2022, the District Court entered final judgment confirming the award. On October 28, 2022, VPX filed a notice of appeal of the District Court’s final judgment confirming the award.

On October 10, 2022, VPX, along with certain of its domestic subsidiaries and affiliates, filed for protection under Chapter 11 of the Bankruptcy Code in the Southern District of Florida. Due to such ongoing proceedings, VPX’s appeal of the District Court’s final judgment confirming the final arbitration award is stayed. While reserving all rights to appeal, VPX made its first royalty payment of $3.6 million on February 14, 2023, which is for sales of Bang Energy drink and other Bang-branded products from October 10, 2022 through December 31, 2022. This payment is subject to potential claw back if, among other things, the judgment and final arbitration award are overturned on appeal or VPX becomes administratively insolvent. In addition, per ASC 450 “Contingencies”, the Company will not recognize the September 2022 jury award or April 2022 arbitration award until the awards are realized or realizable. As of March 1, 2023, the proceedings have yet to progress to a stage where there is sufficient information for an accurate timeline of when the awards, including any royalty payments received, will be realized or realizable, if at all.

​

14. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows at December 31:

​

​	​	​	​	​	​	​
​		2022			2021
Accumulated net unrealized loss on available-for-sale securities		$	(5,843)		$	(956)
Foreign currency translation adjustments, net of tax	​	​	(153,230)	​	​	(68,209)
Total accumulated other comprehensive loss		$	(159,073)		$	(69,165)

​

​

15. TREASURY STOCK PURCHASE

On March 13, 2020, the Company’s Board of Directors authorized a new share repurchase program for the purchase of up to $500.0 million of the Company’s outstanding common stock (the “March 2020 Repurchase Plan”). During the year ended December 31, 2022, the Company purchased approximately 5.1 million shares of common stock at an average purchase price of $86.89 per share, for a total amount of approximately $441.5 million (excluding broker commissions), which exhausted the availability under the March 2020 Repurchase Plan.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

On June 14, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “June 2022 Repurchase Plan”). During the year ended December 31, 2022, the Company purchased approximately 3.6 million shares of common stock at an average purchase price of $88.73 per share, for a total amount of approximately $317.2 million (excluding broker commissions), under the June 2022 Repurchase Plan. As of March 1, 2023, $182.8 million remained available for repurchase under the June 2022 Repurchase Plan.

On November 2, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company’s outstanding common stock (the “November 2022 Repurchase Plan”). During the year ended December 31, 2022, no shares were repurchased under the November 2022 Repurchase Plan. As of March 1, 2023, $500.0 million remained available for repurchase under the November 2022 Repurchase Plan.

The aggregate amount of the Company’s outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $682.8 million as of March 1, 2023.

During the year ended December 31, 2022, 0.2 million 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 $12.5 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company’s authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2022.

​

16. STOCK-BASED COMPENSATION

The Company has two stock-based compensation plans under which shares were available for grant at December 31, 2022: (i) the Monster Beverage Corporation 2020 Omnibus Incentive Plan (the “2020 Omnibus Incentive Plan”), which includes the Monster Beverage Corporation Deferred Compensation Plan as a sub plan thereunder, and (ii) the Monster Beverage Corporation 2017 Compensation Plan for Non-Employee Directors (the “2017 Directors Plan”), which includes the Monster Beverage Corporation Deferred Compensation Plan for Non-Employee Directors as a sub plan thereunder. The 2020 Omnibus Incentive Plan was approved by the Board of Directors on April 14, 2020 and approved by the stockholders of the Company at the annual meeting of the Company’s stockholders held on June 3, 2020 (the “Effective Date”). The 2020 Omnibus Incentive Plan replaced the Monster Beverage Corporation 2011 Omnibus Incentive Plan (the “2011 Omnibus Incentive Plan”).

The 2020 Omnibus Incentive Plan provides for the granting of stock options, stock appreciation rights, restricted stock, restricted stock units, performance awards, and other share-based awards up to an aggregate of 46,169,367 shares of the Company’s common stock, comprised of 32,000,000 new shares of common stock reserved under the 2020 Omnibus Incentive Plan, which were authorized on the Effective Date, and 14,169,367 shares of common stock that were available for grant under the 2011 Omnibus Incentive Plan as of December 31, 2019 and prior to the Effective Date. Shares authorized under the 2020 Omnibus Incentive Plan are reduced by one (1) share for options or stock appreciation rights granted under the 2020 Omnibus Incentive Plan and for any grants after December 31, 2019 under the 2011 Omnibus Incentive Plan, and by 2.6 shares for each share granted or issued with respect to a Full Value Award under either the 2020 Omnibus Incentive Plan or for any shares granted after December 31, 2019 under the 2011 Omnibus Incentive Plan. A “Full Value Award” is an award other than an incentive stock option, a non-qualified stock option, or a stock appreciation right, which is settled by the issuance of shares. Options granted under the 2020 Omnibus Incentive Plan may be incentive stock options under Section 422 of the Internal Revenue Code, as amended (the “Code”), or non-qualified stock options.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Shares previously granted under the 2011 Omnibus Incentive Plan after December 31, 2019 and prior to the Effective Date of the 2020 Omnibus Incentive Plan reduced the number of shares available for grant under the 2020 Omnibus Incentive Plan. As of December 31, 2022, 5,696,341 shares of the Company’s common stock have been granted, net of cancellations, and 38,873,388 shares (as adjusted for Full Value Awards) of the Company’s common stock remain available for grant under the 2020 Omnibus Incentive Plan.

The Compensation Committee of the Board of Directors (the “Compensation Committee”) has sole and exclusive authority to grant stock awards to all employees who are not new hires and to all new hires who are subject to Section 16 of the Exchange Act (“Section 16”). Each of the Compensation Committee and the Executive Committee of the Board of Directors (the “Executive Committee”) independently has the authority to grant stock awards to (i) new hires and (ii) employees receiving a promotion, in each case, who are not Section 16 employees. Awards granted by the Executive Committee are not subject to approval or ratification by the Board of Directors or the Compensation Committee. Options granted under the 2020 Omnibus Incentive Plan generally vest over a three- to five-year period from the grant date and are generally exercisable up to 10 years after the grant date. Restricted stock units granted under the 2020 Omnibus Incentive Plan generally vest over a three- or five-year period from the grant date. Performance share units will generally vest based on the achievement of performance goals specified for the applicable award.

In 2016, the Company adopted the Deferred Compensation Plan (as a sub plan to the 2011 Omnibus Incentive Plan), pursuant to which eligible employees may elect to defer cash and/or equity based compensation and to receive the deferred amounts, together with an investment return (positive or negative), either at a pre-determined time in the future or upon termination of their employment with the Company or its subsidiaries or affiliates that are participating employers under the Deferred Compensation Plan, as provided under the Deferred Compensation Plan and in relevant deferral elections. Deferrals under the Deferred Compensation Plan are unfunded and unsecured. As of December 31, 2022 deferrals under the Deferred Compensation Plan are solely comprised of cash compensation and equity compensation and are not material in the aggregate.

In 2017, the Company adopted the 2017 Directors Plan, a successor plan to the 2009 Monster Beverage Corporation Stock Incentive Plan for Non-Employee Directors. The 2017 Directors Plan permits the granting of stock options, stock appreciation rights, restricted shares or restricted stock units, deferred awards, dividend equivalents, and other share based-awards up to an aggregate of 1,250,000 shares of common stock of the Company to non-employee directors of the Company.

Each calendar year, a non-employee director will receive an annual retainer and annual equity award, as provided for in the 2017 Directors Plan, which may be modified from time to time. In February 2022, the Board of Directors amended and restated the 2017 Directors Plan to provide for increases to the annual cash retainer and annual equity retainer that non-employee directors are entitled to receive. Currently, non-employee directors receive an annual equity retainer of approximately $175,000 in the form of restricted stock units at each annual meeting of the Company’s stockholders or promptly thereafter. A non-employee director’s annual award of restricted stock units will generally vest on the earliest to occur of: (a) the last business day immediately preceding the annual meeting of the Company’s stockholders in the calendar year following the calendar year in which the grant date occurs, (b) a Change of Control (as defined in the 2017 Directors Plan), (c) the non-employee director’s death, or (d) the date of the non-employee director’s separation from service due to disability, so long as the non-employee director remains a non-employee director through such date. The Board of Directors may in its discretion award non-employee directors stock options, stock appreciation rights, restricted stock and other share-based awards in lieu of or in addition to restricted stock units. The Board of Directors may amend or terminate the 2017 Directors Plan at any time, subject to certain limitations set forth in the 2017 Directors Plan. As of December 31, 2022, 116,791 shares of the Company’s common stock had been granted under the 2017 Directors Plan, and 1,133,209 shares of the Company’s common stock remain available for grant.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

In 2017, the Company adopted the Deferred Compensation Plan for Non-Employee Directors (as a sub plan to the 2017 Directors Plan), pursuant to which the Board of Directors may permit non-employee directors to elect, at such times and in accordance with rules and procedures (or sub-plan) adopted by the Board of Directors (which are intended to comply with Section 409A of the Code, as applicable), to receive all or any portion of such non-employee director’s compensation, whether payable in cash or in equity, on a deferred basis. Deferrals under the Deferred Compensation Plan for Non-Employee Directors are unfunded and unsecured. As of December 31, 2021, deferrals under the Deferred Compensation Plan for Non-Employee Directors are solely comprised of cash compensation and equity compensation and are not material in the aggregate. The 2017 Directors Plan was adopted to effectuate any such deferrals. The 2017 Directors Plan is administered by the Board of Directors. Each award granted under the 2017 Directors Plan will be evidenced by a written agreement and will contain the terms and conditions that the Board of Directors deems appropriate.

In February 2022, as part of the Board of Directors’ amendment and restatement of the 2017 Directors Plan, such amendment and restatement also introduced the requirement for each non-employee director to satisfy the share ownership guidelines set forth below, as may be modified by the Board of Directors from time to time. The current share ownership guidelines provide that non-employee directors of the Company must:

	●	Hold shares of Company common stock having a total value of five times the annual retainer payable to a non-employee director (excluding any portion of the annual retainer attributable to a non-employee director’s service as a member of a subcommittee, as a chair of a subcommittee or as the lead independent director, as applicable). For this purpose, deferred shares or deferred restricted stock units will be deemed held, to the extent vested.

	●	The minimum stock ownership level must be achieved by each non-employee director by the fifth anniversary of such non-employee director’s initial appointment to the Board of Directors.

	●	Once achieved, ownership of the guideline amount should be maintained for so long as the non-employee director retains his or her seat on the Board of Directors.

	●	There may be rare instances where these guidelines would place a hardship on a non-employee director. In these cases or in similar circumstances, the Board of Directors will make the final decision as to developing an alternative stock ownership guideline for a non-employee director that reflects the intention of these guidelines and his or her personal circumstances.

The Company recorded $64.1 million, $70.5 million and $70.3 million of compensation expense relating to outstanding options, restricted stock units, performance share units and other share-based awards during the years ended December 31, 2022, 2021 and 2020, respectively.

The tax benefit for tax deductions from non-qualified stock option exercises, disqualifying dispositions of incentive stock options and vesting of restricted stock units and performance share units for the years ended December 31, 2022, 2021 and 2020 was $9.1 million, $6.8 million and $10.5 million, respectively.

Stock Options

Under the Company’s stock-based compensation plans, all stock options granted through December 31, 2022 were granted at prices based on the fair value of the Company’s common stock on the date of grant. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula with the assumptions included in the table below. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee’s performance is complete, using the Black-Scholes-Merton option pricing formula with the

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

assumptions included in the table below. The Company uses historical data to determine the exercise behavior, volatility and forfeiture rate of the options.

The following weighted-average assumptions were used to estimate the fair value of options granted during:

​

​	​	​	​	​	​	​	​
​		2022		2021		2020
Dividend yield	​	0.0	%	0.0	%	0.0	%
Expected volatility	​	27.7	%	28.9	%	30.4	%
Risk-free interest rate	​	2.15	%	0.85	%	0.70	%
Expected term	​	6.1 Years	​	5.8 Years	​	5.8 Years	​

​

Expected Volatility: The Company uses historical volatility as it provides a reasonable estimate of the expected volatility. Historical volatility is based on the most recent volatility of the stock price over a period of time equivalent to the expected term of the option.

Risk-Free Interest Rate: The risk-free interest rate is based on the U.S. treasury zero-coupon yield curve in effect at the time of grant for the expected term of the option.

Expected Term: The Company’s expected term represents the weighted-average period that the Company’s stock options are expected to be outstanding. The expected term is based on expected time to post-vesting exercise of options by employees. The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

The following table summarizes the Company’s activities with respect to its stock option plans as follows:

​

​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	Weighted-	​	​	​
​	​	​	​	Weighted-		​	Average	​	​	​
​	​	​	​	Average		​	Remaining	​	​	​
​	​	Number of	​	Exercise		​	Contractual	​	Aggregate
​	​	Shares	​	Price Per		​	Term (in	​	Intrinsic
Options		(in thousands)		Share			years)		Value
Outstanding at January 1, 2022		13,860	​	$	48.19		5.1	​	$	663,148
Granted 01/01/22 - 03/31/22		2,489	​	$	73.96	​	​	​	​	​
Granted 04/01/22 - 06/30/22		8	​	$	88.05	​	​	​	​	​
Granted 07/01/22 - 09/30/22		34	​	$	95.72	​	​	​	​	​
Granted 10/01/22 - 12/31/22		32	​	$	91.10	​	​	​	​	​
Exercised		(1,411)	​	$	45.37	​	​	​	​	​
Cancelled or forfeited		(157)	​	$	72.15	​	​	​	​	​
Outstanding at December 31, 2022		14,855	​	$	52.75		5.0	​	$	724,651
Vested and expected to vest in the future at December 31, 2022	​	14,509	​	$	52.22	​	4.9	​	$	715,462
Exercisable at December 31, 2022		9,764	​	$	42.81		3.4	​	$	573,325

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The following table summarizes information about stock options outstanding and exercisable at December 31, 2022:

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	Options Outstanding						​	Options Exercisable
​	​	​	​	​	​	​	​	Weighted Average	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	Remaining	​	Weighted		​	Number	​	Weighted
​	​	​	​	​	​	Number	​	Contractual	​	Average		​	Exercisable	​	Average
Range of Exercise					​	Outstanding	​	Term	​	Exercise		​	(In	​	Exercise
Prices ($)						(In Thousands)		(Years)		Price ($)			Thousands)		Price ($)
$	15.71	-	$	36.05		2,768		0.8		$	20.75		2,768		$	20.75
$	37.10	-	$	43.99		1,751		3.3		$	43.43		1,751		$	43.43
$	44.92	-	$	46.27		2,189		3.2		$	45.60		2,189		$	45.60
$	48.11	-	$	57.95		529		5.5		$	53.29		313		$	52.96
$	58.73	-	$	58.73		1,818		5.2		$	58.73		1,310		$	58.73
$	58.77	-	$	62.39		2,247		6.6		$	60.80		1,252		$	60.53
$	62.92	-	$	67.42		43		6.1		$	64.19		26		$	63.46
$	73.23	-	$	73.23		2,263		9.2		$	73.23		—		$	—
$	77.92	-	$	97.80		1,237		8.4		$	88.32		155		$	89.02
$	98.49	-	$	98.49		10		9.6		$	98.49		—		$	—
​	​	​	​	​		14,855		5.0		$	52.75		9,764		$	42.81

​

The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, 2021 and 2020 was $23.47 per share, $25.80 per share and $18.82 per share, respectively. The total intrinsic value of options exercised during the years ended December 31, 2022, 2021 and 2020 was $68.2 million, $51.2 million and $68.8 million, respectively.

Cash received from option exercises under all plans for the years ended December 31, 2022, 2021 and 2020 was $64.0 million, $45.7 million and $72.9 million, respectively.

At December 31, 2022, there was $69.5 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s share-based payment plans. That cost is expected to be recognized over a weighted-average period of 2.7 years.

Restricted Stock Units and Performance Share Units

The cost of stock-based compensation for restricted stock units and performance share units is measured based on the closing fair market value of the Company’s common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

The following table summarizes the Company’s activities with respect to non-vested restricted stock units and performance share units as follows:

​

​	​	​	​	​	​
​	​	​	​	Weighted
​	​	Number of	​	Average
​	​	Shares (in	​	Grant-Date
​		thousands)		Fair Value
Non-vested at January 1, 2022	​	910	​	$	69.02
Granted 01/01/22 - 03/31/221	​	484	​	$	71.88
Granted 04/01/22 - 06/30/22	​	15	​	$	87.52
Granted 07/01/22 - 09/30/22	​	6	​	$	95.17
Granted 10/01/22 - 12/31/22	​	1	​	$	90.29
Vested	​	(389)	​	$	64.59
Forfeited/cancelled	​	(14)	​	$	68.27
Non-vested at December 31, 2022	​	1,013	​	$	72.54

​

1_The grant activity for performance share units is recorded based on the target performance level earning_ 100% of target performance share units. The actual number of performance share units earned could range from 0% to 200% of target depending on the achievement of pre-established performance goals.

The weighted-average grant-date fair value of restricted stock units and/or performance share units granted during the years ended December 31, 2022, 2021 and 2020 was $74.26, $89.12 and $62.97 per share, respectively. As of December 31, 2022, 1.0 million of restricted stock units and performance share units are expected to vest.

At December 31, 2022, total unrecognized compensation expense relating to non-vested restricted stock units and performance share units was $36.7 million, which is expected to be recognized over a weighted-average period of 1.7 years.

Other Share-Based Awards

The Company has granted other share-based awards to certain employees that are payable in cash. These awards are classified as liabilities and are valued based on the fair value of the award at the grant date and are remeasured at each reporting date until settlement, with compensation expense being recognized in proportion to the completed requisite service period up until date of settlement. At December 31, 2022, other share-based awards outstanding included grants that vest over three years payable in the first quarters of 2023, 2024 and 2025.

At December 31, 2022, there was $0.1 million of total unrecognized compensation expense related to nonvested other share-based awards granted to employees under the Company’s stock-based compensation plans. That cost is expected to be recognized over a weighted-average period of 1.0 years.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Employee and Non-Employee Share-Based Compensation Expense

The table below shows the amounts recognized in the consolidated financial statements for the years ended December 31, 2022, 2021 and 2020 for share-based compensation related to employees and non-employees. Employee and non-employee share-based compensation expense of $64.1 million for the year ended December 31, 2022 is comprised of $9.4 million relating to incentive stock options, $0.7 million relating to other share-based awards and $54.0 million relating to non-qualified stock options, restricted stock units and performance share units. Employee and non-employee share-based compensation expense of $70.5 million for the year ended December 31, 2021 is comprised of $8.3 million relating to incentive stock options, $1.6 million relating to other share-based awards and $60.6 million relating to non-qualified stock options, restricted stock units and performance share units. Employee and non-employee share-based compensation expense of $70.3 million for the year ended December 31, 2020 is comprised of $9.4 million relating to incentive stock options, $2.7 million relating to other share-based awards and $58.2 million relating to non-qualified stock options, restricted stock units and performance share units.

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Operating expenses		$	64,109		$	70,483		$	70,289
Total employee and non-employee share-based compensation expense included in income, before income tax	​	​	64,109	​	​	70,483	​	​	70,289
Less: Amount of income tax benefit recognized in earnings	​	​	(13,175)	​	​	(14,228)	​	​	(15,499)
Amount charged against net income		$	50,934		$	56,255		$	54,790

​

​

17. INCOME TAXES

The Company evaluated the various provisions of the Tax Reform Act, including, the global intangible low-taxed income (“GILTI”) and the foreign derived intangible income provisions. The Company will treat any U.S. tax on foreign earnings under GILTI as a current period expense when incurred.

The Company currently considers the earnings of its foreign entities (excluding Japan) to be permanently reinvested outside the United States based on estimates that future domestic cash generation will be sufficient to meet future domestic cash needs. Accordingly, deferred income taxes have not been recorded for the undistributed earnings of the Company’s foreign subsidiaries excluding Japan. Deferred income taxes have not been recorded for Japan, as any federal, state, or foreign withholding taxes associated with the repatriation of those earnings would be immaterial.

The domestic and foreign components of the Company’s income before provision for income taxes are as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2022			2021			2020
Domestic*		$	1,327,459		$	1,431,797		$	1,374,402
Foreign*	​	​	244,505	​	​	369,622	​	​	251,755
Income before provision for income taxes		$	1,571,964		$	1,801,419		$	1,626,157

​

*After intercompany royalties, management fees and interest charges from the Company’s domestic to foreign entities of $85.0 million, $61.1 million and $54.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Components of the provision for income taxes are as follows:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2022			2021			2020
Current:	​	​	​	​	​	​	​	​	​
Federal		$	247,482		$	273,115		$	259,073
State	​	​	47,255	​	​	44,990	​	​	43,704
Foreign	​	​	37,421	​	​	89,410	​	​	70,658
​	​	​	332,158	​	​	407,515	​	​	373,435
​	​	​	​	​	​	​	​	​	​
Deferred:	​	​	​	​	​	​	​	​	​
Federal	​	​	19,111	​	​	14,750	​	​	11,401
State	​	​	258	​	​	4,689	​	​	4,709
Foreign	​	​	26,084	​	​	5,092	​	​	(167,595)
​	​	​	45,453	​	​	24,531	​	​	(151,485)
​	​	​	​	​	​	​	​	​	​
Valuation allowance	​	​	2,729	​	​	(8,102)	​	​	(5,387)
​		$	380,340		$	423,944		$	216,563

​

A reconciliation of the total provision for income taxes after applying the U.S. federal statutory rate of 21% to income before provision for income taxes to the reported provision for income taxes are as follows for the years ended:

​

​	​	​	​	​	​	​	​	​	​
​	​	Year Ended December 31,
​		2022			2021			2020
U.S. Federal tax expense at statutory rates		$	330,113		$	378,298		$	341,493
State income taxes, net of federal tax benefit	​	​	35,848	​	​	38,894	​	​	37,478
Permanent differences	​	​	(5,450)	​	​	(4,168)	​	​	(1,064)
Stock based compensation	​	​	3,571	​	​	2,790	​	​	1,097
Intra-company transfer benefit	​	​	—	​	​	—	​	​	(165,075)
Other	​	​	1,371	​	​	(649)	​	​	(7,388)
Foreign rate differential	​	​	12,158	​	​	16,881	​	​	15,409
Valuation allowance	​	​	2,729	​	​	(8,102)	​	​	(5,387)
​		$	380,340		$	423,944		$	216,563

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Major components of the Company’s deferred tax assets (liabilities) at December 31, 2022 and 2021 are as follows:

​

​	​	​	​	​	​	​
​		2022			2021
Deferred Tax Assets:	​	​	​	​	​	​
Reserve for sales returns		$	2,262		$	889
Reserve for inventory obsolescence	​	​	4,651	​	​	3,643
Reserve for marketing development fund	​	​	7,487	​	​	8,951
Capitalization of inventory costs	​	​	6,537	​	​	2,533
State franchise tax - current	​	​	2,339	​	​	2,493
Accrued compensation	​	​	10,499	​	​	2,854
Accrued other liabilities	​	​	1,820	​	​	4,634
Deferred revenue	​	​	63,196	​	​	68,557
Stock-based compensation	​	​	25,526	​	​	24,635
Foreign net operating loss carryforward	​	​	19,896	​	​	14,507
Prepaid supplies	​	​	7,901	​	​	6,317
Termination payments	​	​	52,466	​	​	58,042
Operating lease liabilities	​	​	5,739	​	​	4,711
Intangibles	​	​	33,603	​	​	72,666
Impairment-trademarks and others	​	​	2,567	​	​	2,047
Other deferred tax assets	​	​	33,209	​	​	33,013
Total gross deferred tax assets		$	279,698		$	310,492
​	​	​	​	​	​	​
Deferred Tax Liabilities:	​	​	​	​	​	​
Amortization of trademarks		$	(39,237)		$	(41,517)
State franchise tax - deferred	​	​	(5,503)	​	​	(5,505)
Operating lease ROU assets	​	​	(5,739)	​	​	(4,711)
Other deferred tax liabilities	​	​	(5)	​	​	(618)
Depreciation	​	​	(22,433)	​	​	(5,907)
Total gross deferred tax liabilities	​	​	(72,917)	​	​	(58,258)
​	​	​	​	​	​	​
Valuation Allowance	​	​	(29,742)	​	​	(27,013)
​	​	​	​	​	​	​
Net deferred tax assets		$	177,039		$	225,221

​

During the years ended December 31, 2022, 2021 and 2020, the Company established full valuation allowances against certain deferred tax assets, resulting from cumulative net operating losses incurred by certain foreign subsidiaries of the Company. The effect of the valuation allowances and the subsequent related impact on the Company’s overall tax rate was to increase the Company’s provision for income taxes by $2.7 million for the year ended December 31, 2022, decrease the Company’s provision for income taxes by $8.1 million for the year ended December 31, 2021 and decrease the Company’s provision for income taxes by $5.4 million for the year ended December 31, 2020. At December 31, 2022, the Company had net operating loss carryforwards of approximately $92.1 million. Of this amount, $78.8 million may be carried forward indefinitely. The remaining $13.3 million of net operating loss carryforwards will begin to expire in 2023.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

In October 2020, the Company completed an intra-entity transfer of intangible assets between certain of the Company’s foreign subsidiaries to better align its international structure with its expanding operations. The transfer resulted in a step-up of the tax-deductible basis in the transferred assets in a foreign jurisdiction, and created a temporary difference between the tax basis and book basis for such intangible assets. The Company recognized deferred tax assets of approximately $165.1 million, with a corresponding reduction to the provision for income taxes during the fourth quarter of 2020 in its consolidated financial statements. The tax deductions for the amortization of the deferred tax assets will be recognized in the future and any amortization not deducted for tax purposes will be carried forward indefinitely. The tax impact on the foreign subsidiary transferor was not material.

The following is a roll-forward of the Company’s total gross unrecognized tax benefits, not including interest and penalties, for the years ended December 31, 2022, 2021 and 2020:

​

​	​	​	​
​		Gross Unrecognized Tax
​	​	Benefits
Balance at December 31, 2019	​	$	2,993
Additions for tax positions related to the current year	​		—
Additions for tax positions related to the prior year	​		—
Decreases for tax positions related to prior years	​		(2,251)
Balance at December 31, 2020	​	$	742
Additions for tax positions related to the current year	​	​	—
Additions for tax positions related to the prior year	​	​	—
Decreases for tax positions related to prior years	​	​	(742)
Balance at December 31, 2021	​	$	—
Additions for tax positions related to the current year	​	​	—
Additions for tax positions related to the prior year	​	​	3,020
Decreases for tax positions related to prior years	​		—
Balance at December 31, 2022	​	$	3,020

​

The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the Company’s consolidated financial statements. As of December 31, 2022, the Company had accrued approximately $0.4 million in interest and penalties related to unrecognized tax benefits. If the Company were to prevail on all uncertain tax positions, it would not have a significant impact on the Company’s effective tax rate.

It is expected that any change in the amount of unrecognized tax benefit change within the next 12 months will not be significant.

The Company is subject to U.S. federal income tax as well as to income tax in multiple state and foreign jurisdictions.

The Company is in various stages of examination with certain states and certain foreign jurisdictions, including the United Kingdom and Ireland. The Company’s 2019 through 2021 U.S. federal income tax returns are subject to examination by the IRS. The Company’s state income tax returns are subject to examination for the 2018 through 2021 tax years.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

18. EARNINGS PER SHARE

A reconciliation of the weighted average shares used in the basic and diluted earnings per common share computations for the years ended December 31, 2022, 2021 and 2020 is presented below:

​

​	​	​	​	​	​	​
​		2022		2021		2020
Weighted-average shares outstanding:	​	​	​	​	​	​
Basic	​	526,779	​	528,763	​	529,639
Dilutive securities	​	6,442	​	6,876	​	5,168
Diluted	​	533,221	​	535,639	​	534,807

​

For the years ended December 31, 2022, 2021 and 2020, options and awards outstanding totaling 3.0 million shares, 0.8 million shares and 1.8 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive.

​

19. EMPLOYEE BENEFIT PLAN

Employees of the Company may participate in the Monster Beverage Corporation 401(k) Plan, a defined contribution plan, which qualifies under Section 401(k) of the Internal Revenue Code. Participating employees may contribute into a traditional plan with pretax salary or into a Roth plan with after tax salary up to statutory limits. The Company contributes 50% of the employee contribution, up to 8% of each employee’s earnings, which vest over four years (2 years of service = 50%, 3 years of service = 75%, 4 years of service = 100%). Matching contributions were $6.9 million, $5.5 million and $4.7 million for the years ended December 31, 2022, 2021 and 2020, respectively.

​

20. SEGMENT INFORMATION

The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster_®_ Tour WaterTM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment, which is primarily comprised of the various energy drink brands acquired from TCCC in 2015 as well as the Company’s affordable energy brands, (iii) Alcohol Brands segment, which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast UnleashedTM FMBs and (iv) Other segment, which is comprised of the AFF Third-Party Products.

The Company’s Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged drinks primarily to bottlers/distributors. In some cases, the Company sells ready-to-drink packaged drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

The Company’s Strategic Brands segment primarily generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

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

The Company’s Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.

Generally, the Alcohol Brands segment will have lower gross profit margin percentages than the Monster Energy® Drinks segment.

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

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

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Net sales:	​	​	​	​	​	​	​	​	​
Monster Energy® Drinks1	​	$	5,833,211	​	$	5,220,673	​	$	4,305,246
Strategic Brands	​		353,490	​		294,762	​		266,354
Alcohol Brands2	​	​	101,405	​	​	—	​	​	—
Other	​		22,944	​		25,917	​		27,038
Corporate and unallocated	​		—	​		—	​		—
​	​	$	6,311,050	​	$	5,541,352	​	$	4,598,638

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Operating Income:	​	​	​	​	​	​	​	​	​
Monster Energy® Drinks1	​	$	1,850,053	​	$	1,990,785	​	$	1,820,346
Strategic Brands	​		197,709	​		173,660	​		155,047
Alcohol Brands2	​	​	(31,502)	​	​	—	​	​	—
Other	​		3,040	​		6,935	​		5,930
Corporate and unallocated	​		(434,579)	​		(373,913)	​		(348,170)
​	​	$	1,584,721	​	$	1,797,467	​	$	1,633,153

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Income before tax:	​	​	​	​	​	​	​	​	​
Monster Energy® Drinks1	​	$	1,853,011	​	$	1,992,185	​	$	1,820,625
Strategic Brands	​		197,843	​		173,739	​		155,047
Alcohol Brands2	​	​	(31,772)	​	​	—	​	​	—
Other	​		3,041	​		6,935	​		5,933
Corporate and unallocated	​		(450,159)	​		(371,440)	​		(355,448)
​	​	$	1,571,964	​	$	1,801,419	​	$	1,626,157

​

(1)	Includes $40.0 million, $41.5 million and $42.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of deferred revenue.

(2)	Effectively from February 17, 2022 to December 31, 2022_._

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

​	​	​	​	​	​	​	​	​	​
​		2022			2021			2020
Depreciation and amortization:	​	​	​	​	​	​	​	​	​
Monster Energy® Drinks	​	$	31,957	​	$	34,532	​	$	38,277
Strategic Brands	​		924	​		1,085	​		4,178
Alcohol Brands	​	​	13,440	​	​	—	​	​	—
Other	​		4,461	​		4,485	​		4,631
Corporate and unallocated	​		10,459	​		10,053	​		9,944
​	​	$	61,241	​	$	50,155	​	$	57,030

​

Corporate and unallocated expenses were $434.6 million for the year ended December 31, 2022 and included $278.7 million of payroll costs, of which $63.1 million was attributable to stock-based compensation expense (See Note 16, “Stock-Based Compensation”), $87.1 million of professional service expenses, including accounting and legal costs, $10.5 million of insurance costs and $58.3 million of other operating expenses.

Corporate and unallocated expenses were $373.9 million for the year ended December 31, 2021 and included $258.6 million of payroll costs, of which $70.3 million was attributable to stock-based compensation expense (See Note 16, “Stock-Based Compensation”), $77.9 million of professional service expenses, including accounting and legal costs, $9.3 million of insurance costs and $28.1 million of other operating expenses.

Corporate and unallocated expenses were $348.2 million for the year ended December 31, 2020 and included $234.1 million of payroll costs, of which $69.9 million was attributable to stock-based compensation expense (See Note 16, “Stock-Based Compensation”), $67.6 million of professional service expenses, including accounting and legal costs, $7.5 million of insurance costs and $39.0 million of other operating expenses.

Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 10% and 11% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Coca-Cola Europacific Partners accounted for approximately 13%, 12% and 10% of the Company’s net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

Net sales to customers outside the United States amounted to $2.36 billion, $2.04 billion and $1.51 billion for the years ended December 31, 2022, 2021 and 2020, respectively. Such sales were approximately 37%, 37% and 33% of net sales for the years ended December 31, 2022, 2021 and 2020, respectively.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

Goodwill and other intangible assets for the Company’s reportable segments as of December 31, 2022 and 2021 are as follows:

​

​	​	​	​	​	​	​
​		2022			2021
Goodwill and other intangible assets:	​	​	​	​	​	​
Monster Energy® Drinks	​	$	1,424,212	​	$	1,420,503
Strategic Brands	​		979,896	​		978,032
Alcohol Brands	​	​	233,140	​	​	—
Other	​		1,103	​		5,494
Corporate and unallocated	​		—	​		—
​	​	$	2,638,351	​	$	2,404,029

​

​

21. RELATED PARTY TRANSACTIONS

TCCC controls approximately 19.6% of the voting interests of the Company. The TCCC Subsidiaries, the TCCC Related Parties and certain TCCC independent bottlers, purchase and distribute the Company’s products in domestic and certain international markets. The Company also pays TCCC a commission based on certain sales within the TCCC distribution network.

TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, for the year ended December 31, 2022 were $49.3 million, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Independent Bottlers for the year ended December 31, 2022 were $30.7 million, and are included in operating expenses in the consolidated statements of income.

TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, for the year ended December 31, 2021 were $77.5 million, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Independent Bottlers for the year ended December 31, 2021 were $28.7 million, and are included in operating expenses in the consolidated statements of income.

TCCC commissions, based on sales to the TCCC Subsidiaries and the TCCC Related Parties, for the year ended December 31, 2020 were $56.5 million, and are included as a reduction to net sales. TCCC commissions, based on sales to the TCCC Independent Bottlers for the year ended December 31, 2020 were $21.4 million, and are included in operating expenses in the consolidated statements of income.

Net sales to the TCCC Subsidiaries for the years ended December 31, 2022, 2021 and 2020 were $129.4 million, $120.4 million and $83.3 million, respectively.

The Company also purchases concentrates from TCCC which are then sold to certain of the Company’s bottlers/distributors. Concentrate purchases from TCCC were $27.1 million, $27.2 million and $23.9 million for the years ended December 31, 2022, 2021 and 2020, respectively.

Certain TCCC Subsidiaries also contract manufacture certain of the Company’s energy drinks. Such contract manufacturing expenses were $30.6 million, $31.5 million and $17.2 million for the years ended December 31, 2022, 2021 and 2020, respectively.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

​

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

​

​	​	​	​	​	​	​
​	​	December 31,		​	December 31,
​		2022			2021
Accounts receivable, net	​	$	88,169	​	$	94,647
Accounts payable	​	$	(35,467)	​	$	(35,248)
Accrued promotional allowances	​	$	(11,222)	​	$	(4,536)
Accrued liabilities	​	$	(14,733)	​	$	(26,616)

​

One director of the Company through certain trusts, and a family member of one director are principal owners of a company that provides promotional materials to the Company. Expenses incurred with such company in connection with promotional materials purchased during the years ended December 31, 2022, 2021 and 2020 were $6.0 million, $3.6 million and $2.1 million, respectively.

During the year ended December 31, 2022, the Company occasionally chartered a private aircraft that is indirectly owned by Mr. Rodney C. Sacks, Co-Chief Executive Officer and Chairman of the Board of Directors. On certain occasions, Mr. Sacks was accompanied by guests and other Company personnel when using such aircraft for business travel. During the year ended December 31, 2022, the Company incurred costs of $0.08 million, amounts the Company believes are commensurate with market rates for comparable travel.

In December 2018, the Company and a director of the Company entered into a 50-50 partnership that purchased land, and real property thereon, in Kona, Hawaii for the purpose of producing coffee products. This partnership meets the definition of a Variable Interest Entity (“VIE”) for which the Company has determined that it is the primary beneficiary. Therefore, the Company consolidates the VIE in the accompanying consolidated financial statements. The aggregate carrying values of the VIE’s assets and liabilities, after elimination of any intercompany transactions and balances, as well as the results of operations for all periods presented, are not material to the Company’s consolidated financial statements.

​

22. SUBSEQUENT EVENTS

On February 28, 2023, the Company announced that its Board of Directors has approved and declared a 2-for-1 split of its common stock that will be effected in the form of a 100% stock dividend. Each stockholder of record on March 13, 2023 will receive a dividend of one additional share of common stock for each then-held share, to be distributed after close of trading on March 27, 2023. The Company anticipates its common stock to begin trading at the split-adjusted price on March 28, 2023.

​

​

​

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS

FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (Dollars in Thousands)

​

​	​	​	​	​	​	​	​	​	​	​	​	​
​	​	Balance at		​	Charged to		​	​	​	​	Balance at
​	​	beginning		​	cost and		​	​	​	​	end of
Description		of period			expenses			Deductions			period
Allowance for doubtful accounts, sales returns and cash discounts:	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
2022	​	$	4,676	​	$	23,177	​	$	(17,393)	​	$	10,460
2021	​	$	1,878	​	$	14,799	​	$	(12,001)	​	$	4,676
2020	​	$	2,045	​	$	9,664	​	$	(9,831)	​	$	1,878
​	​	​	​	​	​	​	​	​	​	​	​	​
Allowance on Deferred Tax Assets and Unrecognized Tax Benefits:	​	​	​	​	​	​	​	​	​	​	​	​
​	​	​	​	​	​	​	​	​	​	​	​	​
2022	​	$	27,013	​	$	6,153	​	$	—	​	$	33,166
2021	​	$	35,993	​	$	(8,980)	​	$	—	​	$	27,013
2020	​	$	43,853	​	$	(7,860)	​	$	—	​	$	35,993

​

​

​