What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-29 compared with 2023-03-01 · 413 added, 406 removed, 984 unchanged (45% of the section changed)

5 unchanged sentences

Based on our management’s evaluation under the framework in Internal Control - Integrated Framework (2013) , our management concluded that our internal control over financial reporting was effective as of December 31, 2023.

Our internal control over financial reporting as of December 31, 2022 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their attestation.

Our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their attestation.

Changes in Internal Control Over Financial Reporting – There were no changes in the Company’s internal controls over financial reporting during the quarter ended December 31, 2023, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Monster Beverage Corporation

Corona, California

To the Stockholders and the Board of Directors of Monster Beverage Corporation and Subsidiaries

Opinion on Internal Control Over Financial Reporting

We have audited the internal control over financial reporting of Monster Beverage Corporation and subsidiaries (the ”Company”) as of December 31, 2022, based on criteria established in Internal Control —Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements and financial statement schedule as of and for the year ended December 31, 2022, of the Company and our report dated March 1, 2023, expressed an unqualified opinion on those financial statements.

We have audited Monster Beverage Corporation and Subsidiaries’ internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework), (the COSO criteria).

In our opinion, Monster Beverage Corporation and Subsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of Monster Beverage Corporation and Subsidiaries as of December 31, 2023, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for the year ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”) of the Company and our report dated February 29, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control Over Financial Reporting.

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying “Management’s Annual Report on Internal Control Over Financial Reporting”.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ DELOITTE & TOUCHE LLP

Costa Mesa, California

March 1, 2023

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

February 29, 2024

OTHER INFORMATION

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The following documents are filed as a part of this Form 10-K:

Report of Independent Registered Public Accounting F irm (PCAOB ID No.

Reports of Independent Registered Public Accounting F irms (PCAOB ID No.

42 and PCAOB ID No.

Financial Statements:

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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).

Certificate of Incorporation of the Company, as amended (incorporated by reference to Exhibit 3.1 to our Form 10-K dated November 7, 2016).

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).

Second Amended and Restated Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to our Form 8-K dated June 27, 2023).

Third Amended and Restated By-laws of the Company (incorporated by reference to Exhibit 3.2 to our Form 8-K dated June 27, 2023).

Description of Common Stock (incorporated by reference to Exhibit 4.1 to our Form 10-K dated February 28, 2020).

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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).

Consent of Independent Registered Public Accounting Firm

Consent of Deloitte & Touche LLP, independent registered public accounting firm

Consent of Ernst & Young LLP, independent registered public accounting firm

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

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Monster Beverage Corporation Clawback Policy, effective as of December 1, 2023.

The following materials from Monster Beverage Corporation’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 are furnished herewith, formatted in iXBRL (Inline eXtensible Business Reporting Language):

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/s/ RODNEY C.

March 1, 2023

February 29, 2024

Chairman of the Board of

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/s/ HILTON H.

March 1, 2023

February 29, 2024

Vice Chairman of the Board of

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Chairman of the Board of

March 1, 2023

February 29, 2024

Directors and Co-Chief Executive

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Vice Chairman of the Board of Directors

March 1, 2023

February 29, 2024

and Co-Chief Executive Officer (principal

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Chief Financial Officer (principal financial

March 1, 2023

February 29, 2024

officer, principal accounting officer)

/s/ ANA DEMEL

March 1, 2023

February 29, 2024

/s/ TIFFANY M.

March 1, 2023

February 29, 2024

/s/ JEANNE P.

March 1, 2023

February 29, 2024

/s/ STEVEN G.

March 1, 2023

February 29, 2024

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

Report of Independent Registered Public Accounting Firm

Reports of Independent Registered Public Accounting Firms

Consolidated Balance Sheets as of December 31, 2023 and 2022

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of Monster Beverage Corporation and Subsidiaries

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Monster Beverage Corporation and Subsidiaries (the Company) as of December 31, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the year ended December 31, 2023, and the related notes and financial statement schedule listed in the Index in Item 15(a) (collectively referred to as the “ consolidated financial statements ” ).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S.

generally accepted accounting principles.

As described in Note 1, in 2023 the Company ’ s Board of Directors approved a two-for-one stock split distributed in the form of a stock dividend, and all references to number of shares and per share information in the consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis.

We audited the adjustments that were applied to restate the number of shares and per share information reflected in the 2022 and 2021 consolidated financial statements.

Our procedures included (a) agreeing the authorization for the two-for-one stock split to the Company ’ s underlying records obtained from management, and (b) testing the mathematical accuracy of the restated number of shares, basic and diluted earnings per share, common stock repurchased and other applicable disclosures such as equity-based compensation.

In our opinion, such adjustments are appropriate and have been properly applied.

However, we were not engaged to audit, review, or apply any procedures to the 2022 and 2021 consolidated financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 and 2021 consolidated financial statements taken as a whole.

We also have 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, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.

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 audit.

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 audit 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 audit 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 audit 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 audit provides 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 judgment.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated 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 disclosure to which it relates.

Accrued Promotional Allowances

Description of the Matter

The Company recorded $269.1 million in accrued promotional allowances as of December 31, 2023.

As described in Notes 1 and 3 of the consolidated financial statements, the Company ’ s promotional allowances are calculated based on various programs and agreements with its bottlers/distributors and retail customers, and accruals are established at the time of the initial product sale.

These accruals are based on agreed-upon terms as well as the Company ’ s historical experience with similar programs.

Promotional allowances for the Company ’ s energy drink products primarily include consideration given to its non-alcohol bottlers/distributors or retail customers.

The promotional expenditures are recorded as a reduction to net sales in the period the underlying sale occurs.

Auditing the accrued promotional allowances was challenging due to the amount of data utilized to compute the accrual as a result of the number of bottlers/distributors and retail customers.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of management ’ s controls over promotional allowances.

We also tested controls over management ’ s review of the amount of the recorded promotional allowances and tested management's controls to validate the completeness and accuracy of data used in management ’ s estimate.

Our substantive audit procedures included, among others, testing the data underlying the promotional allowances and testing the completeness and accuracy of the accrued promotional allowances.

We evaluated the completeness of the accrual by selecting accrued promotional allowances recorded, sending confirmation requests to the bottlers/distributors and retail customers and testing a sample of payments made subsequent to year end.

We performed analytical procedures considering historical relationships between the promotional allowances recorded to sales.

We additionally performed detail testing over the current year promotional expenditures and performed testing over management ’ s lookback analysis comparing the previous year-end accrued promotional allowances amounts to actual payments.

Lastly, we performed inquiries of the Company ’ s sales and marketing personnel in order to corroborate our understanding of new and existing promotional programs that could impact the amounts recorded.

/s/ Ernst & Young LLP

We have served as the Company's auditor since 2023.

Irvine, California

February 29, 2024

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of

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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.

We have audited, before the effects of the adjustments to retrospectively apply the stock split discussed in Note 1 to the consolidated financial statements, the consolidated balance sheet of Monster Beverage Corporation and subsidiaries (the “Company”) as of December 31, 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity, and cash flows, for the years ended December 31, 2022 and 2021, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”) (the 2022 and 2021 financial statements before the effects of the retrospective adjustments discussed in Note 1 to the financial statements are not presented herein).

In our opinion, the 2022 and 2021 financial statements, before the effects of the adjustments to retrospectively apply the stock split discussed in Note 1 to the financial statements, present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for the years ended December 31, 2022 and 2021, in conformity with accounting principles generally accepted in the United States of America.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the stock split discussed in Note 1 to the financial statements, and accordingly, we do not express an opinion or any other form of assurance about whether such retrospective adjustments are appropriate and have been properly applied.

Those retrospective adjustments were audited by other auditors.

Basis for Opinion

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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

1 unchanged sentence

March 1, 2023

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

We began serving as the Company’s auditor in 1991.

In 2023, we became the predecessor auditor.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

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PROPERTY AND EQUIPMENT, net

DEFERRED INCOME TAXES

DEFERRED INCOME TAXES, net

OTHER INTANGIBLE ASSETS, net

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Total Liabilities and Stockholders’ Equity

1 Stock Split - On February 28, 2023, the Company announced a two-for-one stock split of its common stock to be effected in the form of a 100% stock dividend.

The stock dividend was issued on March 27, 2023 (the “Stock Split”).

The accompanying consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split.

See Note 1 for additional information .

See accompanying notes to consolidated financial statements.

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OPERATING INCOME

OTHER (EXPENSE) INCOME , NET

INTEREST AND OTHER INCOME (EXPENSE), NET

INCOME BEFORE PROVISION FOR INCOME TAXES

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WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS 1 :

1 Stock Split - The accompanying consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split.

See Note 1 for additional information .

See accompanying notes to consolidated financial statements.

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Other comprehensive income (loss):

Change in foreign currency translation adjustment, net of tax

Change in foreign currency translation adjustment

Available-for-sale investments:

Change in net unrealized losses

Reclassification adjustment for net gains included in net income

Net change in available-for-sale investments

Change in net unrealized gains (losses)

Net gains on commodity derivatives

Other comprehensive income (loss)

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FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)

Common Stock 1

Comprehensive

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Stock-based compensation

Exercise of stock options

Unrealized loss on available-for-sale securities

Stock options/awards

Unrealized gain (loss), net on available-for-sale securities

Repurchase of common stock

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Stock-based compensation

Exercise of stock options

Unrealized loss on available-for-sale securities

Stock options/awards

Unrealized gain (loss), net on available-for-sale securities

Repurchase of common stock

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Stock-based compensation

Exercise of stock options

Unrealized loss on available-for-sale securities

Stock options/awards

Unrealized gain (loss), net on available-for-sale securities

Retirement of treasury stock

( 4,692,425 )

Repurchase of common stock

Foreign currency translation

Net gains on commodity derivatives

Balance, December 31, 2023

( 2,566,383 )

1 Stock Split - The accompanying consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split.

See Note 1 for additional information.

See accompanying notes to consolidated financial statements.

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CASH FLOWS FROM OPERATING ACTIVITIES:

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to

net cash provided by operating activities:

Depreciation and amortization

Non-cash lease expense

Gain on disposal of property and equipment

Loss (gain) on disposal of property and equipment

Gain on Bang Transaction

Loss on impairment of intangibles

Loss on impairment of property and equipment

Stock-based compensation

Deferred income taxes

Effect on cash of changes in operating assets and liabilities net of acquisition:

Effect on cash of changes in operating assets and liabilities

net of acquisitions:

Accounts receivable

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( 2,413,143 )

Acquisition of Bang Energy

Acquisition of CANarchy, net of cash

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CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings (payments) on debt

(Payments) borrowings on debt

Issuance of common stock

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Effect of exchange rate changes on cash and cash equivalents

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

CASH AND CASH EQUIVALENTS, beginning of year

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Accounts payable included equipment purchases of $ 16.9 million, $ 2.9 million and $ 0.6 million as of December 31, 2023, 2022 and 2021, 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.

Accounts receivable included sales of available-for-sale short-term investments of $ 3.0 million and $ 15.2 million as of December 31, 2023 and 2022, respectively.

No sales of available-for-sale investments were included in accounts receivable as of December 31, 2021.

See accompanying notes to consolidated financial statements.

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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 Man TM IPA, Dale’s Pale Ale®, Wild Basin TM Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed TM and a host of other brands.

Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel, Reign Storm®, Bang Energy®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Live+®, Predator® and Fury®.

The Company also develops, markets, sells and distributes still and sparkling waters under the Monster Tour Water® brand name.

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 Man TM IPA, Dale’s Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep Ellum TM IPA, Perrin Brewing Company TM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty Beast TM Hard Tea 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.

Treasury Stock Retirement – On March 10, 2023, the Company retired 170.0 million shares (stock split adjusted) of treasury stock owned by the Company.

The retired treasury stock had a carrying value of approximately $ 4.69 billion.

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

Stock Split – On February 28, 2023, the Company announced a two -for-one stock split of the Company’s common stock which was effected in the form of a 100 % stock dividend.

The common stock dividend was issued on March 27, 2023 (the “Stock Split”) and the Company’s common stock began trading at the split adjusted price on March 28, 2023.

Accordingly, all per share amounts, average common stock outstanding, common stock outstanding, common stock repurchased and equity-based compensation disclosure presented in the consolidated financial statements and notes have been adjusted retroactively, where applicable, to reflect the Stock Split.

Stockholders’ equity has been retroactively adjusted, where applicable, to give effect to the Stock Split for all periods presented by reclassifying the par value of the additional shares issued in connection with the Stock Split to common stock from additional paid-in capital.

Principles of Consolidation – The Company consolidates all entities that it controls by ownership of a majority voting interest.

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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).

Adjustments to fair value

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

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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.

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

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

Property and Equipment – Property and equipment are stated at cost.

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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.

instead, goodwill is 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.

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For the years ended December 31, 2023, 2022 and 2021 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 Unleashed TM trademarks, all used in connection with the manufacture, sale and distribution of beverages.

Other Intangibles – Other Intangibles are comprised primarily of trademarks that represent the Company’s exclusive ownership of the Monster Energy®, ®, Monster Energy Ultra®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Punch Monster®, Juice Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, Reign Storm®, Predator®, Fury®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play ® (stylized), Relentless®, BPM®, BU®, Samurai®, Bang Energy®, Monster Tour Water®, 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®, The Beast Unleashed® and Nasty Beast TM Hard Tea 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.

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The Company amortizes its trademarks with finite useful lives over their respective useful lives.

External legal costs incurred in the defense of the Company's trademarks are capitalized when the future economic benefit of the intangible asset will be increased, and a successful defense is probable.

In the event of a successful defense, the settlements received are netted against the external legal costs that were capitalized.

The external legal costs incurred and settlements received may not occur in the same period.

For the years ended December 31, 2023 and 2022, impairment charges of $ 38.7 million and $ 2.2 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 Unleashed TM 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.

The Company presently has more than 21,300 registered trademarks and pending applications in various countries worldwide, and the Company applies for new trademarks on an ongoing basis.

The Company regards its trademarks, service marks, copyrights, domain names, trade dress and other intellectual property as very important to its business.

The Company considers Monster®, Monster Energy®, ®, Monster Energy Ultra®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Punch Monster®, Juice Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, Reign Storm®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Samurai®, Bang Energy®, Monster Tour Water®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale’s

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

Pale Ale®, Dallas Blonde®, Wild Basin®, Dale’s®, Hop Rising®, The Beast Unleashed® and Nasty Beast TM Hard Tea to be its core trademarks.

The Company also owns the intellectual property of its most important flavors for certain of its Monster Energy® Brand energy drinks in perpetuity.

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 FASB 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 the 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.

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.

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 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 statements 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 interest and other income (expense), net in the consolidated statements of income.

Long-Lived Assets – Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment.

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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.

The fair value is estimated 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 year ended December 31, 2023, an impairment charge of $ 4.3 million was recognized on property and equipment related to the Company's alcohol products.

For the years ended December 31, 2022 and 2021 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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

Derivative Financial Instruments – The Company uses derivative financial instruments for the purpose of hedging risk exposures to fluctuations in foreign currency exchange rates and aluminum commodity prices.

The Company’s derivative instruments are recorded in the consolidated balance sheets at fair value.

The Company values each derivative financial instrument by obtaining valuation information from a reliable and observable market source.

For a derivative designated as a cash flow hedge, the derivative's mark to fair value is initially recorded as a component of accumulated other comprehensive income (loss) and subsequently reclassified into earnings when the hedged item affects earnings, unless it is no longer probable that the forecasted transaction will occur.

Derivatives that do not qualify for hedge accounting are marked to fair value with gains and losses immediately recorded in earnings.

In the consolidated statements of cash flows, derivative activities are classified based on the cash flows of the items being hedged.

Upon the dedesignation of an effective derivative contract, the gains or losses are deferred in accumulated other comprehensive income (loss) until the originally hedged item affects earnings, unless it is probable the hedged item will not occur, at which time it is recognized immediately.

Any gains or losses incurred after the dedesignation date are recorded in earnings immediately.

Foreign Currency Translation and Transactions – The accounts of the Company’s foreign subsidiaries are translated in accordance with FASB ASC 830.

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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.

Therefore, gains and losses on the Company’s foreign currency exchange contracts are recognized in interest and other income (expense), 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, 2023, 2022 and 2021, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($ 60.2 ) million, ($ 37.9 ) million and $ 0.3 million, respectively, and have been recorded in interest and other income(expense), net, in the accompanying consolidated statements of income.

Revenue Recognition – See Note 3.

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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

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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, impairment charges on intangible assets, depreciation and other general and administrative costs.

Freight-Out Costs – For the years ended December 31, 2023, 2022 and 2021, freight-out costs amounted to $ 223.6 million, $ 249.2 million and $ 213.9 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income.

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.

A significant amount of the Company’s promotional expenses result from payments under sponsorship and endorsement contracts.

Accounting for sponsorship and endorsement payments is based upon specific contract provisions.

Generally, sponsorship and endorsement 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 $ 528.9 million, $ 460.7 million and $ 417.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income.

Advertising and promotional expenses that are not subject to FASB ASC 606 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.

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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.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

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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.

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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.

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Coca-Cola Europacific Partners accounted for approximately 13 %, 13 % and 12 % of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, 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.

Credit Risk – The Company sells its products nationally and internationally, primarily to bottlers and full service beverage distributors (“bottlers/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.

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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)”.

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.

Recent Accounting Pronouncements – In November 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this update improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses.

The amendments in ASU No.

2023-07 are effective for fiscal years beginning after December 15, 2023.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

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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 City TM family of brands including Jai Alai® IPA and Florida Man TM IPA, the Oskar Blues TM family of brands including Dale’s Pale Ale®, Wild Basin TM Hard Seltzers, the Deep Ellum TM family of brands including Dallas Blonde® and Deep Ellum TM IPA, the Perrin Brewing Company TM 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:

Assets Acquired

and Liabilities

Early adoption is permitted.

The Company is currently evaluating the impact ASU No.

2023-07 will have on its consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The amendments in this update primarily require more detailed disclosures related to the rate reconciliation and income taxes paid.

The amendments in ASU No.

2023-09 are effective for fiscal years beginning after December 15, 2024.

Early adoption is permitted.

The Company is currently evaluating the impact ASU No.

2023-09 will have on its consolidated financial statements .

On July 31, 2023, a subsidiary of the Company, Blast Asset Acquisition LLC, completed its acquisition of substantially all of the assets of Vital Pharmaceuticals, Inc.

and certain of its affiliates (collectively, “Bang Energy”) (the “Bang Transaction”).

The acquired assets primarily include the Bang Energy® drinks business and a beverage production facility in Phoenix, AZ.

The Company accounted for the Bang Transaction in accordance with FASB ASC 805.

Under the acquisition method of accounting, the Company allocated the purchase price of the acquisition to identifiable assets acquired and liabilities assumed based on their estimated fair values as of the acquisition date.

During the year ended December 31, 2023, in connection with the Bang Transaction, the Company recorded a gain of $ 45.4 million in interest and other income (expense), net within the consolidated statements of income and reported within the Corporate and Unallocated segment (the “Bang Transaction Gain”).

During the year ended December 31, 2023, the Company incurred $ 16.1 million of acquisition costs related to the Bang Transaction.

Acquisition costs are included in operating expenses within the consolidated statements of income.

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

(Liabilities)

Consideration

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Intangibles - customer relationships (amortizing)

Intangibles - permits (non-amortizing)

Property and equipment

Property and equipment, net

Right-of-use assets

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Working capital (excluding inventory)

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

Bang Transaction Gain

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

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The Company determined the fair values as follows:

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

● Customer relationships – multi-period excess earnings method of the income approach

● Property and equipment – cost approach and market approach

● Inventory – comparative sales method and replacement cost method

● Bang Transaction Gain – residual of net assets acquired less cash consideration transferred

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.

For tax purposes, the Bang Transaction was recorded as an asset purchase.

In accordance with Regulation S-X, pro forma unaudited condensed financial information for the Bang 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.

CANarchy Craft Brewery Collective LLC

The Company accounted for the CANarchy Transaction in accordance with FASB ASC 805.

Effective January 31, 2024, CANarchy began operating under the name Monster Brewing Company.

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.

REVENUE RECOGNITION

Revenues are accounted for in accordance with ASC 606 “Revenue from Contracts with Consumers”.

Revenues are accounted for in accordance with FASB ASC 606 “Revenue from Contracts with Customers”.

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 Water TM 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 Unleashed TM 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”).

(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, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, (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, Predator® and Fury®, (iii) Alcohol Brands segment (“Alcohol Brands”), which is comprised of various craft beers, hard seltzers and 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/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.

Such bottlers generally combine the concentrates

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

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and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks.

To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.

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.

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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

These agreements generally provide for one or

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for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined.

more of the arrangements described above and are of varying durations, typically ranging from one week to one year.

Differences between such estimated expenses and actual expenses 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.

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Strategic Brands

Alcohol Brands 2

Total Net Sales

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During the years ended December 31, 2023, 2022 and 2021, $ 40.0 million, $ 40.0 million and $ 41.5 million, respectively, of deferred revenue, was recognized in net sales.

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:

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.

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.

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 leases identified assets consisting primarily of office and warehouse space, warehouse equipment and vehicles.

Leases are classified as either finance leases or operating leases based on criteria in FASB ASC 842.

The Company’s leases have remaining lease terms of less than one year to 10 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, 2023, 2022 and 2021 were as follows:

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Finance leases:

Amortization of ROU assets

Amortization of right-of-use assets

Interest on lease liabilities

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Total lease cost

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

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 were as follows:

Cash paid for amounts included in the measurement of lease liabilities:

5 unchanged sentences

Operating leases

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

Balance Sheet Location

Operating leases

Finance leases

Property and Equipment, net

December 31, 2021

Supplemental balance sheet information related to leases was as follows:

Balance Sheet Location

Operating leases:

Finance leases

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

Right-of-use assets

Current lease liabilities

Accrued liabilities

Noncurrent lease liabilities

Other liabilities

December 31, 2021

Operating Leases

Total operating lease liabilities

Finance leases:

Right-of-use assets

Property and equipment, net

Current lease liabilities

Accrued liabilities

Noncurrent lease liabilities

Other liabilities

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

December 31, 2022

Total finance lease liabilities

Weighted-average remaining lease term and weighted-average discount rate for the Company’s leases were as follows:

Weighted-average remaining lease term in years:

Operating leases

Finance leases

Weighted-average remaining lease term (years)

Weighted-average discount rate:

December 31, 2021

Operating leases

Finance leases

Weighted-average remaining lease term (years)

Weighted-average discount rate

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(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:

The following table outlines maturities of the Company’s lease liabilities as of December 31, 2023:

Undiscounted Future Lease Payments

4 unchanged sentences

Less imputed interest

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.

As of December 31, 2023, the Company did not have any significant leases that had not yet commenced.

The following table summarizes the Company’s investments at:

7 unchanged sentences

government agency securities

Corporate bonds

government agency securities

Variable rate demand notes

Corporate bonds

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

10 unchanged sentences

government agency securities

Variable rate demand notes

During the years ended December 31, 2023, 2022 and 2021, realized gains or losses recognized on the sale of investments were not significant.

13 unchanged sentences

Certificates of deposit

Corporate bonds

Due 1 - 10 years:

1 unchanged sentence

Variable rate demand notes

Corporate bonds

Due 11 - 20 years:

Variable rate demand notes

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.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(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.

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 on the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

ASC 820 also 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.

10 unchanged sentences

Commercial paper

Variable rate demand notes

Corporate bonds

Municipal securities

1 unchanged sentence

Foreign currency derivatives

Commodity derivatives

Amounts included in:

10 unchanged sentences

Commercial paper

Variable rate demand notes

Municipal securities

12 unchanged sentences

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”.

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

The Company accounts for its derivative instruments and hedging activities under ASC 815, “Derivatives and Hedging.” The following table presents the fair values of the Company’s derivative instruments:

Derivatives designated as

hedging instruments

Balance Sheet location

Foreign currency exchange contracts:

Receive SGD/pay USD

Accounts receivable, net

Receive CAD/pay USD

Accounts receivable, net

Receive USD/pay MXN

Accounts receivable, net

Receive USD/pay GBP

Accounts receivable, net

Receive RSD/pay USD

Accounts receivable, net

Receive GBP/pay USD

Accounts receivable, net

Receive GBP/pay USD

Accounts receivable, net

Receive USD/pay COP

Commodity contracts

Accounts receivable, net

Foreign currency exchange contracts:

Receive USD/pay CLP

Accrued liabilities

Receive USD/pay EUR

Accrued liabilities

Receive USD/pay CNY

Accrued liabilities

Receive USD/pay EUR

Accrued liabilities

Receive USD/pay NZD

Accrued liabilities

Receive USD/pay AUD

Accrued liabilities

Receive USD/pay ZAR

Commodity contracts

Accrued liabilities

December 31, 2021

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

Derivatives not designated as

hedging instruments under

hedging instruments

Balance Sheet location

Foreign currency exchange contracts

Receive SGD/pay USD

Accounts receivable, net

Receive USD/pay COP

Accounts receivable, net

Receive RSD/pay USD

Accounts receivable, net

Receive USD/pay RUB

Accounts receivable, net

Foreign currency exchange contracts

Receive USD/pay GBP

Accrued liabilities

Receive USD/pay AUD

Accrued liabilities

Receive USD/pay CNY

Accrued liabilities

Receive USD/pay NZD

Accrued liabilities

Receive USD/pay EUR

Accrued liabilities

Receive USD/pay ZAR

Accrued liabilities

Receive USD/pay DKK

Accrued liabilities

Cash Flow Hedging Strategy

The Company uses cash flow hedges to minimize the variability in cash flows of forecasted transactions caused by fluctuations in commodity prices.

The changes in the fair values of derivatives designated as cash flow hedges are recorded in accumulated other comprehensive income (loss) (“AOCI”) and are reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period that the hedged items affect earnings.

The changes in the fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings.

The maximum length of time for which the Company hedges its exposure to the variability in future cash flows is currently less than two years.

The Company has entered into commodity hedge contracts to mitigate the price risk associated with a portion of its forecasted aluminum purchases.

These derivative instruments were designated as part of the Company’s commodity cash flow hedging program.

The objective of this hedging program is to reduce the variability of cash flows associated with future purchases of aluminum.

The total notional values of derivatives that were designated and qualified for this program were $ 98.3 million as of December 31, 2023.

Transactions under the commodity cash flow hedging program were executed beginning in May 2023.

The following table presents the impact that changes in the fair values of derivatives designated as cash flow hedges had on other comprehensive income (“OCI”), AOCI and earnings:

Year ended December 31, 2023

Derivatives designated as

Location of gain (loss)

Gain (loss) reclassified

hedging instruments

recognized in AOCI

recognized in income

from AOCI into income

Commodity contracts

Cost of sales

As of December 31, 2023, the Company estimates that it will reclassify into earnings net gains (losses) of $ 4.1 million from the amount recorded in AOCI as the anticipated cash flows occur during the next 12 months.

Economic (Non-Designated) Hedging Strategy

The Company is exposed to foreign currency exchange rate risks related primarily to its foreign business operations.

During the years ended December 31, 2023, 2022 and 2021, 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, 2023 have terms of approximately one month or less.

The Company does not enter into forward currency exchange contracts for speculation or trading purposes.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(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

The Company has not designated its foreign currency exchange contracts as hedge transactions.

The total notional values of derivatives related to our foreign currency economic hedges were $ 282.7 million and $ 299.8 million as of December 31, 2023 and 2022, respectively.

The net gains (losses) on derivatives not designated as hedging instruments in the consolidated statements of income were as follows:

Gain (loss) recognized

in income on derivatives

Derivatives not designated as

Location of loss

hedging instruments under

recognized in income on

Location of gain (loss)

hedging instruments

recognized in income on derivatives

Foreign currency exchange contracts

Other (expense) income, net

Interest and other income (expense), net

Certain of the Company’s counterparty agreements contain provisions that require the Company to post collateral on derivative instruments in a net liability position.

As of December 31, 2023, $ 3.8 million was held as collateral.

Inventories consist of the following at December 31:

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accumulated depreciation and amortization

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

1 unchanged sentence

(Tabular Dollars in Thousands, Except Per Share Amounts)

Total depreciation and amortization expense recorded was $ 63.0 million, $ 53.7 million and $ 45.7 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Assets under construction are not depreciated until in service date.

GOODWILL AND OTHER INTANGIBLE ASSETS

9 unchanged sentences

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 $ 5.9 million, $ 7.6 million and $ 4.4 million for the years ended December 31, 2023, 2022 and 2021, respectively.

1 unchanged sentence

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:

2028 and thereafter

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(Tabular Dollars in Thousands, Except Per Share Amounts)

The following is the future estimated amortization expense related to amortizing intangibles as of December 31, 2023:

Year Ending December 31:

2029 and thereafter

At December 31, 2023, non-amortizing intangibles primarily consist of indefinite-lived tradenames, flavors and formulas.

1 unchanged sentence

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 $ 0.2 million and $ 5.3 million for the years ended December 31, 2023 and 2021, respectively.

The Company incurred no termination costs for the year ended December 31, 2022.

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, 2023 and 2021.

3 unchanged sentences

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.

Interest on borrowings under the line of credit is based on Comerica’s base (prime) rate minus 1.00 % to 1.50 %, depending upon certain financial ratios maintained by the Company.

The Company had no outstanding borrowings on this line of credit at December 31, 2023.

4 unchanged sentences

At December 31, 2023, 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.

As of December 31, 2023, no balance was outstanding on this line of credit.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

18 unchanged sentences

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.

As of December 31, 2023, $ 0.3 million of loss contingencies were included in the Company's accompanying consolidated balance sheet.

As of December 31, 2022, no loss contingencies were included in the Company’s accompanying consolidated balance sheet.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

1 unchanged sentence

(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.

ACCUMULATED OTHER COMPREHENSIVE LOSS

1 unchanged sentence

Accumulated net unrealized loss on available-for-sale securities

Foreign currency translation adjustments, net of tax

Accumulated foreign currency translation adjustments

Accumulated net gains on commodity derivatives

Total accumulated other comprehensive loss

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.

TREASURY STOCK

On June 14, 2022, the Company’s Board of Directors authorized a share repurchase program for the purchase of up to $ 500.0 million of the Company’s outstanding common stock (the “June 2022 Repurchase Plan”).

During the year ended December 31, 2023, the Company purchased approximately 3.3 million shares of common stock at an average purchase price of $ 55.52 per share, for a total amount of approximately $ 182.8 million (excluding broker commissions), which exhausted the availability 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, 2023, the Company purchased approximately 4.8 million shares of common stock at an average purchase price of $ 54.31 per share, for a total amount of approximately $ 260.3 million (excluding broker commissions), under the November 2022 Repurchase Plan.

As of February 27, 2024, $ 142.4 million remained available for repurchase under the November 2022 Repurchase Plan.

On November 7, 2023, 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 2023 Repurchase Plan”).

During the year ended December 31, 2023, no shares were repurchased under the November 2023 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.

As of February 27, 2024, $ 500.0 million remained available for repurchase under the November 2023 Repurchase Plan.

The aggregate amount of the Company’s outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $ 642.4 million as of February 27, 2024.

During the year ended December 31, 2023, 3.8 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 $ 214.2 million.

2 unchanged sentences

STOCK-BASED COMPENSATION

The Company has two stock-based compensation plans under which shares were available for grant at December 31, 2022:

The Company has two stock-based compensation plans under which shares were available for grant as of December 31, 2023:

(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”).

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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”).

3 unchanged sentences

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.

5 unchanged sentences

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.

Performance share units will generally vest based on an award recipient's continuous employment through a cumulative three - year performance period and the achievement of financial performance goals specified for the applicable award during such performance period.

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.

1 unchanged sentence

As of December 31, 2023 deferrals under the Deferred Compensation Plan are solely comprised of cash compensation and equity compensation and are not material in the aggregate.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

8 unchanged sentences

As of December 31, 2023, 260,428 shares of the Company’s common stock had been granted under the 2017 Directors Plan, and 2,239,572 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.

10 unchanged sentences

● 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.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

● There may be rare instances where these guidelines would place a hardship on a non-employee director.

5 unchanged sentences

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.

14 unchanged sentences

The Company uses historical exercise patterns of previously granted options to derive employee behavioral patterns used to forecast expected exercise patterns.

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 its stock option plans as follows:

(in thousands)

Intrinsic Value

Outstanding at January 1, 2023

7 unchanged sentences

Exercisable at December 31, 2023

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, 2023:

1 unchanged sentence

Options Exercisable

Weighted Average

Range of Exercise

3 unchanged sentences

Cash received from option exercises under all plans for the years ended December 31, 2023, 2022 and 2021 was $ 130.3 million, $ 64.0 million and $ 45.7 million, respectively.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

At December 31, 2023, there was $ 96.3 million of total unrecognized compensation expense related to non-vested options granted to employees under the Company’s share-based payment plans.

3 unchanged sentences

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:

15 unchanged sentences

At December 31, 2023, other share-based awards outstanding included grants that vest over three years payable in the first quarters of 2024, 2025 and 2026.

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

1 unchanged sentence

(Tabular Dollars in Thousands, Except Per Share Amounts)

At December 31, 2023, there was $ 0.3 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.

Employee and Non-Employee Share-Based Compensation Expense

10 unchanged sentences

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.

Consolidated retained earnings at December 31, 2023 included undistributed after-tax earnings from certain non-U.S.

subsidiaries that were not indefinitely reinvested.

At December 31, 2023, the Company had a deferred tax liability of $ 8.4 million for the estimated taxes associated with the repatriation of these earnings.

Undistributed earnings of approximately $ 583 million in foreign subsidiaries were indefinitely reinvested in foreign operations.

Quantification of the deferred tax liability, if any, associated with indefinitely reinvested earnings was not practicable.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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

2 unchanged sentences

*After intercompany royalties, management fees and interest charges from the Company’s domestic to foreign entities of $ 101.4 million, $ 85.0 million and $ 61.1 million for the years ended December 31, 2023, 2022 and 2021, 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:

8 unchanged sentences

Stock-based compensation

Intra-company transfer benefit

Residual tax on undistributed foreign earnings

Foreign rate differential

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Operating lease ROU assets

Bang transaction gain

Other deferred tax liabilities

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During the years ended December 31, 2023, 2022 and 2021, 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.

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 $ 0.2 million for the year ended December 31, 2023, increase the Company’s provision for income taxes by $ 2.7 million for the year ended December 31, 2022 and decrease the Company’s provision for income taxes by $ 8.1 million for the year ended December 31, 2021.

At December 31, 2023, the Company had net operating loss carryforwards of approximately $ 103.9 million.

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(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, 2023, 2022 and 2021:

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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 is in various stages of examination with certain states and certain foreign jurisdictions.

The Company’s 2020 through 2022 U.S.

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The Company’s state income tax returns are subject to examination for the 2019 through 2022 tax years.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

The United Kingdom and Ireland income tax returns are subject to examination for the 2019 through 2022 tax years.

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:

A reconciliation of the weighted average shares used in the basic and diluted earnings per common share computations for the years ended December 31, 2023, 2022 and 2021 is presented below (in thousands):

Weighted-average shares outstanding:

Dilutive securities

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

For the years ended December 31, 2023, 2022 and 2021, options and awards outstanding totaling 3.3 million shares, 6.0 million shares and 1.6 million shares, respectively, were excluded from the calculations as their effect would have been antidilutive.

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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 Water TM 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 Unleashed TM FMBs and (iv) Other segment, which is comprised of the AFF Third-Party Products.

(i) Monster Energy® Drinks segment, which is primarily comprised of the Company’s Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Reign Storm® total wellness energy drinks, Bang Energy® drinks and Monster Tour Water®, (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, Predator® and Fury®, (iii) Alcohol Brands segment, which is comprised of various craft beers, hard seltzers and 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.

In some cases, the Company sells ready-to-drink packaged drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience and gas 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 and gas 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.

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

Generally, the Alcohol Brands segment has 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.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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:

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(1) Includes $ 40.0 million, $ 40.0 million and $ 41.5 million for the years ended December 31, 2023, 2022 and 2021, 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)

(2) For the year ended December 31, 2022, effectively from February 17, 2022 to December 31, 2022 .

Depreciation and amortization:

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Corporate and unallocated expenses were $ 515.0 million for the year ended December 31, 2023 and included $ 331.7 million of payroll costs, of which $ 67.1 million was attributable to stock-based compensation expense (See Note 16, “Stock-Based Compensation”), $ 95.2 million of professional service expenses, including accounting and legal costs, $ 11.7 million of insurance costs and $ 76.4 million of other operating expenses.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

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Such sales were approximately 38 %, 37 % and 37 % of net sales for the years ended December 31, 2023, 2022 and 2021, 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, 2023 and 2022 are as follows:

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TCCC commissions, based on sales to the TCCC Independent Bottlers for the year ended December 31, 2023 were $ 32.0 million, and are included in operating expenses in the consolidated statements of income.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

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Such contract manufacturing expenses were $ 35.4 million, $ 30.6 million and $ 31.5 million for the years ended December 31, 2023, 2022 and 2021, 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:

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Expenses incurred with such company in connection with promotional materials purchased during the years ended December 31, 2023, 2022 and 2021 were $ 4.0 million, $ 6.0 million and $ 3.6 million, respectively.

During the year ended December 31, 2022, the Company occasionally chartered a private aircraft that is indirectly owned by Mr.

The Company occasionally charters a private aircraft that is indirectly owned by Mr.

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.

Sacks is accompanied by guests and other Company personnel when using such aircraft for business travel.

During the years ended December 31, 2023 and 2022, the Company incurred costs of $ 0.14 million and $ 0.08 million, respectively.

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts)

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.

In October 2023, the partnership made a special, one-time distribution to each of the partners, reflecting the amount of their initial capital contributions.

This partnership meets the definition of a Variable Interest Entity (“VIE”) for which the Company has determined that it is the primary beneficiary.

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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.

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

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures