--- ticker: MNST company: Monster Beverage Corporation filing_type: 10-K year_current: 2024 year_prior: 2023 risks_added: 11 risks_removed: 10 risks_modified: 46 risks_unchanged: 17 source: SEC EDGAR url: https://riskdiff.com/mnst/2024-vs-2023/ markdown_url: https://riskdiff.com/mnst/2024-vs-2023/index.md generated: 2026-05-10 --- # Monster Beverage Corporation: 10-K Risk Factor Changes 2024 vs 2023 > Source: U.S. Securities and Exchange Commission (EDGAR) > Generated: 2026-05-10 > All data extracted directly from official filings. No hallucinated content. > **[AI-Generated Summary]** The paragraph below was produced by a language > model and may contain errors. All other content on this page is deterministically > extracted from the original SEC filing. > Monster Beverage's 2024 10-K Risk Factors section reflects a shift in acquisition focus, with the CANarchy acquisition risk removed and Bang Energy acquisition risk added, signaling a change in M&A priorities. The company elevated financial management risks by adding dedicated sections on "Liquidity and Capital Resources" and "Interest and Other Income (Expense), net," indicating increased emphasis on capital structure and financial sustainability. Nearly half of the existing risks (46 out of 84 total risks) underwent substantive modifications, suggesting Monster reassessed and recalibrated disclosures across operational, market, and strategic risk categories. --- ## Summary | Status | Count | |--------|-------| | New risks added | 11 | | Risks removed | 10 | | Risks modified | 46 | | Unchanged | 17 | --- ## New in Current Filing: Bang Energy Acquisition On July 31, 2023, we completed the Bang Transaction. The acquired assets primarily include the Bang Energy® drink business and a beverage production facility in Phoenix, AZ. ​ --- ## New in Current Filing: Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below. --- ## New in Current Filing: Interest and Other Income (Expense), net ​ Interest and other income (expense), net, was $115.1 million for the year ended December 31, 2023, as compared to interest and other income (expense), net, of ($12.8) million for the year ended December 31, 2022. Foreign currency transaction gains (losses) were ($60.2) million and ($37.9) million for the years ended December 31, 2023 and 2022, respectively. Interest income was $130.0 million and $29.7 million for the years ended December 31, 2023 and 2022, respectively. Interest and other income (expense), net included a gain on transaction of $45.4 million related to the acquisition of Bang Energy ("Bang Transaction Gain") for the year ended December 31, 2023. --- ## New in Current Filing: Report of Independent Registered Public Accounting Firm ​ To the Stockholders and the Board of Directors of Monster Beverage Corporation and Subsidiaries ​ --- ## New in Current Filing: 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 ​ ​ ​ 79 79 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM​To the Board of Directors and Stockholders ofMonster Beverage CorporationCorona, California​Opinion on the Financial StatementsWe 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 OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaMarch 1, 2023We began serving as the Company's auditor in 1991. In 2023, we became the predecessor auditor.​80 Table of Contents Table of Contents Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM​To the Board of Directors and Stockholders ofMonster Beverage CorporationCorona, California​Opinion on the Financial StatementsWe 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 OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion./s/ DELOITTE & TOUCHE LLPCosta Mesa, CaliforniaMarch 1, 2023We began serving as the Company's auditor in 1991. In 2023, we became the predecessor auditor.​ --- ## New in Current Filing: Opinion on the Financial Statements 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. --- ## New in Current Filing: Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ DELOITTE & TOUCHE LLP Costa Mesa, California March 1, 2023 We began serving as the Company's auditor in 1991. In 2023, we became the predecessor auditor. ​ 80 80 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2023 AND 2022 (In Thousands, Except Par Value)​​​​​​​​​December 31, ​December 31, ​ 2023 2022ASSETS​​​​​​CURRENT ASSETS:​​​​​​Cash and cash equivalents​$ 2,297,675​$ 1,307,141Short-term investments​ 955,605 1,362,314Accounts receivable, net​ 1,193,964 1,016,203Inventories​ 971,406 935,631Prepaid expenses and other current assets​ 116,195 109,823Prepaid income taxes​ 54,151 33,785Total current assets​ 5,588,996 4,764,897​​​​​​​INVESTMENTS​ 76,431 61,443PROPERTY AND EQUIPMENT, net​ 890,796 516,897DEFERRED INCOME TAXES, net​ 175,003 177,039GOODWILL​ 1,417,941 1,417,941OTHER INTANGIBLE ASSETS, net​ 1,427,139 1,220,410OTHER ASSETS​ 110,216 134,478Total Assets​$ 9,686,522 $ 8,293,105​​​​​​​LIABILITIES AND STOCKHOLDERS' EQUITY​​​​​​CURRENT LIABILITIES:​​​​​​Accounts payable​$ 564,379 $ 444,265Accrued liabilities​ 183,988 172,991Accrued promotional allowances​ 269,061 255,631Deferred revenue​ 41,914 43,311Accrued compensation​ 87,392 72,463Income taxes payable​ 14,955 13,317Total current liabilities​ 1,161,689 1,001,978​​​​​​​DEFERRED REVENUE​ 204,251 223,800​​​​​​​OTHER LIABILITIES​​ 91,838​​ 42,286​​​​​​​COMMITMENTS AND CONTINGENCIES (Note 13)​​​​​​​​​​​​​STOCKHOLDERS' EQUITY1:​​​​​​Common stock - $0.005 par value; 5,000,000 shares authorized; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023;1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022​​ 5,613​​ 6,418Additional paid-in capital​ 4,975,115 4,776,804Retained earnings​ 5,939,736 9,001,173Accumulated other comprehensive loss​ (125,337) (159,073)Common stock in treasury, at cost; 81,021 shares and 239,088 shares as of December 31, 2023 and December 31, 2022, respectively ​ (2,566,383) (6,600,281)Total stockholders' equity​ 8,228,744 7,025,041Total Liabilities and Stockholders' Equity​$ 9,686,522 $ 8,293,105​1Stock 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.​81 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2023 AND 2022 (In Thousands, Except Par Value)​​​​​​​​​December 31, ​December 31, ​ 2023 2022ASSETS​​​​​​CURRENT ASSETS:​​​​​​Cash and cash equivalents​$ 2,297,675​$ 1,307,141Short-term investments​ 955,605 1,362,314Accounts receivable, net​ 1,193,964 1,016,203Inventories​ 971,406 935,631Prepaid expenses and other current assets​ 116,195 109,823Prepaid income taxes​ 54,151 33,785Total current assets​ 5,588,996 4,764,897​​​​​​​INVESTMENTS​ 76,431 61,443PROPERTY AND EQUIPMENT, net​ 890,796 516,897DEFERRED INCOME TAXES, net​ 175,003 177,039GOODWILL​ 1,417,941 1,417,941OTHER INTANGIBLE ASSETS, net​ 1,427,139 1,220,410OTHER ASSETS​ 110,216 134,478Total Assets​$ 9,686,522 $ 8,293,105​​​​​​​LIABILITIES AND STOCKHOLDERS' EQUITY​​​​​​CURRENT LIABILITIES:​​​​​​Accounts payable​$ 564,379 $ 444,265Accrued liabilities​ 183,988 172,991Accrued promotional allowances​ 269,061 255,631Deferred revenue​ 41,914 43,311Accrued compensation​ 87,392 72,463Income taxes payable​ 14,955 13,317Total current liabilities​ 1,161,689 1,001,978​​​​​​​DEFERRED REVENUE​ 204,251 223,800​​​​​​​OTHER LIABILITIES​​ 91,838​​ 42,286​​​​​​​COMMITMENTS AND CONTINGENCIES (Note 13)​​​​​​​​​​​​​STOCKHOLDERS' EQUITY1:​​​​​​Common stock - $0.005 par value; 5,000,000 shares authorized; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023;1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022​​ 5,613​​ 6,418Additional paid-in capital​ 4,975,115 4,776,804Retained earnings​ 5,939,736 9,001,173Accumulated other comprehensive loss​ (125,337) (159,073)Common stock in treasury, at cost; 81,021 shares and 239,088 shares as of December 31, 2023 and December 31, 2022, respectively ​ (2,566,383) (6,600,281)Total stockholders' equity​ 8,228,744 7,025,041Total Liabilities and Stockholders' Equity​$ 9,686,522 $ 8,293,105​1Stock 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.​ --- ## New in Current Filing: Balance, December 31, 2022 1,283,688 $ 6,418 $ 4,776,804 $ 9,001,173 $ (159,073) ​ (239,088) $ (6,600,281) $ 7,025,041 Stock-based compensation ​ - ​ ​ - ​ ​ 67,664 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 67,664 Stock options/awards ​ 8,904 ​ ​ 45 ​ ​ 130,222 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 130,267 Unrealized gain (loss), net on available-for-sale securities ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 5,085 ​ - ​ ​ - ​ ​ 5,085 Retirement of treasury stock ​ (170,000) ​ ​ (850) ​ ​ 425 ​ ​ (4,692,425) ​ ​ - ​ 170,000 ​ ​ 4,692,850 ​ ​ - Repurchase of common stock ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (11,933) ​ ​ (658,952) ​ ​ (658,952) Foreign currency translation ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 24,241 ​ - ​ ​ - ​ ​ 24,241 Net gains on commodity derivatives ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ 4,410 ​ - ​ ​ - ​ ​ 4,410 Net income - ​ ​ - ​ ​ - ​ ​ 1,630,988 ​ ​ - ​ - ​ ​ - ​ ​ 1,630,988 --- ## New in Current Filing: (Tabular Dollars in Thousands, Except Per Share Amounts) ​ 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.2. ACQUISITIONS Bang Energy​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 $16.1 million of acquisition costs related to the Bang Transaction. Acquisition costs are included in operating expenses within the consolidated statements of income.The following table summarizes the final fair value allocations of the Bang Transaction:​​​​​​​​​​Identifiable ​​​​​Assets​​​​​Acquired and ​​​​​(Liabilities)​​Consideration ​ Assumed TransferredIntangibles - trademarks (non-amortizing)​$ 209,000​$ - Intangibles - customer relationships (amortizing) ​ 23,000 ​ - Property and equipment, net ​ 143,200 ​ - Inventory ​ 30,496 ​ - Right-of-use assets ​ 12,523 ​ - Operating lease liabilities ​ (12,523) ​ - Working capital (excluding inventory) ​ 2,871 ​ - Other ​ 200 ​ - Cash ​ - ​ 363,385Bang Transaction Gain ​ - ​ 45,382Total​$ 408,767​$ 408,767​ 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. --- ## New in Current Filing: 2. ACQUISITIONS Bang Energy ​ 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. --- ## New in Current Filing: Available-for-sale ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial paper ​ $ 163,775 ​ $ - ​ $ 1 ​ $ 163,774 ​ $ 1 ​ $ - Certificates of deposit ​ ​ 15,590 ​ ​ - ​ ​ - ​ ​ 15,590 ​ ​ - ​ ​ - Municipal securities ​ 361 ​ ​ - ​ ​ - ​ ​ 361 ​ ​ - ​ ​ - U.S. government agency securities ​ 116,524 ​ 90 ​ 66 ​ 116,548 ​ 66 ​ - U.S. treasuries ​ ​ 412,936 ​ 205 ​ 1,084 ​ 412,057 ​ 1,084 ​ - Corporate bonds ​ ​ 247,340 ​ ​ 89 ​ ​ 154 ​ ​ 247,275 ​ ​ 154 ​ ​ - Long-term: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency securities ​ ​ 23,485 ​ ​ 51 ​ ​ 5 ​ ​ 23,531 ​ ​ 5 ​ ​ - U.S. treasuries ​ ​ 35,896 ​ ​ 79 ​ ​ 8 ​ ​ 35,967 ​ ​ 8 ​ ​ - Corporate bonds ​ ​ 16,903 ​ ​ 32 ​ ​ 2 ​ ​ 16,933 ​ ​ 2 ​ ​ - Total ​ $ 1,032,810 ​ $ 546 ​ $ 1,320 ​ $ 1,032,036 ​ $ 1,320 ​ $ - ​ 100 100 --- ## No Match in Current: CANarchy Acquisition *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* On February 17, 2022, we completed the CANarchy Transaction. The CANarchy Transaction facilitates our entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, and the Wasatch® family of brands including Apricot Hefeweizen to our beverage portfolio. The CANarchy Transaction did not include CANarchy's stand-alone restaurants. Our organizational structure for our existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team. ​ 44 44 Table of ContentsRussia-Ukraine ConflictDuring the year ended December 31, 2022, the Russia-Ukraine conflict did not have a material impact on our financial position, results of operations and liquidity. Net sales in Russia and Ukraine combined were approximately 1.1% of our total net sales for the twelve months ended December 31, 2021. We will continue to monitor future developments relative to this conflict and its potential impacts.​The COVID - 19 PandemicThe COVID-19 pandemic has directly and indirectly impacted our business. The duration and severity of this impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information regarding the COVID-19 pandemic, as well as the emergence of new variants, the actions taken to limit its spread and the economic impact on local, regional, national and international markets. See "Part I, Item 1A - Risk Factors."Pricing ActionsIn 2022, we implemented measures to mitigate our increased costs through price increases and reductions in promotions ("Pricing Actions"). We implemented a price increase effective September 1, 2022 in the United States and implemented price increases at various times in certain international markets, all of which positively impacted gross profit margins in the third and fourth quarters of 2022.Distribution and Supply ChainSince the beginning of the COVID-19 pandemic and the subsequent increased demand for our energy drinks, we prioritized ensuring product availability for our customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands.During the year ended December 31, 2022, we experienced a significant increase in cost of sales, resulting in a material decrease in both gross profit and gross profit as a percentage of net sales, relative to the comparative year ended December 31, 2021. The increase in cost of sales was primarily due to (i) increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, (ii) increased logistical costs, (iii) increased aluminum can costs and (iv) geographical and product sales mix.In the third and fourth quarters of 2022 we began to see an improvement in our gross profit margins as compared to the second quarter of 2022. This improvement was primarily attributable to (i) Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs. Furthermore, we experienced significant increases in distribution expenses, primarily the result of increased warehousing expenses, as well as increases in other logistical expenses, which adversely impacted operating costs.We continue to address the controllable challenges in our supply chain.Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below.45 Table of Contents Table of Contents Table of Contents Russia-Ukraine ConflictDuring the year ended December 31, 2022, the Russia-Ukraine conflict did not have a material impact on our financial position, results of operations and liquidity. Net sales in Russia and Ukraine combined were approximately 1.1% of our total net sales for the twelve months ended December 31, 2021. We will continue to monitor future developments relative to this conflict and its potential impacts.​The COVID - 19 PandemicThe COVID-19 pandemic has directly and indirectly impacted our business. The duration and severity of this impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information regarding the COVID-19 pandemic, as well as the emergence of new variants, the actions taken to limit its spread and the economic impact on local, regional, national and international markets. See "Part I, Item 1A - Risk Factors."Pricing ActionsIn 2022, we implemented measures to mitigate our increased costs through price increases and reductions in promotions ("Pricing Actions"). We implemented a price increase effective September 1, 2022 in the United States and implemented price increases at various times in certain international markets, all of which positively impacted gross profit margins in the third and fourth quarters of 2022.Distribution and Supply ChainSince the beginning of the COVID-19 pandemic and the subsequent increased demand for our energy drinks, we prioritized ensuring product availability for our customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands.During the year ended December 31, 2022, we experienced a significant increase in cost of sales, resulting in a material decrease in both gross profit and gross profit as a percentage of net sales, relative to the comparative year ended December 31, 2021. The increase in cost of sales was primarily due to (i) increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, (ii) increased logistical costs, (iii) increased aluminum can costs and (iv) geographical and product sales mix.In the third and fourth quarters of 2022 we began to see an improvement in our gross profit margins as compared to the second quarter of 2022. This improvement was primarily attributable to (i) Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs. Furthermore, we experienced significant increases in distribution expenses, primarily the result of increased warehousing expenses, as well as increases in other logistical expenses, which adversely impacted operating costs.We continue to address the controllable challenges in our supply chain.Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below. --- ## No Match in Current: Russia-Ukraine Conflict *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* During the year ended December 31, 2022, the Russia-Ukraine conflict did not have a material impact on our financial position, results of operations and liquidity. Net sales in Russia and Ukraine combined were approximately 1.1% of our total net sales for the twelve months ended December 31, 2021. We will continue to monitor future developments relative to this conflict and its potential impacts. ​ --- ## No Match in Current: The COVID - 19 Pandemic *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* The COVID-19 pandemic has directly and indirectly impacted our business. The duration and severity of this impact will depend on future developments that are highly uncertain and cannot be accurately predicted, including new information regarding the COVID-19 pandemic, as well as the emergence of new variants, the actions taken to limit its spread and the economic impact on local, regional, national and international markets. See "Part I, Item 1A - Risk Factors." --- ## No Match in Current: Pricing Actions *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* In 2022, we implemented measures to mitigate our increased costs through price increases and reductions in promotions ("Pricing Actions"). We implemented a price increase effective September 1, 2022 in the United States and implemented price increases at various times in certain international markets, all of which positively impacted gross profit margins in the third and fourth quarters of 2022. --- ## No Match in Current: Other (Expense) Income, net *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* Other (expense) income, net, was ($12.8) million for the year ended December 31, 2022, as compared to other (expense) income, net, of $4.0 million for the year ended December 31, 2021. Foreign currency transaction gains (losses) were ($37.9) million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. Interest income was $29.7 million and $4.2 million for the years ended December 31, 2022 and 2021, respectively. --- ## No Match in Current: Accrued Promotional Allowances - Refer to Note 3 to the financial statements *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* 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: 79 79 Table of Contents●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 LLPCosta Mesa, CaliforniaMarch 1, 2023We have served as the Company's auditor since 1991.​80 Table of Contents Table of Contents Table of Contents ●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 LLPCosta Mesa, CaliforniaMarch 1, 2023We have served as the Company's auditor since 1991.​ /s/ DELOITTE & TOUCHE LLP Costa Mesa, California March 1, 2023 We have served as the Company's auditor since 1991. ​ 80 80 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2022 AND 2021 (In Thousands, Except Par Value)​​​​​​​​​December 31, ​December 31, ​ 2022 2021ASSETS​​​​​​CURRENT ASSETS:​​​​​​Cash and cash equivalents​$ 1,307,141​$ 1,326,462Short-term investments​ 1,362,314 1,749,727Accounts receivable, net​ 1,016,203 896,658Inventories​ 935,631 593,357Prepaid expenses and other current assets​ 109,823 82,668Prepaid income taxes​ 33,785 33,238Total current assets​ 4,764,897 4,682,110​​​​​​​INVESTMENTS​ 61,443 99,419PROPERTY AND EQUIPMENT, net​ 516,897 313,753DEFERRED INCOME TAXES​ 177,039 225,221GOODWILL​ 1,417,941 1,331,643OTHER INTANGIBLE ASSETS, net​ 1,220,410 1,072,386OTHER ASSETS​ 134,478 80,252Total Assets​$ 8,293,105 $ 7,804,784​​​​​​​LIABILITIES AND STOCKHOLDERS' EQUITY​​​​​​CURRENT LIABILITIES:​​​​​​Accounts payable​$ 444,265 $ 404,263Accrued liabilities​ 172,991 210,964Accrued promotional allowances​ 255,631 211,461Deferred revenue​ 43,311 42,530Accrued compensation​ 72,463 65,459Income taxes payable​ 13,317 30,399Total current liabilities​ 1,001,978 965,076​​​​​​​DEFERRED REVENUE​ 223,800 243,249​​​​​​​OTHER LIABILITIES​​ 42,286​​ 29,508​​​​​​​COMMITMENTS AND CONTINGENCIES (Note 13)​​​​​​​​​​​​​STOCKHOLDERS' EQUITY:​​​​​​Common stock - $0.005 par value; 1,250,000 shares authorized; 641,844 shares issued and 522,300 shares outstanding as of December 31, 2022; 640,043 shares issued and 529,323 shares outstanding as of December 31, 2021​​ 3,209​​ 3,200Additional paid-in capital​ 4,780,013 4,652,620Retained earnings​ 9,001,173 7,809,549Accumulated other comprehensive loss​ (159,073) (69,165)Common stock in treasury, at cost; 119,544 shares and 110,720 shares as of December 31, 2022 and December 31, 2021, respectively ​ (6,600,281) (5,829,253)Total stockholders' equity​ 7,025,041 6,566,951Total Liabilities and Stockholders' Equity​$ 8,293,105 $ 7,804,784​See accompanying notes to consolidated financial statements.​81 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2022 AND 2021 (In Thousands, Except Par Value)​​​​​​​​​December 31, ​December 31, ​ 2022 2021ASSETS​​​​​​CURRENT ASSETS:​​​​​​Cash and cash equivalents​$ 1,307,141​$ 1,326,462Short-term investments​ 1,362,314 1,749,727Accounts receivable, net​ 1,016,203 896,658Inventories​ 935,631 593,357Prepaid expenses and other current assets​ 109,823 82,668Prepaid income taxes​ 33,785 33,238Total current assets​ 4,764,897 4,682,110​​​​​​​INVESTMENTS​ 61,443 99,419PROPERTY AND EQUIPMENT, net​ 516,897 313,753DEFERRED INCOME TAXES​ 177,039 225,221GOODWILL​ 1,417,941 1,331,643OTHER INTANGIBLE ASSETS, net​ 1,220,410 1,072,386OTHER ASSETS​ 134,478 80,252Total Assets​$ 8,293,105 $ 7,804,784​​​​​​​LIABILITIES AND STOCKHOLDERS' EQUITY​​​​​​CURRENT LIABILITIES:​​​​​​Accounts payable​$ 444,265 $ 404,263Accrued liabilities​ 172,991 210,964Accrued promotional allowances​ 255,631 211,461Deferred revenue​ 43,311 42,530Accrued compensation​ 72,463 65,459Income taxes payable​ 13,317 30,399Total current liabilities​ 1,001,978 965,076​​​​​​​DEFERRED REVENUE​ 223,800 243,249​​​​​​​OTHER LIABILITIES​​ 42,286​​ 29,508​​​​​​​COMMITMENTS AND CONTINGENCIES (Note 13)​​​​​​​​​​​​​STOCKHOLDERS' EQUITY:​​​​​​Common stock - $0.005 par value; 1,250,000 shares authorized; 641,844 shares issued and 522,300 shares outstanding as of December 31, 2022; 640,043 shares issued and 529,323 shares outstanding as of December 31, 2021​​ 3,209​​ 3,200Additional paid-in capital​ 4,780,013 4,652,620Retained earnings​ 9,001,173 7,809,549Accumulated other comprehensive loss​ (159,073) (69,165)Common stock in treasury, at cost; 119,544 shares and 110,720 shares as of December 31, 2022 and December 31, 2021, respectively ​ (6,600,281) (5,829,253)Total stockholders' equity​ 7,025,041 6,566,951Total Liabilities and Stockholders' Equity​$ 8,293,105 $ 7,804,784​See accompanying notes to consolidated financial statements.​ --- ## No Match in Current: Balance, January 1, 2020 *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* 636,460 $ 3,182 $ 4,397,511 $ 5,022,480 $ (32,387) (99,762) $ (5,219,505) $ 4,171,281 Stock-based compensation - ​ ​ - ​ ​ 67,546 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 67,546 Exercise of stock options 2,202 ​ ​ 11 ​ ​ 72,925 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 72,936 Unrealized loss on available-for-sale securities - ​ - ​ - ​ - ​ (110) - ​ - ​ (110) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (10,803) ​ ​ (595,918) ​ ​ (595,918) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ 35,531 ​ - ​ ​ - ​ ​ 35,531 Net income - ​ ​ - ​ ​ - ​ ​ 1,409,594 ​ ​ - ​ - ​ ​ - ​ ​ 1,409,594 --- ## No Match in Current: (Tabular Dollars in Thousands, Except Per Share Amounts) *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ 2. ACQUISITIONS On February 17, 2022, the Company completed its acquisition of CANarchy Craft Brewery Collective LLC ("CANarchy"), a craft beer and hard seltzer company, for $329.5 million in cash (net of cash acquired), after certain working capital adjustments (the "CANarchy Transaction"). The CANarchy Transaction facilitates the Company's entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, the Wasatch® family of brands including Apricot Hefeweizen, as well as certain other brands (collectively the "CANarchy Brands") to the Company's beverage portfolio. The transaction did not include CANarchy's stand-alone restaurants. The Company's organizational structure for its existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team.The Company accounted for the CANarchy Transaction in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations".The following table summarizes the final fair value allocations of the CANarchy Transaction:​​​​​​​​​​Identifiable ​​​​​Assets Acquired ​​​​​and Liabilities​​Consideration ​ Assumed TransferredIntangibles - trademarks (non-amortizing)​$ 89,500​$ - Intangibles - customer relationships (amortizing) ​ 54,500 ​ - Intangibles - permits (non-amortizing) ​ 6,000 ​ - Property and equipment ​ 81,285 ​ - Inventory ​ 18,300 ​ - Right-of-use assets ​ 12,836 ​ - Operating lease liabilities ​ (12,836) ​ - Working capital (excluding inventory) ​ (5,640) ​ - Other ​ (770) ​ - Goodwill ​ 86,298 ​ - Cash ​ 3,248 ​ 332,721Total​$ 332,721​$ 332,721​During the fourth quarter of 2022, the Company identified a measurement period adjustment to the Company's previous purchase accounting estimates for the CANarchy Transaction. The adjustments to the estimated values previously disclosed, resulted from the completed assessment of certain trademarks. As a result, Intangibles - trademarks (non-amortizing) decreased and Goodwill increased by $5.0 million, respectively, from amounts previously reported.The Company determined the fair values as follows:●Trademarks - relief-from-royalty method of the income approach●Customer relationships - distributor method of the income approach●Permits - with-and-without method of the income approach●Property and equipment - cost approach --- ## No Match in Current: 2. ACQUISITIONS *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* On February 17, 2022, the Company completed its acquisition of CANarchy Craft Brewery Collective LLC ("CANarchy"), a craft beer and hard seltzer company, for $329.5 million in cash (net of cash acquired), after certain working capital adjustments (the "CANarchy Transaction"). The CANarchy Transaction facilitates the Company's entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, the Wasatch® family of brands including Apricot Hefeweizen, as well as certain other brands (collectively the "CANarchy Brands") to the Company's beverage portfolio. The transaction did not include CANarchy's stand-alone restaurants. The Company's organizational structure for its existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team. --- ## No Match in Current: Available-for-sale *This section from the 2023 filing does not have a high-confidence textual match in 2024. It may have been removed, merged, or substantially reworded.* ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commercial paper ​ $ 197,712 ​ $ 1 ​ $ 4 ​ $ 197,709 ​ $ 4 ​ $ - Certificates of deposit ​ ​ 10,078 ​ ​ - ​ ​ - ​ ​ 10,078 ​ ​ - ​ ​ - Municipal securities ​ 211,791 ​ ​ 60 ​ ​ 612 ​ ​ 211,239 ​ ​ 612 ​ ​ - U.S. government agency securities ​ 109,697 ​ 3 ​ 715 ​ 108,985 ​ 715 ​ - U.S. treasuries ​ ​ 838,825 ​ 17 ​ 4,539 ​ 834,303 ​ 4,539 ​ - Long-term: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S. government agency securities ​ ​ 2,016 ​ ​ - ​ ​ 3 ​ ​ 2,013 ​ ​ 3 ​ ​ - U.S. treasuries ​ ​ 53,215 ​ ​ 20 ​ ​ 71 ​ ​ 53,164 ​ ​ 71 ​ ​ - Variable rate demand notes ​ ​ 6,266 ​ ​ - ​ ​ - ​ ​ 6,266 ​ ​ - ​ ​ - Total ​ $ 1,429,600 ​ $ 101 ​ $ 5,944 ​ $ 1,423,757 ​ $ 5,944 ​ $ - ​ 100 100 --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks." - Reworded sentence: "The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business." - Reworded sentence: "The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022." - Reworded sentence: "These agreements generally provide for one or 96 96 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​more of the arrangements described above and are of varying durations, typically ranging from one week to one year." - Reworded sentence: "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." **Prior (2023):** ​ The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2022 and 2021.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, typically ranging from one week to one year. The Company's promotional and other allowances for its energy drink products are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company's anticipated liabilities. These accruals are based on agreed upon terms as well as the Company's historical experience with similar programs and require management's judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States. The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2022 and 2021. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses. Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following: 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 95 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience.Disaggregation of RevenueThe following table disaggregates the Company's revenue by geographical markets and reportable segments:​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2022​​​​​​​​​​​Latin​​​​​​​​​​​​​​America​​​​​U.S. and​​​​​​​and​​​Net Sales Canada EMEA1 Asia Pacific Caribbean TotalMonster Energy® Drinks​$ 3,806,351​$ 1,105,302​$ 426,800​$ 494,758​$ 5,833,211Strategic Brands​ 184,844​ 123,440​ 29,386​ 15,820​ 353,490Alcohol Brands2​​ 101,405​​ - ​​ - ​​ - ​​ 101,405Other​ 22,944​ - ​ - ​ - ​ 22,944Total Net Sales​$ 4,115,544​$ 1,228,742​$ 456,186​$ 510,578​$ 6,311,050​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2021​​​​​​​​​​​Latin​​​​​​​​​​​​​​America​​​​​U.S. and​​​​​​​and​​​Net Sales Canada EMEA1 Asia Pacific Caribbean TotalMonster Energy® Drinks​$ 3,455,704​$ 1,004,005​$ 446,023​$ 314,941​$ 5,220,673Strategic Brands​ 158,390​ 99,423​ 26,811​ 10,138​ 294,762Other​ 25,917​ - ​ - ​ - ​ 25,917Total Net Sales​$ 3,640,011​$ 1,103,428​$ 472,834​$ 325,079​$ 5,541,352​96 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 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.The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or 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. The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States. The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022. The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers. Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses. Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following: 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 96 96 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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 for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience.Disaggregation of RevenueThe following table disaggregates the Company's revenue by geographical markets and reportable segments:​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2023​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 4,202,537​$ 1,257,471​$ 484,459​$ 610,622​$ 6,555,089Strategic Brands​ 199,183​ 133,188​ 29,990​ 14,228​ 376,589Alcohol Brands​​ 184,855​​ - ​​ - ​​ - ​​ 184,855Other​ 23,494​ - ​ - ​ - ​ 23,494Total Net Sales​$ 4,610,069​$ 1,390,659​$ 514,449​$ 624,850​$ 7,140,027​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2022​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 3,806,351​$ 1,105,302​$ 426,800​$ 494,758​$ 5,833,211Strategic Brands​ 184,844​ 123,440​ 29,386​ 15,820​ 353,490Alcohol Brands2​​ 101,405​​ - ​​ - ​​ - ​​ 101,405Other​ 22,944​ - ​ - ​ - ​ 22,944Total Net Sales​$ 4,115,544​$ 1,228,742​$ 456,186​$ 510,578​$ 6,311,050​97 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses." - Reworded sentence: "store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses." - Reworded sentence: "A significant amount of the Company's promotional expenses result from payments under sponsorship and endorsement contracts." - Reworded sentence: "92 92 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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." - Reworded sentence: "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.Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources." **Prior (2023):** ​ Advertising and Promotional Expenses - The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company's promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to the periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $460.7 million, $417.6 million and $345.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income.Income Taxes - The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16.Net Income Per Common Share - In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable. Advertising and Promotional Expenses - The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company's promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to the periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $460.7 million, $417.6 million and $345.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income. Income Taxes - The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16. Net Income Per Common Share - In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable. 91 91 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020.Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 10% and 11% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Coca-Cola Europacific Partners accounted for approximately 13%, 12% and 10% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Credit Risk - The Company sells its products nationally and internationally, primarily to bottlers and full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations.Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments.Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Recent Accounting Pronouncements - In October 2021, the FASB issued Accounting Standards Update ("ASU") No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)". ASU No. 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company adopted ASU No. 2021-08 on January 1, 2023, which did not have a material impact on the Company's financial position, results of operations and liquidity.​92 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 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 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 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. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16. 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 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 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. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made. The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements. Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16. 92 92 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable.Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021.Coca-Cola Consolidated, Inc. accounted for approximately 10%, 11% and 12% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively.Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 9% and 10% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively.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 ("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. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations.Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments.Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Recent Accounting Pronouncements - In 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. 93 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Gross Billings** **Key changes:** - Reworded sentence: "Gross billings were $8.23 billion for the year ended December 31, 2023, an increase of approximately $968.1 million, or 13.3% higher than gross billings of $7.26 billion for the year ended December 31, 2022." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on 54 54 Table of Contentsgross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023.​Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022." - Reworded sentence: "In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.55 Table of Contents Table of Contents Table of Contents gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023.​Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022." - Reworded sentence: "gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023." - Reworded sentence: "55 55 Table of ContentsThe following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​​​​​​​​​​​​​​​​ ​ ​ ​ Percentage Percentage​In thousands​​​​​​​​​ Change​Change​​ 2023 2022 2021 23 vs." **Prior (2023):** Gross billings were $7.26 billion for the year ended December 31, 2022, an increase of approximately $837.0 million, or 13.0% higher than gross billings of $6.42 billion for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $285.9 million for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment were $6.74 billion for the year ended December 31, 2022, an increase of approximately $678.4 million, or 11.2% higher than gross billings of $6.06 billion for the year ended December 31, 2021. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on 54 54 Table of Contentsgross billings for the Monster Energy® Drinks segment of approximately $268.7 million for the year ended December 31, 2022. Gross billings for the Strategic Brands segment were $398.7 million for the year ended December 31, 2022, an increase of $58.6 million, or 17.2% higher than gross billings of $340.2 million for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022.Gross billings for the Alcohol Brands segment were $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 gross billings for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022.Gross billings for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of $3.0 million, or 11.5% lower than gross billings of $25.9 million for the year ended December 31, 2021. Promotional allowances, commissions and other expenses, as described in the footnote below, were $990.6 million for the year ended December 31, 2022, an increase of $65.8 million, or 7.1% higher than promotional allowances, commissions and other expenses of $924.7 million for the year ended December 31, 2021. Promotional allowances as a percentage of gross billings were 13.6% and 14.4% for the years ended December 31, 2022 and 2021, respectively.**Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.55 Table of Contents Table of Contents Table of Contents gross billings for the Monster Energy® Drinks segment of approximately $268.7 million for the year ended December 31, 2022. Gross billings for the Strategic Brands segment were $398.7 million for the year ended December 31, 2022, an increase of $58.6 million, or 17.2% higher than gross billings of $340.2 million for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022.Gross billings for the Alcohol Brands segment were $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 gross billings for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022.Gross billings for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of $3.0 million, or 11.5% lower than gross billings of $25.9 million for the year ended December 31, 2021. Promotional allowances, commissions and other expenses, as described in the footnote below, were $990.6 million for the year ended December 31, 2022, an increase of $65.8 million, or 7.1% higher than promotional allowances, commissions and other expenses of $924.7 million for the year ended December 31, 2021. Promotional allowances as a percentage of gross billings were 13.6% and 14.4% for the years ended December 31, 2022 and 2021, respectively.**Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. gross billings for the Monster Energy® Drinks segment of approximately $268.7 million for the year ended December 31, 2022. Gross billings for the Strategic Brands segment were $398.7 million for the year ended December 31, 2022, an increase of $58.6 million, or 17.2% higher than gross billings of $340.2 million for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022. Gross billings for the Alcohol Brands segment were $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 gross billings for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022. Gross billings for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of $3.0 million, or 11.5% lower than gross billings of $25.9 million for the year ended December 31, 2021. Promotional allowances, commissions and other expenses, as described in the footnote below, were $990.6 million for the year ended December 31, 2022, an increase of $65.8 million, or 7.1% higher than promotional allowances, commissions and other expenses of $924.7 million for the year ended December 31, 2021. Promotional allowances as a percentage of gross billings were 13.6% and 14.4% for the years ended December 31, 2022 and 2021, respectively. **Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. 55 55 Table of ContentsThe following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​​​​​​​​​​​​​​​​ ​ ​ ​ Percentage Percentage​In thousands​​​​​​​​​ Change​Change​​ 2022 2021 2020 22 vs. 21​21 vs. 20​Gross Billings​$ 7,261,639​$ 6,424,632​$ 5,328,683 13.0% 20.6%Deferred Revenue​​ 39,969​​ 41,462​​ 42,110​ (3.6)% (1.5)%Less: Promotional allowances, commissions and other expenses***​ (990,558)​ (924,742)​ (772,155) 7.1% 19.8%Net Sales​$ 6,311,050​$ 5,541,352​$ 4,598,638 13.9% 20.5%​***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2022 and 2021 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.SalesThe table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends.Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us.Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses. The 56 Table of Contents Table of Contents Table of Contents The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​​​​​​​​​​​​​​​​ ​ ​ ​ Percentage Percentage​In thousands​​​​​​​​​ Change​Change​​ 2022 2021 2020 22 vs. 21​21 vs. 20​Gross Billings​$ 7,261,639​$ 6,424,632​$ 5,328,683 13.0% 20.6%Deferred Revenue​​ 39,969​​ 41,462​​ 42,110​ (3.6)% (1.5)%Less: Promotional allowances, commissions and other expenses***​ (990,558)​ (924,742)​ (772,155) 7.1% 19.8%Net Sales​$ 6,311,050​$ 5,541,352​$ 4,598,638 13.9% 20.5%​***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2022 and 2021 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.SalesThe table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends.Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us.Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses. The The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Percentage ​ In thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2022 2021 2020 22 vs. 21 ​ 21 vs. 20 ​ Gross Billings ​ $ 7,261,639 ​ $ 6,424,632 ​ $ 5,328,683 13.0 % 20.6 % Deferred Revenue ​ ​ 39,969 ​ ​ 41,462 ​ ​ 42,110 ​ (3.6) % (1.5) % Less: Promotional allowances, commissions and other expenses*** ​ (990,558) ​ (924,742) ​ (772,155) 7.1 % 19.8 % Net Sales ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 13.9 % 20.5 % ​ ***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2022 and 2021 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted. Sales The table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends. Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us. Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses. The 56 56 Table of ContentsCOVID-19 pandemic, including new variants, may also have an impact on consumer behavior and change the seasonal fluctuation of our business. (See "Part I, Item 1 - Business - Seasonality").​​​​​​​​​​​ 2022 2021 2020Net Sales (in Thousands)​​​​​​​​​Quarter 1​$ 1,518,574​$ 1,243,816​$ 1,062,097Quarter 2​ 1,655,260​ 1,461,934​ 1,093,896Quarter 3​ 1,624,286​ 1,410,557​ 1,246,362Quarter 4​ 1,512,930​ 1,425,045​ 1,196,283Total​$ 6,311,050​$ 5,541,352​$ 4,598,638​​​​​​​​​​Less: Alcohol Brands and Other segment net sales (in Thousands)​​​​​​​​​Quarter 1​$ (21,134)​$ (5,727)​$ (5,105)Quarter 2​ (38,428)​ (7,905)​ (6,644)Quarter 3​ (33,265)​ (6,316)​ (8,618)Quarter 4​ (31,522)​ (5,969)​ (6,671)Total​$ (124,349)​$ (25,917)​$ (27,038)​​​​​​​​​​Adjusted Net Sales (in Thousands)¹​​​​​​​​​Quarter 1​$ 1,497,440​$ 1,238,089​$ 1,056,992Quarter 2​ 1,616,832​ 1,454,029​ 1,087,252Quarter 3​ 1,591,021​ 1,404,241​ 1,237,744Quarter 4​ 1,481,408​ 1,419,076​ 1,189,612Total​$ 6,186,701​$ 5,515,435​$ 4,571,600​​​​​​​​​​Energy Drink Case Volume / Sales (in Thousands)​​​​​​​​​Quarter 1​ 168,793​ 138,566​ 115,598Quarter 2​ 184,197​ 161,450​ 116,960Quarter 3​ 182,460​ 159,975​ 139,922Quarter 4​ 166,227​ 153,450​ 132,341Total​ 701,677​ 613,441​ 504,821​​​​​​​​​​Energy Drink Adjusted Average Net Sales Per Case​​​​​​​​​Quarter 1​$ 8.87​$ 8.94​$ 9.14Quarter 2​ 8.78​ 9.01​ 9.30Quarter 3​ 8.72​ 8.78​ 8.85Quarter 4​ 8.91​ 9.25​ 8.99Total​$ 8.82​$ 8.99​$ 9.06​1Excludes Alcohol Brands and Other segment net sales.57 Table of Contents Table of Contents Table of Contents COVID-19 pandemic, including new variants, may also have an impact on consumer behavior and change the seasonal fluctuation of our business. (See "Part I, Item 1 - Business - Seasonality").​​​​​​​​​​​ 2022 2021 2020Net Sales (in Thousands)​​​​​​​​​Quarter 1​$ 1,518,574​$ 1,243,816​$ 1,062,097Quarter 2​ 1,655,260​ 1,461,934​ 1,093,896Quarter 3​ 1,624,286​ 1,410,557​ 1,246,362Quarter 4​ 1,512,930​ 1,425,045​ 1,196,283Total​$ 6,311,050​$ 5,541,352​$ 4,598,638​​​​​​​​​​Less: Alcohol Brands and Other segment net sales (in Thousands)​​​​​​​​​Quarter 1​$ (21,134)​$ (5,727)​$ (5,105)Quarter 2​ (38,428)​ (7,905)​ (6,644)Quarter 3​ (33,265)​ (6,316)​ (8,618)Quarter 4​ (31,522)​ (5,969)​ (6,671)Total​$ (124,349)​$ (25,917)​$ (27,038)​​​​​​​​​​Adjusted Net Sales (in Thousands)¹​​​​​​​​​Quarter 1​$ 1,497,440​$ 1,238,089​$ 1,056,992Quarter 2​ 1,616,832​ 1,454,029​ 1,087,252Quarter 3​ 1,591,021​ 1,404,241​ 1,237,744Quarter 4​ 1,481,408​ 1,419,076​ 1,189,612Total​$ 6,186,701​$ 5,515,435​$ 4,571,600​​​​​​​​​​Energy Drink Case Volume / Sales (in Thousands)​​​​​​​​​Quarter 1​ 168,793​ 138,566​ 115,598Quarter 2​ 184,197​ 161,450​ 116,960Quarter 3​ 182,460​ 159,975​ 139,922Quarter 4​ 166,227​ 153,450​ 132,341Total​ 701,677​ 613,441​ 504,821​​​​​​​​​​Energy Drink Adjusted Average Net Sales Per Case​​​​​​​​​Quarter 1​$ 8.87​$ 8.94​$ 9.14Quarter 2​ 8.78​ 9.01​ 9.30Quarter 3​ 8.72​ 8.78​ 8.85Quarter 4​ 8.91​ 9.25​ 8.99Total​$ 8.82​$ 8.99​$ 9.06​1Excludes Alcohol Brands and Other segment net sales. COVID-19 pandemic, including new variants, may also have an impact on consumer behavior and change the seasonal fluctuation of our business. (See "Part I, Item 1 - Business - Seasonality"). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Net Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,518,574 ​ $ 1,243,816 ​ $ 1,062,097 Quarter 2 ​ 1,655,260 ​ 1,461,934 ​ 1,093,896 Quarter 3 ​ 1,624,286 ​ 1,410,557 ​ 1,246,362 Quarter 4 ​ 1,512,930 ​ 1,425,045 ​ 1,196,283 Total ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Alcohol Brands and Other segment net sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ (21,134) ​ $ (5,727) ​ $ (5,105) Quarter 2 ​ (38,428) ​ (7,905) ​ (6,644) Quarter 3 ​ (33,265) ​ (6,316) ​ (8,618) Quarter 4 ​ (31,522) ​ (5,969) ​ (6,671) Total ​ $ (124,349) ​ $ (25,917) ​ $ (27,038) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Net Sales (in Thousands)¹ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,497,440 ​ $ 1,238,089 ​ $ 1,056,992 Quarter 2 ​ 1,616,832 ​ 1,454,029 ​ 1,087,252 Quarter 3 ​ 1,591,021 ​ 1,404,241 ​ 1,237,744 Quarter 4 ​ 1,481,408 ​ 1,419,076 ​ 1,189,612 Total ​ $ 6,186,701 ​ $ 5,515,435 ​ $ 4,571,600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Case Volume / Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ 168,793 ​ 138,566 ​ 115,598 Quarter 2 ​ 184,197 ​ 161,450 ​ 116,960 Quarter 3 ​ 182,460 ​ 159,975 ​ 139,922 Quarter 4 ​ 166,227 ​ 153,450 ​ 132,341 Total ​ 701,677 ​ 613,441 ​ 504,821 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Adjusted Average Net Sales Per Case ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 8.87 ​ $ 8.94 ​ $ 9.14 Quarter 2 ​ 8.78 ​ 9.01 ​ 9.30 Quarter 3 ​ 8.72 ​ 8.78 ​ 8.85 Quarter 4 ​ 8.91 ​ 9.25 ​ 8.99 Total ​ $ 8.82 ​ $ 8.99 ​ $ 9.06 ​ 1Excludes Alcohol Brands and Other segment net sales. 57 57 Table of ContentsThe following represents energy drink case sales by segment for the years ended December 31:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​(In thousands, except average net sales per case) 2022 2021 2020Net sales​$ 6,311,050​$ 5,541,352​$ 4,598,638Less: Alcohol Brands segment sales​​ (101,405)​​ - ​​ - Less: Other segment sales​ (22,944)​ (25,917)​ (27,038)Adjusted net sales1​$ 6,186,701​$ 5,515,435​$ 4,571,600​​​​​​​​​​Case sales by segment:1​ ​ ​ Monster Energy® Drinks​ 581,937​ 520,577​ 428,596Strategic Brands​ 119,740​ 92,864​ 76,225Total case sales​ 701,677​ 613,441​ 504,821Average net sales per case - Energy Drinks​$ 8.82​$ 8.99​$ 9.06​1Excludes Alcohol Brands segment (effectively from February 17, 2022 to December 31, 2022) and Other segment net sales.Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2022.Unit Sales of our alcohol products are expressed in barrel equivalents ("Barrel"). A Barrel is a unit of measurement equal to 31 U.S. gallons. Barrel sales were 0.3 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).InflationInflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the years ended December 31, 2022 and 2021. To mitigate the impact of inflation, we implemented a price increase effective September 1, 2022 in the United States and continue to implement price increases in certain international markets where feasible. Liquidity and Capital ResourcesCash and cash equivalents, short-term and long-term investments - As of December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.Of our $1.31 billion of cash and cash equivalents held at December 31, 2022, $668.9 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2022. We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of equipment, purchases of real property and purchases of shares of our common stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $300.0 million through December 31, 2023. However, future business opportunities may cause a change in this estimate.58 Table of Contents Table of Contents Table of Contents The following represents energy drink case sales by segment for the years ended December 31:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​(In thousands, except average net sales per case) 2022 2021 2020Net sales​$ 6,311,050​$ 5,541,352​$ 4,598,638Less: Alcohol Brands segment sales​​ (101,405)​​ - ​​ - Less: Other segment sales​ (22,944)​ (25,917)​ (27,038)Adjusted net sales1​$ 6,186,701​$ 5,515,435​$ 4,571,600​​​​​​​​​​Case sales by segment:1​ ​ ​ Monster Energy® Drinks​ 581,937​ 520,577​ 428,596Strategic Brands​ 119,740​ 92,864​ 76,225Total case sales​ 701,677​ 613,441​ 504,821Average net sales per case - Energy Drinks​$ 8.82​$ 8.99​$ 9.06​1Excludes Alcohol Brands segment (effectively from February 17, 2022 to December 31, 2022) and Other segment net sales.Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2022.Unit Sales of our alcohol products are expressed in barrel equivalents ("Barrel"). A Barrel is a unit of measurement equal to 31 U.S. gallons. Barrel sales were 0.3 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).InflationInflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the years ended December 31, 2022 and 2021. To mitigate the impact of inflation, we implemented a price increase effective September 1, 2022 in the United States and continue to implement price increases in certain international markets where feasible. Liquidity and Capital ResourcesCash and cash equivalents, short-term and long-term investments - As of December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.Of our $1.31 billion of cash and cash equivalents held at December 31, 2022, $668.9 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2022. We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of equipment, purchases of real property and purchases of shares of our common stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $300.0 million through December 31, 2023. However, future business opportunities may cause a change in this estimate. The following represents energy drink case sales by segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except average net sales per case) 2022 2021 2020 Net sales ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 Less: Alcohol Brands segment sales ​ ​ (101,405) ​ ​ - ​ ​ - Less: Other segment sales ​ (22,944) ​ (25,917) ​ (27,038) Adjusted net sales1 ​ $ 6,186,701 ​ $ 5,515,435 ​ $ 4,571,600 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Case sales by segment:1 ​ ​ ​ Monster Energy® Drinks ​ 581,937 ​ 520,577 ​ 428,596 Strategic Brands ​ 119,740 ​ 92,864 ​ 76,225 Total case sales ​ 701,677 ​ 613,441 ​ 504,821 Average net sales per case - Energy Drinks ​ $ 8.82 ​ $ 8.99 ​ $ 9.06 ​ 1Excludes Alcohol Brands segment (effectively from February 17, 2022 to December 31, 2022) and Other segment net sales. Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2022. Unit Sales of our alcohol products are expressed in barrel equivalents ("Barrel"). A Barrel is a unit of measurement equal to 31 U.S. gallons. Barrel sales were 0.3 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Inflation Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the years ended December 31, 2022 and 2021. To mitigate the impact of inflation, we implemented a price increase effective September 1, 2022 in the United States and continue to implement price increases in certain international markets where feasible. **Current (2024):** Gross billings were $8.23 billion for the year ended December 31, 2023, an increase of approximately $968.1 million, or 13.3% higher than gross billings of $7.26 billion for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $149.8 million for the year ended December 31, 2023. ​ Gross billings for the Monster Energy® Drinks segment were $7.59 billion for the year ended December 31, 2023, an increase of approximately $855.4 million, or 12.7% higher than gross billings of $6.74 billion for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on 54 54 Table of Contentsgross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023.​Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $22.0 million for the year ended December 31, 2023.​Gross billings for the Alcohol Brands segment were $188.6 million for the year ended December 31, 2023, an increase of $85.6 million, or 83.0% higher than gross billings of $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).​Gross billings for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of $0.6 million, or 2.6% higher than gross billings of $22.9 million for the year ended December 31, 2022.​Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.13 billion for the year ended December 31, 2023, an increase of $139.1 million, or 14.0% higher than promotional allowances, commissions and other expenses of $990.6 million for the year ended December 31, 2022. Promotional allowances as a percentage of gross billings were 13.7% and 13.6% for the years ended December 31, 2023 and 2022, respectively.**Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.55 Table of Contents Table of Contents Table of Contents gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023.​Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $22.0 million for the year ended December 31, 2023.​Gross billings for the Alcohol Brands segment were $188.6 million for the year ended December 31, 2023, an increase of $85.6 million, or 83.0% higher than gross billings of $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).​Gross billings for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of $0.6 million, or 2.6% higher than gross billings of $22.9 million for the year ended December 31, 2022.​Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.13 billion for the year ended December 31, 2023, an increase of $139.1 million, or 14.0% higher than promotional allowances, commissions and other expenses of $990.6 million for the year ended December 31, 2022. Promotional allowances as a percentage of gross billings were 13.7% and 13.6% for the years ended December 31, 2023 and 2022, respectively.**Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. gross billings for the Monster Energy® Drinks segment of approximately $127.8 million for the year ended December 31, 2023. ​ Gross billings for the Strategic Brands segment were $425.3 million for the year ended December 31, 2023, an increase of $26.6 million, or 6.7% higher than gross billings of $398.7 million for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings in the Strategic Brands segment of approximately $22.0 million for the year ended December 31, 2023. ​ Gross billings for the Alcohol Brands segment were $188.6 million for the year ended December 31, 2023, an increase of $85.6 million, or 83.0% higher than gross billings of $103.0 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). ​ Gross billings for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of $0.6 million, or 2.6% higher than gross billings of $22.9 million for the year ended December 31, 2022. ​ Promotional allowances, commissions and other expenses, as described in the footnote below, were $1.13 billion for the year ended December 31, 2023, an increase of $139.1 million, or 14.0% higher than promotional allowances, commissions and other expenses of $990.6 million for the year ended December 31, 2022. Promotional allowances as a percentage of gross billings were 13.7% and 13.6% for the years ended December 31, 2023 and 2022, respectively. **Gross billings represent amounts invoiced to customers net of cash discounts, returns and excise taxes. Gross billings are used internally by management as an indicator of and to monitor operating performance, including sales performance of particular products, salesperson performance, product growth or declines and is useful to investors in evaluating overall Company performance. The use of gross billings allows evaluation of sales performance before the effect of any promotional items, which can mask certain performance issues. We therefore believe that the presentation of gross billings provides a useful measure of our operating performance. The use of gross billings is not a measure that is recognized under GAAP and should not be considered as an alternative to net sales, which is determined in accordance with GAAP, and should not be used alone as an indicator of operating performance in place of net sales. Additionally, gross billings may not be comparable to similarly titled measures used by other companies, as gross billings has been defined by our internal reporting practices. In addition, gross billings may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers. 55 55 Table of ContentsThe following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​​​​​​​​​​​​​​​​ ​ ​ ​ Percentage Percentage​In thousands​​​​​​​​​ Change​Change​​ 2023 2022 2021 23 vs. 22​22 vs. 21​Gross Billings​$ 8,229,709​$ 7,261,639​$ 6,424,632 13.3% 13.0%Deferred Revenue​​ 39,955​​ 39,969​​ 41,462​ (0.0)% (3.6)%Less: Promotional allowances, commissions and other expenses***​ (1,129,637)​ (990,558)​ (924,742) 14.0% 7.1%Net Sales​$ 7,140,027​$ 6,311,050​$ 5,541,352 13.1% 13.9%​***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2023 and 2022 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.SalesThe table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends.Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us.Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, 56 Table of Contents Table of Contents Table of Contents The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​​​​​​​​​​​​​​​​ ​ ​ ​ Percentage Percentage​In thousands​​​​​​​​​ Change​Change​​ 2023 2022 2021 23 vs. 22​22 vs. 21​Gross Billings​$ 8,229,709​$ 7,261,639​$ 6,424,632 13.3% 13.0%Deferred Revenue​​ 39,955​​ 39,969​​ 41,462​ (0.0)% (3.6)%Less: Promotional allowances, commissions and other expenses***​ (1,129,637)​ (990,558)​ (924,742) 14.0% 7.1%Net Sales​$ 7,140,027​$ 6,311,050​$ 5,541,352 13.1% 13.9%​***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2023 and 2022 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.SalesThe table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends.Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us.Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, The following table reconciles the non-GAAP financial measure of gross billings with the most directly comparable GAAP financial measure of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Percentage Percentage ​ In thousands ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2023 2022 2021 23 vs. 22 ​ 22 vs. 21 ​ Gross Billings ​ $ 8,229,709 ​ $ 7,261,639 ​ $ 6,424,632 13.3 % 13.0 % Deferred Revenue ​ ​ 39,955 ​ ​ 39,969 ​ ​ 41,462 ​ (0.0) % (3.6) % Less: Promotional allowances, commissions and other expenses*** ​ (1,129,637) ​ (990,558) ​ (924,742) 14.0 % 7.1 % Net Sales ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 13.1 % 13.9 % ​ ***Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the presentation thereof does not conform to GAAP presentation requirements. Additionally, our definition of promotional and other allowances may not be comparable to similar items presented by other companies. Promotional and other allowances for our energy drink products primarily include consideration given to our 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 our 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) our agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) our agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; (v) incentives given to our bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to our bottlers/distributors related to sales made by us direct to certain customers that fall within the bottlers'/distributors' sales territories; and (viii) certain commissions paid based on sales to our bottlers/distributors. The presentation of promotional and other allowances facilitates an evaluation of their impact on the determination of net sales and the spending levels incurred or correlated with such sales. Promotional and other allowances for our energy drink products constitute a material portion of our marketing activities. Our promotional allowance programs for our energy drink products with our numerous 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, ranging from one week to one year. The primary drivers of our promotional and other allowance activities for our energy drink products for the years ended December 31, 2023 and 2022 were (i) to increase sales volume and trial, (ii) to address market conditions, and (iii) to secure shelf and display space at retail. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted. Sales The table set forth below discloses selected quarterly data regarding sales for the past three years. Data from any one or more quarters is not necessarily indicative of annual results or continuing trends. Sales of our energy drinks are expressed in unit case volume. A "unit case" means a unit of measurement equal to 192 U.S. fluid ounces of finished beverage (24 eight-ounce servings). Unit case volume means the number of unit cases (or unit case equivalents) of finished products or concentrates, as if converted into finished products, sold by us. Our quarterly results of operations reflect seasonal trends that are primarily the result of increased demand in the warmer months of the year. Beverage sales tend to be lower during the first and fourth quarters of each calendar year. However, our experience with our energy drink products suggests they are less seasonal than the seasonality expected from traditional beverages. In addition, our continued growth internationally may further reduce the impact of seasonality on our business. Quarterly fluctuations may also be affected by other factors including the introduction of new products, the opening of new markets where temperature fluctuations are more pronounced, the addition of new bottlers/distributors, 56 56 Table of Contentschanges in the sales mix of our products and changes in and/or increased advertising and promotional expenses. (See "Part I, Item 1 - Business - Seasonality").​​​​​​​​​​​ 2023 2022 2021Net Sales (in Thousands)​​​​​​​​​Quarter 1​$ 1,698,930​$ 1,518,574​$ 1,243,816Quarter 2​ 1,854,961​ 1,655,260​ 1,461,934Quarter 3​ 1,856,028​ 1,624,286​ 1,410,557Quarter 4​ 1,730,108​ 1,512,930​ 1,425,045Total​$ 7,140,027​$ 6,311,050​$ 5,541,352​​​​​​​​​​Less: Alcohol Brands and Other segment net sales (in Thousands)​​​​​​​​​Quarter 1​$ (50,904)​$ (21,134)​$ (5,727)Quarter 2​ (68,384)​ (38,428)​ (7,905)Quarter 3​ (49,024)​ (33,265)​ (6,316)Quarter 4​ (40,037)​ (31,522)​ (5,969)Total​$ (208,349)​$ (124,349)​$ (25,917)​​​​​​​​​​Adjusted Net Sales (in Thousands)¹​​​​​​​​​Quarter 1​$ 1,648,026​$ 1,497,440​$ 1,238,089Quarter 2​ 1,786,577​ 1,616,832​ 1,454,029Quarter 3​ 1,807,004​ 1,591,021​ 1,404,241Quarter 4​ 1,690,071​ 1,481,408​ 1,419,076Total​$ 6,931,678​$ 6,186,701​$ 5,515,435​​​​​​​​​​Energy Drink Case Volume / Sales (in Thousands)​​​​​​​​​Quarter 1​ 182,444​ 168,793​ 138,566Quarter 2​ 198,406​ 184,197​ 161,450Quarter 3​ 203,088​ 182,460​ 159,975Quarter 4​ 185,303​ 166,227​ 153,450Total​ 769,241​ 701,677​ 613,441​​​​​​​​​​Energy Drink Adjusted Average Net Sales Per Case​​​​​​​​​Quarter 1​$ 9.03​$ 8.87​$ 8.94Quarter 2​ 9.00​ 8.78​ 9.01Quarter 3​ 8.90​ 8.72​ 8.78Quarter 4​ 9.12​ 8.91​ 9.25Total​$ 9.01​$ 8.82​$ 8.99​1Excludes Alcohol Brands segment and Other segment net sales.57 Table of Contents Table of Contents Table of Contents changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses. (See "Part I, Item 1 - Business - Seasonality").​​​​​​​​​​​ 2023 2022 2021Net Sales (in Thousands)​​​​​​​​​Quarter 1​$ 1,698,930​$ 1,518,574​$ 1,243,816Quarter 2​ 1,854,961​ 1,655,260​ 1,461,934Quarter 3​ 1,856,028​ 1,624,286​ 1,410,557Quarter 4​ 1,730,108​ 1,512,930​ 1,425,045Total​$ 7,140,027​$ 6,311,050​$ 5,541,352​​​​​​​​​​Less: Alcohol Brands and Other segment net sales (in Thousands)​​​​​​​​​Quarter 1​$ (50,904)​$ (21,134)​$ (5,727)Quarter 2​ (68,384)​ (38,428)​ (7,905)Quarter 3​ (49,024)​ (33,265)​ (6,316)Quarter 4​ (40,037)​ (31,522)​ (5,969)Total​$ (208,349)​$ (124,349)​$ (25,917)​​​​​​​​​​Adjusted Net Sales (in Thousands)¹​​​​​​​​​Quarter 1​$ 1,648,026​$ 1,497,440​$ 1,238,089Quarter 2​ 1,786,577​ 1,616,832​ 1,454,029Quarter 3​ 1,807,004​ 1,591,021​ 1,404,241Quarter 4​ 1,690,071​ 1,481,408​ 1,419,076Total​$ 6,931,678​$ 6,186,701​$ 5,515,435​​​​​​​​​​Energy Drink Case Volume / Sales (in Thousands)​​​​​​​​​Quarter 1​ 182,444​ 168,793​ 138,566Quarter 2​ 198,406​ 184,197​ 161,450Quarter 3​ 203,088​ 182,460​ 159,975Quarter 4​ 185,303​ 166,227​ 153,450Total​ 769,241​ 701,677​ 613,441​​​​​​​​​​Energy Drink Adjusted Average Net Sales Per Case​​​​​​​​​Quarter 1​$ 9.03​$ 8.87​$ 8.94Quarter 2​ 9.00​ 8.78​ 9.01Quarter 3​ 8.90​ 8.72​ 8.78Quarter 4​ 9.12​ 8.91​ 9.25Total​$ 9.01​$ 8.82​$ 8.99​1Excludes Alcohol Brands segment and Other segment net sales. changes in the sales mix of our products and changes in and/or increased advertising and promotional expenses. (See "Part I, Item 1 - Business - Seasonality"). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,698,930 ​ $ 1,518,574 ​ $ 1,243,816 Quarter 2 ​ 1,854,961 ​ 1,655,260 ​ 1,461,934 Quarter 3 ​ 1,856,028 ​ 1,624,286 ​ 1,410,557 Quarter 4 ​ 1,730,108 ​ 1,512,930 ​ 1,425,045 Total ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Alcohol Brands and Other segment net sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ (50,904) ​ $ (21,134) ​ $ (5,727) Quarter 2 ​ (68,384) ​ (38,428) ​ (7,905) Quarter 3 ​ (49,024) ​ (33,265) ​ (6,316) Quarter 4 ​ (40,037) ​ (31,522) ​ (5,969) Total ​ $ (208,349) ​ $ (124,349) ​ $ (25,917) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Adjusted Net Sales (in Thousands)¹ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 1,648,026 ​ $ 1,497,440 ​ $ 1,238,089 Quarter 2 ​ 1,786,577 ​ 1,616,832 ​ 1,454,029 Quarter 3 ​ 1,807,004 ​ 1,591,021 ​ 1,404,241 Quarter 4 ​ 1,690,071 ​ 1,481,408 ​ 1,419,076 Total ​ $ 6,931,678 ​ $ 6,186,701 ​ $ 5,515,435 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Case Volume / Sales (in Thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ 182,444 ​ 168,793 ​ 138,566 Quarter 2 ​ 198,406 ​ 184,197 ​ 161,450 Quarter 3 ​ 203,088 ​ 182,460 ​ 159,975 Quarter 4 ​ 185,303 ​ 166,227 ​ 153,450 Total ​ 769,241 ​ 701,677 ​ 613,441 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink Adjusted Average Net Sales Per Case ​ ​ ​ ​ ​ ​ ​ ​ ​ Quarter 1 ​ $ 9.03 ​ $ 8.87 ​ $ 8.94 Quarter 2 ​ 9.00 ​ 8.78 ​ 9.01 Quarter 3 ​ 8.90 ​ 8.72 ​ 8.78 Quarter 4 ​ 9.12 ​ 8.91 ​ 9.25 Total ​ $ 9.01 ​ $ 8.82 ​ $ 8.99 ​ 1Excludes Alcohol Brands segment and Other segment net sales. 57 57 Table of ContentsThe following represents energy drink case sales by segment for the years ended December 31:​​​​​​​​​​(In thousands, except average net sales per case) 2023 2022 2021Net sales​$ 7,140,027​$ 6,311,050​$ 5,541,352Less: Alcohol Brands segment sales​​ (184,855)​​ (101,405)​​ - Less: Other segment sales​ (23,494)​ (22,944)​ (25,917)Adjusted net sales1​$ 6,931,678​$ 6,186,701​$ 5,515,435​​​​​​​​​​Case sales by segment:1​ ​ ​ Monster Energy® Drinks​ 632,950​ 581,937​ 520,577Strategic Brands​ 136,291​ 119,740​ 92,864Total case sales​ 769,241​ 701,677​ 613,441Average net sales per case - Energy Drinks​$ 9.01​$ 8.82​$ 8.99​1Excludes Alcohol Brands segment and Other segment net sales.Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2023.The following represents case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, for the years ended December 31:​​​​​​​(In thousands, except average net sales per case) 2023 20221Alcohol Brands segment net sales $ 184,855 $ 101,405Case sales​ 13,131​ 6,525Average net sales per case - Alcohol Brands​$ 14.08​$ 15.54​1For the year ended December 31, 2022, effectively from February 17, 2022 to December 31, 2022.InflationWe believe inflation did not have a significant impact on our results of operations for the year ended December 31, 2023. Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the year ended December 31, 2022. To mitigate the impact of inflation, we implemented the Pricing Actions.Liquidity and Capital ResourcesCash and cash equivalents, short-term and long-term investments - As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2023.​We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of 58 Table of Contents Table of Contents Table of Contents The following represents energy drink case sales by segment for the years ended December 31:​​​​​​​​​​(In thousands, except average net sales per case) 2023 2022 2021Net sales​$ 7,140,027​$ 6,311,050​$ 5,541,352Less: Alcohol Brands segment sales​​ (184,855)​​ (101,405)​​ - Less: Other segment sales​ (23,494)​ (22,944)​ (25,917)Adjusted net sales1​$ 6,931,678​$ 6,186,701​$ 5,515,435​​​​​​​​​​Case sales by segment:1​ ​ ​ Monster Energy® Drinks​ 632,950​ 581,937​ 520,577Strategic Brands​ 136,291​ 119,740​ 92,864Total case sales​ 769,241​ 701,677​ 613,441Average net sales per case - Energy Drinks​$ 9.01​$ 8.82​$ 8.99​1Excludes Alcohol Brands segment and Other segment net sales.Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2023.The following represents case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, for the years ended December 31:​​​​​​​(In thousands, except average net sales per case) 2023 20221Alcohol Brands segment net sales $ 184,855 $ 101,405Case sales​ 13,131​ 6,525Average net sales per case - Alcohol Brands​$ 14.08​$ 15.54​1For the year ended December 31, 2022, effectively from February 17, 2022 to December 31, 2022.InflationWe believe inflation did not have a significant impact on our results of operations for the year ended December 31, 2023. Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the year ended December 31, 2022. To mitigate the impact of inflation, we implemented the Pricing Actions.Liquidity and Capital ResourcesCash and cash equivalents, short-term and long-term investments - As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2023.​We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of The following represents energy drink case sales by segment for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except average net sales per case) 2023 2022 2021 Net sales ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 Less: Alcohol Brands segment sales ​ ​ (184,855) ​ ​ (101,405) ​ ​ - Less: Other segment sales ​ (23,494) ​ (22,944) ​ (25,917) Adjusted net sales1 ​ $ 6,931,678 ​ $ 6,186,701 ​ $ 5,515,435 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Case sales by segment:1 ​ ​ ​ Monster Energy® Drinks ​ 632,950 ​ 581,937 ​ 520,577 Strategic Brands ​ 136,291 ​ 119,740 ​ 92,864 Total case sales ​ 769,241 ​ 701,677 ​ 613,441 Average net sales per case - Energy Drinks ​ $ 9.01 ​ $ 8.82 ​ $ 8.99 ​ 1Excludes Alcohol Brands segment and Other segment net sales. Net changes in foreign currency exchange rates had an unfavorable impact on both net sales and the overall average net sales per case for the year ended December 31, 2023. The following represents case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, for the years ended December 31: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except average net sales per case) 2023 20221 Alcohol Brands segment net sales $ 184,855 $ 101,405 Case sales ​ 13,131 ​ 6,525 Average net sales per case - Alcohol Brands ​ $ 14.08 ​ $ 15.54 ​ 1For the year ended December 31, 2022, effectively from February 17, 2022 to December 31, 2022. Inflation We believe inflation did not have a significant impact on our results of operations for the year ended December 31, 2023. Inflation had a negative impact on our results of operations, leading to increased cost of sales and operating expenses for the year ended December 31, 2022. To mitigate the impact of inflation, we implemented the Pricing Actions. --- ## Modified: Opportunities, Challenges and Risks **Key changes:** - Reworded sentence: "In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy and alcohol drinks have been published." - Reworded sentence: "In addition, other key challenges and risks that could impact our Company's future financial results include, but are not limited to: 49 49 Table of Contents●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●changes in consumer preferences and demand for our products;●The emergence of new subcategories within the energy and/or alcohol beverage sectors that we fail (or are late) to successfully react to;●economic uncertainty in the United States, Europe and other countries in which we operate;●the risks associated with foreign currency exchange rate fluctuations;●maintenance of our brand image, product quality and corporate reputation;●increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns;●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●increases in ocean and domestic fuel and freight rates; and●the imposition of additional regulations, including regulations restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets;50 Table of Contents Table of Contents Table of Contents ●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●changes in consumer preferences and demand for our products;●The emergence of new subcategories within the energy and/or alcohol beverage sectors that we fail (or are late) to successfully react to;●economic uncertainty in the United States, Europe and other countries in which we operate;●the risks associated with foreign currency exchange rate fluctuations;●maintenance of our brand image, product quality and corporate reputation;●increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns;●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●increases in ocean and domestic fuel and freight rates; and●the imposition of additional regulations, including regulations restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets; See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company." **Prior (2023):** Looking forward, our management has identified certain challenges and risks for the beverage industry and the Company, including our significant commercial relationship with TCCC and TCCC's status as a significant stockholder of the Company, in each case as described above under "Part I, Item 1A - Risk Factors." In addition, legislation has been proposed and/or adopted at the U.S., state, county and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy and alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine and/or alcohol content, require certain product labeling disclosures and/or warnings, impose taxes, limit product sizes or impose age restrictions for the sale of energy and/or alcohol drinks. In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy or alcohol drinks have been published. The proposal and/or adoption of such legislation and the publication of such articles, or the future proposal and/or adoption of similar legislation or publication of similar articles, may adversely affect our Company. In addition, uncertainty and/or volatility in our domestic and/or our international economic markets could negatively affect both the stability of our industry and our Company. Furthermore, our growth strategy includes expanding our international business, which exposes us to risks inherent in conducting international operations, including the risks associated with foreign currency exchange rate fluctuations. Consumer discretionary spending also represents a challenge to the successful marketing and sale of our products. Increases in consumer and regulatory awareness of the health problems arising from obesity and inactive lifestyles as well as alcohol consumption continue to represent a challenge. We recognize that obesity and alcohol abuse and misuse are complex and serious public health problems. Our commitment to consumers begins with our broad product line and a wide selection of diet, light and low calorie beverages within our product lines. We continuously strive to meet changing consumer needs through beverage innovation, choice and variety. (See "Part I, Item 1A - Risk Factors"). Our historical success is attributable, in part, to our introduction of different and innovative beverages which have been positively accepted by consumers. Our future success will depend, in part, upon our continued ability to develop and introduce different and innovative beverages that meet consumer preferences, although there can be no assurance of our ability to do so. In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of price, quality, method of distribution, brand image and intellectual property protection. The beverage industry is subject to changing consumer preferences that may adversely affect us if we misjudge such preferences. In addition, other key challenges and risks that could impact our Company's future financial results include, but are not limited to: 49 49 Table of Contents●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to the COVID-19 pandemic, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●increases in ocean and domestic freight rates;●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●the imposition of additional regulation, including regulation restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions; and●the continuation or worsening of the COVID-19 pandemic.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets;●launching and/or relaunching our products and new products into new domestic and international markets and channels;●continued focus on reducing our cost base; and●our entry into the alcohol category and development of our alcohol portfolio.50 Table of Contents Table of Contents Table of Contents ●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to the COVID-19 pandemic, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●increases in ocean and domestic freight rates;●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●the imposition of additional regulation, including regulation restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions; and●the continuation or worsening of the COVID-19 pandemic.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets;●launching and/or relaunching our products and new products into new domestic and international markets and channels;●continued focus on reducing our cost base; and●our entry into the alcohol category and development of our alcohol portfolio. See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company. We believe that the following opportunities exist for us: 50 50 Table of ContentsResults of OperationsThis section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. A detailed discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.The following table sets forth key statistics for the years ended December 31, 2022, 2021 and 2020, respectively.​​​​​​​​​​​​​​​(In thousands, except per share amounts) ​ ​​ ​​ ​Percentage​Percentage​​​​​​​​​​​​Change​Change​​ 2022 2021 2020 22 vs. 21 21 vs. 20​Net sales1​$ 6,311,050​$ 5,541,352​$ 4,598,638​ 13.9% 20.5%Cost of sales​ 3,136,483​ 2,432,839​ 1,874,758​ 28.9% 29.8%Gross profit*1​ 3,174,567​ 3,108,513​ 2,723,880​ 2.1% 14.1%Gross profit as a percentage of net sales​ 50.3% 56.1% 59.2%​​​​​​​​​​​​​​​​​​​Operating expenses​ 1,589,846​ 1,311,046​ 1,090,727​ 21.3% 20.2%Operating expenses as a percentage of net sales​ 25.2% 23.7% 23.7%​​​​​​​​​​​​​​​​​​​Operating income1​ 1,584,721​ 1,797,467​ 1,633,153​ (11.8)% 10.1%Operating income as a percentage of net sales​ 25.1% 32.4% 35.5%​​​​​​​​​​​​​​​​​​​Other (expense) income, net​ (12,757)​ 3,952​ (6,996)​ (422.8)% (156.5)%​​​​​​​​​​​​​​​Income before provision for income taxes1​ 1,571,964​ 1,801,419​ 1,626,157​ (12.7)% 10.8%​​​​​​​​​​​​​​​Provision for income taxes​ 380,340​ 423,944​ 216,563​ (10.3)% 95.8%​​​​​​​​​​​​​​​Income taxes as a percentage of income before taxes​ 24.2% 23.5% 13.3%​​​​​​​​​​​​​​​​​​​Net income1​$ 1,191,624​$ 1,377,475​$ 1,409,594​ (13.5)% (2.3)%Net income as a percentage of net sales​ 18.9% 24.9% 30.7%​​​​​​​​​​​​​​​​​​​Net income per common share:​ ​​ ​​ ​​​​​​Basic​$ 2.26​$ 2.61​$ 2.66​ (13.2)% (2.1)%Diluted​$ 2.23​$ 2.57​$ 2.64​ (13.1)% (2.4)%​​​​​​​​​​​​​​​Energy Drink case sales (in thousands) (in 192‑ounce case equivalents)2​ 701,677​ 613,441​ 504,821​ 14.4% 21.5%​1Includes $40.0 million, $41.5 million and $42.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of deferred revenue.2Excludes case sales of the Alcohol Brands and Other segments.*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.51 Table of Contents Table of Contents Table of Contents Results of OperationsThis section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. A detailed discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021.The following table sets forth key statistics for the years ended December 31, 2022, 2021 and 2020, respectively.​​​​​​​​​​​​​​​(In thousands, except per share amounts) ​ ​​ ​​ ​Percentage​Percentage​​​​​​​​​​​​Change​Change​​ 2022 2021 2020 22 vs. 21 21 vs. 20​Net sales1​$ 6,311,050​$ 5,541,352​$ 4,598,638​ 13.9% 20.5%Cost of sales​ 3,136,483​ 2,432,839​ 1,874,758​ 28.9% 29.8%Gross profit*1​ 3,174,567​ 3,108,513​ 2,723,880​ 2.1% 14.1%Gross profit as a percentage of net sales​ 50.3% 56.1% 59.2%​​​​​​​​​​​​​​​​​​​Operating expenses​ 1,589,846​ 1,311,046​ 1,090,727​ 21.3% 20.2%Operating expenses as a percentage of net sales​ 25.2% 23.7% 23.7%​​​​​​​​​​​​​​​​​​​Operating income1​ 1,584,721​ 1,797,467​ 1,633,153​ (11.8)% 10.1%Operating income as a percentage of net sales​ 25.1% 32.4% 35.5%​​​​​​​​​​​​​​​​​​​Other (expense) income, net​ (12,757)​ 3,952​ (6,996)​ (422.8)% (156.5)%​​​​​​​​​​​​​​​Income before provision for income taxes1​ 1,571,964​ 1,801,419​ 1,626,157​ (12.7)% 10.8%​​​​​​​​​​​​​​​Provision for income taxes​ 380,340​ 423,944​ 216,563​ (10.3)% 95.8%​​​​​​​​​​​​​​​Income taxes as a percentage of income before taxes​ 24.2% 23.5% 13.3%​​​​​​​​​​​​​​​​​​​Net income1​$ 1,191,624​$ 1,377,475​$ 1,409,594​ (13.5)% (2.3)%Net income as a percentage of net sales​ 18.9% 24.9% 30.7%​​​​​​​​​​​​​​​​​​​Net income per common share:​ ​​ ​​ ​​​​​​Basic​$ 2.26​$ 2.61​$ 2.66​ (13.2)% (2.1)%Diluted​$ 2.23​$ 2.57​$ 2.64​ (13.1)% (2.4)%​​​​​​​​​​​​​​​Energy Drink case sales (in thousands) (in 192‑ounce case equivalents)2​ 701,677​ 613,441​ 504,821​ 14.4% 21.5%​1Includes $40.0 million, $41.5 million and $42.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of deferred revenue.2Excludes case sales of the Alcohol Brands and Other segments.*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. **Current (2024):** Looking forward, our management has identified certain challenges and risks for the beverage industry and the Company, including our significant commercial relationship with TCCC and TCCC's status as a significant stockholder of the Company, in each case as described above under "Part I, Item 1A - Risk Factors." In addition, legislation has been proposed and/or adopted at the U.S., state, county and/or municipal level and proposed and/or adopted in certain foreign jurisdictions to restrict the sale of energy and alcohol drinks (including prohibiting the sale of energy and/or alcohol drinks at certain establishments or pursuant to certain governmental programs), limit caffeine and/or alcohol content, require certain product labeling disclosures and/or warnings, impose taxes, limit product sizes or impose age restrictions for the sale of energy and/or alcohol drinks. In addition, articles critical of the caffeine content in energy drinks and their perceived benefits, or alcohol drinks and their misuse or abuse, as well as articles indicating certain health risks of energy and alcohol drinks have been published. The proposal and/or adoption of such legislation and the publication of such articles, or the future proposal and/or adoption of similar legislation or publication of similar articles, may adversely affect our Company. In addition, uncertainty and/or volatility in our domestic and/or our international economic markets could negatively affect both the stability of our industry and our Company. Furthermore, our growth strategy includes expanding our international business, which exposes us to risks inherent in conducting international operations, including the risks associated with foreign currency exchange rate fluctuations. Consumer discretionary spending also represents a challenge to the successful marketing and sale of our products. Increases in consumer and regulatory awareness of the health problems arising from obesity and inactive lifestyles as well as alcohol consumption continue to represent a challenge. We recognize that obesity and alcohol abuse and misuse are complex and serious public health problems. Our commitment to consumers begins with our broad product line and a wide selection of diet, light and low calorie beverages within our product lines. We continuously strive to meet changing consumer needs through beverage innovation, choice and variety. (See "Part I, Item 1A - Risk Factors"). Our historical success is attributable, in part, to our introduction of different and innovative beverages which have been positively accepted by consumers. Our future success will depend, in part, upon our continued ability to develop and introduce different and innovative beverages that meet consumer preferences, although there can be no assurance of our ability to do so. In order to retain and expand our market share, we must continue to develop and introduce different and innovative beverages and be competitive in the areas of price, quality, method of distribution, brand image and intellectual property protection. The beverage industry is subject to changing consumer preferences that may adversely affect us if we misjudge such preferences. In addition, other key challenges and risks that could impact our Company's future financial results include, but are not limited to: 49 49 Table of Contents●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●changes in consumer preferences and demand for our products;●The emergence of new subcategories within the energy and/or alcohol beverage sectors that we fail (or are late) to successfully react to;●economic uncertainty in the United States, Europe and other countries in which we operate;●the risks associated with foreign currency exchange rate fluctuations;●maintenance of our brand image, product quality and corporate reputation;●increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns;●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●increases in ocean and domestic fuel and freight rates; and●the imposition of additional regulations, including regulations restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets;50 Table of Contents Table of Contents Table of Contents ●profitable expansion and growth of our family of brands in the competitive market place (See "Part I, Item 1 - Business - Competition" and "Part I, Item 1 - Business - Sales and Marketing");●changes in consumer preferences and demand for our products;●The emergence of new subcategories within the energy and/or alcohol beverage sectors that we fail (or are late) to successfully react to;●economic uncertainty in the United States, Europe and other countries in which we operate;●the risks associated with foreign currency exchange rate fluctuations;●maintenance of our brand image, product quality and corporate reputation;●increasing concern over various environmental, human rights and health matters, including obesity, caffeine and/or alcohol consumption and energy and/or alcohol drinks generally, and changes in regulation and consumer preferences in response to those concerns;●costs of establishing and promoting our brands internationally;●the risks associated with entering into new sectors in the beverage industry, in particular the alcohol beverage sector, and making acquisitions to implement our growth strategy;●increases in costs of raw materials used by us;●restrictions on imports and sources of supply, duties or tariffs, changes in related government regulations and disruptions in the timely import or export of our products and/or ingredients including flavors, flavor ingredients and supplement ingredients, due to port strikes and/or port congestion, delays due to pandemics, related labor issues or other importation impediments;●protection of our existing intellectual property portfolio of trademarks and copyrights and our continuous pursuit to develop and protect new and innovative trademarks and copyrights for our expanding product lines;●limitations on available quantities of aluminum cans, other packaging materials and ingredients;●limitations on co-packing availability and in particular, consolidation in the co-packing industry; ●the long-term impact of Brexit on our business in Europe and the United Kingdom; ●increases in ocean and domestic fuel and freight rates; and●the imposition of additional regulations, including regulations restricting the sale of energy or alcohol drinks, limiting caffeine or alcohol content in beverages, requiring product labeling and/or warnings, imposing excise taxes and/or sales taxes, and/or limiting product size and/or age restrictions.See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company.We believe that the following opportunities exist for us:●domestic and international growth potential of our products;●growth potential of the energy drink and alcohol beverage categories, both domestically and internationally;●growth potential of the affordable energy drink category;●planned and future new product and product line introductions with the objective of increasing sales and/or contributing to higher profitability;●the introduction of new package formats designed to generate strong revenue growth;●package, pricing and channel opportunities to increase profitable growth;●effective strategic positioning to capitalize on industry growth;●broadening distribution/expansion opportunities in both domestic and international markets; See "Part I, Item 1A - Risk Factors" for additional information about risks and uncertainties facing our Company. We believe that the following opportunities exist for us: 50 50 Table of Contents●launching and/or relaunching our products and new products into new domestic and international markets and channels;●continued focus on reducing our cost base; and●our entry into the alcohol category and development of our alcohol portfolio.Results of OperationsThis section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. A detailed discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.The following table sets forth key statistics for the years ended December 31, 2023, 2022 and 2021, respectively.​​​​​​​​​​​​​​​(In thousands, except per share amounts) ​ ​​ ​​ ​Percentage​Percentage​​​​​​​​​​​​Change​Change​​ 2023 2022 2021 23 vs. 22 22 vs. 21​Net sales1​$ 7,140,027​$ 6,311,050​$ 5,541,352​ 13.1% 13.9%Cost of sales​ 3,345,821​ 3,136,483​ 2,432,839​ 6.7% 28.9%Gross profit*1​ 3,794,206​ 3,174,567​ 3,108,513​ 19.5% 2.1%Gross profit as a percentage of net sales​ 53.1% 50.3% 56.1%​​​​​​​​​​​​​​​​​​​Operating expenses​ 1,840,851​ 1,589,846​ 1,311,046​ 15.8% 21.3%Operating expenses as a percentage of net sales​ 25.8% 25.2% 23.7%​​​​​​​​​​​​​​​​​​​Operating income1​ 1,953,355​ 1,584,721​ 1,797,467​ 23.3% (11.8)%Operating income as a percentage of net sales​ 27.4% 25.1% 32.4%​​​​​​​​​​​​​​​​​​​Interest and other income (expense), net​ 115,127​ (12,757)​ 3,952​ 1,002.5% (422.8)%​​​​​​​​​​​​​​​Income before provision for income taxes1​ 2,068,482​ 1,571,964​ 1,801,419​ 31.6% (12.7)%​​​​​​​​​​​​​​​Provision for income taxes​ 437,494​ 380,340​ 423,944​ 15.0% (10.3)%​​​​​​​​​​​​​​​Income taxes as a percentage of income before taxes​ 21.2% 24.2% 23.5%​​​​​​​​​​​​​​​​​​​Net income1​$ 1,630,988​$ 1,191,624​$ 1,377,475​ 36.9% (13.5)%Net income as a percentage of net sales​ 22.8% 18.9% 24.9%​​​​​​​​​​​​​​​​​​​Net income per common share:​ ​​ ​​ ​​​​​​Basic​$ 1.56​$ 1.13​$ 1.30​ 38.0% (13.2)%Diluted​$ 1.54​$ 1.12​$ 1.29​ 38.0% (13.1)%​​​​​​​​​​​​​​​Energy Drink case sales (in thousands) (in 192‑ounce case equivalents)​ 769,241​ 701,677​ 613,441​ 9.6% 14.4%​1Includes $40.0 million, $40.0 million and $41.5 million for the years ended December 31, 2023, 2022 and 2021, respectively, related to the recognition of deferred revenue.*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales.51 Table of Contents Table of Contents Table of Contents ●launching and/or relaunching our products and new products into new domestic and international markets and channels;●continued focus on reducing our cost base; and●our entry into the alcohol category and development of our alcohol portfolio.Results of OperationsThis section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. A detailed discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022.The following table sets forth key statistics for the years ended December 31, 2023, 2022 and 2021, respectively.​​​​​​​​​​​​​​​(In thousands, except per share amounts) ​ ​​ ​​ ​Percentage​Percentage​​​​​​​​​​​​Change​Change​​ 2023 2022 2021 23 vs. 22 22 vs. 21​Net sales1​$ 7,140,027​$ 6,311,050​$ 5,541,352​ 13.1% 13.9%Cost of sales​ 3,345,821​ 3,136,483​ 2,432,839​ 6.7% 28.9%Gross profit*1​ 3,794,206​ 3,174,567​ 3,108,513​ 19.5% 2.1%Gross profit as a percentage of net sales​ 53.1% 50.3% 56.1%​​​​​​​​​​​​​​​​​​​Operating expenses​ 1,840,851​ 1,589,846​ 1,311,046​ 15.8% 21.3%Operating expenses as a percentage of net sales​ 25.8% 25.2% 23.7%​​​​​​​​​​​​​​​​​​​Operating income1​ 1,953,355​ 1,584,721​ 1,797,467​ 23.3% (11.8)%Operating income as a percentage of net sales​ 27.4% 25.1% 32.4%​​​​​​​​​​​​​​​​​​​Interest and other income (expense), net​ 115,127​ (12,757)​ 3,952​ 1,002.5% (422.8)%​​​​​​​​​​​​​​​Income before provision for income taxes1​ 2,068,482​ 1,571,964​ 1,801,419​ 31.6% (12.7)%​​​​​​​​​​​​​​​Provision for income taxes​ 437,494​ 380,340​ 423,944​ 15.0% (10.3)%​​​​​​​​​​​​​​​Income taxes as a percentage of income before taxes​ 21.2% 24.2% 23.5%​​​​​​​​​​​​​​​​​​​Net income1​$ 1,630,988​$ 1,191,624​$ 1,377,475​ 36.9% (13.5)%Net income as a percentage of net sales​ 22.8% 18.9% 24.9%​​​​​​​​​​​​​​​​​​​Net income per common share:​ ​​ ​​ ​​​​​​Basic​$ 1.56​$ 1.13​$ 1.30​ 38.0% (13.2)%Diluted​$ 1.54​$ 1.12​$ 1.29​ 38.0% (13.1)%​​​​​​​​​​​​​​​Energy Drink case sales (in thousands) (in 192‑ounce case equivalents)​ 769,241​ 701,677​ 613,441​ 9.6% 14.4%​1Includes $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.*Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. --- ## Modified: Critical Accounting Policies and Estimates **Key changes:** - Reworded sentence: "The following summarizes our most significant critical accounting estimates: Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects." - Reworded sentence: "For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances." - Added sentence: "For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment." - Reworded sentence: "61 61 Table of ContentsRevenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.The Company's promotional allowance programs for its energy drink products with its bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business." - Reworded sentence: "Recent Accounting PronouncementsSee "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements" for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company's consolidated financial position, results of operations or liquidity.Forward-Looking StatementsCertain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act")) regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things." **Prior (2023):** Our consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies. 60 60 Table of ContentsThe following summarizes our most significant critical accounting estimates:Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2022, 2021 and 2020, there were no goodwill impairments recorded and there are no accumulated impairment balances.Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. For the year ended December 31, 2020, an impairment charge of $8.7 million was recorded to intangibles.Revenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and 61 Table of Contents Table of Contents Table of Contents The following summarizes our most significant critical accounting estimates:Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2022, 2021 and 2020, there were no goodwill impairments recorded and there are no accumulated impairment balances.Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. For the year ended December 31, 2020, an impairment charge of $8.7 million was recorded to intangibles.Revenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and The following summarizes our most significant critical accounting estimates: Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2022, 2021 and 2020, there were no goodwill impairments recorded and there are no accumulated impairment balances. Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. For the year ended December 31, 2020, an impairment charge of $8.7 million was recorded to intangibles. Revenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following: 61 61 Table of Contents●commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. Recent Accounting PronouncementsSee "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements" for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company's consolidated financial position, results of operations or liquidity.Forward-Looking StatementsCertain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act") regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management's plans and objectives for future operations, or a statement of future economic performance contained in management's discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical information, are forward-looking statements within the meaning of the Exchange Act. Without limiting the foregoing, the words "believes," "thinks," "anticipates," "plans," "expects," "estimates" and similar expressions are intended to identify forward-looking statements.Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following:●Our ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers;●The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers, particularly the rising cost of energy;●Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products;●The impact of the military conflict in Ukraine, including supply chain disruptions, volatility in commodity prices, increased economic uncertainty and escalating geopolitical tensions; 62 Table of Contents Table of Contents Table of Contents ●commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. Recent Accounting PronouncementsSee "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements" for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company's consolidated financial position, results of operations or liquidity.Forward-Looking StatementsCertain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act") regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management's plans and objectives for future operations, or a statement of future economic performance contained in management's discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical information, are forward-looking statements within the meaning of the Exchange Act. Without limiting the foregoing, the words "believes," "thinks," "anticipates," "plans," "expects," "estimates" and similar expressions are intended to identify forward-looking statements.Management cautions that these statements are qualified by their terms and/or important factors, many of which are outside our control and involve a number of risks, uncertainties and other factors, that could cause actual results and events to differ materially from the statements made including, but not limited to, the following:●Our ability to absorb, mitigate or pass on cost increases to our bottlers/distributors and/or customers;●The impact of rising costs, interest rates, and inflation on the discretionary income of our consumers, particularly the rising cost of energy;●Uncertainties associated with an economic slowdown or recession that could negatively impact the financial condition of our customers and could result in a reduced demand for our products;●The impact of the military conflict in Ukraine, including supply chain disruptions, volatility in commodity prices, increased economic uncertainty and escalating geopolitical tensions; The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. **Current (2024):** Our consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies. The following summarizes our most significant critical accounting estimates: Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances. Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. 61 61 Table of ContentsRevenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. Recent Accounting PronouncementsSee "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements" for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company's consolidated financial position, results of operations or liquidity.Forward-Looking StatementsCertain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act")) regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management's plans and objectives for future operations, or a statement of future economic performance contained in management's discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical 62 Table of Contents Table of Contents Table of Contents Revenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions paid to TCCC based on our sales to certain wholly-owned subsidiaries of TCCC and/or to certain companies accounted for under the equity method by TCCC.The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. Recent Accounting PronouncementsSee "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies - Recent Accounting Pronouncements" for a full description of recent accounting pronouncements including the respective expected dates of adoption and expected effects on the Company's consolidated financial position, results of operations or liquidity.Forward-Looking StatementsCertain statements made in this report may constitute forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended) (the "Exchange Act")) regarding the expectations of management with respect to revenues, profitability, adequacy of funds from operations and our existing credit facility, among other things. All statements containing a projection of revenues, income (loss), earnings (loss) per share, capital expenditures, dividends, capital structure or other financial items, a statement of management's plans and objectives for future operations, or a statement of future economic performance contained in management's discussion and analysis of financial condition and results of operations, including statements related to new products, volume growth and statements encompassing general optimism about future operating results and non-historical Revenue Recognition - Promotional and other allowances (variable consideration) recorded as a reduction to net sales for our energy drink products primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following: The Company's promotional allowance programs for its energy drink products with its 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, 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 during the year for its 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 distributor and retail customer performance levels. 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 the Alcohol Brands segment primarily include price promotions where permitted. --- ## Modified: Liquidity and Capital Resources **Key changes:** - Reworded sentence: "Cash and cash equivalents, short-term and long-term investments - As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments." - Reworded sentence: "Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries." - Reworded sentence: "Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash." - Reworded sentence: "For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes." - Reworded sentence: "Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022." **Prior (2023):** Cash and cash equivalents, short-term and long-term investments - As of December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. Of our $1.31 billion of cash and cash equivalents held at December 31, 2022, $668.9 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2022. We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of equipment, purchases of real property and purchases of shares of our common stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $300.0 million through December 31, 2023. However, future business opportunities may cause a change in this estimate. 58 58 Table of ContentsPurchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.The following summarizes our cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands):​​​​​​​​​​​Net cash provided by (used in): ​​ ​​ ​​​ 2022 2021 2020Operating activities​$ 887,699​$ 1,155,741​$ 1,364,163Investing activities​$ (161,367)​$ (992,022)​$ (472,487)Financing activities​$ (706,938)​$ 34,821​$ (526,068)​Cash flows provided by operating activities. Cash provided by operating activities was $887.7 million for the year ended December 31, 2022, as compared with cash provided by operating activities of $1.16 billion for the year ended December 31, 2021. For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and $4.4 million decrease in prepaid income taxes.For the year ended December 31, 2021, cash provided by operating activities was primarily attributable to net income earned of $1.38 billion and adjustments for certain non-cash expenses, consisting of $50.2 million of depreciation and amortization, and $70.5 million of stock-based compensation. For the year ended December 31, 2021, cash provided by operating activities also increased due to a $114.3 million increase in accounts payable, a $71.6 million increase in accrued liabilities, a $31.5 million increase in accrued promotional allowances, a $16.4 million increase in deferred income taxes, an $8.0 million increase in accrued compensation and a $7.2 million increase in income taxes payable. For the year ended December 31, 2021, cash used in operating activities was primarily attributable to a $277.8 million increase in inventories, a $254.2 million increase in accounts receivable, a $29.3 million increase in prepaid expenses and other assets, a $22.7 million decrease in deferred revenue and a $10.9 million increase in prepaid income taxes.Cash flows used in investing activities. Net cash used in investing activities was $161.4 million for the year ended December 31, 2022, as compared to cash used in investing activities of $992.0 million for the year ended December 31, 2021. For both the years ended December 31, 2022 and 2021, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2022 and 2021, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the CANarchy Transaction. To a lesser extent, for both the years ended December 31, 2022 and 2021, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect 59 Table of Contents Table of Contents Table of Contents Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.The following summarizes our cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands):​​​​​​​​​​​Net cash provided by (used in): ​​ ​​ ​​​ 2022 2021 2020Operating activities​$ 887,699​$ 1,155,741​$ 1,364,163Investing activities​$ (161,367)​$ (992,022)​$ (472,487)Financing activities​$ (706,938)​$ 34,821​$ (526,068)​Cash flows provided by operating activities. Cash provided by operating activities was $887.7 million for the year ended December 31, 2022, as compared with cash provided by operating activities of $1.16 billion for the year ended December 31, 2021. For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and $4.4 million decrease in prepaid income taxes.For the year ended December 31, 2021, cash provided by operating activities was primarily attributable to net income earned of $1.38 billion and adjustments for certain non-cash expenses, consisting of $50.2 million of depreciation and amortization, and $70.5 million of stock-based compensation. For the year ended December 31, 2021, cash provided by operating activities also increased due to a $114.3 million increase in accounts payable, a $71.6 million increase in accrued liabilities, a $31.5 million increase in accrued promotional allowances, a $16.4 million increase in deferred income taxes, an $8.0 million increase in accrued compensation and a $7.2 million increase in income taxes payable. For the year ended December 31, 2021, cash used in operating activities was primarily attributable to a $277.8 million increase in inventories, a $254.2 million increase in accounts receivable, a $29.3 million increase in prepaid expenses and other assets, a $22.7 million decrease in deferred revenue and a $10.9 million increase in prepaid income taxes.Cash flows used in investing activities. Net cash used in investing activities was $161.4 million for the year ended December 31, 2022, as compared to cash used in investing activities of $992.0 million for the year ended December 31, 2021. For both the years ended December 31, 2022 and 2021, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2022 and 2021, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the CANarchy Transaction. To a lesser extent, for both the years ended December 31, 2022 and 2021, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash. The following summarizes our cash flows for the years ended December 31, 2022, 2021 and 2020 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Operating activities ​ $ 887,699 ​ $ 1,155,741 ​ $ 1,364,163 Investing activities ​ $ (161,367) ​ $ (992,022) ​ $ (472,487) Financing activities ​ $ (706,938) ​ $ 34,821 ​ $ (526,068) ​ Cash flows provided by operating activities. Cash provided by operating activities was $887.7 million for the year ended December 31, 2022, as compared with cash provided by operating activities of $1.16 billion for the year ended December 31, 2021. For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and $4.4 million decrease in prepaid income taxes. For the year ended December 31, 2021, cash provided by operating activities was primarily attributable to net income earned of $1.38 billion and adjustments for certain non-cash expenses, consisting of $50.2 million of depreciation and amortization, and $70.5 million of stock-based compensation. For the year ended December 31, 2021, cash provided by operating activities also increased due to a $114.3 million increase in accounts payable, a $71.6 million increase in accrued liabilities, a $31.5 million increase in accrued promotional allowances, a $16.4 million increase in deferred income taxes, an $8.0 million increase in accrued compensation and a $7.2 million increase in income taxes payable. For the year ended December 31, 2021, cash used in operating activities was primarily attributable to a $277.8 million increase in inventories, a $254.2 million increase in accounts receivable, a $29.3 million increase in prepaid expenses and other assets, a $22.7 million decrease in deferred revenue and a $10.9 million increase in prepaid income taxes. Cash flows used in investing activities. Net cash used in investing activities was $161.4 million for the year ended December 31, 2022, as compared to cash used in investing activities of $992.0 million for the year ended December 31, 2021. For both the years ended December 31, 2022 and 2021, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2022 and 2021, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the CANarchy Transaction. To a lesser extent, for both the years ended December 31, 2022 and 2021, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect 59 59 Table of Contentsto continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.Cash flows (used in) provided by financing activities. Cash used in financing activities was $706.9 million for the year ended December 31, 2022 as compared to cash provided by financing activities of $34.8 million for the year ended December 31, 2021. The cash flows used in financing activities for the year ended December 31, 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2022, and 2021 was primarily attributable to the issuance of our common stock related to stock-based compensation. The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2022:​​​​​​​​​​​​​​​​​​Payments due by period (in thousands)​ ​​ Less than 1‑3 3‑5 More thanObligations​Total​1 year years years 5 yearsContractual Obligations1​$ 314,251​$ 239,350​$ 65,315​$ 9,586​$ - Finance Leases​ 811​ 769​ 40​ 2​ - Operating Leases​ 42,011​ 8,854​ 12,566​ 8,242​ 12,349Purchase Commitments2​ 328,015​ 316,680​ 11,156​ 179​ - ​​$ 685,088​$ 565,653​$ 89,077​$ 18,009​$ 12,349​1Contractual obligations include our obligations related to sponsorships and other commitments.2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.In addition, approximately $3.0 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2022. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2022, we had $0.4 million of accrued interest and penalties related to unrecognized tax benefits.Accounting Policies and PronouncementsCritical Accounting Policies and EstimatesOur consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies.60 Table of Contents Table of Contents Table of Contents to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.Cash flows (used in) provided by financing activities. Cash used in financing activities was $706.9 million for the year ended December 31, 2022 as compared to cash provided by financing activities of $34.8 million for the year ended December 31, 2021. The cash flows used in financing activities for the year ended December 31, 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2022, and 2021 was primarily attributable to the issuance of our common stock related to stock-based compensation. The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2022:​​​​​​​​​​​​​​​​​​Payments due by period (in thousands)​ ​​ Less than 1‑3 3‑5 More thanObligations​Total​1 year years years 5 yearsContractual Obligations1​$ 314,251​$ 239,350​$ 65,315​$ 9,586​$ - Finance Leases​ 811​ 769​ 40​ 2​ - Operating Leases​ 42,011​ 8,854​ 12,566​ 8,242​ 12,349Purchase Commitments2​ 328,015​ 316,680​ 11,156​ 179​ - ​​$ 685,088​$ 565,653​$ 89,077​$ 18,009​$ 12,349​1Contractual obligations include our obligations related to sponsorships and other commitments.2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.In addition, approximately $3.0 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2022. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2022, we had $0.4 million of accrued interest and penalties related to unrecognized tax benefits.Accounting Policies and PronouncementsCritical Accounting Policies and EstimatesOur consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies. to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses. Cash flows (used in) provided by financing activities. Cash used in financing activities was $706.9 million for the year ended December 31, 2022 as compared to cash provided by financing activities of $34.8 million for the year ended December 31, 2021. The cash flows used in financing activities for the year ended December 31, 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2022, and 2021 was primarily attributable to the issuance of our common stock related to stock-based compensation. The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period (in thousands) ​ ​ ​ Less than 1‑3 3‑5 More than Obligations ​ Total ​ 1 year years years 5 years Contractual Obligations1 ​ $ 314,251 ​ $ 239,350 ​ $ 65,315 ​ $ 9,586 ​ $ - Finance Leases ​ 811 ​ 769 ​ 40 ​ 2 ​ - Operating Leases ​ 42,011 ​ 8,854 ​ 12,566 ​ 8,242 ​ 12,349 Purchase Commitments2 ​ 328,015 ​ 316,680 ​ 11,156 ​ 179 ​ - ​ ​ $ 685,088 ​ $ 565,653 ​ $ 89,077 ​ $ 18,009 ​ $ 12,349 ​ 1Contractual obligations include our obligations related to sponsorships and other commitments. 2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year. In addition, approximately $3.0 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2022. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2022, we had $0.4 million of accrued interest and penalties related to unrecognized tax benefits. **Current (2024):** Cash and cash equivalents, short-term and long-term investments - As of December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments. We maintain our investments for cash management purposes and not for purposes of speculation. Our risk management policies emphasize credit quality (primarily based on short-term ratings by nationally recognized statistical rating organizations) in selecting and maintaining our investments. We regularly assess market risk of our investments and believe our current policies and investment practices adequately limit those risks. However, certain of these investments are subject to general credit, liquidity, market and interest rate risks. These market risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. Of our $2.30 billion of cash and cash equivalents held at December 31, 2023, $971.8 million was held by our foreign subsidiaries. No short-term or long-term investments were held by our foreign subsidiaries at December 31, 2023. ​ We believe that cash available from operations, including our cash resources and access to credit, will be sufficient for our working capital needs, including purchase commitments for raw materials and inventory, increases in accounts receivable, payments of tax liabilities, expansion and development needs, purchases of capital assets, purchases of 58 58 Table of Contentsequipment, purchases of real property and purchases of treasury stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through December 31, 2024. However, future business opportunities may cause a change in this estimate.Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.The following summarizes our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands):​​​​​​​​​​​Net cash provided by (used in): ​​ ​​ ​​​ 2023 2022 2021Operating activities​$ 1,717,753​$ 887,699​$ 1,155,741Investing activities​$ (193,395)​$ (161,367)​$ (992,022)Financing activities​$ (542,599)​$ (706,938)​$ 34,821​Cash flows provided by operating activities. Cash provided by operating activities was $1.72 billion for the year ended December 31, 2023, as compared with cash provided by operating activities of $887.7 million for the year ended December 31, 2022.For the year ended December 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $1.63 billion and adjustments for certain non-cash expenses, consisting of $68.9 million of depreciation and amortization, $68.8 million of stock-based compensation, $38.7 million loss on impairment of intangibles, $9.0 million of non-cash lease expense and $4.3 million loss on impairment of property and equipment, partially offset by the $45.4 million Bang Transaction Gain. For the year ended December 31, 2023, cash provided by operating activities also increased due to a $112.8 million increase in accounts payable, a $23.0 million increase in other liabilities, a $13.4 million increase in accrued compensation, an $8.4 million increase in accrued promotional allowances, a $7.9 million decrease in inventories and a $2.0 million decrease in deferred income taxes. For the year ended December 31, 2023, cash used in operating activities was primarily attributable to a $163.2 million increase in accounts receivable, a $24.5 million decrease in deferred revenue, an $18.8 million increase in prepaid income taxes, a $10.4 million decrease in accrued liabilities and a $10.2 million increase in prepaid expenses and other assets.​For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes.Cash flows used in investing activities. Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022.For both the years ended December 31, 2023 and 2022, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2023 and 2022, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December 59 Table of Contents Table of Contents Table of Contents equipment, purchases of real property and purchases of treasury stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through December 31, 2024. However, future business opportunities may cause a change in this estimate.Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash.The following summarizes our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands):​​​​​​​​​​​Net cash provided by (used in): ​​ ​​ ​​​ 2023 2022 2021Operating activities​$ 1,717,753​$ 887,699​$ 1,155,741Investing activities​$ (193,395)​$ (161,367)​$ (992,022)Financing activities​$ (542,599)​$ (706,938)​$ 34,821​Cash flows provided by operating activities. Cash provided by operating activities was $1.72 billion for the year ended December 31, 2023, as compared with cash provided by operating activities of $887.7 million for the year ended December 31, 2022.For the year ended December 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $1.63 billion and adjustments for certain non-cash expenses, consisting of $68.9 million of depreciation and amortization, $68.8 million of stock-based compensation, $38.7 million loss on impairment of intangibles, $9.0 million of non-cash lease expense and $4.3 million loss on impairment of property and equipment, partially offset by the $45.4 million Bang Transaction Gain. For the year ended December 31, 2023, cash provided by operating activities also increased due to a $112.8 million increase in accounts payable, a $23.0 million increase in other liabilities, a $13.4 million increase in accrued compensation, an $8.4 million increase in accrued promotional allowances, a $7.9 million decrease in inventories and a $2.0 million decrease in deferred income taxes. For the year ended December 31, 2023, cash used in operating activities was primarily attributable to a $163.2 million increase in accounts receivable, a $24.5 million decrease in deferred revenue, an $18.8 million increase in prepaid income taxes, a $10.4 million decrease in accrued liabilities and a $10.2 million increase in prepaid expenses and other assets.​For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes.Cash flows used in investing activities. Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022.For both the years ended December 31, 2023 and 2022, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2023 and 2022, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December equipment, purchases of real property and purchases of treasury stock, through at least the next 12 months. Based on our current plans, capital expenditures (exclusive of common stock repurchases) are likely to be less than $500.0 million through December 31, 2024. However, future business opportunities may cause a change in this estimate. Purchases of inventories, increases in accounts receivable and other assets, acquisition of property and equipment (including real property, personal property and coolers), leasehold improvements, advances for or the purchase of equipment for our bottlers, acquisition and maintenance of trademarks, payments of accounts payable, income taxes payable and purchases of our common stock are expected to remain our principal recurring use of cash. The following summarizes our cash flows for the years ended December 31, 2023, 2022 and 2021 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net cash provided by (used in): ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Operating activities ​ $ 1,717,753 ​ $ 887,699 ​ $ 1,155,741 Investing activities ​ $ (193,395) ​ $ (161,367) ​ $ (992,022) Financing activities ​ $ (542,599) ​ $ (706,938) ​ $ 34,821 ​ Cash flows provided by operating activities. Cash provided by operating activities was $1.72 billion for the year ended December 31, 2023, as compared with cash provided by operating activities of $887.7 million for the year ended December 31, 2022. For the year ended December 31, 2023, cash provided by operating activities was primarily attributable to net income earned of $1.63 billion and adjustments for certain non-cash expenses, consisting of $68.9 million of depreciation and amortization, $68.8 million of stock-based compensation, $38.7 million loss on impairment of intangibles, $9.0 million of non-cash lease expense and $4.3 million loss on impairment of property and equipment, partially offset by the $45.4 million Bang Transaction Gain. For the year ended December 31, 2023, cash provided by operating activities also increased due to a $112.8 million increase in accounts payable, a $23.0 million increase in other liabilities, a $13.4 million increase in accrued compensation, an $8.4 million increase in accrued promotional allowances, a $7.9 million decrease in inventories and a $2.0 million decrease in deferred income taxes. For the year ended December 31, 2023, cash used in operating activities was primarily attributable to a $163.2 million increase in accounts receivable, a $24.5 million decrease in deferred revenue, an $18.8 million increase in prepaid income taxes, a $10.4 million decrease in accrued liabilities and a $10.2 million increase in prepaid expenses and other assets. ​ For the year ended December 31, 2022, cash provided by operating activities was primarily attributable to net income earned of $1.19 billion and adjustments for certain non-cash expenses, consisting of $64.1 million of stock-based compensation, $61.2 million of depreciation and amortization, $7.3 million of non-cash lease expense and $2.2 million loss on impairment of intangibles. For the year ended December 31, 2022, cash provided by operating activities also increased due to a $49.8 million increase in accounts payable, a $48.2 million decrease in deferred income taxes, a $50.8 million increase in accrued promotional allowances and a $3.7 million increase in accrued compensation. For the year ended December 31, 2022, cash used in operating activities was primarily attributable to a $347.7 million increase in inventories, a $129.0 million increase in accounts receivable, a $38.3 million increase in prepaid expenses and other assets, a $30.4 million decrease in accrued liabilities, a $19.9 million decrease in deferred revenue, a $16.9 million decrease in income taxes payable, a $4.5 million decrease in other liabilities and a $4.4 million decrease in prepaid income taxes. Cash flows used in investing activities. Net cash used in investing activities was $193.4 million for the year ended December 31, 2023, as compared to cash used in investing activities of $161.4 million for the year ended December 31, 2022. For both the years ended December 31, 2023 and 2022, cash provided by investing activities was primarily attributable to sales of available-for-sale investments. For both the years ended December 31, 2023 and 2022, cash used in investing activities was primarily attributable to purchases of available-for-sale investments. For the year ended December 59 59 Table of Contents31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the acquisition of Monster Brewing Company. To a lesser extent, for both the years ended December 31, 2023 and 2022, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.​Cash flows (used in) provided by financing activities. Cash used in financing activities was $542.6 million for the year ended December 31, 2023 as compared to cash used in financing activities of $706.9 million for the year ended December 31, 2022. The cash flows used in financing activities for both the years ended December 31, 2023 and 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2023 and 2022 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2023:​​​​​​​​​​​​​​​​​​Payments due by period (in thousands)​ ​​ Less than 1‑3 3‑5 More thanObligations​Total​1 year years years 5 yearsContractual Obligations1​$ 417,631​$ 328,200​$ 85,282​$ 4,031​$ 118Finance Leases​ 6,620​ 6,601​ 19​ - ​ - Operating Leases​ 69,311​ 13,490​ 21,077​ 16,922​ 17,822Purchase Commitments2​ 414,691​ 394,867​ 19,315​ 509​ - ​​$ 908,253​$ 743,158​$ 125,693​$ 21,462​$ 17,940​1Contractual obligations include our obligations related to sponsorships and other commitments.2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.In addition, approximately $3.1 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2023. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2023, we had $0.6 million of accrued interest and penalties related to unrecognized tax benefits.60 Table of Contents Table of Contents Table of Contents 31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the acquisition of Monster Brewing Company. To a lesser extent, for both the years ended December 31, 2023 and 2022, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses.​Cash flows (used in) provided by financing activities. Cash used in financing activities was $542.6 million for the year ended December 31, 2023 as compared to cash used in financing activities of $706.9 million for the year ended December 31, 2022. The cash flows used in financing activities for both the years ended December 31, 2023 and 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2023 and 2022 was primarily attributable to the issuance of our common stock under our stock-based compensation plans.The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2023:​​​​​​​​​​​​​​​​​​Payments due by period (in thousands)​ ​​ Less than 1‑3 3‑5 More thanObligations​Total​1 year years years 5 yearsContractual Obligations1​$ 417,631​$ 328,200​$ 85,282​$ 4,031​$ 118Finance Leases​ 6,620​ 6,601​ 19​ - ​ - Operating Leases​ 69,311​ 13,490​ 21,077​ 16,922​ 17,822Purchase Commitments2​ 414,691​ 394,867​ 19,315​ 509​ - ​​$ 908,253​$ 743,158​$ 125,693​$ 21,462​$ 17,940​1Contractual obligations include our obligations related to sponsorships and other commitments.2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year.In addition, approximately $3.1 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2023. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2023, we had $0.6 million of accrued interest and penalties related to unrecognized tax benefits. 31, 2023, cash used in investing activities included $363.4 million related to the acquisition of Bang Energy. For the year ended December 31, 2022, cash used in investing activities included $329.5 million (net of cash acquired), related to the acquisition of Monster Brewing Company. To a lesser extent, for both the years ended December 31, 2023 and 2022, cash used in investing activities also included the acquisition of real property, fixed assets consisting of vans and promotional vehicles, coolers and other equipment to support our marketing and promotional activities, production equipment, furniture and fixtures, office and computer equipment, computer software, equipment used for sales and administrative activities, certain leasehold improvements, improvements to real property as well as the acquisition, defense and maintenance of trademarks. We expect to continue to use a portion of our cash in excess of our requirements for operations for purchasing short-term and long-term investments, leasehold improvements, the acquisition of capital equipment (specifically, vans, trucks and promotional vehicles, coolers, other promotional equipment, merchandise displays, warehousing racks as well as items of production equipment required to produce certain of our existing and/or new products and to develop our brand in international markets) and for other corporate purposes. From time to time, we may also use cash to purchase additional real property related to our beverage business and/or acquire compatible businesses. ​ Cash flows (used in) provided by financing activities. Cash used in financing activities was $542.6 million for the year ended December 31, 2023 as compared to cash used in financing activities of $706.9 million for the year ended December 31, 2022. The cash flows used in financing activities for both the years ended December 31, 2023 and 2022 was primarily the result of the repurchases of our common stock. The cash flows provided by financing activities for both the years ended December 31, 2023 and 2022 was primarily attributable to the issuance of our common stock under our stock-based compensation plans. The following represents a summary of the Company's contractual commitments and related scheduled maturities as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Payments due by period (in thousands) ​ ​ ​ Less than 1‑3 3‑5 More than Obligations ​ Total ​ 1 year years years 5 years Contractual Obligations1 ​ $ 417,631 ​ $ 328,200 ​ $ 85,282 ​ $ 4,031 ​ $ 118 Finance Leases ​ 6,620 ​ 6,601 ​ 19 ​ - ​ - Operating Leases ​ 69,311 ​ 13,490 ​ 21,077 ​ 16,922 ​ 17,822 Purchase Commitments2 ​ 414,691 ​ 394,867 ​ 19,315 ​ 509 ​ - ​ ​ $ 908,253 ​ $ 743,158 ​ $ 125,693 ​ $ 21,462 ​ $ 17,940 ​ 1Contractual obligations include our obligations related to sponsorships and other commitments. 2Purchase commitments include obligations made by us and our subsidiaries to various suppliers for raw materials used in the production of our products. These obligations vary in terms, but are generally satisfied within one year. In addition, approximately $3.1 million of unrecognized tax benefits have been recorded as liabilities as of December 31, 2023. It is expected that the amount of unrecognized tax benefits will not significantly change within the next 12 months. As of December 31, 2023, we had $0.6 million of accrued interest and penalties related to unrecognized tax benefits. 60 60 Table of ContentsAccounting Policies and PronouncementsCritical Accounting Policies and EstimatesOur consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies.The following summarizes our most significant critical accounting estimates:Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances.Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles.61 Table of Contents Table of Contents Table of Contents Accounting Policies and PronouncementsCritical Accounting Policies and EstimatesOur consolidated financial statements are prepared in accordance with GAAP. GAAP requires us to make estimates and assumptions that affect the reported amounts in our consolidated financial statements. Critical accounting estimates are those that management believes are the most important to the portrayal of our financial condition and results and require the most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain and that have had, or are reasonably likely to have, a material impact on our financial condition or results of operations. Judgments and uncertainties may result in materially different amounts being reported under different conditions or using different assumptions. See "Part II, Item 8 - Financial Statements and Supplementary Data - Note 1 - Organization and Summary of Significant Accounting Policies" for a summary of our significant accounting policies.The following summarizes our most significant critical accounting estimates:Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. Application of the goodwill impairment test requires significant judgment, including the identification of reporting units, assignment of assets and liabilities to reporting units, assignment of goodwill to reporting units, and determination of the fair value of each reporting unit. The fair value of each reporting unit is estimated through the use of a discounted cash flow methodology. This analysis requires significant assumptions, including discount rate, projected future revenues, projected future operating margins and terminal growth rates. The estimates used to calculate the fair value of a reporting unit change from year to year based on operating results, market conditions and other factors. Changes in these estimates and assumptions could materially affect the determination of fair value and goodwill impairment for each reporting unit. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2023, 2022 and 2021, there were no goodwill impairments recorded and there are no accumulated impairment balances.Other Intangibles - In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. Recoverability of indefinite-lived intangible assets is determined on a relief from royalty methodology, which is based on the implied royalty paid, at an appropriate discount rate, to license the use of an asset rather than owning the asset. The present value of the after-tax cost savings (i.e. royalty relief) indicates the estimated fair value of the asset. Any excess of the carrying value over the estimated fair value is recognized as an impairment loss equal to that excess. This analysis requires significant assumptions, including discount rate, projected future revenues and terminal growth rates. A significant change in any or a combination of the assumptions used to estimate fair value of our indefinite-lived intangible assets could have a negative impact on the estimated fair values. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the year ended December 31, 2023, impairment charges of $38.7 million were recorded to intangibles primarily related to trademarks in our Alcohol Brands segment. For the year ended December 31, 2022, an impairment charge of $2.2 million was recorded to intangibles. For the year ended December 31, 2021 no impairment charges were recorded to intangibles. --- ## Modified: Basis for Opinion **Key changes:** - Reworded sentence: "These financial statements are the responsibility of the Company's management." - Reworded sentence: "We conducted our audit in accordance with the standards of the PCAOB." - Reworded sentence: "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." - Reworded sentence: "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." **Prior (2023):** These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. **Current (2024):** 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. --- ## Modified: Intellectual Property, Information Technology and Data Privacy Risks **Key changes:** - Reworded sentence: "Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations." - Reworded sentence: "Cybersecurity attacks may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches." - Reworded sentence: "While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity." - Reworded sentence: "In the European Union, the General Data Protection Regulation ("GDPR") includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance." - Reworded sentence: "Data breaches or improper processing, or breaches of personal data in violation of the GDPR or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results.Financial RisksFluctuations in our effective tax rate could adversely affect our financial condition and results of operations.We are subject to income and other taxes in both the U.S." **Prior (2023):** Our intellectual property rights are critical to our success, and the loss of such rights could materially adversely affect our business. We own numerous trademarks that are very important to our business. We also own the copyright in, and to, a portion of the content on the packaging of our products. We regard our trademarks, copyrights and similar intellectual property as critical to our success and attempt to protect such intellectual property through registration and enforcement actions. However, there can be no assurance that other parties will not infringe or misappropriate our trademarks, copyrights and similar proprietary rights. We also have been, and may in the future be, unable to use our trademarks, trade names or designs and/or trade dress in certain countries, which may impact sales of the affected brands and require increased expenditures, which could have an adverse effect on our business, financial condition or results of operations. 35 35 Table of ContentsWe must continually maintain, monitor, protect and/or upgrade our information technology systems, including protecting us from internal and external cybersecurity threats.Information technology enables us to operate efficiently, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements. If we do not appropriately allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, and/or the loss of and/or damage to intellectual property through security breaches, including internal and external cybersecurity threats. Cybersecurity attacks are evolving, may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches. Such attacks could lead to disruptions in or loss of access to our data or business systems, an inability to process customer orders and/or lost customer orders, unauthorized release of confidential or otherwise protected information, lost revenues or other costs due to office, plant, warehouse or other facility disruption or shutdown, and corruption of data.We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. These third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise.However, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to operational interruption, damage to our brand image and private data exposure.Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results.We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") became effective in May 2018 for all member states. The GDPR includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, the California Consumer Privacy Act of 2018 ("CCPA"), which was enacted in June 2018 and came into effect on January 1, 2020, provides a new private right of action and statutory damages for certain data breaches and imposes operational requirements on companies that process personal data of California residents, including making new disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties. 36 Table of Contents Table of Contents Table of Contents We must continually maintain, monitor, protect and/or upgrade our information technology systems, including protecting us from internal and external cybersecurity threats.Information technology enables us to operate efficiently, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements. If we do not appropriately allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, and/or the loss of and/or damage to intellectual property through security breaches, including internal and external cybersecurity threats. Cybersecurity attacks are evolving, may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches. Such attacks could lead to disruptions in or loss of access to our data or business systems, an inability to process customer orders and/or lost customer orders, unauthorized release of confidential or otherwise protected information, lost revenues or other costs due to office, plant, warehouse or other facility disruption or shutdown, and corruption of data.We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. These third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise.However, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to operational interruption, damage to our brand image and private data exposure.Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results.We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") became effective in May 2018 for all member states. The GDPR includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, the California Consumer Privacy Act of 2018 ("CCPA"), which was enacted in June 2018 and came into effect on January 1, 2020, provides a new private right of action and statutory damages for certain data breaches and imposes operational requirements on companies that process personal data of California residents, including making new disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties. We must continually maintain, monitor, protect and/or upgrade our information technology systems, including protecting us from internal and external cybersecurity threats. Information technology enables us to operate efficiently, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements. If we do not appropriately allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, and/or the loss of and/or damage to intellectual property through security breaches, including internal and external cybersecurity threats. Cybersecurity attacks are evolving, may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches. Such attacks could lead to disruptions in or loss of access to our data or business systems, an inability to process customer orders and/or lost customer orders, unauthorized release of confidential or otherwise protected information, lost revenues or other costs due to office, plant, warehouse or other facility disruption or shutdown, and corruption of data. We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, which increases our financial, legal, reputational and operational risk. These third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise. However, given the unpredictability of the timing, nature and scope of such disruptions, we could potentially be subject to operational interruption, damage to our brand image and private data exposure. Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results. If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results. We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") became effective in May 2018 for all member states. The GDPR includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, the California Consumer Privacy Act of 2018 ("CCPA"), which was enacted in June 2018 and came into effect on January 1, 2020, provides a new private right of action and statutory damages for certain data breaches and imposes operational requirements on companies that process personal data of California residents, including making new disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties. 36 36 Table of ContentsChanges introduced by the GDPR and the CCPA, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR, the CCPA and/or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results.​Financial RisksFluctuations in our effective tax rate could adversely affect our financial condition and results of operations.We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2019 through 2021 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2018 through 2021 tax years.At any given time, events may occur which change our expectation about how any such tax audits will be resolved and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions. Changes in U.S. tax laws as a result of any legislation proposed by the new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations.We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired.Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry.37 Table of Contents Table of Contents Table of Contents Changes introduced by the GDPR and the CCPA, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR, the CCPA and/or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results.​Financial RisksFluctuations in our effective tax rate could adversely affect our financial condition and results of operations.We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2019 through 2021 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2018 through 2021 tax years.At any given time, events may occur which change our expectation about how any such tax audits will be resolved and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions. Changes in U.S. tax laws as a result of any legislation proposed by the new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations.We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired.Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry. Changes introduced by the GDPR and the CCPA, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR, the CCPA and/or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results. ​ **Current (2024):** Our intellectual property rights are critical to our success, and the loss of such rights could materially adversely affect our business. We own numerous trademarks that are very important to our business. We also own the copyright in, and to, a portion of the content on the packaging of our products. We regard our trademarks, copyrights and similar intellectual property as critical to our success and attempt to protect such intellectual property through registration and enforcement actions. However, there can be no assurance that other parties will not infringe or misappropriate our trademarks, copyrights and similar proprietary rights. We also have been, and may in the future be, unable to use our trademarks, trade names or designs and/or trade dress in certain countries, which may impact sales of the affected brands and require increased expenditures, which could have an adverse effect on our business, financial condition or results of operations. Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations. Information technology, including the Internet and third-party hosted services, enables us to operate efficiently, manage our procurement, supply chain and employee processes, interface with customers, maintain financial accuracy and efficiency and accurately produce our financial statements. If we do not appropriately allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, and/or the loss of and/or damage to intellectual property through security breaches, including internal and external cybersecurity threats. Cybersecurity attacks may be difficult to detect for periods of time, and include, but are not limited to, malicious software (malware, ransomware and viruses), phishing and social engineering, attempts to gain unauthorized access to networks, computer systems and data, malicious or negligent actions of employees (including misuse of information they are entitled to access), cyber extortion, electronic or wire fraud, and other forms of electronic security breaches. These incidents may be caused by failures during routine operations, such as system upgrades, or by user errors, as well as network or hardware failures, malicious or 36 36 Table of Contentsdisruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by hackers, criminal groups or nation-state organizations (which may include social engineering, business email compromise, cyber extortion, denial of service, or attempts to exploit vulnerabilities, such as phishing), geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. Such attacks could lead to disruptions in or loss of access to our data or business systems; an inability to process customer orders and/or lost customer orders; unauthorized release of confidential, proprietary or otherwise protected information belonging to us or our employees, customers, consumers, partners, or suppliers; lost revenues or other costs due to office, plant, production, warehouse or other facility disruption or shutdown; additional expenses, including the cost of remediating incidents or improving security measures, increased insurance costs, and/or ransomware payments; and corruption of data. Any such consequences could materially and adversely affect our financial condition, results of operations and cash flows. We also may suffer reputational damage because of lost or misappropriated confidential or proprietary information belonging to us, or employees, customers, suppliers or other third party service providers and may become exposed to legal action and increased regulatory oversight, including governmental inquiries, investigations, enforcement actions and regulatory fines. Although we maintain insurance coverage that may, subject to the policy's terms and conditions, cover certain aspects of a breach or disruption, such insurance coverage may be insufficient to cover all losses. In addition, the scope and severity of cyber threats, in particular the use of ransomware attacks, are increasing. Due to such constant evolving nature and methods of security threats, we cannot predict the form and nature of any future incident, and the cost and operational expense of implementing, maintaining and enhancing protective measures to guard against increasingly complex and sophisticated cyber threats could increase significantly.Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity. If we fail to adequately monitor our third party service providers' and partners' performance, including for compliance with regulatory and legal requirements, we may have to incur additional costs to correct errors, our reputation could be harmed or we could be subject to litigation, claims, legal or regulatory proceedings, inquiries or investigations. These risks may also be present if our third party service providers and partners use separate information systems that are not integrated with our systems and suffer a cybersecurity incident. These risks are also present in acquired businesses, joint ventures or companies that we invest in or partner with that use separate information systems or have not yet been fully integrated into our information systems. Third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise. As a result, we are subject to the risk that the activities associated with our third party service providers and partners will adversely affect our business, even if the cyber incident does not directly impact our systems or information.37 Table of Contents Table of Contents Table of Contents disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by hackers, criminal groups or nation-state organizations (which may include social engineering, business email compromise, cyber extortion, denial of service, or attempts to exploit vulnerabilities, such as phishing), geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. Such attacks could lead to disruptions in or loss of access to our data or business systems; an inability to process customer orders and/or lost customer orders; unauthorized release of confidential, proprietary or otherwise protected information belonging to us or our employees, customers, consumers, partners, or suppliers; lost revenues or other costs due to office, plant, production, warehouse or other facility disruption or shutdown; additional expenses, including the cost of remediating incidents or improving security measures, increased insurance costs, and/or ransomware payments; and corruption of data. Any such consequences could materially and adversely affect our financial condition, results of operations and cash flows. We also may suffer reputational damage because of lost or misappropriated confidential or proprietary information belonging to us, or employees, customers, suppliers or other third party service providers and may become exposed to legal action and increased regulatory oversight, including governmental inquiries, investigations, enforcement actions and regulatory fines. Although we maintain insurance coverage that may, subject to the policy's terms and conditions, cover certain aspects of a breach or disruption, such insurance coverage may be insufficient to cover all losses. In addition, the scope and severity of cyber threats, in particular the use of ransomware attacks, are increasing. Due to such constant evolving nature and methods of security threats, we cannot predict the form and nature of any future incident, and the cost and operational expense of implementing, maintaining and enhancing protective measures to guard against increasingly complex and sophisticated cyber threats could increase significantly.Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results.We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity. If we fail to adequately monitor our third party service providers' and partners' performance, including for compliance with regulatory and legal requirements, we may have to incur additional costs to correct errors, our reputation could be harmed or we could be subject to litigation, claims, legal or regulatory proceedings, inquiries or investigations. These risks may also be present if our third party service providers and partners use separate information systems that are not integrated with our systems and suffer a cybersecurity incident. These risks are also present in acquired businesses, joint ventures or companies that we invest in or partner with that use separate information systems or have not yet been fully integrated into our information systems. Third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise. As a result, we are subject to the risk that the activities associated with our third party service providers and partners will adversely affect our business, even if the cyber incident does not directly impact our systems or information. disruptive software, unintentional or malicious actions of employees or contractors, cyberattacks by hackers, criminal groups or nation-state organizations (which may include social engineering, business email compromise, cyber extortion, denial of service, or attempts to exploit vulnerabilities, such as phishing), geopolitical events, natural disasters, failures or impairments of telecommunications networks, or other catastrophic events. Such attacks could lead to disruptions in or loss of access to our data or business systems; an inability to process customer orders and/or lost customer orders; unauthorized release of confidential, proprietary or otherwise protected information belonging to us or our employees, customers, consumers, partners, or suppliers; lost revenues or other costs due to office, plant, production, warehouse or other facility disruption or shutdown; additional expenses, including the cost of remediating incidents or improving security measures, increased insurance costs, and/or ransomware payments; and corruption of data. Any such consequences could materially and adversely affect our financial condition, results of operations and cash flows. We also may suffer reputational damage because of lost or misappropriated confidential or proprietary information belonging to us, or employees, customers, suppliers or other third party service providers and may become exposed to legal action and increased regulatory oversight, including governmental inquiries, investigations, enforcement actions and regulatory fines. Although we maintain insurance coverage that may, subject to the policy's terms and conditions, cover certain aspects of a breach or disruption, such insurance coverage may be insufficient to cover all losses. In addition, the scope and severity of cyber threats, in particular the use of ransomware attacks, are increasing. Due to such constant evolving nature and methods of security threats, we cannot predict the form and nature of any future incident, and the cost and operational expense of implementing, maintaining and enhancing protective measures to guard against increasingly complex and sophisticated cyber threats could increase significantly. Moreover, if our data management systems, including our SAP enterprise resource planning system, do not effectively collect, store, process and report relevant data for the operation of our business (whether due to equipment malfunction or constraints, software deficiencies, cybersecurity attack and/or human error), our ability to effectively plan, forecast and execute our business plan and comply with applicable laws and regulations will be impaired, perhaps materially. Any such impairment could materially and adversely affect our financial condition, results of operations, cash flows and the timeliness with which we report our internal and external operating results. We rely on relationships with third parties, including suppliers, distributors, bottlers, contract packers, contractors, cloud data storage and other information technology service providers and other external business partners, for certain functions or for services in support of our operations. These third-party service providers and partners, with whom we may share data, are subject to similar risks as we are relating to cybersecurity, privacy violations, business interruption, and systems, as well as employee failures. While we have procedures in place for selecting and managing our relationships with third-party service providers and other business partners, we do not have control over their business operations or governance and compliance systems, practices and procedures, and our management of multiple third party service providers increases our operational complexity. If we fail to adequately monitor our third party service providers' and partners' performance, including for compliance with regulatory and legal requirements, we may have to incur additional costs to correct errors, our reputation could be harmed or we could be subject to litigation, claims, legal or regulatory proceedings, inquiries or investigations. These risks may also be present if our third party service providers and partners use separate information systems that are not integrated with our systems and suffer a cybersecurity incident. These risks are also present in acquired businesses, joint ventures or companies that we invest in or partner with that use separate information systems or have not yet been fully integrated into our information systems. Third parties may experience cybersecurity incidents that may involve data we share with them or rely on them to provide to us, and the need to coordinate with such third-parties, including with respect to timely notification and access to personnel and information concerning an incident, may complicate our efforts to resolve any issues that arise. As a result, we are subject to the risk that the activities associated with our third party service providers and partners will adversely affect our business, even if the cyber incident does not directly impact our systems or information. 37 37 Table of ContentsIf we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results.We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, privacy laws and regulations adopted or being considered by various states, including the California Consumer Privacy Act of 2018 ("CCPA") and the California Privacy Rights Act, provides new private rights of action and statutory damages for certain data breaches and impose operational requirements on companies that process personal data of state residents, including making disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties.Changes introduced by the GDPR and state privacy laws, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results.Financial RisksFluctuations in our effective tax rate could adversely affect our financial condition and results of operations.We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2020 through 2022 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2019 through 2022 tax years. The United Kingdom and Ireland income tax returns are subject to examination for the 2019 through 2022 tax years.At any given time, events may occur which change our expectation about how any such tax audits will be resolved, and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions.Changes in U.S. tax laws as a result of any legislation proposed by a new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's 38 Table of Contents Table of Contents Table of Contents If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results.We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, privacy laws and regulations adopted or being considered by various states, including the California Consumer Privacy Act of 2018 ("CCPA") and the California Privacy Rights Act, provides new private rights of action and statutory damages for certain data breaches and impose operational requirements on companies that process personal data of state residents, including making disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties.Changes introduced by the GDPR and state privacy laws, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results.Financial RisksFluctuations in our effective tax rate could adversely affect our financial condition and results of operations.We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2020 through 2022 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2019 through 2022 tax years. The United Kingdom and Ireland income tax returns are subject to examination for the 2019 through 2022 tax years.At any given time, events may occur which change our expectation about how any such tax audits will be resolved, and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions.Changes in U.S. tax laws as a result of any legislation proposed by a new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results. We receive, process, transmit and store information relating to certain identified or identifiable individuals ("personal data"), including current and former employees, in the ordinary course of business. As a result, we are subject to various U.S. federal and state and foreign laws and regulations relating to personal data. These laws are subject to change, and new personal data legislation may be enacted in other jurisdictions at any time. In the European Union, the General Data Protection Regulation ("GDPR") includes operational requirements for companies receiving or processing personal data of residents of the European Union different from those that were previously in place and also includes significant penalties for noncompliance. Additionally, privacy laws and regulations adopted or being considered by various states, including the California Consumer Privacy Act of 2018 ("CCPA") and the California Privacy Rights Act, provides new private rights of action and statutory damages for certain data breaches and impose operational requirements on companies that process personal data of state residents, including making disclosures to consumers about data collection, processing and sharing practices and allowing consumers to opt out of certain data sharing with third parties. Changes introduced by the GDPR and state privacy laws, as well as other changes to existing personal data protection laws and the introduction of such laws in other jurisdictions, subject the Company to, among other things, additional costs and expenses and may require costly changes to our business practices and security systems, policies, procedures and practices. There can be no assurances that our security controls over personal data, training of personnel on data privacy and data security, vendor management processes, and the policies, procedures and practices we implement will prevent the improper processing or breaches of personal data. Data breaches or improper processing, or breaches of personal data in violation of the GDPR or of other personal data protection or privacy laws and regulations, could harm our reputation, cause loss of consumer confidence, subject us to government enforcement actions (including fines), or result in private litigation against us, which may result in potential loss of revenue, increased costs, liability for monetary damages or fines and/or criminal prosecution, thereby negatively impacting our business and operating results. --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ 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 transferredThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.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​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")." - Reworded sentence: "Such bottlers generally combine the concentrates 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." - Reworded sentence: "Such bottlers generally combine the concentrates 95 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks." - Reworded sentence: "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.The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer." - Reworded sentence: "The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business." **Prior (2023):** ​ ●Inventory - comparative sales method and replacement cost methodThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.The Company has determined goodwill in accordance with ASC 805, which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date.For tax purposes, the CANarchy Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the CANarchy assets, net, equal to the purchase price.In accordance with Regulation S-X, pro forma unaudited condensed financial information for the CANarchy Transaction has not been provided as the impact of the transaction on the Company's financial position, results of operations and liquidity was not material.On May 5, 2022, the Company acquired certain real property and equipment in Norwalk, California for a purchase price of $62.5 million. The acquisition was treated as an asset acquisition for accounting purposes. The fair value allocations include $50.6 million for land, $10.0 million for building and $1.9 million for equipment. The Company intends to utilize the property as a manufacturing facility for certain of its products.​3. REVENUE RECOGNITIONRevenues are accounted for in accordance with ASC 606 "Revenue from Contracts with Consumers". The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment ("Monster Energy® Drinks"), which is primarily comprised of the Company's Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster® Tour WaterTM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment ("Strategic Brands"), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company ("TCCC") in 2015 as well as the Company's affordable energy brands, (iii) Alcohol Brands segment ("Alcohol Brands"), which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast UnleashedTM FMBs and (iv) Other segment ("Other"), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the "AFF Third-Party Products").The Company's Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors ("bottlers/distributors"). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.The Company's Strategic Brands segment primarily generates net operating revenues by selling "concentrates" and/or "beverage bases" to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors. ●Inventory - comparative sales method and replacement cost method The book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts. The Company has determined goodwill in accordance with ASC 805, which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date. For tax purposes, the CANarchy Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the CANarchy assets, net, equal to the purchase price. In accordance with Regulation S-X, pro forma unaudited condensed financial information for the CANarchy Transaction has not been provided as the impact of the transaction on the Company's financial position, results of operations and liquidity was not material. On May 5, 2022, the Company acquired certain real property and equipment in Norwalk, California for a purchase price of $62.5 million. The acquisition was treated as an asset acquisition for accounting purposes. The fair value allocations include $50.6 million for land, $10.0 million for building and $1.9 million for equipment. The Company intends to utilize the property as a manufacturing facility for certain of its products. ​ 3. REVENUE RECOGNITION Revenues are accounted for in accordance with ASC 606 "Revenue from Contracts with Consumers". The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment ("Monster Energy® Drinks"), which is primarily comprised of the Company's Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster® Tour WaterTM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment ("Strategic Brands"), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company ("TCCC") in 2015 as well as the Company's affordable energy brands, (iii) Alcohol Brands segment ("Alcohol Brands"), which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast UnleashedTM FMBs and (iv) Other segment ("Other"), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the "AFF Third-Party Products"). reportable The Company's Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors ("bottlers/distributors"). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. The Company's Strategic Brands segment primarily generates net operating revenues by selling "concentrates" and/or "beverage bases" to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors. 94 94 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2022 and 2021.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or more of the arrangements described above and are of varying durations, typically ranging from one week to one year. The Company's promotional and other allowances for its energy drink products are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company's anticipated liabilities. These accruals are based on agreed upon terms as well as the Company's historical experience with similar programs and require management's judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 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 transferredThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.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​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 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.​3. REVENUE RECOGNITIONRevenues 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, 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 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. 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 ​ 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 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. ​ 3. REVENUE RECOGNITION 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, 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 95 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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.The Company's Alcohol Brands segment primarily generates operating revenues by selling kegged and ready-to-drink canned beers, hard seltzers and FMBs primarily to beer distributors in the United States.The majority of the Company's revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company's products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company's bottlers/distributors may also perform a separate function as a co-packer on the Company's behalf. In such cases, control of the Company's products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company's finished goods. The Company's general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of December 31, 2023 and 2022.The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.Distribution expenses to transport the Company's products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.Promotional and other allowances (variable consideration) recorded as a reduction to net sales for the Company's energy drink products, primarily include consideration given to the Company's non-alcohol bottlers/distributors or retail customers including, but not limited to the following:●discounts granted off list prices to support price promotions to end-consumers by retailers; ●reimbursements given to the Company's bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products; ●the Company's agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; ●the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers; ●incentives given to the Company's bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals; ●discounted or free products; ●contractual fees given to the Company's bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers'/distributors' sales territories; and ●commissions to TCCC based on the Company's sales to wholly-owned subsidiaries of TCCC (the "TCCC Subsidiaries") and/or to TCCC bottlers/distributors accounted for under the equity method by TCCC (the "TCCC Related Parties").The Company's promotional allowance programs with its non-alcohol bottlers/distributors and/or retailers are executed through separate agreements in the ordinary course of business. These agreements generally provide for one or 96 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Principal Market **Key changes:** - Reworded sentence: "As of February 15, 2024, there were 1,040,636,235 shares of the Company's common stock outstanding held by approximately 189 holders of record." **Prior (2023):** The Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 16, 2023, there were 522,409,358 shares of the Company's common stock outstanding held by approximately 183 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions. **Current (2024):** The Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 15, 2024, there were 1,040,636,235 shares of the Company's common stock outstanding held by approximately 189 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions. --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ 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." - Reworded sentence: "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." - Reworded sentence: "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." - Reworded sentence: "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- 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." - Reworded sentence: "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." **Prior (2023):** ​ using the present value of the future cash flows discounted at a rate commensurate with management's estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management's best estimate of assumptions concerning expected future conditions. For the years ended December 31, 2022, 2021 and 2020, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.Foreign Currency Translation and Transactions - The accounts of the Company's foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 2022, 2021 and 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries non-functional currency denominated assets and liabilities. All foreign currency exchange contracts outstanding as of December 31, 2022 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2022, 2021 and 2020, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($37.9) million, $0.3 million and ($11.2) million, respectively, and have been recorded in other (expense) income, net, in the accompanying consolidated statements of income.Revenue Recognition - See Note 3.Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company's prior distributors, depreciation and other general and administrative costs.Freight-Out Costs - For the years ended December 31, 2022, 2021 and 2020, freight-out costs amounted to $249.2 million, $213.9 million and $134.1 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income. using the present value of the future cash flows discounted at a rate commensurate with management's estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management's best estimate of assumptions concerning expected future conditions. For the years ended December 31, 2022, 2021 and 2020, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell. Foreign Currency Translation and Transactions - The accounts of the Company's foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 2022, 2021 and 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries non-functional currency denominated assets and liabilities. All foreign currency exchange contracts outstanding as of December 31, 2022 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes. The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2022, 2021 and 2020, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($37.9) million, $0.3 million and ($11.2) million, respectively, and have been recorded in other (expense) income, net, in the accompanying consolidated statements of income. Revenue Recognition - See Note 3. Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials. Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company's prior distributors, depreciation and other general and administrative costs. Freight-Out Costs - For the years ended December 31, 2022, 2021 and 2020, freight-out costs amounted to $249.2 million, $213.9 million and $134.1 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income. 90 90 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​Advertising and Promotional Expenses - The Company accounts for advertising production costs by expensing such production costs the first time the related advertising takes place. A significant amount of the Company's promotional expenses result from payments under endorsement and sponsorship contracts. Accounting for endorsement and sponsorship payments is based upon specific contract provisions. Generally, endorsement and sponsorship payments are expensed on a straight-line basis over the term of the contract after giving recognition to the periodic performance compliance provisions of the contracts. Advertising and promotional expenses, including, but not limited to, production costs amounted to $460.7 million, $417.6 million and $345.7 million for the years ended December 31, 2022, 2021 and 2020, respectively. Advertising and promotional expenses are included in operating expenses in the accompanying consolidated statements of income.Income Taxes - The Company utilizes the liability method of accounting for income taxes as set forth in FASB ASC 740. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16.Net Income Per Common Share - In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable.91 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 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. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 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 outstanding as of December 31, 2023 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in 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.Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in- 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. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 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 outstanding as of December 31, 2023 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes. The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in 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. Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials. Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in- 91 91 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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 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 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. Under the liability method, deferred taxes are determined based on the temporary differences between the financial statement and tax basis of assets and liabilities using tax rates expected to be in effect during the years in which the basis differences reverse. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. In determining the need for valuation allowances the Company considers projected future taxable income and the availability of tax planning strategies. If in the future the Company determines that it would not be able to realize its recorded deferred tax assets, an increase in the valuation allowance would be recorded, decreasing earnings in the period in which such determination is made.The Company assesses its income tax positions and records tax benefits for all years subject to examination based upon the Company's evaluation of the facts, circumstances and information available at the reporting date. For those tax positions where there is a greater than 50% likelihood that a tax benefit will be sustained, the Company has recorded the largest amount of tax benefit that may potentially be realized upon ultimate settlement with a taxing authority that has full knowledge of all relevant information. For those income tax positions where there is less than 50% likelihood that a tax benefit will be sustained, no tax benefit has been recognized in the financial statements.Stock-Based Compensation - The Company accounts for stock-based compensation under the provisions of FASB ASC 718. The Company records compensation expense for employee stock options based on the estimated fair value of the options on the date of grant using the Black-Scholes-Merton option pricing formula. The Company records compensation expense for non-employee stock options based on the estimated fair value of the options as of the earlier of (1) the date at which a commitment for performance by the non-employee to earn the stock option is reached or (2) the date at which the non-employee's performance is complete, using the Black-Scholes-Merton option pricing formula. Stock-based compensation cost for restricted stock units and performance share units is measured based on the closing fair market value of the Company's common stock at the date of grant. In the event that the Company has the option and intent to settle a restricted stock unit or performance share unit in cash, the award is classified as a liability and revalued at each balance sheet date. See Note 16.92 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Results of Operations **Key changes:** - Reworded sentence: "This section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022." - Reworded sentence: "51 51 Table of ContentsNet SalesNet sales were $7.14 billion for the year ended December 31, 2023, an increase of approximately $829.0 million, or 13.1% higher than net sales of $6.31 billion for the year ended December 31, 2022." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023." **Prior (2023):** This section of the Annual Report on Form 10-K generally discusses 2022 and 2021 items and year-to-year comparisons between 2022 and 2021. A detailed discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021. The following table sets forth key statistics for the years ended December 31, 2022, 2021 and 2020, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ Percentage ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2022 2021 2020 22 vs. 21 21 vs. 20 ​ Net sales1 ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 ​ 13.9 % 20.5 % Cost of sales ​ 3,136,483 ​ 2,432,839 ​ 1,874,758 ​ 28.9 % 29.8 % Gross profit*1 ​ 3,174,567 ​ 3,108,513 ​ 2,723,880 ​ 2.1 % 14.1 % Gross profit as a percentage of net sales ​ 50.3 % 56.1 % 59.2 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ 1,589,846 ​ 1,311,046 ​ 1,090,727 ​ 21.3 % 20.2 % Operating expenses as a percentage of net sales ​ 25.2 % 23.7 % 23.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income1 ​ 1,584,721 ​ 1,797,467 ​ 1,633,153 ​ (11.8) % 10.1 % Operating income as a percentage of net sales ​ 25.1 % 32.4 % 35.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other (expense) income, net ​ (12,757) ​ 3,952 ​ (6,996) ​ (422.8) % (156.5) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes1 ​ 1,571,964 ​ 1,801,419 ​ 1,626,157 ​ (12.7) % 10.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 380,340 ​ 423,944 ​ 216,563 ​ (10.3) % 95.8 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes as a percentage of income before taxes ​ 24.2 % 23.5 % 13.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income1 ​ $ 1,191,624 ​ $ 1,377,475 ​ $ 1,409,594 ​ (13.5) % (2.3) % Net income as a percentage of net sales ​ 18.9 % 24.9 % 30.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.26 ​ $ 2.61 ​ $ 2.66 ​ (13.2) % (2.1) % Diluted ​ $ 2.23 ​ $ 2.57 ​ $ 2.64 ​ (13.1) % (2.4) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink case sales (in thousands) (in 192‑ounce case equivalents)2 ​ 701,677 ​ 613,441 ​ 504,821 ​ 14.4 % 21.5 % ​ 1Includes $40.0 million, $41.5 million and $42.1 million for the years ended December 31, 2022, 2021 and 2020, respectively, related to the recognition of deferred revenue. 2Excludes case sales of the Alcohol Brands and Other segments. *Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. 51 51 Table of ContentsNet SalesNet sales were $6.31 billion for the year ended December 31, 2022, an increase of approximately $769.7 million, or 13.9% higher than net sales of $5.54 billion for the year ended December 31, 2021. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to pricing actions and reductions in promotions in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022. Net sales on a foreign currency adjusted basis increased 18.2% for the year ended December 31, 2022.Net sales were $2.20 billion and $1.90 billion for the years ended December 31, 2022 and 2021, respectively, in EMEA, Asia Pacific, Latin America and the Caribbean.Net sales for the Monster Energy® Drinks segment were $5.83 billion for the year ended December 31, 2022, an increase of approximately $612.5 million, or 11.7% higher than net sales of $5.22 billion for the year ended December 31, 2021. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 16.0% for the year ended December 31, 2022.Net sales for the Strategic Brands segment were $353.5 million for the year ended December 31, 2022, an increase of approximately $58.7 million, or 19.9% higher than net sales of $294.8 million for the year ended December 31, 2021. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our Predator® and NOS® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $17.2 million for the Strategic Brands segment for the year ended December 31, 2022. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 25.8% for the year ended December 31, 2022.Net sales for the Alcohol Brands segment were $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 net sales for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022. Net sales for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of approximately $3.0 million, or 11.5% lower than net sales of $25.9 million for the year ended December 31, 2021. Case sales for our energy drink products, in 192-ounce case equivalents, were 701.7 million cases for the year ended December 31, 2022, an increase of approximately 88.2 million cases or 14.4% higher than case sales of 613.4 million cases for the year ended December 31, 2021. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.82 for the year ended December 31, 2022, which was 1.9% lower than the average net sales per case of $8.99 for the year ended December 31, 2021. The decrease in the average net sales per case was primarily the result of geographical and product sales mix. Barrel sales for our craft beers and hard seltzers, in 31 US gallon equivalents, were 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).Gross ProfitGross profit was $3.17 billion for the year ended December 31, 2022, an increase of approximately $66.1 million, or 2.1% higher than the gross profit of $3.11 billion for the year ended December 31, 2021. 52 Table of Contents Table of Contents Table of Contents Net SalesNet sales were $6.31 billion for the year ended December 31, 2022, an increase of approximately $769.7 million, or 13.9% higher than net sales of $5.54 billion for the year ended December 31, 2021. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to pricing actions and reductions in promotions in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022. Net sales on a foreign currency adjusted basis increased 18.2% for the year ended December 31, 2022.Net sales were $2.20 billion and $1.90 billion for the years ended December 31, 2022 and 2021, respectively, in EMEA, Asia Pacific, Latin America and the Caribbean.Net sales for the Monster Energy® Drinks segment were $5.83 billion for the year ended December 31, 2022, an increase of approximately $612.5 million, or 11.7% higher than net sales of $5.22 billion for the year ended December 31, 2021. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 16.0% for the year ended December 31, 2022.Net sales for the Strategic Brands segment were $353.5 million for the year ended December 31, 2022, an increase of approximately $58.7 million, or 19.9% higher than net sales of $294.8 million for the year ended December 31, 2021. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our Predator® and NOS® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $17.2 million for the Strategic Brands segment for the year ended December 31, 2022. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 25.8% for the year ended December 31, 2022.Net sales for the Alcohol Brands segment were $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 net sales for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022. Net sales for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of approximately $3.0 million, or 11.5% lower than net sales of $25.9 million for the year ended December 31, 2021. Case sales for our energy drink products, in 192-ounce case equivalents, were 701.7 million cases for the year ended December 31, 2022, an increase of approximately 88.2 million cases or 14.4% higher than case sales of 613.4 million cases for the year ended December 31, 2021. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.82 for the year ended December 31, 2022, which was 1.9% lower than the average net sales per case of $8.99 for the year ended December 31, 2021. The decrease in the average net sales per case was primarily the result of geographical and product sales mix. Barrel sales for our craft beers and hard seltzers, in 31 US gallon equivalents, were 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).Gross ProfitGross profit was $3.17 billion for the year ended December 31, 2022, an increase of approximately $66.1 million, or 2.1% higher than the gross profit of $3.11 billion for the year ended December 31, 2021. Net Sales Net sales were $6.31 billion for the year ended December 31, 2022, an increase of approximately $769.7 million, or 13.9% higher than net sales of $5.54 billion for the year ended December 31, 2021. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to pricing actions and reductions in promotions in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022. Net sales on a foreign currency adjusted basis increased 18.2% for the year ended December 31, 2022. Net sales were $2.20 billion and $1.90 billion for the years ended December 31, 2022 and 2021, respectively, in EMEA, Asia Pacific, Latin America and the Caribbean. Net sales for the Monster Energy® Drinks segment were $5.83 billion for the year ended December 31, 2022, an increase of approximately $612.5 million, or 11.7% higher than net sales of $5.22 billion for the year ended December 31, 2021. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 16.0% for the year ended December 31, 2022. Net sales for the Strategic Brands segment were $353.5 million for the year ended December 31, 2022, an increase of approximately $58.7 million, or 19.9% higher than net sales of $294.8 million for the year ended December 31, 2021. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our Predator® and NOS® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $17.2 million for the Strategic Brands segment for the year ended December 31, 2022. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 25.8% for the year ended December 31, 2022. Net sales for the Alcohol Brands segment were $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). There were no comparative 2021 net sales for the Alcohol Brands segment as the Company completed its acquisition of CANarchy on February 17, 2022. Net sales for the Other segment were $22.9 million for the year ended December 31, 2022, a decrease of approximately $3.0 million, or 11.5% lower than net sales of $25.9 million for the year ended December 31, 2021. Case sales for our energy drink products, in 192-ounce case equivalents, were 701.7 million cases for the year ended December 31, 2022, an increase of approximately 88.2 million cases or 14.4% higher than case sales of 613.4 million cases for the year ended December 31, 2021. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) decreased to $8.82 for the year ended December 31, 2022, which was 1.9% lower than the average net sales per case of $8.99 for the year ended December 31, 2021. The decrease in the average net sales per case was primarily the result of geographical and product sales mix. Barrel sales for our craft beers and hard seltzers, in 31 US gallon equivalents, were 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). **Current (2024):** This section of the Annual Report on Form 10-K generally discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. A detailed discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Annual Report on Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022. The following table sets forth key statistics for the years ended December 31, 2023, 2022 and 2021, respectively. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ Percentage ​ Percentage ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Change ​ Change ​ ​ 2023 2022 2021 23 vs. 22 22 vs. 21 ​ Net sales1 ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ 13.1 % 13.9 % Cost of sales ​ 3,345,821 ​ 3,136,483 ​ 2,432,839 ​ 6.7 % 28.9 % Gross profit*1 ​ 3,794,206 ​ 3,174,567 ​ 3,108,513 ​ 19.5 % 2.1 % Gross profit as a percentage of net sales ​ 53.1 % 50.3 % 56.1 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ 1,840,851 ​ 1,589,846 ​ 1,311,046 ​ 15.8 % 21.3 % Operating expenses as a percentage of net sales ​ 25.8 % 25.2 % 23.7 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating income1 ​ 1,953,355 ​ 1,584,721 ​ 1,797,467 ​ 23.3 % (11.8) % Operating income as a percentage of net sales ​ 27.4 % 25.1 % 32.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest and other income (expense), net ​ 115,127 ​ (12,757) ​ 3,952 ​ 1,002.5 % (422.8) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before provision for income taxes1 ​ 2,068,482 ​ 1,571,964 ​ 1,801,419 ​ 31.6 % (12.7) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ 437,494 ​ 380,340 ​ 423,944 ​ 15.0 % (10.3) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Income taxes as a percentage of income before taxes ​ 21.2 % 24.2 % 23.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income1 ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 ​ 36.9 % (13.5) % Net income as a percentage of net sales ​ 22.8 % 18.9 % 24.9 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per common share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.56 ​ $ 1.13 ​ $ 1.30 ​ 38.0 % (13.2) % Diluted ​ $ 1.54 ​ $ 1.12 ​ $ 1.29 ​ 38.0 % (13.1) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Energy Drink case sales (in thousands) (in 192‑ounce case equivalents) ​ 769,241 ​ 701,677 ​ 613,441 ​ 9.6 % 14.4 % ​ 1Includes $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. *Gross profit may not be comparable to that of other entities since some entities include all costs associated with their distribution process in cost of sales, whereas others exclude certain costs and instead include such costs within another line item such as operating expenses. We include out-bound freight and warehouse costs in operating expenses rather than in cost of sales. 51 51 Table of ContentsNet SalesNet sales were $7.14 billion for the year ended December 31, 2023, an increase of approximately $829.0 million, or 13.1% higher than net sales of $6.31 billion for the year ended December 31, 2022. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023. Net sales on a foreign currency adjusted basis increased 15.5% for the year ended December 31, 2023.​Net sales were $2.53 billion and $2.20 billion for the years ended December 31, 2023 and 2022, respectively, in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.​Net sales for the Monster Energy® Drinks segment were $6.56 billion for the year ended December 31, 2023, an increase of approximately $721.9 million, or 12.4% higher than net sales of $5.83 billion for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 14.5% for the year ended December 31, 2023.​Net sales for the Strategic Brands segment were $376.6 million for the year ended December 31, 2023, an increase of approximately $23.1 million, or 6.5% higher than net sales of $353.5 million for the year ended December 31, 2022. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our NOS®, Predator® and Fury® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $22.4 million for the Strategic Brands segment for the year ended December 31, 2023. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 12.9% for the year ended December 31, 2023.​Net sales for the Alcohol Brands segment were $184.9 million for the year ended December 31, 2023, an increase of approximately $83.5 million, or 82.3% higher than net sales of $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Net sales of The Beast Unleashed® FMBs, which launched during the 2023 first quarter in the United States on a rolling state basis, were $86.7 million for the year ended December 31, 2023.​Net sales for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of approximately $0.6 million, or 2.4% higher than net sales of $22.9 million for the year ended December 31, 2022.​Case sales for our energy drink products, in 192-ounce case equivalents, were 769.2 million cases for the year ended December 31, 2023, an increase of approximately 67.6 million cases or 9.6% higher than case sales of 701.7 million cases for the year ended December 31, 2022. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) increased to $9.01 for the year ended December 31, 2023, which was 2.2% higher than the average net sales per case of $8.82 for the year ended December 31, 2022. The increase in the average net sales per case was primarily the result of the Pricing Actions.​Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 13.1 million cases for the year ended December 31, 2023, an increase of approximately 6.6 million cases or 101.3% higher than case sales of 6.5 million cases for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Barrel sales for our craft beers, hard seltzers and FMBs, in 31 U.S. gallon equivalents, were 0.6 million barrels for the year ended December 31, 2023, an increase of approximately 0.3 million barrels or 101.3% higher than barrel sales of 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022).52 Table of Contents Table of Contents Table of Contents Net SalesNet sales were $7.14 billion for the year ended December 31, 2023, an increase of approximately $829.0 million, or 13.1% higher than net sales of $6.31 billion for the year ended December 31, 2022. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023. Net sales on a foreign currency adjusted basis increased 15.5% for the year ended December 31, 2023.​Net sales were $2.53 billion and $2.20 billion for the years ended December 31, 2023 and 2022, respectively, in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.​Net sales for the Monster Energy® Drinks segment were $6.56 billion for the year ended December 31, 2023, an increase of approximately $721.9 million, or 12.4% higher than net sales of $5.83 billion for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 14.5% for the year ended December 31, 2023.​Net sales for the Strategic Brands segment were $376.6 million for the year ended December 31, 2023, an increase of approximately $23.1 million, or 6.5% higher than net sales of $353.5 million for the year ended December 31, 2022. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our NOS®, Predator® and Fury® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $22.4 million for the Strategic Brands segment for the year ended December 31, 2023. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 12.9% for the year ended December 31, 2023.​Net sales for the Alcohol Brands segment were $184.9 million for the year ended December 31, 2023, an increase of approximately $83.5 million, or 82.3% higher than net sales of $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Net sales of The Beast Unleashed® FMBs, which launched during the 2023 first quarter in the United States on a rolling state basis, were $86.7 million for the year ended December 31, 2023.​Net sales for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of approximately $0.6 million, or 2.4% higher than net sales of $22.9 million for the year ended December 31, 2022.​Case sales for our energy drink products, in 192-ounce case equivalents, were 769.2 million cases for the year ended December 31, 2023, an increase of approximately 67.6 million cases or 9.6% higher than case sales of 701.7 million cases for the year ended December 31, 2022. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) increased to $9.01 for the year ended December 31, 2023, which was 2.2% higher than the average net sales per case of $8.82 for the year ended December 31, 2022. The increase in the average net sales per case was primarily the result of the Pricing Actions.​Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 13.1 million cases for the year ended December 31, 2023, an increase of approximately 6.6 million cases or 101.3% higher than case sales of 6.5 million cases for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Barrel sales for our craft beers, hard seltzers and FMBs, in 31 U.S. gallon equivalents, were 0.6 million barrels for the year ended December 31, 2023, an increase of approximately 0.3 million barrels or 101.3% higher than barrel sales of 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Net Sales Net sales were $7.14 billion for the year ended December 31, 2023, an increase of approximately $829.0 million, or 13.1% higher than net sales of $6.31 billion for the year ended December 31, 2022. Net sales increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand as well as due to the Pricing Actions. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023. Net sales on a foreign currency adjusted basis increased 15.5% for the year ended December 31, 2023. ​ Net sales were $2.53 billion and $2.20 billion for the years ended December 31, 2023 and 2022, respectively, in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean. ​ Net sales for the Monster Energy® Drinks segment were $6.56 billion for the year ended December 31, 2023, an increase of approximately $721.9 million, or 12.4% higher than net sales of $5.83 billion for the year ended December 31, 2022. Net sales for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales for the Monster Energy® Drinks segment of approximately $124.3 million for the year ended December 31, 2023. Net sales for the Monster Energy® Drinks segment on a foreign currency adjusted basis increased 14.5% for the year ended December 31, 2023. ​ Net sales for the Strategic Brands segment were $376.6 million for the year ended December 31, 2023, an increase of approximately $23.1 million, or 6.5% higher than net sales of $353.5 million for the year ended December 31, 2022. Net sales for the Strategic Brands segment increased primarily due to increased worldwide sales by volume of our NOS®, Predator® and Fury® brand energy drinks as a result of increased consumer demand. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $22.4 million for the Strategic Brands segment for the year ended December 31, 2023. Net sales for the Strategic Brands segment on a foreign currency adjusted basis increased 12.9% for the year ended December 31, 2023. ​ Net sales for the Alcohol Brands segment were $184.9 million for the year ended December 31, 2023, an increase of approximately $83.5 million, or 82.3% higher than net sales of $101.4 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Net sales of The Beast Unleashed® FMBs, which launched during the 2023 first quarter in the United States on a rolling state basis, were $86.7 million for the year ended December 31, 2023. ​ Net sales for the Other segment were $23.5 million for the year ended December 31, 2023, an increase of approximately $0.6 million, or 2.4% higher than net sales of $22.9 million for the year ended December 31, 2022. ​ Case sales for our energy drink products, in 192-ounce case equivalents, were 769.2 million cases for the year ended December 31, 2023, an increase of approximately 67.6 million cases or 9.6% higher than case sales of 701.7 million cases for the year ended December 31, 2022. The overall average net sales per case for our energy drink products (excluding net sales of Alcohol Brands and Other segments) increased to $9.01 for the year ended December 31, 2023, which was 2.2% higher than the average net sales per case of $8.82 for the year ended December 31, 2022. The increase in the average net sales per case was primarily the result of the Pricing Actions. ​ Case sales for our craft beers, hard seltzers and FMBs, in 192-ounce equivalents, were 13.1 million cases for the year ended December 31, 2023, an increase of approximately 6.6 million cases or 101.3% higher than case sales of 6.5 million cases for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). Barrel sales for our craft beers, hard seltzers and FMBs, in 31 U.S. gallon equivalents, were 0.6 million barrels for the year ended December 31, 2023, an increase of approximately 0.3 million barrels or 101.3% higher than barrel sales of 0.3 million barrels for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). 52 52 Table of ContentsGross ProfitGross profit was $3.79 billion for the year ended December 31, 2023, an increase of approximately $619.6 million, or 19.5% higher than the gross profit of $3.17 billion for the year ended December 31, 2022.​Gross profit as a percentage of net sales increased to 53.1% for the year ended December 31, 2023 from 50.3% for the year ended December 31, 2022. The increase for the year ended December 31, 2023 was primarily the result of the Pricing Actions, decreased freight-in costs as well as decreased aluminum can costs.Operating Expenses Total operating expenses were $1.84 billion for the year ended December 31, 2023, an increase of approximately $251.0 million, or 15.8% higher than total operating expenses of $1.59 billion for the year ended December 31, 2022.​The increase in operating expenses was primarily due to increased general and administrative expenses of $80.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased selling and marketing expenses of $92.2 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $82.4 million. In addition, operating expenses for the year ended December 31, 2023 included $16.1 million of transaction costs related to the acquisition of Bang Energy and $42.7 million of impairment charges related to the Alcohol Brands segment (the "Alcohol Impairment Charges"). The Alcohol Impairment Charges, due in part to the continuing challenges in the craft beer and hard seltzer categories, relate to certain non-amortizing intangibles as well as property and equipment, acquired as part of the CANarchy transaction (as defined below in Note 2, "Acquisitions").​Operating expenses as a percentage of net sales for the years ended December 31, 2023 and 2022 were 25.8% and 25.2%, respectively.Operating Income Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022. Operating income as a percentage of net sales increased to 27.4% for the year ended December 31, 2023 from 25.1% for the year ended December 31, 2022. Operating income for the year ended December 31, 2023 increased primarily due to an increase of $619.6 million in gross profit partially offset by an increase in operating expenses of $368.6 million, which includes the Alcohol Impairment Charges.​Operating income was $409.3 million and $316.3 million for the years ended December 31, 2023 and 2022, respectively, for our operations in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.​Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $2.34 billion for the year ended December 31, 2023, an increase of approximately $488.7 million, or 26.4% higher than operating income of $1.85 billion for the year ended December 31, 2022. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of a $572.5 million increase in gross profit.​Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $207.1 million for the year ended December 31, 2023, an increase of approximately $9.4 million, or 4.8% higher than operating income of $197.7 million for the year ended December 31, 2022. The increase in operating income for the Strategic Brands segment was primarily the result of a $14.6 million increase in gross profit.​Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $81.1 million for the year ended December 31, 2023, an increase of approximately $49.6 million, or 157.5% higher than operating loss of 53 Table of Contents Table of Contents Table of Contents Gross ProfitGross profit was $3.79 billion for the year ended December 31, 2023, an increase of approximately $619.6 million, or 19.5% higher than the gross profit of $3.17 billion for the year ended December 31, 2022.​Gross profit as a percentage of net sales increased to 53.1% for the year ended December 31, 2023 from 50.3% for the year ended December 31, 2022. The increase for the year ended December 31, 2023 was primarily the result of the Pricing Actions, decreased freight-in costs as well as decreased aluminum can costs.Operating Expenses Total operating expenses were $1.84 billion for the year ended December 31, 2023, an increase of approximately $251.0 million, or 15.8% higher than total operating expenses of $1.59 billion for the year ended December 31, 2022.​The increase in operating expenses was primarily due to increased general and administrative expenses of $80.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased selling and marketing expenses of $92.2 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $82.4 million. In addition, operating expenses for the year ended December 31, 2023 included $16.1 million of transaction costs related to the acquisition of Bang Energy and $42.7 million of impairment charges related to the Alcohol Brands segment (the "Alcohol Impairment Charges"). The Alcohol Impairment Charges, due in part to the continuing challenges in the craft beer and hard seltzer categories, relate to certain non-amortizing intangibles as well as property and equipment, acquired as part of the CANarchy transaction (as defined below in Note 2, "Acquisitions").​Operating expenses as a percentage of net sales for the years ended December 31, 2023 and 2022 were 25.8% and 25.2%, respectively.Operating Income Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022. Operating income as a percentage of net sales increased to 27.4% for the year ended December 31, 2023 from 25.1% for the year ended December 31, 2022. Operating income for the year ended December 31, 2023 increased primarily due to an increase of $619.6 million in gross profit partially offset by an increase in operating expenses of $368.6 million, which includes the Alcohol Impairment Charges.​Operating income was $409.3 million and $316.3 million for the years ended December 31, 2023 and 2022, respectively, for our operations in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean.​Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $2.34 billion for the year ended December 31, 2023, an increase of approximately $488.7 million, or 26.4% higher than operating income of $1.85 billion for the year ended December 31, 2022. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of a $572.5 million increase in gross profit.​Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $207.1 million for the year ended December 31, 2023, an increase of approximately $9.4 million, or 4.8% higher than operating income of $197.7 million for the year ended December 31, 2022. The increase in operating income for the Strategic Brands segment was primarily the result of a $14.6 million increase in gross profit.​Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $81.1 million for the year ended December 31, 2023, an increase of approximately $49.6 million, or 157.5% higher than operating loss of --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, 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 ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM 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.Treasury Stock Retirement - On March 10, 2023, the Company retired 170.0 million shares (stock split adjusted) of treasury stock owned by the Company." - Reworded sentence: "Adjustments to fair value 1." - Reworded sentence: "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®, 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®." - Reworded sentence: "Treasury Stock Retirement - On March 10, 2023, the Company retired 170.0 million shares (stock split adjusted) of treasury stock owned by the Company." - Reworded sentence: "Adjustments to fair value 87 87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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)." **Prior (2023):** ​ 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, Monster Hydro® Energy Water, Monster Hydro® Super Sport, Monster Super Fuel®, Monster Dragon Tea®, Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel, Reign Storm®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Live+®, Predator®, Fury® and True North®.The Company also develops, markets, sells and distributes craft beers, flavored malt beverages ("FMBs") and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands.Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its consolidated subsidiaries.Amounts previously classified in certain property and equipment balances totaling $20.1 million as of December 31, 2021 have been reclassified to assets under construction to conform to presentation as of December 31, 2022. See Note 9. Principles of Consolidation - The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation.Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination.Cash and Cash Equivalents - The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future. 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries. Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, Monster Hydro® Energy Water, Monster Hydro® Super Sport, Monster Super Fuel®, Monster Dragon Tea®, Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel, Reign Storm®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Live+®, Predator®, Fury® and True North®. The Company also develops, markets, sells and distributes craft beers, flavored malt beverages ("FMBs") and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands. Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its consolidated subsidiaries. Amounts previously classified in certain property and equipment balances totaling $20.1 million as of December 31, 2021 have been reclassified to assets under construction to conform to presentation as of December 31, 2022. See Note 9. Principles of Consolidation - The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation. Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination. Cash and Cash Equivalents - The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future. 87 87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​Investments - The Company's investments in debt securities are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive income (loss) as a separate component of stockholders' equity. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. Under FASB ASC 326-30-35, a security is considered to be impaired if the fair value of the security is less than its amortized cost basis. Where the decline in fair value below the amortized cost basis has resulted from a credit loss, the Company will record an impairment relating to credit losses through an allowance for credit losses. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income (loss), net of applicable taxes. The Company evaluates whether the decline in fair value of its investments has resulted from credit loss or other factors at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer's financial condition and, if applicable, information on the guarantors' financial condition. Factors considered in determining whether an impairment has resulted from credit loss or other factors include the length of time and extent to which the investment's fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company's intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.Accounts Receivable - The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer's inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company's recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its consolidated balance sheets, the Company has presented accounts receivable, net of promotional allowances, only for those customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis.Inventories - Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value).Property and Equipment - Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, real property and vehicles is based on their estimated useful lives (three to thirty years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is 88 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, 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 ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM 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.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. All intercompany balances and transactions have been eliminated in consolidation.Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries. Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, 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 ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM 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. 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. All intercompany balances and transactions have been eliminated in consolidation. Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value 87 87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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.Cash and Cash Equivalents - The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future.Investments - The Company's investments in debt securities are classified as either held-to-maturity, available-for-sale or trading, in accordance with FASB ASC 320. Held-to-maturity securities are those securities that the Company has the positive intent and ability to hold until maturity. Trading securities are those securities that the Company intends to sell in the near term. All other securities not included in the held-to-maturity or trading category are classified as available-for-sale. Held-to-maturity securities are recorded at amortized cost which approximates fair market value. Trading securities are carried at fair value with unrealized gains and losses charged to earnings. Available-for-sale securities are carried at fair value with unrealized gains and losses recorded within accumulated other comprehensive income (loss) as a separate component of stockholders' equity. FASB ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. Under FASB ASC 326-30-35, a security is considered to be impaired if the fair value of the security is less than its amortized cost basis. Where the decline in fair value below the amortized cost basis has resulted from a credit loss, the Company will record an impairment relating to credit losses through an allowance for credit losses. The allowance is limited by the amount that the fair value is less than the amortized cost basis. Impairment that has not been recorded through an allowance for credit losses is recorded through other comprehensive income (loss), net of applicable taxes. The Company evaluates whether the decline in fair value of its investments has resulted from credit loss or other factors at each quarter-end. This evaluation consists of a review by management, and includes market pricing information and maturity dates for the securities held, market and economic trends in the industry and information on the issuer's financial condition and, if applicable, information on the guarantors' financial condition. Factors considered in determining whether an impairment has resulted from credit loss or other factors include the length of time and extent to which the investment's fair value has been less than its cost basis, the financial condition and near-term prospects of the issuer and guarantors, including any specific events which may influence the operations of the issuer and the Company's intent and ability to retain the investment for a reasonable period of time sufficient to allow for any anticipated recovery of fair value.Accounts Receivable - The Company evaluates the collectability of its trade accounts receivable based on a number of factors. In circumstances where the Company becomes aware of a specific customer's inability to meet its financial obligations to the Company, a specific reserve for bad debts is estimated and recorded, which reduces the recognized receivable to the estimated amount the Company believes will ultimately be collected. In addition to specific customer identification of potential bad debts, bad debt charges are recorded based on the Company's recent loss history and an overall assessment of past due trade accounts receivable outstanding. In accordance with FASB ASC 210-20-45, in its consolidated balance sheets, the Company has presented accounts receivable, net of promotional allowances, only for those customers that it allows net settlement. All other accounts receivable and related promotional allowances are shown on a gross basis.Inventories - Inventories are valued at the lower of first-in, first-out, cost or market value (net realizable value).88 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Operating Income **Key changes:** - Reworded sentence: "Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on 54 Table of Contents Table of Contents Table of Contents $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022)." - Reworded sentence: "Net changes in foreign currency exchange rates had an unfavorable impact on $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022)." **Prior (2023):** Operating income was $1.58 billion for the year ended December 31, 2022, a decrease of approximately $212.7 million, or 11.8% lower than operating income of $1.80 billion for the year ended December 31, 2021. Operating income as a percentage of net sales decreased to 25.1% for the year ended December 31, 2022 from 32.4% for the year ended December 31, 2021. Operating income for the year ended December 31, 2022 decreased primarily as a result of the increase in operating expenses as well as the decrease in the gross profit as a percentage of net sales. Operating income was $316.3 million and $402.8 million for the years ended December 31, 2022 and 2021, respectively, for our operations in EMEA, Asia Pacific, Latin America and the Caribbean. Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $1.85 billion for the year ended December 31, 2022, a decrease of approximately $140.7 million, or 7.1% lower than operating income of $1.99 billion for the year ended December 31, 2021. The decrease in operating income for the Monster Energy® Drinks segment was primarily the result of an increase in operating expenses as well as a decrease in gross profit as a percentage of net sales. Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $197.7 million for the year ended December 31, 2022, an increase of approximately $24.0 million, or 13.8% higher than operating income of $173.7 million for the year ended December 31, 2021. The increase in operating income for the Strategic Brands segment was primarily the result of a $30.6 million increase in gross profit. Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The operating loss for the year ended December 31, 2022 was due in part to (i) excess depreciation and amortization as well as the fair value treatment of purchased inventory, all relating to the CANarchy Transaction, (ii) increased input costs and an underutilization 53 53 Table of Contentsof fixed overhead and (iii) sales volume declines primarily of Wild BasinTM due in part to overall sales declines in the hard seltzer category. The inventory acquired, which was subsequently sold, was recognized through cost of goods sold at fair value (purchased cost), resulting in no recognized profits on the associated sales.Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.0 million for the year ended December 31, 2022, a decrease of approximately $3.9 million, or 56.2% lower than operating income of $6.9 million for the year ended December 31, 2021.Other (Expense) Income, net Other (expense) income, net, was ($12.8) million for the year ended December 31, 2022, as compared to other (expense) income, net, of $4.0 million for the year ended December 31, 2021. Foreign currency transaction gains (losses) were ($37.9) million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. Interest income was $29.7 million and $4.2 million for the years ended December 31, 2022 and 2021, respectively.Provision for Income Taxes Provision for income taxes was $380.3 million for the year ended December 31, 2022, a decrease of $43.6 million, or 10.3% lower than the provision for income taxes of $423.9 million for the year ended December 31, 2021. The effective combined federal, state and foreign tax rate was 24.2% and 23.5% for the years ended December 31, 2022 and 2021, respectively. The increase in the effective tax rate was primarily attributable to the decrease in income in certain foreign jurisdictions with lower tax rates compared to the United States.Net IncomeNet income was $1.19 billion for the year ended December 31, 2022, a decrease of $185.9 million, or 13.5% lower than net income of $1.38 billion for the year ended December 31, 2021. The decrease in net income for the year ended December 31, 2022 was primarily due to the decrease in the gross profit percentage of net sales as well as the increase in operating expenses.Key Business MetricsWe use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see "Non-GAAP Financial Measures and Other Key Metrics" below.Non-GAAP Financial Measures and Other Key MetricsGross Billings**Gross billings were $7.26 billion for the year ended December 31, 2022, an increase of approximately $837.0 million, or 13.0% higher than gross billings of $6.42 billion for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $285.9 million for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment were $6.74 billion for the year ended December 31, 2022, an increase of approximately $678.4 million, or 11.2% higher than gross billings of $6.06 billion for the year ended December 31, 2021. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on 54 Table of Contents Table of Contents Table of Contents of fixed overhead and (iii) sales volume declines primarily of Wild BasinTM due in part to overall sales declines in the hard seltzer category. The inventory acquired, which was subsequently sold, was recognized through cost of goods sold at fair value (purchased cost), resulting in no recognized profits on the associated sales.Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.0 million for the year ended December 31, 2022, a decrease of approximately $3.9 million, or 56.2% lower than operating income of $6.9 million for the year ended December 31, 2021.Other (Expense) Income, net Other (expense) income, net, was ($12.8) million for the year ended December 31, 2022, as compared to other (expense) income, net, of $4.0 million for the year ended December 31, 2021. Foreign currency transaction gains (losses) were ($37.9) million and $0.3 million for the years ended December 31, 2022 and 2021, respectively. Interest income was $29.7 million and $4.2 million for the years ended December 31, 2022 and 2021, respectively.Provision for Income Taxes Provision for income taxes was $380.3 million for the year ended December 31, 2022, a decrease of $43.6 million, or 10.3% lower than the provision for income taxes of $423.9 million for the year ended December 31, 2021. The effective combined federal, state and foreign tax rate was 24.2% and 23.5% for the years ended December 31, 2022 and 2021, respectively. The increase in the effective tax rate was primarily attributable to the decrease in income in certain foreign jurisdictions with lower tax rates compared to the United States.Net IncomeNet income was $1.19 billion for the year ended December 31, 2022, a decrease of $185.9 million, or 13.5% lower than net income of $1.38 billion for the year ended December 31, 2021. The decrease in net income for the year ended December 31, 2022 was primarily due to the decrease in the gross profit percentage of net sales as well as the increase in operating expenses.Key Business MetricsWe use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see "Non-GAAP Financial Measures and Other Key Metrics" below.Non-GAAP Financial Measures and Other Key MetricsGross Billings**Gross billings were $7.26 billion for the year ended December 31, 2022, an increase of approximately $837.0 million, or 13.0% higher than gross billings of $6.42 billion for the year ended December 31, 2021. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $285.9 million for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment were $6.74 billion for the year ended December 31, 2022, an increase of approximately $678.4 million, or 11.2% higher than gross billings of $6.06 billion for the year ended December 31, 2021. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on of fixed overhead and (iii) sales volume declines primarily of Wild BasinTM due in part to overall sales declines in the hard seltzer category. The inventory acquired, which was subsequently sold, was recognized through cost of goods sold at fair value (purchased cost), resulting in no recognized profits on the associated sales. Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.0 million for the year ended December 31, 2022, a decrease of approximately $3.9 million, or 56.2% lower than operating income of $6.9 million for the year ended December 31, 2021. **Current (2024):** Operating income was $1.95 billion for the year ended December 31, 2023, an increase of approximately $368.6 million, or 23.3% higher than operating income of $1.58 billion for the year ended December 31, 2022. Operating income as a percentage of net sales increased to 27.4% for the year ended December 31, 2023 from 25.1% for the year ended December 31, 2022. Operating income for the year ended December 31, 2023 increased primarily due to an increase of $619.6 million in gross profit partially offset by an increase in operating expenses of $368.6 million, which includes the Alcohol Impairment Charges. ​ Operating income was $409.3 million and $316.3 million for the years ended December 31, 2023 and 2022, respectively, for our operations in EMEA, Asia Pacific (including Oceania), Latin America and the Caribbean. ​ Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $2.34 billion for the year ended December 31, 2023, an increase of approximately $488.7 million, or 26.4% higher than operating income of $1.85 billion for the year ended December 31, 2022. The increase in operating income for the Monster Energy® Drinks segment was primarily the result of a $572.5 million increase in gross profit. ​ Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $207.1 million for the year ended December 31, 2023, an increase of approximately $9.4 million, or 4.8% higher than operating income of $197.7 million for the year ended December 31, 2022. The increase in operating income for the Strategic Brands segment was primarily the result of a $14.6 million increase in gross profit. ​ Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $81.1 million for the year ended December 31, 2023, an increase of approximately $49.6 million, or 157.5% higher than operating loss of 53 53 Table of Contents$31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2023 was primarily as a result of the Alcohol Impairment Charges of $42.7 million.​Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.6 million for the year ended December 31, 2023, an increase of approximately $0.5 million, or 17.3% higher than operating income of $3.0 million for the year ended December 31, 2022.Interest and Other Income (Expense), net​Interest and other income (expense), net, was $115.1 million for the year ended December 31, 2023, as compared to interest and other income (expense), net, of ($12.8) million for the year ended December 31, 2022. Foreign currency transaction gains (losses) were ($60.2) million and ($37.9) million for the years ended December 31, 2023 and 2022, respectively. Interest income was $130.0 million and $29.7 million for the years ended December 31, 2023 and 2022, respectively. Interest and other income (expense), net included a gain on transaction of $45.4 million related to the acquisition of Bang Energy ("Bang Transaction Gain") for the year ended December 31, 2023.Provision for Income Taxes Provision for income taxes was $437.5 million for the year ended December 31, 2023, an increase of $57.2 million, or 15.0% higher than the provision for income taxes of $380.3 million for the year ended December 31, 2022. The effective combined federal, state and foreign tax rate was 21.2% and 24.2% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction for the year ended December 31, 2023.Net IncomeNet income was $1.63 billion for the year ended December 31, 2023, an increase of $439.4 million, or 36.9% higher than net income of $1.19 billion for the year ended December 31, 2022. The increase in net income for the year ended December 31, 2023 was primarily due to the increase in gross profit.Key Business MetricsWe use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see "Non-GAAP Financial Measures and Other Key Metrics" below.Non-GAAP Financial Measures and Other Key MetricsGross Billings**Gross billings were $8.23 billion for the year ended December 31, 2023, an increase of approximately $968.1 million, or 13.3% higher than gross billings of $7.26 billion for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $149.8 million for the year ended December 31, 2023.​Gross billings for the Monster Energy® Drinks segment were $7.59 billion for the year ended December 31, 2023, an increase of approximately $855.4 million, or 12.7% higher than gross billings of $6.74 billion for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on 54 Table of Contents Table of Contents Table of Contents $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2023 was primarily as a result of the Alcohol Impairment Charges of $42.7 million.​Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.6 million for the year ended December 31, 2023, an increase of approximately $0.5 million, or 17.3% higher than operating income of $3.0 million for the year ended December 31, 2022.Interest and Other Income (Expense), net​Interest and other income (expense), net, was $115.1 million for the year ended December 31, 2023, as compared to interest and other income (expense), net, of ($12.8) million for the year ended December 31, 2022. Foreign currency transaction gains (losses) were ($60.2) million and ($37.9) million for the years ended December 31, 2023 and 2022, respectively. Interest income was $130.0 million and $29.7 million for the years ended December 31, 2023 and 2022, respectively. Interest and other income (expense), net included a gain on transaction of $45.4 million related to the acquisition of Bang Energy ("Bang Transaction Gain") for the year ended December 31, 2023.Provision for Income Taxes Provision for income taxes was $437.5 million for the year ended December 31, 2023, an increase of $57.2 million, or 15.0% higher than the provision for income taxes of $380.3 million for the year ended December 31, 2022. The effective combined federal, state and foreign tax rate was 21.2% and 24.2% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction for the year ended December 31, 2023.Net IncomeNet income was $1.63 billion for the year ended December 31, 2023, an increase of $439.4 million, or 36.9% higher than net income of $1.19 billion for the year ended December 31, 2022. The increase in net income for the year ended December 31, 2023 was primarily due to the increase in gross profit.Key Business MetricsWe use certain key metrics and financial measures not prepared in accordance with United States Generally Accepted Accounting Principles ("GAAP") to evaluate and manage our business. For a further discussion of how we use key metrics and certain non-GAAP financial measures, see "Non-GAAP Financial Measures and Other Key Metrics" below.Non-GAAP Financial Measures and Other Key MetricsGross Billings**Gross billings were $8.23 billion for the year ended December 31, 2023, an increase of approximately $968.1 million, or 13.3% higher than gross billings of $7.26 billion for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on gross billings of approximately $149.8 million for the year ended December 31, 2023.​Gross billings for the Monster Energy® Drinks segment were $7.59 billion for the year ended December 31, 2023, an increase of approximately $855.4 million, or 12.7% higher than gross billings of $6.74 billion for the year ended December 31, 2022. Gross billings for the Monster Energy® Drinks segment increased primarily due to increased worldwide sales by volume of our Monster Energy® brand energy drinks as a result of increased consumer demand, as well as due to price increases in certain markets. Net changes in foreign currency exchange rates had an unfavorable impact on $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The increase in the operating loss for the Alcohol Brands segment for the year ended December 31, 2023 was primarily as a result of the Alcohol Impairment Charges of $42.7 million. ​ Operating income for the Other segment, exclusive of corporate and unallocated expenses, was $3.6 million for the year ended December 31, 2023, an increase of approximately $0.5 million, or 17.3% higher than operating income of $3.0 million for the year ended December 31, 2022. --- ## Modified: Opinion on Internal Control Over Financial Reporting **Key changes:** - Reworded sentence: "​ 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)." **Prior (2023):** 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. **Current (2024):** ​ 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. ​ --- ## Modified: Financial Risks **Key changes:** - Reworded sentence: "Our 2020 through 2022 U.S." - Reworded sentence: "Our state income tax returns are subject to examination for the 2019 through 2022 tax years." - Reworded sentence: "In connection with the OECD's 38 38 Table of ContentsBEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries." - Reworded sentence: "As of December 31, 2023, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.43 billion." - Reworded sentence: "dollar has impacted our results of operations.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.Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.We cannot predict the impact that future changes in accounting standards or practices may have on our financial results." **Prior (2023):** Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations. We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2019 through 2021 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2018 through 2021 tax years. At any given time, events may occur which change our expectation about how any such tax audits will be resolved and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions. Changes in U.S. tax laws as a result of any legislation proposed by the new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations. We may be required in the future to record a significant charge to earnings if our goodwill or intangible assets become impaired. Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include, declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry. 37 37 Table of ContentsWe may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2022, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.22 billion.Fluctuations in foreign currency exchange rates may adversely affect our operating results.We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations.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.Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales.If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected.We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, European and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. Included in the foregoing are long-term uncertainties surrounding the United Kingdom's withdrawal from the European Union on January 31, 2020 (commonly referred to as 38 Table of Contents Table of Contents Table of Contents We may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2022, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.22 billion.Fluctuations in foreign currency exchange rates may adversely affect our operating results.We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations.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.Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales.If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected.We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, European and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. Included in the foregoing are long-term uncertainties surrounding the United Kingdom's withdrawal from the European Union on January 31, 2020 (commonly referred to as We may be required in the future to record a significant charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2022, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.22 billion. Fluctuations in foreign currency exchange rates may adversely affect our operating results. We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations. 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. Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results. We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales. If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected. We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed. Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations. Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, European and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. Included in the foregoing are long-term uncertainties surrounding the United Kingdom's withdrawal from the European Union on January 31, 2020 (commonly referred to as 38 38 Table of Contents"Brexit") and any resulting increases in tariffs, importation restrictions, out of stocks, volatility in currency exchange rates, including the valuation of the euro and the British pound in particular, changes in the laws and regulations applied in the United Kingdom or impacts on economic and market conditions in the United Kingdom, the European Union and its member states and elsewhere. The foregoing also includes the military conflict in Ukraine and any increased economic uncertainty and volatility in commodity prices that it poses.Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition.Volatility of stock price may restrict sale opportunities.Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties as well as many other factors including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mix of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2022, the high of our stock price was $104.65 and the low was $71.78.Our investments are subject to risks which may cause losses and affect the liquidity of these investments.At December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments, including certificates of deposit, commercial paper, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.​ITEM 1B.UNRESOLVED STAFF COMMENTSNot applicable.​ITEM 2.PROPERTIESAs of February 16, 2023, our principal properties include our corporate headquarters as well as our Southern California warehouse and distribution center.39 Table of Contents Table of Contents Table of Contents "Brexit") and any resulting increases in tariffs, importation restrictions, out of stocks, volatility in currency exchange rates, including the valuation of the euro and the British pound in particular, changes in the laws and regulations applied in the United Kingdom or impacts on economic and market conditions in the United Kingdom, the European Union and its member states and elsewhere. The foregoing also includes the military conflict in Ukraine and any increased economic uncertainty and volatility in commodity prices that it poses.Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition.Volatility of stock price may restrict sale opportunities.Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties as well as many other factors including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mix of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2022, the high of our stock price was $104.65 and the low was $71.78.Our investments are subject to risks which may cause losses and affect the liquidity of these investments.At December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments, including certificates of deposit, commercial paper, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.​ITEM 1B.UNRESOLVED STAFF COMMENTSNot applicable.​ITEM 2.PROPERTIESAs of February 16, 2023, our principal properties include our corporate headquarters as well as our Southern California warehouse and distribution center. "Brexit") and any resulting increases in tariffs, importation restrictions, out of stocks, volatility in currency exchange rates, including the valuation of the euro and the British pound in particular, changes in the laws and regulations applied in the United Kingdom or impacts on economic and market conditions in the United Kingdom, the European Union and its member states and elsewhere. The foregoing also includes the military conflict in Ukraine and any increased economic uncertainty and volatility in commodity prices that it poses. Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses. As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition. Volatility of stock price may restrict sale opportunities. Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties as well as many other factors including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mix of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2022, the high of our stock price was $104.65 and the low was $71.78. Our investments are subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2022, we had $1.31 billion in cash and cash equivalents, $1.36 billion in short-term investments and $61.4 million in long-term investments, including certificates of deposit, commercial paper, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. ​ ITEM 1B.UNRESOLVED STAFF COMMENTS Not applicable. ​ ITEM 2.PROPERTIES As of February 16, 2023, our principal properties include our corporate headquarters as well as our Southern California warehouse and distribution center. 39 39 Table of ContentsOur owned corporate facilities located in Corona, California, consist of (i) an approximately 141,000 square-foot, free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) an approximately 147,625 square-foot three-story parking structure and storage facility, which houses our approximately 14,000 square-foot quality control laboratory, (iii) an approximately 75,426 square foot, free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) an approximately 20,661 square-foot, free-standing, single-story building and (v) an approximately 49,617 square-foot, free-standing, two-story building.Our owned Southern California warehouse and distribution center is located in Rialto, California, consisting of an approximately 1,000,000 square-foot building which is LEED certified.During 2022, we acquired certain real property and equipment in Norwalk, California. We intend to utilize the property as a manufacturing facility for certain of our products.During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom.During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location. In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations.​ITEM 3.LEGAL PROCEEDINGSFrom time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations.The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 2022 and 2021, no loss contingencies were included in the Company's consolidated balance sheets.​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 40 Table of Contents Table of Contents Table of Contents Our owned corporate facilities located in Corona, California, consist of (i) an approximately 141,000 square-foot, free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) an approximately 147,625 square-foot three-story parking structure and storage facility, which houses our approximately 14,000 square-foot quality control laboratory, (iii) an approximately 75,426 square foot, free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) an approximately 20,661 square-foot, free-standing, single-story building and (v) an approximately 49,617 square-foot, free-standing, two-story building.Our owned Southern California warehouse and distribution center is located in Rialto, California, consisting of an approximately 1,000,000 square-foot building which is LEED certified.During 2022, we acquired certain real property and equipment in Norwalk, California. We intend to utilize the property as a manufacturing facility for certain of our products.During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom.During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location. In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations.​ITEM 3.LEGAL PROCEEDINGSFrom time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations.The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 2022 and 2021, no loss contingencies were included in the Company's consolidated balance sheets.​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 Our owned corporate facilities located in Corona, California, consist of (i) an approximately 141,000 square-foot, free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) an approximately 147,625 square-foot three-story parking structure and storage facility, which houses our approximately 14,000 square-foot quality control laboratory, (iii) an approximately 75,426 square foot, free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) an approximately 20,661 square-foot, free-standing, single-story building and (v) an approximately 49,617 square-foot, free-standing, two-story building. Our owned Southern California warehouse and distribution center is located in Rialto, California, consisting of an approximately 1,000,000 square-foot building which is LEED certified. During 2022, we acquired certain real property and equipment in Norwalk, California. We intend to utilize the property as a manufacturing facility for certain of our products. During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom. During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location. In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations. ​ ITEM 3.LEGAL PROCEEDINGS From time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 2022 and 2021, no loss contingencies were included in the Company's consolidated balance sheets. ​ 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 40 40 Table of Contentsonly 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 drinks 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.​ITEM 4.MINE SAFETY DISCLOSURESNot applicable.​41 Table of Contents Table of Contents Table of Contents 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 drinks 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.​ITEM 4.MINE SAFETY DISCLOSURESNot applicable.​ 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 drinks 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. ​ ITEM 4.MINE SAFETY DISCLOSURES Not applicable. ​ 41 41 Table of ContentsPART IIITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESPrincipal MarketThe Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 16, 2023, there were 522,409,358 shares of the Company's common stock outstanding held by approximately 183 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions.Stock Price and Dividend InformationWe have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future.On March 13, 2020, 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 "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.On June 14, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "June 2022 Repurchase Plan"). During the year ended December 31, 2022, the Company purchased approximately 3.6 million shares of common stock at an average purchase price of $88.73 per share, for a total amount of approximately $317.2 million (excluding broker commissions), under the June 2022 Repurchase Plan. As of March 1, 2023, $182.8 million remained available for repurchase under the June 2022 Repurchase Plan.On November 2, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "November 2022 Repurchase Plan"). During the year ended December 31, 2022, no shares were repurchased under the November 2022 Repurchase Plan. As of March 1, 2023, $500.0 million remained available for repurchase under the November 2022 Repurchase Plan.The aggregate amount of the Company's outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $682.8 million as of March 1, 2023.During the year ended December 31, 2022, 0.2 million shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $12.5 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2022. 42 Table of Contents Table of Contents Table of Contents PART IIITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESPrincipal MarketThe Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 16, 2023, there were 522,409,358 shares of the Company's common stock outstanding held by approximately 183 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions.Stock Price and Dividend InformationWe have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future.On March 13, 2020, 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 "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.On June 14, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "June 2022 Repurchase Plan"). During the year ended December 31, 2022, the Company purchased approximately 3.6 million shares of common stock at an average purchase price of $88.73 per share, for a total amount of approximately $317.2 million (excluding broker commissions), under the June 2022 Repurchase Plan. As of March 1, 2023, $182.8 million remained available for repurchase under the June 2022 Repurchase Plan.On November 2, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "November 2022 Repurchase Plan"). During the year ended December 31, 2022, no shares were repurchased under the November 2022 Repurchase Plan. As of March 1, 2023, $500.0 million remained available for repurchase under the November 2022 Repurchase Plan.The aggregate amount of the Company's outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $682.8 million as of March 1, 2023.During the year ended December 31, 2022, 0.2 million shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $12.5 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2022. PART II ITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES **Current (2024):** Fluctuations in our effective tax rate could adversely affect our financial condition and results of operations. We are subject to income and other taxes in both the U.S. and certain foreign jurisdictions. Therefore, we are subject to audits for multiple tax years in various jurisdictions at once. We are in various stages of examination with certain states and certain foreign jurisdictions. Our 2020 through 2022 U.S. federal income tax returns are subject to examination by the IRS. Our state income tax returns are subject to examination for the 2019 through 2022 tax years. The United Kingdom and Ireland income tax returns are subject to examination for the 2019 through 2022 tax years. At any given time, events may occur which change our expectation about how any such tax audits will be resolved, and thus, there could be significant variability in our quarterly and/or annual tax rates, because these events may change our plans for uncertain tax positions. Changes in U.S. tax laws as a result of any legislation proposed by a new U.S. Presidential Administration or U.S. Congress, which may include efforts to change or repeal the 2017 Tax Cuts and Jobs Act and the federal corporate income tax rate reduction, could adversely affect our provision for income taxes, resulting in an adverse impact on our financial condition or results of operations. In addition, changes in the manner in which U.S. multinational corporations are taxed on foreign earnings, including changes in how existing tax laws are interpreted or enforced, could adversely affect our financial condition or results of operations. For example, the Organization for Economic Cooperation and Development ("OECD") has recommended changes to numerous long-standing international tax principles through its base erosion and profit shifting ("BEPS") project. These changes, to the extent adopted, may increase tax uncertainty, result in higher compliance costs and adversely affect our provision for income taxes, results of operations and/or cash flow. In connection with the OECD's 38 38 Table of ContentsBEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult, and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations.We may be required to record a charge to earnings if our goodwill or intangible assets become impaired.Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to test our indefinite lived intangible assets and goodwill for impairment at least annually and to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry.We may be required to record a charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2023, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.43 billion. For the year ended December 31, 2023, we recorded $38.7 million of impairment charges related to certain non-amortizing intangibles.Fluctuations in foreign currency exchange rates may adversely affect our operating results.We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations.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.Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales.If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected.We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain 39 Table of Contents Table of Contents Table of Contents BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult, and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations.We may be required to record a charge to earnings if our goodwill or intangible assets become impaired.Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to test our indefinite lived intangible assets and goodwill for impairment at least annually and to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry.We may be required to record a charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2023, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.43 billion. For the year ended December 31, 2023, we recorded $38.7 million of impairment charges related to certain non-amortizing intangibles.Fluctuations in foreign currency exchange rates may adversely affect our operating results.We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations.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.Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results.We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales.If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected.We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain BEPS project, companies are required to disclose more information to tax authorities on operations around the world, which may lead to greater audit scrutiny of profits earned in various countries. Economic and political pressures to increase tax revenues in jurisdictions in which we operate, or the adoption of new or reformed tax legislation or regulation, may make resolving tax disputes more difficult, and the final resolution of tax audits and any related litigation could differ from our historical provisions and accruals, resulting in an adverse impact on our financial condition or results of operations. We may be required to record a charge to earnings if our goodwill or intangible assets become impaired. Under United States Generally Accepted Accounting Principles ("GAAP"), we are required to test our indefinite lived intangible assets and goodwill for impairment at least annually and to review our intangible assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. Factors that may be considered a change in circumstances indicating that the carrying value of our intangible assets may not be recoverable include declining or slower than anticipated growth rates for certain of our existing products, a decline in stock price and market capitalization, and slower growth rates in our industry. We may be required to record a charge to earnings during the period in which we determine that our intangible assets have been impaired. Any such charge would adversely impact our results of operations. As of December 31, 2023, our goodwill totaled approximately $1.42 billion and other intangible assets totaled approximately $1.43 billion. For the year ended December 31, 2023, we recorded $38.7 million of impairment charges related to certain non-amortizing intangibles. Fluctuations in foreign currency exchange rates may adversely affect our operating results. We are exposed to foreign currency exchange rate risk with respect to our sales, expenses, profits, assets and liabilities denominated in currencies other than the U.S. dollar. We enter 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. We have not used instruments to hedge against all foreign currency risks and are therefore not protected against all foreign currency fluctuations. As a result, our reported earnings may be affected by changes in foreign currency exchange rates. Moreover, any favorable impacts to profit margins or financial results from fluctuations in foreign currency exchange rates are likely to be unsustainable over time. The current relative strength of the U.S. dollar has impacted our results of operations. 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. Potential changes in accounting standards or practices and/or taxation may adversely affect our financial results. We cannot predict the impact that future changes in accounting standards or practices may have on our financial results. New accounting standards could be issued that change the way we record revenues, expenses, assets and liabilities. These changes in accounting standards could adversely affect our reported earnings. Increases in direct and indirect income tax rates could affect after-tax income. Equally, increases in indirect taxes (including environmental taxes pertaining to the disposal of beverage containers and/or indirect taxes on beverages generally or energy drinks in particular) could affect our products' affordability and reduce our sales. If we fail to maintain effective disclosure controls and procedures and internal control over financial reporting on a consolidated basis, our stock price and investor confidence in the Company could be materially and adversely affected. We are required to maintain both disclosure controls and procedures as well as internal control over financial reporting that are effective for the purposes described in "Part II, Item 9A - Controls and Procedures." If we fail to maintain 39 39 Table of Contentssuch controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, Central and South American, European, Middle Eastern and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. The foregoing also includes the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits and any increased economic uncertainty and volatility in commodity prices that it poses.Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition.Volatility of stock price may restrict sale opportunities.Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties, as well as many other factors, including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mixes of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2023, the high of our stock price was $60.47 and the low was $47.13.40 Table of Contents Table of Contents Table of Contents such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed.Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations.Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, Central and South American, European, Middle Eastern and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. The foregoing also includes the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits and any increased economic uncertainty and volatility in commodity prices that it poses.Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition.Volatility of stock price may restrict sale opportunities.Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties, as well as many other factors, including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mixes of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2023, the high of our stock price was $60.47 and the low was $47.13. such controls and procedures, our business, results of operations, financial condition and/or the value of our stock could be materially harmed. Uncertainty in the financial markets and other adverse changes in general economic or political conditions in any of the major countries in which we do business could adversely affect our industry, business and results of operations. Global economic uncertainties, including highly inflationary economies and foreign currency exchange rates and rising interest rates, affect businesses such as ours in a number of ways, making it difficult to accurately forecast and plan our future business activities. There can be no assurance that economic improvements will occur, or that they would be sustainable, or that they would enhance conditions in markets relevant to us. In addition, we cannot predict the duration and severity of disruptions in any of our markets or the impact they may have on our customers or business, as our expansion outside of the United States has increased our exposure to any developments or crises in African, Asian, Central and South American, European, Middle Eastern and other international markets. Unfavorable economic conditions and financial uncertainties in our major international markets, including economic slowdowns and recessions, and unstable political conditions, including civil unrest and governmental changes, in certain of our other international markets could undermine global consumer confidence and reduce consumers' purchasing power, thereby reducing demand for our products. The foregoing also includes the military conflicts in Ukraine, Israel and Gaza as well as tensions in the Middle East in general and tensions across the Taiwan Straits and any increased economic uncertainty and volatility in commodity prices that it poses. Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses. As part of any hedging activities that we may conduct, we may enter into transactions involving derivative financial instruments, including forward contracts, commodity futures contracts, option contracts, collars and swaps, with various financial institutions. We also have significant amounts of cash, cash equivalents and other investments on deposit or in accounts with banks or other financial institutions both in the United States and abroad, exposing us to risk of default by or failure of such counterparty financial institutions. This risk of counterparty default or failure is greater during periods of economic downturn or uncertainty in financial markets. If one of our counterparties became insolvent or filed for bankruptcy, our ability to recover losses incurred due to the default or to retrieve assets deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or applicable laws governing insolvency and bankruptcy proceedings. Default by or failure of one or more of our counterparties could cause us to incur significant losses and negatively impact our results of operations and financial condition. Volatility of stock price may restrict sale opportunities. Our stock price is affected by a number of factors, including stockholder expectations, financial results, the introduction of new products by us and our competitors, general economic and market conditions such as inflation, estimates and projections by the investment community and public comments by other parties, as well as many other factors, including litigation, many of which are beyond our control. We do not provide guidance on our future performance, including, but not limited to, our revenues, margins, product mix, operating expenses, net income, or earnings per share. We may be unable to achieve analysts' net revenue and/or earnings forecasts, which are based on their own projected revenues, sales volumes and sales mixes of many product types and/or new products, certain of which are more profitable than others, as well as their own estimates of gross margin and operating expenses. There can be no assurance that we will achieve any such projected levels or mix of product sales, revenues, gross margins, operating profits, net income and/or earnings per share. As a result, our stock price is subject to significant volatility, and stockholders may not be able to sell our stock at attractive prices. In addition, periods of volatility in the market price of our stock could result in the initiation of securities class action litigation against us. During the fiscal year ended December 31, 2023, the high of our stock price was $60.47 and the low was $47.13. 40 40 Table of ContentsOur investments are subject to risks which may cause losses and affect the liquidity of these investments.At December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments, including certificates of deposit, commercial paper, corporate bonds, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.​ITEM 1B.UNRESOLVED STAFF COMMENTSNot applicable.​ITEM 1C.CYBERSECURITYOur Board recognizes the importance of maintaining the trust and confidence of our customers, consumers, employees and other stakeholders and oversees all cybersecurity matters. Management plays a central role in our information security program, which is a critical component of our enterprise risk management and includes the implementation of controls aligned with industry best practices and applicable frameworks to identify threats, deter attacks and protect our Company assets. In addition, we engage a range of cybersecurity experts, including cybersecurity auditors, assessors, and consultants, in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights and ensure that our cybersecurity strategies and processes remain in line with industry best practices. Our collaboration with these third parties includes regular audits, threat assessments, and consultation on security enhancements.Our Chief Information Officer and his team are responsible for leading our cybersecurity strategy, policy, standards, architecture, and processes. Our information security leadership team has more than 20 years of combined experience in cyber and information security matters. Our information security program is also supported by our Chief Compliance Officer and other members of senior management. We conduct periodic reviews of our program by internal and external experts with the results of those reviews reported to senior management and the Board. We have procedures in place for selecting and managing our relationships with third-party service providers and other business partners. For example, we require certain third-party service providers and other business partners to provide us with SOC II reports that demonstrate compliance with security standards. We also actively engage with industry participants, as well as intelligence and law enforcement communities as appropriate, as part of our continuing efforts to evolve our cybersecurity governance.Our information security team promptly informs our Incident Response Team of potentially material cybersecurity incidents, including with respect to our third-party service providers. The Chief Information Officer briefs our Co-Chief Executive Officers and reports to the Audit Committee of our Board (the "Audit Committee"). The Audit Committee, in turn and if necessary, briefs the Board on, among other matters, our cyber risks and threats, the status of projects to strengthen our information security systems (such as employee cybersecurity training), an assessment of the information security program, and the emerging threat landscape. The Cybersecurity and Compliance Steering Committee, comprised of senior members of management, has convened and is scheduled to convene on a quarterly basis to review all matters related to strengthening our cybersecurity posture and providing governance.For a discussion regarding risks from cybersecurity threats that are reasonably likely to affect the Company, see "Part I, Item 1A - Risk Factors - Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations" and "If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results."​41 Table of Contents Table of Contents Table of Contents Our investments are subject to risks which may cause losses and affect the liquidity of these investments.At December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments, including certificates of deposit, commercial paper, corporate bonds, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition.​ITEM 1B.UNRESOLVED STAFF COMMENTSNot applicable.​ITEM 1C.CYBERSECURITYOur Board recognizes the importance of maintaining the trust and confidence of our customers, consumers, employees and other stakeholders and oversees all cybersecurity matters. Management plays a central role in our information security program, which is a critical component of our enterprise risk management and includes the implementation of controls aligned with industry best practices and applicable frameworks to identify threats, deter attacks and protect our Company assets. In addition, we engage a range of cybersecurity experts, including cybersecurity auditors, assessors, and consultants, in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights and ensure that our cybersecurity strategies and processes remain in line with industry best practices. Our collaboration with these third parties includes regular audits, threat assessments, and consultation on security enhancements.Our Chief Information Officer and his team are responsible for leading our cybersecurity strategy, policy, standards, architecture, and processes. Our information security leadership team has more than 20 years of combined experience in cyber and information security matters. Our information security program is also supported by our Chief Compliance Officer and other members of senior management. We conduct periodic reviews of our program by internal and external experts with the results of those reviews reported to senior management and the Board. We have procedures in place for selecting and managing our relationships with third-party service providers and other business partners. For example, we require certain third-party service providers and other business partners to provide us with SOC II reports that demonstrate compliance with security standards. We also actively engage with industry participants, as well as intelligence and law enforcement communities as appropriate, as part of our continuing efforts to evolve our cybersecurity governance.Our information security team promptly informs our Incident Response Team of potentially material cybersecurity incidents, including with respect to our third-party service providers. The Chief Information Officer briefs our Co-Chief Executive Officers and reports to the Audit Committee of our Board (the "Audit Committee"). The Audit Committee, in turn and if necessary, briefs the Board on, among other matters, our cyber risks and threats, the status of projects to strengthen our information security systems (such as employee cybersecurity training), an assessment of the information security program, and the emerging threat landscape. The Cybersecurity and Compliance Steering Committee, comprised of senior members of management, has convened and is scheduled to convene on a quarterly basis to review all matters related to strengthening our cybersecurity posture and providing governance.For a discussion regarding risks from cybersecurity threats that are reasonably likely to affect the Company, see "Part I, Item 1A - Risk Factors - Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations" and "If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results."​ Our investments are subject to risks which may cause losses and affect the liquidity of these investments. At December 31, 2023, we had $2.30 billion in cash and cash equivalents, $955.6 million in short-term investments and $76.4 million in long-term investments, including certificates of deposit, commercial paper, corporate bonds, U.S. government agency securities, U.S. treasuries, and to a lesser extent, municipal securities. Certain of these investments are subject to general credit, liquidity, market and interest rate risks. These risks associated with our investment portfolio may have an adverse effect on our future results of operations, liquidity and financial condition. ​ ITEM 1B.UNRESOLVED STAFF COMMENTS Not applicable. ​ ITEM 1C.CYBERSECURITY Our Board recognizes the importance of maintaining the trust and confidence of our customers, consumers, employees and other stakeholders and oversees all cybersecurity matters. Management plays a central role in our information security program, which is a critical component of our enterprise risk management and includes the implementation of controls aligned with industry best practices and applicable frameworks to identify threats, deter attacks and protect our Company assets. In addition, we engage a range of cybersecurity experts, including cybersecurity auditors, assessors, and consultants, in evaluating and testing our risk management systems. These partnerships enable us to leverage specialized knowledge and insights and ensure that our cybersecurity strategies and processes remain in line with industry best practices. Our collaboration with these third parties includes regular audits, threat assessments, and consultation on security enhancements. Our Chief Information Officer and his team are responsible for leading our cybersecurity strategy, policy, standards, architecture, and processes. Our information security leadership team has more than 20 years of combined experience in cyber and information security matters. Our information security program is also supported by our Chief Compliance Officer and other members of senior management. We conduct periodic reviews of our program by internal and external experts with the results of those reviews reported to senior management and the Board. We have procedures in place for selecting and managing our relationships with third-party service providers and other business partners. For example, we require certain third-party service providers and other business partners to provide us with SOC II reports that demonstrate compliance with security standards. We also actively engage with industry participants, as well as intelligence and law enforcement communities as appropriate, as part of our continuing efforts to evolve our cybersecurity governance. Our information security team promptly informs our Incident Response Team of potentially material cybersecurity incidents, including with respect to our third-party service providers. The Chief Information Officer briefs our Co-Chief Executive Officers and reports to the Audit Committee of our Board (the "Audit Committee"). The Audit Committee, in turn and if necessary, briefs the Board on, among other matters, our cyber risks and threats, the status of projects to strengthen our information security systems (such as employee cybersecurity training), an assessment of the information security program, and the emerging threat landscape. The Cybersecurity and Compliance Steering Committee, comprised of senior members of management, has convened and is scheduled to convene on a quarterly basis to review all matters related to strengthening our cybersecurity posture and providing governance. For a discussion regarding risks from cybersecurity threats that are reasonably likely to affect the Company, see "Part I, Item 1A - Risk Factors - Our use of information technology and third party service providers exposes us to cybersecurity breaches and other interruptions that could disrupt our business operations and adversely impact our reputation and results of operations" and "If we fail to comply with data privacy and personal data protection laws, we could be subject to adverse publicity, government enforcement actions and/or private litigation, which may negatively impact our business and operating results." ​ 41 41 Table of ContentsITEM 2.PROPERTIESAs of February 15, 2024, our principal properties include the following:Our owned corporate headquarters located in Corona, California, consist of (i) a free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) a three-story parking structure and storage facility, which houses our quality control laboratory, (iii) a free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) a free-standing, single-story building and (v) a free-standing, two-story building.Our owned Southern California warehouse and distribution center is located in Rialto, California, which is LEED certified.During 2023, we acquired a beverage production facility in Phoenix, Arizona, to manufacture certain of our energy drink products.During 2022, we acquired certain real property and equipment in Norwalk, California. We utilize the property as a manufacturing facility for certain of our products. Manufacturing commenced in January 2024.During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom.During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. In January 2024, we acquired additional land adjoining the property to support continued development of the manufacturing site.During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location.In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations.​ITEM 3.LEGAL PROCEEDINGSFrom time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations.The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 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 consolidated balance sheet.​ITEM 4.MINE SAFETY DISCLOSURESNot applicable.​42 Table of Contents Table of Contents Table of Contents ITEM 2.PROPERTIESAs of February 15, 2024, our principal properties include the following:Our owned corporate headquarters located in Corona, California, consist of (i) a free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) a three-story parking structure and storage facility, which houses our quality control laboratory, (iii) a free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) a free-standing, single-story building and (v) a free-standing, two-story building.Our owned Southern California warehouse and distribution center is located in Rialto, California, which is LEED certified.During 2023, we acquired a beverage production facility in Phoenix, Arizona, to manufacture certain of our energy drink products.During 2022, we acquired certain real property and equipment in Norwalk, California. We utilize the property as a manufacturing facility for certain of our products. Manufacturing commenced in January 2024.During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom.During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. In January 2024, we acquired additional land adjoining the property to support continued development of the manufacturing site.During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location.In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations.​ITEM 3.LEGAL PROCEEDINGSFrom time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations.The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 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 consolidated balance sheet.​ITEM 4.MINE SAFETY DISCLOSURESNot applicable.​ ITEM 2.PROPERTIES As of February 15, 2024, our principal properties include the following: Our owned corporate headquarters located in Corona, California, consist of (i) a free-standing, six-story building (LEED Gold and ENERGY STAR certified), (ii) a three-story parking structure and storage facility, which houses our quality control laboratory, (iii) a free-standing, three-story building (currently pursuing ENERGY STAR certification), (iv) a free-standing, single-story building and (v) a free-standing, two-story building. Our owned Southern California warehouse and distribution center is located in Rialto, California, which is LEED certified. During 2023, we acquired a beverage production facility in Phoenix, Arizona, to manufacture certain of our energy drink products. During 2022, we acquired certain real property and equipment in Norwalk, California. We utilize the property as a manufacturing facility for certain of our products. Manufacturing commenced in January 2024. During 2020, we purchased a three-story office building located in Uxbridge, United Kingdom. During 2019, we acquired a manufacturing plant and adjoining land in Athy, County Kildare, Ireland to produce and supply ingredients, including flavors, for certain of our international markets. In January 2024, we acquired additional land adjoining the property to support continued development of the manufacturing site. During 2019, we purchased approximately 7.66 acres of land in San Fernando, California. We are in the process of constructing a new production facility thereon to consolidate AFF's operations into a single location. In addition, we lease many smaller office and/or warehouse/manufacturing spaces, both domestically and in certain international locations. ​ ITEM 3.LEGAL PROCEEDINGS From time to time in the normal course of business, the Company is named in litigation, including labor and employment matters, personal injury matters, consumer class actions, intellectual property matters and claims from prior distributors. Although it is not possible to predict the ultimate outcome of such litigation, based on the facts known to the Company, management believes that such litigation in aggregate will likely not have a material adverse effect on the Company's financial position or results of operations. The Company evaluates, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that is accrued, if any, and any related insurance reimbursements. As of December 31, 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 consolidated balance sheet. ​ ITEM 4.MINE SAFETY DISCLOSURES Not applicable. ​ 42 42 Table of ContentsPART IIITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESPrincipal MarketThe Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 15, 2024, there were 1,040,636,235 shares of the Company's common stock outstanding held by approximately 189 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions.Stock Price and Dividend InformationWe have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future.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 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. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2023.43 Table of Contents Table of Contents Table of Contents PART IIITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIESPrincipal MarketThe Company's common stock trades on the Nasdaq Global Select Market under the symbol, "MNST". As of February 15, 2024, there were 1,040,636,235 shares of the Company's common stock outstanding held by approximately 189 holders of record. The holders of record do not include those stockholders whose shares are held of record by banks, brokers and other financial institutions.Stock Price and Dividend InformationWe have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future.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 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. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2023. PART II ITEM 5.MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES --- ## Modified: INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ Page MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES ​ ​ ​ Reports of Independent Registered Public Accounting Firms Reports of Independent Registered Public Accounting Firms 78 ​ ​ Consolidated Balance Sheets as of December 31, 2023 and 2022 Consolidated Balance Sheets as of December 31, 2023 and 2022 81 ​ ​ Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 82 ​ ​ Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 83 ​ ​ Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021 84 ​ ​ Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 85 ​ ​ Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 87 ​ ​ Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021 Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021 124 ​ ​ ​ 77 77 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Monster Beverage Corporation and SubsidiariesOpinion on the Financial StatementsWe 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")." - Reworded sentence: "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." - Reworded sentence: "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." - Reworded sentence: "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." - Reworded sentence: "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." **Prior (2023):** ​ ​ ​ ​ ​ Page MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES ​ ​ ​ Report of Independent Registered Public Accounting Firm Report of Independent Registered Public Accounting Firm 78 ​ ​ Consolidated Balance Sheets as of December 31, 2022 and 2021 Consolidated Balance Sheets as of December 31, 2022 and 20 21 81 ​ ​ Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 202 0 82 ​ ​ Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2 020 83 ​ ​ Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 202 0 84 ​ ​ Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020 Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 202 0 85 ​ ​ Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 87 ​ ​ Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020 Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 202 0 125 ​ ​ ​ 77 77 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM​To the Board of Directors and Stockholders ofMonster Beverage CorporationCorona, California​Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Monster Beverage Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MatterThe 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.78 Table of Contents Table of Contents Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM​To the Board of Directors and Stockholders ofMonster Beverage CorporationCorona, California​Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Monster Beverage Corporation and subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows, for each of the three years in the period ended December 31, 2022, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 1, 2023, expressed an unqualified opinion on the Company's internal control over financial reporting.Basis for OpinionThese financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.Critical Audit MatterThe 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. **Current (2024):** ​ ​ ​ ​ ​ Page MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES ​ ​ ​ Reports of Independent Registered Public Accounting Firms Reports of Independent Registered Public Accounting Firms 78 ​ ​ Consolidated Balance Sheets as of December 31, 2023 and 2022 Consolidated Balance Sheets as of December 31, 2023 and 2022 81 ​ ​ Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 2021 82 ​ ​ Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021 83 ​ ​ Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 2021 84 ​ ​ Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 2021 85 ​ ​ Notes to Consolidated Financial Statements Notes to Consolidated Financial Statements 87 ​ ​ Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021 Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021 124 ​ ​ ​ 77 77 Table of ContentsReport of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Monster Beverage Corporation and SubsidiariesOpinion on the Financial StatementsWe 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 OpinionThese 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 MatterThe 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. 78 Table of Contents Table of Contents Table of Contents Report of Independent Registered Public Accounting FirmTo the Stockholders and the Board of Directors of Monster Beverage Corporation and SubsidiariesOpinion on the Financial StatementsWe 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 OpinionThese 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 MatterThe 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. --- ## Modified: Performance Graph **Key changes:** - Reworded sentence: "Cumulative total return assumes an initial investment of $100 on December 31, 2018." - Reworded sentence: "MD&A includes the following sections:●Bang Energy Acquisition - a discussion of our acquisition of Bang Energy on July 31, 2023;●Pricing Actions - a discussion of certain pricing actions implemented during 2022 and 2023;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2023 and 2022;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management." - Reworded sentence: "MD&A includes the following sections:●Bang Energy Acquisition - a discussion of our acquisition of Bang Energy on July 31, 2023;●Pricing Actions - a discussion of certain pricing actions implemented during 2022 and 2023;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2023 and 2022;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management." **Prior (2023):** The following graph shows a five-year comparison of cumulative total returns:1 ​ ​ 1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2017. The Company's current self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc. The Company's former self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), National Beverage Corporation, Jones Soda Company and PepsiCo, Inc. The Company removed National Beverage Corporation and Jones Soda Company from its peer group and added Constellation Brands, Inc. and Molson Coors Beverage Company to its peer group, as such latter companies have higher market capitalizations and because the Company has recently entered the alcohol beverage industry. 43 43 Table of ContentsITEM 6.[RESERVED]​ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors."This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections:●CANarchy Acquisition - a discussion of our acquisition of CANarchy on February 17, 2022;●Russia-Ukraine Conflict - a discussion of the impact of the Russia-Ukraine conflict on our business and operations;●The COVID-19 Pandemic - a discussion of the impact of the COVID-19 pandemic on our business and operations;●Pricing Actions - a discussion of certain pricing actions implemented during 2022;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2022 and 2021;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management. (See "Forward-Looking Statements" and "Part II, Item 7A - Qualitative and Quantitative Disclosures about Market Risks").CANarchy AcquisitionOn February 17, 2022, we completed the CANarchy Transaction. The CANarchy Transaction facilitates our entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, and the Wasatch® family of brands including Apricot Hefeweizen to our beverage portfolio. The CANarchy Transaction did not include CANarchy's stand-alone restaurants. Our organizational structure for our existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team.​44 Table of Contents Table of Contents Table of Contents ITEM 6.[RESERVED]​ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors."This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections:●CANarchy Acquisition - a discussion of our acquisition of CANarchy on February 17, 2022;●Russia-Ukraine Conflict - a discussion of the impact of the Russia-Ukraine conflict on our business and operations;●The COVID-19 Pandemic - a discussion of the impact of the COVID-19 pandemic on our business and operations;●Pricing Actions - a discussion of certain pricing actions implemented during 2022;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2022 and 2021;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management. (See "Forward-Looking Statements" and "Part II, Item 7A - Qualitative and Quantitative Disclosures about Market Risks").CANarchy AcquisitionOn February 17, 2022, we completed the CANarchy Transaction. The CANarchy Transaction facilitates our entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, and the Wasatch® family of brands including Apricot Hefeweizen to our beverage portfolio. The CANarchy Transaction did not include CANarchy's stand-alone restaurants. Our organizational structure for our existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team.​ ITEM 6.[RESERVED] ​ ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors." This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections: **Current (2024):** The following graph shows a five-year comparison of cumulative total returns:1 ​ ​ 1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2018. The Company's self-selected peer group is comprised of TCCC, Keurig Dr. Pepper Inc., Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc. ITEM 6.[RESERVED] ​ 44 44 Table of ContentsITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors."This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections:●Bang Energy Acquisition - a discussion of our acquisition of Bang Energy on July 31, 2023;●Pricing Actions - a discussion of certain pricing actions implemented during 2022 and 2023;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2023 and 2022;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management. (See "Forward-Looking Statements" and "Part II, Item 7A - Qualitative and Quantitative Disclosures about Market Risks").Bang Energy AcquisitionOn July 31, 2023, we completed the Bang Transaction. The acquired assets primarily include the Bang Energy® drink business and a beverage production facility in Phoenix, AZ.​Pricing ActionsWe implemented pricing actions including (i) price increases effective April 1, 2022 (limited pack sizes), September 1, 2022 and April 1, 2023 (limited pack sizes) in the United States, (ii) price increases at various times in certain international markets during 2022 and 2023 and (iii) decreased promotional allowances as a percentage of net sales in certain markets during 2022 and 2023 (collectively, the "Pricing Actions"). The Pricing Actions positively impacted gross profit margins in 2023.45 Table of Contents Table of Contents Table of Contents ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONSThe following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors."This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections:●Bang Energy Acquisition - a discussion of our acquisition of Bang Energy on July 31, 2023;●Pricing Actions - a discussion of certain pricing actions implemented during 2022 and 2023;●Our Business - a general description of our business, the value drivers of our business, and opportunities and risks facing our Company, stock repurchases, acquisitions and divestitures;●Results of Operations - an analysis of our consolidated results of operations for the years ended December 31, 2023 and 2022;●Sales - details of our sales measured on a quarterly basis in both dollars and cases;●Inflation - information about the impact that inflation may or may not have on our results;●Liquidity and Capital Resources - an analysis of our cash flows, sources and uses of cash and contractual obligations;●Accounting Policies and Pronouncements - a discussion of accounting policies that require critical judgments and estimates including newly issued accounting pronouncements;●Forward-Looking Statements - cautionary information about forward-looking statements and a description of certain risks and uncertainties that could cause our actual results to differ materially from the Company's historical results or our current expectations or projections; and●Market Risks - information about market risks and risk management. (See "Forward-Looking Statements" and "Part II, Item 7A - Qualitative and Quantitative Disclosures about Market Risks").Bang Energy AcquisitionOn July 31, 2023, we completed the Bang Transaction. The acquired assets primarily include the Bang Energy® drink business and a beverage production facility in Phoenix, AZ.​Pricing ActionsWe implemented pricing actions including (i) price increases effective April 1, 2022 (limited pack sizes), September 1, 2022 and April 1, 2023 (limited pack sizes) in the United States, (ii) price increases at various times in certain international markets during 2022 and 2023 and (iii) decreased promotional allowances as a percentage of net sales in certain markets during 2022 and 2023 (collectively, the "Pricing Actions"). The Pricing Actions positively impacted gross profit margins in 2023. ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is provided as a supplement to - and should be read in conjunction with - our financial statements and the accompanying notes ("Notes") included in Part II, Item 8 of this Form 10-K. This discussion contains forward-looking statements that are based on management's current expectations, estimates and projections about our business and operations. Our actual results may differ materially from those currently anticipated and expressed in such forward-looking statements. See "Forward-Looking Statements" and "Part I, Item 1A - Risk Factors." This overview provides our perspective on the individual sections of MD&A. MD&A includes the following sections: --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Hop Rising®, The Beast Unleashed® and Nasty BeastTM Hard Tea to be its core trademarks." - Reworded sentence: "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"." - Reworded sentence: "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." - Reworded sentence: "Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option." - Reworded sentence: "Leases are classified as either finance leases or operating leases based on criteria in FASB ASC 842, "Leases"." **Prior (2023):** ​ ​​​​​​​​​​​​​​​​​​Year Ended December 31, 2020​ ​​ ​​ ​​ Latin ​​​​​​​​​​​​​America​ ​​​U.S. and​​​​​​​and​ ​Net Sales​Canada​EMEA1​Asia Pacific​Caribbean​TotalMonster Energy® Drinks​$ 3,020,667​$ 675,045​$ 400,317​$ 209,217​$ 4,305,246Strategic Brands​​ 166,861​​ 70,782​​ 23,475​​ 5,236​​ 266,354Other​​ 27,038​​ - ​​ - ​​ - ​​ 27,038Total Net Sales​$ 3,214,566​$ 745,827​$ 423,792​$ 214,453​$ 4,598,638​1Europe, Middle East and Africa ("EMEA")2Effectively from February 17, 2022 to December 31, 2022Contract LiabilitiesAmounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2022 and 2021, the Company had $267.1 million and $285.8 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2022, 2021 and 2020, $40.0 million, $41.5 million and $42.1 million, respectively, of deferred revenue, was recognized in net sales. See Note 11.​4. LEASESThe Company leases identified assets comprised of real estate and equipment. Real estate leases consist primarily of office and warehouse space and equipment leases consist of vehicles and warehouse equipment. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company's assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component's relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately.Leases are classified as either finance leases or operating leases based on criteria in ASC 842, "Leases". The Company's operating leases are comprised of real estate and warehouse equipment, and the Company's finance leases are comprised of vehicles. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company's leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.Certain of the Company's real estate leases contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at the lease ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2020 ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ America ​ ​ ​ ​ U.S. and ​ ​ ​ ​ ​ ​ ​ and ​ ​ Net Sales ​ Canada ​ EMEA1 ​ Asia Pacific ​ Caribbean ​ Total Monster Energy® Drinks ​ $ 3,020,667 ​ $ 675,045 ​ $ 400,317 ​ $ 209,217 ​ $ 4,305,246 Strategic Brands ​ ​ 166,861 ​ ​ 70,782 ​ ​ 23,475 ​ ​ 5,236 ​ ​ 266,354 Other ​ ​ 27,038 ​ ​ - ​ ​ - ​ ​ - ​ ​ 27,038 Total Net Sales ​ $ 3,214,566 ​ $ 745,827 ​ $ 423,792 ​ $ 214,453 ​ $ 4,598,638 ​ 1Europe, Middle East and Africa ("EMEA") 2Effectively from February 17, 2022 to December 31, 2022 Contract Liabilities Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2022 and 2021, the Company had $267.1 million and $285.8 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2022, 2021 and 2020, $40.0 million, $41.5 million and $42.1 million, respectively, of deferred revenue, was recognized in net sales. See Note 11. ​ 4. LEASES The Company leases identified assets comprised of real estate and equipment. Real estate leases consist primarily of office and warehouse space and equipment leases consist of vehicles and warehouse equipment. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company's assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component's relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately. Leases are classified as either finance leases or operating leases based on criteria in ASC 842, "Leases". The Company's operating leases are comprised of real estate and warehouse equipment, and the Company's finance leases are comprised of vehicles. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company's leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Certain of the Company's real estate leases contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at the lease 97 97 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​commencement date. Additional payments based on the change in an index or rate, or payments based on a change in the Company's portion of real estate taxes and insurance, are recorded as a period expense when incurred. Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statement of income. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset's estimated useful life and is included in operating expenses in the consolidated statement of income. Interest expense on finance leases is calculated using the amortized cost basis and is included in other (expense) income, net in the consolidated statement of income. The Company's leases have remaining lease terms of less than one year to 11 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less. The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows:​​​​​​​​​​​​ 2022 2021 2020Operating lease cost $ 8,641​$ 4,614 $ 4,637​​​​​​​​​​Short-term lease cost​​ 3,705​ 5,218​ 3,408​​​​​​​​​​Variable lease cost​​ 773​ 710​ 719​​​​​​​​​​Finance leases:​​​​ ​​ ​Amortization of ROU assets​​ 545​ 546​ 626Interest on lease liabilities​​ 24​ 19​ 39Finance lease cost​​ 569​ 565​ 665​​​​​​​​​​Total lease cost​$ 13,688​$ 11,107​$ 9,429​Supplemental cash flow information for the years ended December 31, 2022, 2021 and 2020 were as follows:​​​​​​​​​​​​ 2022 2021 2020Cash paid for amounts included in the measurement of lease liabilities:​​ ​​ ​​ Operating cash flows from operating leases​$ 8,164​$ 4,123​$ 3,982Operating cash flows from finance leases​ 24​ 19​ 39Financing cash flows from finance leases​ 2,091​ 2,698​ 3,086​​​​​​​​​​ROU assets obtained in exchange for lease obligations:​ ​​ ​​ ​Finance leases​ 1,897​ 2,878​ 2,417Operating leases​ 22,962​ 4,313​ 3,003​98 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Hop Rising®, The Beast Unleashed® and Nasty BeastTM 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. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated 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. Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Hop Rising®, The Beast Unleashed® and Nasty BeastTM 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. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated 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. 90 90 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 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 outstanding as of December 31, 2023 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in 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.Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-91 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands) **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 Adjustments to reconcile net income to ​ ​ ​ ​ ​ ​ ​ ​ ​ net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 68,898 ​ 61,241 ​ 50,155 Non-cash lease expense ​ ​ 9,043 ​ ​ 7,337 ​ ​ 4,107 Loss (gain) on disposal of property and equipment ​ 166 ​ ​ (185) ​ ​ (1,013) Gain on Bang Transaction ​ ​ (45,382) ​ ​ - ​ ​ - Loss on impairment of intangibles ​ ​ 38,700 ​ ​ 2,200 ​ ​ - Loss on impairment of property and equipment ​ ​ 4,336 ​ ​ - ​ ​ - Stock-based compensation ​ 68,836 ​ 64,109 ​ 70,483 Deferred income taxes ​ 2,040 ​ ​ 48,182 ​ ​ 16,429 Effect on cash of changes in operating assets and liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ net of acquisitions: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ (163,158) ​ (128,981) ​ (254,228) Inventories ​ 7,898 ​ (347,712) ​ (277,793) Prepaid expenses and other assets ​ (10,215) ​ (38,268) ​ (29,341) Prepaid income taxes ​ (18,833) ​ (4,439) ​ (10,919) Accounts payable ​ 112,786 ​ 49,765 ​ 114,297 Accrued liabilities ​ (10,393) ​ (30,419) ​ 71,586 Accrued promotional allowances ​ 8,418 ​ 50,821 ​ 31,498 Accrued compensation ​ 13,398 ​ 3,729 ​ 7,950 Income taxes payable ​ 1,748 ​ (16,860) ​ 7,221 Other liabilities ​ ​ 22,951 ​ ​ (4,540) ​ ​ 492 Deferred revenue ​ (24,472) ​ (19,905) ​ (22,658) Net cash provided by operating activities ​ 1,717,753 ​ 887,699 ​ 1,155,741 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales of available-for-sale investments ​ 2,029,737 ​ 2,252,355 ​ 1,488,599 Purchases of available-for-sale investments ​ ​ (1,620,718) ​ ​ (1,847,067) ​ ​ (2,413,143) Acquisition of Bang Energy ​ ​ (363,385) ​ ​ - ​ ​ - Acquisition of CANarchy, net of cash ​ - ​ (329,472) ​ - Purchases of property and equipment ​ (221,428) ​ (188,726) ​ (43,868) Proceeds from sale of property and equipment ​ 2,520 ​ 1,313 ​ 1,328 Additions to intangibles ​ (13,296) ​ (23,427) ​ (13,585) Increase in other assets ​ (6,825) ​ (26,343) ​ (11,353) Net cash used in investing activities ​ (193,395) ​ (161,367) ​ (992,022) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ (Payments) borrowings on debt ​ (13,914) ​ 75 ​ 2,928 Issuance of common stock ​ 130,267 ​ 64,015 ​ 45,723 Purchases of common stock held in treasury ​ (658,952) ​ (771,028) ​ (13,830) Net cash (used in) provided by financing activities ​ (542,599) ​ (706,938) ​ 34,821 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ 8,775 ​ (38,715) ​ (52,491) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ​ 990,534 ​ (19,321) ​ 146,049 CASH AND CASH EQUIVALENTS, beginning of year ​ 1,307,141 ​ 1,326,462 ​ 1,180,413 CASH AND CASH EQUIVALENTS, end of year ​ $ 2,297,675 ​ $ 1,307,141 ​ $ 1,326,462 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL INFORMATION: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the year for: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 363 ​ $ 431 ​ $ 134 Income taxes ​ $ 423,224 ​ $ 379,998 ​ $ 420,521 ​ See accompanying notes to consolidated financial statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,191,624 ​ $ 1,377,475 ​ $ 1,409,594 Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 61,241 ​ 50,155 ​ 57,030 Non-cash lease expense ​ ​ 7,337 ​ ​ 4,107 ​ ​ 3,943 Gain on disposal of property and equipment ​ (185) ​ ​ (1,013) ​ ​ (350) Loss on impairment of intangibles ​ ​ 2,200 ​ ​ - ​ ​ 8,700 Stock-based compensation ​ 64,109 ​ 70,483 ​ 70,289 Deferred income taxes ​ 48,182 ​ ​ 16,429 ​ ​ (156,873) Effect on cash of changes in operating assets and liabilities net of acquisition: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ (128,981) ​ (254,228) ​ (119,672) Inventories ​ (347,712) ​ (277,793) ​ 30,304 Prepaid expenses and other assets ​ (38,268) ​ (29,341) ​ 1,024 Prepaid income taxes ​ (4,439) ​ (10,919) ​ 5,516 Accounts payable ​ 49,765 ​ 114,297 ​ 18,696 Accrued liabilities ​ (30,419) ​ 71,586 ​ 26,113 Accrued promotional allowances ​ 50,821 ​ 31,498 ​ 13,762 Accrued compensation ​ 3,729 ​ 7,950 ​ 7,501 Income taxes payable ​ (16,860) ​ 7,221 ​ 10,422 Other liabilities ​ ​ (4,540) ​ ​ 492 ​ ​ (356) Deferred revenue ​ (19,905) ​ (22,658) ​ (21,480) Net cash provided by operating activities ​ 887,699 ​ 1,155,741 ​ 1,364,163 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales of available-for-sale investments ​ 2,252,355 ​ 1,488,599 ​ 920,196 Purchases of available-for-sale investments ​ ​ (1,847,067) ​ ​ (2,413,143) ​ ​ (1,299,981) Acquisition of CANarchy, net of cash ​ (329,472) ​ - ​ - Purchases of property and equipment ​ (188,726) ​ (43,868) ​ (48,722) Proceeds from sale of property and equipment ​ 1,313 ​ 1,328 ​ 993 Additions to intangibles ​ (23,427) ​ (13,585) ​ (18,550) Increase in other assets ​ (26,343) ​ (11,353) ​ (26,423) Net cash used in investing activities ​ (161,367) ​ (992,022) ​ (472,487) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Borrowings (payments) on debt ​ 75 ​ 2,928 ​ (3,086) Issuance of common stock ​ 64,015 ​ 45,723 ​ 72,936 Purchases of common stock held in treasury ​ (771,028) ​ (13,830) ​ (595,918) Net cash (used in) provided by financing activities ​ (706,938) ​ 34,821 ​ (526,068) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ (38,715) ​ (52,491) ​ 16,848 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS ​ (19,321) ​ 146,049 ​ 382,456 CASH AND CASH EQUIVALENTS, beginning of year ​ 1,326,462 ​ 1,180,413 ​ 797,957 CASH AND CASH EQUIVALENTS, end of year ​ $ 1,307,141 ​ $ 1,326,462 ​ $ 1,180,413 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL INFORMATION: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the year for: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 431 ​ $ 134 ​ $ 44 Income taxes ​ $ 379,998 ​ $ 420,521 ​ $ 355,509 ​ See accompanying notes to consolidated financial statements. ​ 85 85 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020​SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS:​Included in accrued liabilities as of December 31, 2022, 2021 and 2020 were $9.4 million, $14.0 million and $9.8 million, respectively, related to net additions to other intangible assets.Accounts payable included equipment purchases of $2.9 million, $0.6 million and $0.6 million as of December 31, 2022, 2021 and 2020, respectively.Accounts receivable included sales of available-for-sale short-term investments of $15.2 million as of December 31, 2022. No sales of available-for-sale investments were included in accounts receivable as of December 31, 2021 and 2020.See accompanying notes to consolidated financial statements.​​86 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020​SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS:​Included in accrued liabilities as of December 31, 2022, 2021 and 2020 were $9.4 million, $14.0 million and $9.8 million, respectively, related to net additions to other intangible assets.Accounts payable included equipment purchases of $2.9 million, $0.6 million and $0.6 million as of December 31, 2022, 2021 and 2020, respectively.Accounts receivable included sales of available-for-sale short-term investments of $15.2 million as of December 31, 2022. No sales of available-for-sale investments were included in accounts receivable as of December 31, 2021 and 2020.See accompanying notes to consolidated financial statements.​​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 CASH FLOWS FROM OPERATING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 Adjustments to reconcile net income to ​ ​ ​ ​ ​ ​ ​ ​ ​ net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 68,898 ​ 61,241 ​ 50,155 Non-cash lease expense ​ ​ 9,043 ​ ​ 7,337 ​ ​ 4,107 Loss (gain) on disposal of property and equipment ​ 166 ​ ​ (185) ​ ​ (1,013) Gain on Bang Transaction ​ ​ (45,382) ​ ​ - ​ ​ - Loss on impairment of intangibles ​ ​ 38,700 ​ ​ 2,200 ​ ​ - Loss on impairment of property and equipment ​ ​ 4,336 ​ ​ - ​ ​ - Stock-based compensation ​ 68,836 ​ 64,109 ​ 70,483 Deferred income taxes ​ 2,040 ​ ​ 48,182 ​ ​ 16,429 Effect on cash of changes in operating assets and liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ net of acquisitions: ​ ​ ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ (163,158) ​ (128,981) ​ (254,228) Inventories ​ 7,898 ​ (347,712) ​ (277,793) Prepaid expenses and other assets ​ (10,215) ​ (38,268) ​ (29,341) Prepaid income taxes ​ (18,833) ​ (4,439) ​ (10,919) Accounts payable ​ 112,786 ​ 49,765 ​ 114,297 Accrued liabilities ​ (10,393) ​ (30,419) ​ 71,586 Accrued promotional allowances ​ 8,418 ​ 50,821 ​ 31,498 Accrued compensation ​ 13,398 ​ 3,729 ​ 7,950 Income taxes payable ​ 1,748 ​ (16,860) ​ 7,221 Other liabilities ​ ​ 22,951 ​ ​ (4,540) ​ ​ 492 Deferred revenue ​ (24,472) ​ (19,905) ​ (22,658) Net cash provided by operating activities ​ 1,717,753 ​ 887,699 ​ 1,155,741 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM INVESTING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ Sales of available-for-sale investments ​ 2,029,737 ​ 2,252,355 ​ 1,488,599 Purchases of available-for-sale investments ​ ​ (1,620,718) ​ ​ (1,847,067) ​ ​ (2,413,143) Acquisition of Bang Energy ​ ​ (363,385) ​ ​ - ​ ​ - Acquisition of CANarchy, net of cash ​ - ​ (329,472) ​ - Purchases of property and equipment ​ (221,428) ​ (188,726) ​ (43,868) Proceeds from sale of property and equipment ​ 2,520 ​ 1,313 ​ 1,328 Additions to intangibles ​ (13,296) ​ (23,427) ​ (13,585) Increase in other assets ​ (6,825) ​ (26,343) ​ (11,353) Net cash used in investing activities ​ (193,395) ​ (161,367) ​ (992,022) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ CASH FLOWS FROM FINANCING ACTIVITIES: ​ ​ ​ ​ ​ ​ ​ ​ ​ (Payments) borrowings on debt ​ (13,914) ​ 75 ​ 2,928 Issuance of common stock ​ 130,267 ​ 64,015 ​ 45,723 Purchases of common stock held in treasury ​ (658,952) ​ (771,028) ​ (13,830) Net cash (used in) provided by financing activities ​ (542,599) ​ (706,938) ​ 34,821 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash and cash equivalents ​ 8,775 ​ (38,715) ​ (52,491) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS ​ 990,534 ​ (19,321) ​ 146,049 CASH AND CASH EQUIVALENTS, beginning of year ​ 1,307,141 ​ 1,326,462 ​ 1,180,413 CASH AND CASH EQUIVALENTS, end of year ​ $ 2,297,675 ​ $ 1,307,141 ​ $ 1,326,462 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ SUPPLEMENTAL INFORMATION: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid during the year for: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest ​ $ 363 ​ $ 431 ​ $ 134 Income taxes ​ $ 423,224 ​ $ 379,998 ​ $ 420,521 ​ See accompanying notes to consolidated financial statements. ​ 85 85 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021​SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS:​Included in accrued liabilities as of December 31, 2023, 2022 and 2021 were $15.4 million, $9.4 million and $14.0 million, respectively, related to net additions to other intangible assets.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 $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.​​86 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021​SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS:​Included in accrued liabilities as of December 31, 2023, 2022 and 2021 were $15.4 million, $9.4 million and $14.0 million, respectively, related to net additions to other intangible assets.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 $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.​​ --- ## Modified: The following table summarizes the final fair value allocations of the Bang Transaction: **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identifiable ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ Acquired and ​ ​ ​ ​ ​ (Liabilities) ​ ​ Consideration ​ Assumed Transferred Intangibles - trademarks (non-amortizing) ​ $ 209,000 ​ $ - Intangibles - customer relationships (amortizing) ​ 23,000 ​ - Property and equipment, net ​ 143,200 ​ - Inventory ​ 30,496 ​ - Right-of-use assets ​ 12,523 ​ - Operating lease liabilities ​ (12,523) ​ - Working capital (excluding inventory) ​ 2,871 ​ - Other ​ 200 ​ - Cash ​ - ​ 363,385 Bang Transaction Gain ​ - ​ 45,382 Total ​ $ 408,767 ​ $ 408,767 ​ 94 94 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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 transferredThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.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​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")." - Reworded sentence: "Such bottlers generally combine the concentrates 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents" **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identifiable ​ ​ ​ ​ ​ Assets Acquired ​ ​ ​ ​ ​ and Liabilities ​ ​ Consideration ​ Assumed Transferred Intangibles - trademarks (non-amortizing) ​ $ 89,500 ​ $ - Intangibles - customer relationships (amortizing) ​ 54,500 ​ - Intangibles - permits (non-amortizing) ​ 6,000 ​ - Property and equipment ​ 81,285 ​ - Inventory ​ 18,300 ​ - Right-of-use assets ​ 12,836 ​ - Operating lease liabilities ​ (12,836) ​ - Working capital (excluding inventory) ​ (5,640) ​ - Other ​ (770) ​ - Goodwill ​ 86,298 ​ - Cash ​ 3,248 ​ 332,721 Total ​ $ 332,721 ​ $ 332,721 ​ During the fourth quarter of 2022, the Company identified a measurement period adjustment to the Company's previous purchase accounting estimates for the CANarchy Transaction. The adjustments to the estimated values previously disclosed, resulted from the completed assessment of certain trademarks. As a result, Intangibles - trademarks (non-amortizing) decreased and Goodwill increased by $5.0 million, respectively, from amounts previously reported. increased 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 93 93 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​●Inventory - comparative sales method and replacement cost methodThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.The Company has determined goodwill in accordance with ASC 805, which requires the recognition of goodwill for the excess of the aggregate consideration over the net amounts of identifiable assets acquired and liabilities assumed as of the acquisition date.For tax purposes, the CANarchy Transaction was recorded as an asset purchase. As such, the Company received a step-up in tax basis of the CANarchy assets, net, equal to the purchase price.In accordance with Regulation S-X, pro forma unaudited condensed financial information for the CANarchy Transaction has not been provided as the impact of the transaction on the Company's financial position, results of operations and liquidity was not material.On May 5, 2022, the Company acquired certain real property and equipment in Norwalk, California for a purchase price of $62.5 million. The acquisition was treated as an asset acquisition for accounting purposes. The fair value allocations include $50.6 million for land, $10.0 million for building and $1.9 million for equipment. The Company intends to utilize the property as a manufacturing facility for certain of its products.​3. REVENUE RECOGNITIONRevenues are accounted for in accordance with ASC 606 "Revenue from Contracts with Consumers". The Company has four operating and reportable segments: (i) Monster Energy® Drinks segment ("Monster Energy® Drinks"), which is primarily comprised of the Company's Monster Energy® drinks, Reign Total Body Fuel® high performance energy drinks, Monster® Tour WaterTM and True North® Pure Energy Seltzers, (ii) Strategic Brands segment ("Strategic Brands"), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company ("TCCC") in 2015 as well as the Company's affordable energy brands, (iii) Alcohol Brands segment ("Alcohol Brands"), which is primarily comprised of the various craft beers and hard seltzers purchased as part of the CANarchy Transaction on February 17, 2022 as well as The Beast UnleashedTM FMBs and (iv) Other segment ("Other"), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the "AFF Third-Party Products").The Company's Monster Energy® Drinks segment primarily generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors ("bottlers/distributors"). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.The Company's Strategic Brands segment primarily generates net operating revenues by selling "concentrates" and/or "beverage bases" to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.94 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Identifiable ​ ​ ​ ​ ​ Assets ​ ​ ​ ​ ​ Acquired and ​ ​ ​ ​ ​ (Liabilities) ​ ​ Consideration ​ Assumed Transferred Intangibles - trademarks (non-amortizing) ​ $ 209,000 ​ $ - Intangibles - customer relationships (amortizing) ​ 23,000 ​ - Property and equipment, net ​ 143,200 ​ - Inventory ​ 30,496 ​ - Right-of-use assets ​ 12,523 ​ - Operating lease liabilities ​ (12,523) ​ - Working capital (excluding inventory) ​ 2,871 ​ - Other ​ 200 ​ - Cash ​ - ​ 363,385 Bang Transaction Gain ​ - ​ 45,382 Total ​ $ 408,767 ​ $ 408,767 ​ 94 94 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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 transferredThe book value of the working capital (excluding inventory) approximates fair value due to the short-term nature of the accounts.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​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 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.​3. REVENUE RECOGNITIONRevenues 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, 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 95 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Stock Price and Dividend Information **Key changes:** - Reworded sentence: "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")." - Reworded sentence: "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." - Reworded sentence: "Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2023." **Prior (2023):** We have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future. On March 13, 2020, 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 "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. On June 14, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "June 2022 Repurchase Plan"). During the year ended December 31, 2022, the Company purchased approximately 3.6 million shares of common stock at an average purchase price of $88.73 per share, for a total amount of approximately $317.2 million (excluding broker commissions), under the June 2022 Repurchase Plan. As of March 1, 2023, $182.8 million remained available for repurchase under the June 2022 Repurchase Plan. On November 2, 2022, the Company's Board of Directors authorized a share repurchase program for the purchase of up to an additional $500.0 million of the Company's outstanding common stock (the "November 2022 Repurchase Plan"). During the year ended December 31, 2022, no shares were repurchased under the November 2022 Repurchase Plan. As of March 1, 2023, $500.0 million remained available for repurchase under the November 2022 Repurchase Plan. The aggregate amount of the Company's outstanding common stock that remains available for repurchase under all previously authorized repurchase plans is $682.8 million as of March 1, 2023. During the year ended December 31, 2022, 0.2 million shares of common stock were purchased from employees in lieu of cash payments for options exercised or withholding taxes due for a total amount of $12.5 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2022. 42 42 Table of ContentsThe following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2022.​​​​​​​​​​​​​​​​​​​​​Maximum Number (or​​​​​​​​​Approximate Dollar​​​​​​​Total Number of​​Value) of Shares that​​​​​​​Shares Purchased​​May Yet Be Purchased​​Total Number​​​​as Part of Publicly​Under the Plans or​​of Shares​Average Price​Announced Plans​Programs (InPeriod Purchased per Share¹ or Programs thousands)²Oct 1 - Oct 31, 2022​ 2,263,063​$ 89.10​ 2,263,063​$ 182,837November 2, 2022 Authorization ​​​​​​​$ 500,000Nov 1 - Nov 30, 2022 - ​$ - - ​$ 682,837Dec 1 - Dec 31, 2022 - ​$ - - ​$ 682,837​¹Excluding broker commissions paid.²Net of broker commissions paid.Performance GraphThe following graph shows a five-year comparison of cumulative total returns:1​​1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2017. The Company's current self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc. The Company's former self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), National Beverage Corporation, Jones Soda Company and PepsiCo, Inc. The Company removed National Beverage Corporation and Jones Soda Company from its peer group and added Constellation Brands, Inc. and Molson Coors Beverage Company to its peer group, as such latter companies have higher market capitalizations and because the Company has recently entered the alcohol beverage industry.43 Table of Contents Table of Contents Table of Contents The following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2022.​​​​​​​​​​​​​​​​​​​​​Maximum Number (or​​​​​​​​​Approximate Dollar​​​​​​​Total Number of​​Value) of Shares that​​​​​​​Shares Purchased​​May Yet Be Purchased​​Total Number​​​​as Part of Publicly​Under the Plans or​​of Shares​Average Price​Announced Plans​Programs (InPeriod Purchased per Share¹ or Programs thousands)²Oct 1 - Oct 31, 2022​ 2,263,063​$ 89.10​ 2,263,063​$ 182,837November 2, 2022 Authorization ​​​​​​​$ 500,000Nov 1 - Nov 30, 2022 - ​$ - - ​$ 682,837Dec 1 - Dec 31, 2022 - ​$ - - ​$ 682,837​¹Excluding broker commissions paid.²Net of broker commissions paid.Performance GraphThe following graph shows a five-year comparison of cumulative total returns:1​​1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2017. The Company's current self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc. The Company's former self-selected peer group is comprised of TCCC, Dr. Pepper Snapple Group, Inc. (through July 9, 2018), Keurig Dr. Pepper Inc. (after July 10, 2018), National Beverage Corporation, Jones Soda Company and PepsiCo, Inc. The Company removed National Beverage Corporation and Jones Soda Company from its peer group and added Constellation Brands, Inc. and Molson Coors Beverage Company to its peer group, as such latter companies have higher market capitalizations and because the Company has recently entered the alcohol beverage industry. The following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2022. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value) of Shares that ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ May Yet Be Purchased ​ ​ Total Number ​ ​ ​ ​ as Part of Publicly ​ Under the Plans or ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Programs (In Period Purchased per Share¹ or Programs thousands)² Oct 1 - Oct 31, 2022 ​ 2,263,063 ​ $ 89.10 ​ 2,263,063 ​ $ 182,837 November 2, 2022 Authorization ​ ​ ​ ​ ​ ​ ​ $ 500,000 Nov 1 - Nov 30, 2022 - ​ $ - - ​ $ 682,837 Dec 1 - Dec 31, 2022 - ​ $ - - ​ $ 682,837 ​ ¹Excluding broker commissions paid. ²Net of broker commissions paid. **Current (2024):** We have not paid cash dividends to our stockholders since our inception and do not anticipate paying cash dividends in the foreseeable future. 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 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 $214.2 million. While such purchases are considered common stock repurchases, they are not counted as purchases against the Company's authorized share repurchase programs. Such shares are included in common stock in treasury in the accompanying consolidated balance sheet at December 31, 2023. 43 43 Table of ContentsThe following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2023.​​​​​​​​​​​​​​​​​​​​​Maximum Number (or​​​​​​​​​Approximate Dollar​​​​​​​Total Number of​​Value) of Shares that​​​​​​​Shares Purchased​​May Yet Be Purchased​​Total Number​​​​as Part of Publicly​Under the Plans or​​of Shares​Average Price​Announced Plans​Programs (InPeriod Purchased per Share¹ or Programs thousands)²Oct 1 - Oct 31, 2023​ - ​$ - ​ - ​$ 282,838November 7, 2023 Authorization ​​​​​​​$ 500,000Nov 1 - Nov 30, 2023 - ​$ - - ​$ 782,838Dec 1 - Dec 31, 2023 791,317​$ 54.57 791,317​$ 739,643​¹Excluding broker commissions paid.²Net of broker commissions paid.Performance GraphThe following graph shows a five-year comparison of cumulative total returns:1​​1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2018. The Company's self-selected peer group is comprised of TCCC, Keurig Dr. Pepper Inc., Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc.ITEM 6.[RESERVED]​44 Table of Contents Table of Contents Table of Contents The following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2023.​​​​​​​​​​​​​​​​​​​​​Maximum Number (or​​​​​​​​​Approximate Dollar​​​​​​​Total Number of​​Value) of Shares that​​​​​​​Shares Purchased​​May Yet Be Purchased​​Total Number​​​​as Part of Publicly​Under the Plans or​​of Shares​Average Price​Announced Plans​Programs (InPeriod Purchased per Share¹ or Programs thousands)²Oct 1 - Oct 31, 2023​ - ​$ - ​ - ​$ 282,838November 7, 2023 Authorization ​​​​​​​$ 500,000Nov 1 - Nov 30, 2023 - ​$ - - ​$ 782,838Dec 1 - Dec 31, 2023 791,317​$ 54.57 791,317​$ 739,643​¹Excluding broker commissions paid.²Net of broker commissions paid.Performance GraphThe following graph shows a five-year comparison of cumulative total returns:1​​1Annual return assumes reinvestment of dividends. Cumulative total return assumes an initial investment of $100 on December 31, 2018. The Company's self-selected peer group is comprised of TCCC, Keurig Dr. Pepper Inc., Constellation Brands, Inc., Molson Coors Beverage Company and PepsiCo, Inc.ITEM 6.[RESERVED]​ The following tabular summary reflects the Company's repurchase activity during the quarter ended December 31, 2023. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Maximum Number (or ​ ​ ​ ​ ​ ​ ​ ​ ​ Approximate Dollar ​ ​ ​ ​ ​ ​ ​ Total Number of ​ ​ Value) of Shares that ​ ​ ​ ​ ​ ​ ​ Shares Purchased ​ ​ May Yet Be Purchased ​ ​ Total Number ​ ​ ​ ​ as Part of Publicly ​ Under the Plans or ​ ​ of Shares ​ Average Price ​ Announced Plans ​ Programs (In Period Purchased per Share¹ or Programs thousands)² Oct 1 - Oct 31, 2023 ​ - ​ $ - ​ - ​ $ 282,838 November 7, 2023 Authorization ​ ​ ​ ​ ​ ​ ​ $ 500,000 Nov 1 - Nov 30, 2023 - ​ $ - - ​ $ 782,838 Dec 1 - Dec 31, 2023 791,317 ​ $ 54.57 791,317 ​ $ 739,643 ​ ¹Excluding broker commissions paid. ²Net of broker commissions paid. --- ## Modified: Provision for Income Taxes **Key changes:** - Reworded sentence: "Provision for income taxes was $437.5 million for the year ended December 31, 2023, an increase of $57.2 million, or 15.0% higher than the provision for income taxes of $380.3 million for the year ended December 31, 2022." **Prior (2023):** Provision for income taxes was $380.3 million for the year ended December 31, 2022, a decrease of $43.6 million, or 10.3% lower than the provision for income taxes of $423.9 million for the year ended December 31, 2021. The effective combined federal, state and foreign tax rate was 24.2% and 23.5% for the years ended December 31, 2022 and 2021, respectively. The increase in the effective tax rate was primarily attributable to the decrease in income in certain foreign jurisdictions with lower tax rates compared to the United States. Net Income Net income was $1.19 billion for the year ended December 31, 2022, a decrease of $185.9 million, or 13.5% lower than net income of $1.38 billion for the year ended December 31, 2021. The decrease in net income for the year ended December 31, 2022 was primarily due to the decrease in the gross profit percentage of net sales as well as the increase in operating expenses. **Current (2024):** Provision for income taxes was $437.5 million for the year ended December 31, 2023, an increase of $57.2 million, or 15.0% higher than the provision for income taxes of $380.3 million for the year ended December 31, 2022. The effective combined federal, state and foreign tax rate was 21.2% and 24.2% for the years ended December 31, 2023 and 2022, respectively. The decrease in the effective tax rate was primarily attributable to the increase in the stock compensation deduction for the year ended December 31, 2023. Net Income Net income was $1.63 billion for the year ended December 31, 2023, an increase of $439.4 million, or 36.9% higher than net income of $1.19 billion for the year ended December 31, 2022. The increase in net income for the year ended December 31, 2023 was primarily due to the increase in gross profit. --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ Property and Equipment - Property and equipment are stated at cost." - Reworded sentence: "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®, 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 BeastTM Hard Tea trademarks, all used in connection with the manufacture, sale and distribution of beverages." - Reworded sentence: "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." - Reworded sentence: "For the years ended December 31, 2023, 2022 and 2021 there were no goodwill impairments recorded and there are no accumulated impairment balances." - Reworded sentence: "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." **Prior (2023):** ​ tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2022, 2021 and 2020 there were no goodwill impairments recorded and there are no accumulated impairment balances.Other Intangibles - Other Intangibles are comprised primarily of trademarks that represent the Company's exclusive ownership of the Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Tea®, Unleash the Beast!®, Monster Rehab®, Java Monster®, Muscle Monster®, Espresso Monster®, Punch Monster®, Juice Monster®, Monster Hydro®, Monster HydroSport Super Fuel®, Monster Super Fuel®, Reign Total Body Fuel®, Reign Inferno®, Predator®, Fury®, True North®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale's Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Mama's Little Yella Pils®, Hop Rising® and The Beast UnleashedTM trademarks, all used in connection with the manufacture, sale and distribution of beverages. The Company also owns a number of other trademarks, flavors and formulas in the United States, as well as in a number of countries around the world. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the years ended December 31, 2022 and 2020, impairment charges of $2.2 million and $8.7 million, respectively, were recorded to indefinite-lived intangibles. For the year ended December 31, 2021, no impairments were recorded.We presently have more than 17,500 registered trademarks and pending applications in various countries worldwide, and we apply for new trademarks on an ongoing basis. We regard our trademarks, service marks, copyrights, domain names, trade dress and other intellectual property as very important to our business. We consider Monster®, Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Iced Tea®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Hydro® (stylized), Monster HydroSport Super Fuel®, Hydro Super Sport®, Monster Super Fuel®, Espresso Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, True North®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale's Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Mama's Little Yella Pils®, Hop Rising® and The Beast UnleashedTM to be our core trademarks. We also own the intellectual property of our most important flavors for certain of our Monster Energy® Brand energy drinks in perpetuity.Leases - See Note 4.Long-Lived Assets - Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 2022, 2021 and 2020 there were no goodwill impairments recorded and there are no accumulated impairment balances. Other Intangibles - Other Intangibles are comprised primarily of trademarks that represent the Company's exclusive ownership of the Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Tea®, Unleash the Beast!®, Monster Rehab®, Java Monster®, Muscle Monster®, Espresso Monster®, Punch Monster®, Juice Monster®, Monster Hydro®, Monster HydroSport Super Fuel®, Monster Super Fuel®, Reign Total Body Fuel®, Reign Inferno®, Predator®, Fury®, True North®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale's Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Mama's Little Yella Pils®, Hop Rising® and The Beast UnleashedTM trademarks, all used in connection with the manufacture, sale and distribution of beverages. The Company also owns a number of other trademarks, flavors and formulas in the United States, as well as in a number of countries around the world. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. For the years ended December 31, 2022 and 2020, impairment charges of $2.2 million and $8.7 million, respectively, were recorded to indefinite-lived intangibles. For the year ended December 31, 2021, no impairments were recorded. We presently have more than 17,500 registered trademarks and pending applications in various countries worldwide, and we apply for new trademarks on an ongoing basis. We regard our trademarks, service marks, copyrights, domain names, trade dress and other intellectual property as very important to our business. We consider Monster®, Monster Energy®, ®, Monster Energy Ultra®, Monster Dragon Iced Tea®, Unleash the Beast!®, Rehab® Monster®, Java Monster®, Muscle Monster®, Punch Monster®, Juice Monster®, Hydro® (stylized), Monster HydroSport Super Fuel®, Hydro Super Sport®, Monster Super Fuel®, Espresso Monster®, Monster Energy® Nitro, Reign Total Body Fuel®, Reign Inferno®, True North®, BU®, Nalu®, NOS®, Full Throttle®, Burn®, Mother®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, Predator®, Fury®, Live+®, BPM®, Gladiator®, Samurai®, Oskar Blues Brewery®, Cigar City®, Deep Ellum Brewing Co®, Perrin Brewing Company®, Squatters®, Wasatch®, Jai Alai®, Dale's Pale Ale®, Dallas Blonde®, Wild Basin®, Dale's®, Mama's Little Yella Pils®, Hop Rising® and The Beast UnleashedTM to be our core trademarks. We also own the intellectual property of our most important flavors for certain of our Monster Energy® Brand energy drinks in perpetuity. Leases - See Note 4. Long-Lived Assets - Management regularly reviews property and equipment and other long-lived assets, including certain definite-lived intangible assets, for possible impairment. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated 89 89 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​using the present value of the future cash flows discounted at a rate commensurate with management's estimates of the business risks. Preparation of estimated expected future cash flows is inherently subjective and is based on management's best estimate of assumptions concerning expected future conditions. For the years ended December 31, 2022, 2021 and 2020, there were no impairment indicators identified. Long-lived assets held for sale are recorded at the lower of their carrying amount or fair value less cost to sell.Foreign Currency Translation and Transactions - The accounts of the Company's foreign subsidiaries are translated in accordance with FASB ASC 830. Foreign currency transaction gains and losses are recognized in other expense, net, at the time they occur. Net foreign currency exchange gains or losses resulting from the translation of assets and liabilities of foreign subsidiaries whose functional currency is not the U.S. dollar are recorded as a part of accumulated other comprehensive income (loss) in stockholders' equity. Unrealized foreign currency exchange gains and losses on certain intercompany transactions that are of a long-term investment nature (i.e., settlement is not planned or anticipated in the foreseeable future) are also recorded in accumulated other comprehensive income (loss) in stockholders' equity. During the years ended December 31, 2022, 2021 and 2020, the Company entered into forward currency exchange contracts with financial institutions to create an economic hedge to specifically manage a portion of the foreign exchange risk exposure associated with certain consolidated subsidiaries non-functional currency denominated assets and liabilities. All foreign currency exchange contracts outstanding as of December 31, 2022 have terms of three months or less. The Company does not enter into forward currency exchange contracts for speculation or trading purposes.The Company has not designated its foreign currency exchange contracts as hedge transactions under FASB ASC 815. Therefore, gains and losses on the Company's foreign currency exchange contracts are recognized in other (expense) income, net, in the consolidated statements of income, and are largely offset by the changes in the fair value of the underlying economically hedged item. For the years ended December 31, 2022, 2021 and 2020, aggregate foreign currency transaction gains (losses), including the gains or losses on forward currency exchange contracts, amounted to ($37.9) million, $0.3 million and ($11.2) million, respectively, and have been recorded in other (expense) income, net, in the accompanying consolidated statements of income.Revenue Recognition - See Note 3.Cost of Sales - Cost of sales consists of the costs of flavors, concentrates, supplement ingredients and/or beverage bases, the costs of raw materials utilized in the manufacture of beverages, co-packing fees, repacking fees, in-bound freight charges, as well as internal transfer costs, warehouse expenses incurred prior to the manufacture of the Company's finished products and certain quality control costs. In addition, the Company includes in costs of sales certain costs such as depreciation, amortization and payroll costs that relate to the direct manufacture by the Company of certain flavors and concentrates. Raw materials account for the largest portion of cost of sales. Raw materials include cans, bottles, other containers, flavors, ingredients and packaging materials.Operating Expenses - Operating expenses include selling expenses such as distribution expenses to transport products to customers and warehousing expenses after manufacture, as well as expenses for advertising, sampling and in-store demonstration costs, costs for merchandise displays, point-of-sale materials and premium items, sponsorship expenses, other marketing expenses and design expenses. Operating expenses also include such costs as payroll costs, travel costs, professional service fees including legal fees, termination payments made to certain of the Company's prior distributors, depreciation and other general and administrative costs.Freight-Out Costs - For the years ended December 31, 2022, 2021 and 2020, freight-out costs amounted to $249.2 million, $213.9 million and $134.1 million, respectively, and have been recorded in operating expenses in the accompanying consolidated statements of income.90 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ Property and Equipment - Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, real property and vehicles is based on their estimated useful lives (three to thirty years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income.Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 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®, 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 BeastTM 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. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. 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.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 Property and Equipment - Property and equipment are stated at cost. Depreciation of furniture and fixtures, office and computer equipment, computer software, equipment, real property and vehicles is based on their estimated useful lives (three to thirty years) and is calculated using the straight-line method. Amortization of leasehold improvements is based on the lesser of their estimated useful lives or the terms of the related leases and is calculated using the straight-line method. Normal repairs and maintenance costs are expensed as incurred. Expenditures that materially increase values or extend useful lives are capitalized. The related costs and accumulated depreciation of disposed assets are eliminated and any resulting gain or loss on disposition is included in net income. three Goodwill - The Company records goodwill when the consideration paid for an acquisition exceeds the fair value of net tangible and intangible assets acquired, including related tax effects. Goodwill is not amortized; instead, goodwill is tested for impairment on an annual basis, or more frequently if the Company believes indicators of impairment exist. The Company first assesses qualitative factors to determine whether it is more-likely-than-not that the fair value of a reporting unit is less than its carrying value. If the Company reasonably determines that it is more-likely-than-not that the fair value is less than the carrying value, the Company performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. The Company will recognize an impairment for the amount by which the carrying amount exceeds a reporting unit's fair value. For the years ended December 31, 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®, 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 BeastTM 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. In accordance with FASB ASC 350, intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. The Company amortizes its trademarks with finite useful lives over their respective useful lives. 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. 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 89 89 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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 BeastTM 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. This review occurs annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset may not be recoverable. If there is indication of impairment, management then prepares an estimate of future cash flows (undiscounted and without interest charges) expected to result from the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment loss is recognized to write down the asset to its estimated fair value. The fair value is estimated 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.90 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Balance, December 31, 2021 **Key changes:** - Reworded sentence: "​ 1,280,086 ​ $ 6,400 ​ $ 4,649,420 ​ $ 7,809,549 ​ $ (69,165) ​ (221,440) ​ $ (5,829,253) ​ $ 6,566,951 Stock-based compensation - ​ ​ - ​ ​ 63,387 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 63,387 Stock options/awards 3,602 ​ ​ 18 ​ ​ 63,997 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 64,015 Unrealized gain (loss), net on available-for-sale securities - ​ ​ - ​ ​ - ​ ​ - ​ ​ (4,887) ​ - ​ ​ - ​ ​ (4,887) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (17,648) ​ ​ (771,028) ​ ​ (771,028) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ (85,021) ​ - ​ ​ - ​ ​ (85,021) Net income - ​ ​ - ​ ​ - ​ ​ 1,191,624 ​ ​ - ​ - ​ ​ - ​ ​ 1,191,624" **Prior (2023):** 640,043 $ 3,200 $ 4,652,620 $ 7,809,549 $ (69,165) ​ (110,720) $ (5,829,253) $ 6,566,951 Stock-based compensation ​ - ​ ​ - ​ ​ 63,387 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 63,387 Exercise of stock options ​ 1,801 ​ ​ 9 ​ ​ 64,006 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 64,015 Unrealized loss on available-for-sale securities ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ (4,887) ​ - ​ ​ - ​ ​ (4,887) Repurchase of common stock ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (8,824) ​ ​ (771,028) ​ ​ (771,028) Foreign currency translation ​ - ​ ​ - ​ ​ - ​ ​ - ​ ​ (85,021) ​ - ​ ​ - ​ ​ (85,021) Net income - ​ ​ - ​ ​ - ​ ​ 1,191,624 ​ ​ - ​ - ​ ​ - ​ ​ 1,191,624 **Current (2024):** ​ 1,280,086 ​ $ 6,400 ​ $ 4,649,420 ​ $ 7,809,549 ​ $ (69,165) ​ (221,440) ​ $ (5,829,253) ​ $ 6,566,951 Stock-based compensation - ​ ​ - ​ ​ 63,387 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 63,387 Stock options/awards 3,602 ​ ​ 18 ​ ​ 63,997 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 64,015 Unrealized gain (loss), net on available-for-sale securities - ​ ​ - ​ ​ - ​ ​ - ​ ​ (4,887) ​ - ​ ​ - ​ ​ (4,887) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (17,648) ​ ​ (771,028) ​ ​ (771,028) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ (85,021) ​ - ​ ​ - ​ ​ (85,021) Net income - ​ ​ - ​ ​ - ​ ​ 1,191,624 ​ ​ - ​ - ​ ​ - ​ ​ 1,191,624 --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ more of the arrangements described above and are of varying durations, typically ranging from one week to one year." - Reworded sentence: "Disaggregation of Revenue The following table disaggregates the Company's revenue by geographical markets and reportable segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asia Pacific ​ America ​ ​ ​ ​ ​ U.S." **Prior (2023):** ​ for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience.Disaggregation of RevenueThe following table disaggregates the Company's revenue by geographical markets and reportable segments:​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2022​​​​​​​​​​​Latin​​​​​​​​​​​​​​America​​​​​U.S. and​​​​​​​and​​​Net Sales Canada EMEA1 Asia Pacific Caribbean TotalMonster Energy® Drinks​$ 3,806,351​$ 1,105,302​$ 426,800​$ 494,758​$ 5,833,211Strategic Brands​ 184,844​ 123,440​ 29,386​ 15,820​ 353,490Alcohol Brands2​​ 101,405​​ - ​​ - ​​ - ​​ 101,405Other​ 22,944​ - ​ - ​ - ​ 22,944Total Net Sales​$ 4,115,544​$ 1,228,742​$ 456,186​$ 510,578​$ 6,311,050​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2021​​​​​​​​​​​Latin​​​​​​​​​​​​​​America​​​​​U.S. and​​​​​​​and​​​Net Sales Canada EMEA1 Asia Pacific Caribbean TotalMonster Energy® Drinks​$ 3,455,704​$ 1,004,005​$ 446,023​$ 314,941​$ 5,220,673Strategic Brands​ 158,390​ 99,423​ 26,811​ 10,138​ 294,762Other​ 25,917​ - ​ - ​ - ​ 25,917Total Net Sales​$ 3,640,011​$ 1,103,428​$ 472,834​$ 325,079​$ 5,541,352​ for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted. Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years. The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience. Disaggregation of Revenue The following table disaggregates the Company's revenue by geographical markets and reportable segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ America ​ ​ ​ ​ ​ U.S. and ​ ​ ​ ​ ​ ​ ​ and ​ ​ ​ Net Sales Canada EMEA1 Asia Pacific Caribbean Total Monster Energy® Drinks ​ $ 3,806,351 ​ $ 1,105,302 ​ $ 426,800 ​ $ 494,758 ​ $ 5,833,211 Strategic Brands ​ 184,844 ​ 123,440 ​ 29,386 ​ 15,820 ​ 353,490 Alcohol Brands2 ​ ​ 101,405 ​ ​ - ​ ​ - ​ ​ - ​ ​ 101,405 Other ​ 22,944 ​ - ​ - ​ - ​ 22,944 Total Net Sales ​ $ 4,115,544 ​ $ 1,228,742 ​ $ 456,186 ​ $ 510,578 ​ $ 6,311,050 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ America ​ ​ ​ ​ ​ U.S. and ​ ​ ​ ​ ​ ​ ​ and ​ ​ ​ Net Sales Canada EMEA1 Asia Pacific Caribbean Total Monster Energy® Drinks ​ $ 3,455,704 ​ $ 1,004,005 ​ $ 446,023 ​ $ 314,941 ​ $ 5,220,673 Strategic Brands ​ 158,390 ​ 99,423 ​ 26,811 ​ 10,138 ​ 294,762 Other ​ 25,917 ​ - ​ - ​ - ​ 25,917 Total Net Sales ​ $ 3,640,011 ​ $ 1,103,428 ​ $ 472,834 ​ $ 325,079 ​ $ 5,541,352 ​ 96 96 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2020​ ​​ ​​ ​​ Latin ​​​​​​​​​​​​​America​ ​​​U.S. and​​​​​​​and​ ​Net Sales​Canada​EMEA1​Asia Pacific​Caribbean​TotalMonster Energy® Drinks​$ 3,020,667​$ 675,045​$ 400,317​$ 209,217​$ 4,305,246Strategic Brands​​ 166,861​​ 70,782​​ 23,475​​ 5,236​​ 266,354Other​​ 27,038​​ - ​​ - ​​ - ​​ 27,038Total Net Sales​$ 3,214,566​$ 745,827​$ 423,792​$ 214,453​$ 4,598,638​1Europe, Middle East and Africa ("EMEA")2Effectively from February 17, 2022 to December 31, 2022Contract LiabilitiesAmounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2022 and 2021, the Company had $267.1 million and $285.8 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2022, 2021 and 2020, $40.0 million, $41.5 million and $42.1 million, respectively, of deferred revenue, was recognized in net sales. See Note 11.​4. LEASESThe Company leases identified assets comprised of real estate and equipment. Real estate leases consist primarily of office and warehouse space and equipment leases consist of vehicles and warehouse equipment. At the inception of a contract, the Company assesses whether the contract is, or contains, a lease. The Company's assessment is based on: (1) whether the contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic benefit from the use of the asset throughout the term, and (3) whether the Company has the right to direct the use of the asset. At inception of a lease, the Company allocates the consideration in the contract to each lease and non-lease component based on the component's relative stand-alone price to determine the lease payments. Lease and non-lease components are accounted for separately.Leases are classified as either finance leases or operating leases based on criteria in ASC 842, "Leases". The Company's operating leases are comprised of real estate and warehouse equipment, and the Company's finance leases are comprised of vehicles. Right-of-use ("ROU") assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. As the Company's leases generally do not provide an implicit rate, the Company uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. ROU assets also include any lease payments made and exclude lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.Certain of the Company's real estate leases contain variable lease payments, including payments based on an index or rate. Variable lease payments based on an index or rate are initially measured using the index or rate in effect at the lease 97 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ 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 for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted.Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience.Disaggregation of RevenueThe following table disaggregates the Company's revenue by geographical markets and reportable segments:​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2023​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 4,202,537​$ 1,257,471​$ 484,459​$ 610,622​$ 6,555,089Strategic Brands​ 199,183​ 133,188​ 29,990​ 14,228​ 376,589Alcohol Brands​​ 184,855​​ - ​​ - ​​ - ​​ 184,855Other​ 23,494​ - ​ - ​ - ​ 23,494Total Net Sales​$ 4,610,069​$ 1,390,659​$ 514,449​$ 624,850​$ 7,140,027​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2022​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 3,806,351​$ 1,105,302​$ 426,800​$ 494,758​$ 5,833,211Strategic Brands​ 184,844​ 123,440​ 29,386​ 15,820​ 353,490Alcohol Brands2​​ 101,405​​ - ​​ - ​​ - ​​ 101,405Other​ 22,944​ - ​ - ​ - ​ 22,944Total Net Sales​$ 4,115,544​$ 1,228,742​$ 456,186​$ 510,578​$ 6,311,050​ 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 for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined. Promotional and other allowances for our Alcohol Brands segment primarily include price promotions where permitted. Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company's prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years. The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company's trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels. Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company's historical experience. Disaggregation of Revenue The following table disaggregates the Company's revenue by geographical markets and reportable segments: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asia Pacific ​ America ​ ​ ​ ​ ​ U.S. and ​ ​ ​ ​ (including ​ and ​ ​ ​ Net Sales Canada EMEA1 Oceania) Caribbean Total Monster Energy® Drinks ​ $ 4,202,537 ​ $ 1,257,471 ​ $ 484,459 ​ $ 610,622 ​ $ 6,555,089 Strategic Brands ​ 199,183 ​ 133,188 ​ 29,990 ​ 14,228 ​ 376,589 Alcohol Brands ​ ​ 184,855 ​ ​ - ​ ​ - ​ ​ - ​ ​ 184,855 Other ​ 23,494 ​ - ​ - ​ - ​ 23,494 Total Net Sales ​ $ 4,610,069 ​ $ 1,390,659 ​ $ 514,449 ​ $ 624,850 ​ $ 7,140,027 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asia Pacific ​ America ​ ​ ​ ​ ​ U.S. and ​ ​ ​ ​ (including ​ and ​ ​ ​ Net Sales Canada EMEA1 Oceania) Caribbean Total Monster Energy® Drinks ​ $ 3,806,351 ​ $ 1,105,302 ​ $ 426,800 ​ $ 494,758 ​ $ 5,833,211 Strategic Brands ​ 184,844 ​ 123,440 ​ 29,386 ​ 15,820 ​ 353,490 Alcohol Brands2 ​ ​ 101,405 ​ ​ - ​ ​ - ​ ​ - ​ ​ 101,405 Other ​ 22,944 ​ - ​ - ​ - ​ 22,944 Total Net Sales ​ $ 4,115,544 ​ $ 1,228,742 ​ $ 456,186 ​ $ 510,578 ​ $ 6,311,050 ​ 97 97 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​​​​​​​​​​​​​​​​​​​Year Ended December 31, 2021​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 3,455,704​$ 1,004,005​$ 446,023​$ 314,941​$ 5,220,673Strategic Brands​ 158,390​ 99,423​ 26,811​ 10,138​ 294,762Other​ 25,917​ - ​ - ​ - ​ 25,917Total Net Sales​$ 3,640,011​$ 1,103,428​$ 472,834​$ 325,079​$ 5,541,352​1Europe, Middle East and Africa ("EMEA")2Effectively from February 17, 2022 to December 31, 2022Contract LiabilitiesAmounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2023 and 2022, the Company had $246.2 million and $267.1 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2023, 2022 and 2021, $40.0 million, $40.0 million and $41.5 million, respectively, of deferred revenue, was recognized in net sales. See Note 11.​4. LEASESThe 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 components of lease cost for the years ended December 31, 2023, 2022 and 2021 were as follows:​​​​​​​​​​​​ 2023 2022 2021Operating lease cost $ 12,060​$ 8,641 $ 4,614Short-term lease cost​​ 5,545​ 3,705​ 5,218Variable lease cost​​ 861​ 773​ 710​​​​​​​​​​Finance leases:​​​​ ​​ ​Amortization of right-of-use assets​​ 1,259​ 545​ 546Interest on lease liabilities​​ 255​ 24​ 19Finance lease cost​​ 1,514​ 569​ 565​​​​​​​​​​Total lease cost​$ 19,980​$ 13,688​$ 11,107​98 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ 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." - Reworded sentence: "The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021.Coca-Cola Consolidated, Inc." - Reworded sentence: "Actual results could differ from those estimates.Recent Accounting Pronouncements - In November 2023, the FASB issued Accounting Standards Update ("ASU") No." - Reworded sentence: "The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021." - Reworded sentence: "accounted for approximately 10%, 11% and 12% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively." **Prior (2023):** ​ Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020.Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 10% and 11% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Coca-Cola Europacific Partners accounted for approximately 13%, 12% and 10% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively.Credit Risk - The Company sells its products nationally and internationally, primarily to bottlers and full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations.Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments.Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Recent Accounting Pronouncements - In October 2021, the FASB issued Accounting Standards Update ("ASU") No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)". ASU No. 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company adopted ASU No. 2021-08 on January 1, 2023, which did not have a material impact on the Company's financial position, results of operations and liquidity.​ Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production. The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020. Coca-Cola Consolidated, Inc. accounted for approximately 11%, 12% and 12% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 10% and 11% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively. Coca-Cola Europacific Partners accounted for approximately 13%, 12% and 10% of the Company's net sales for the years ended December 31, 2022, 2021 and 2020, respectively. Credit Risk - The Company sells its products nationally and internationally, primarily to bottlers and full service beverage distributors, retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations. Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments. Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements - In October 2021, the FASB issued Accounting Standards Update ("ASU") No. 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (Topic 805)". ASU No. 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. At the acquisition date, the acquirer applies the revenue model as if it had originated the acquired contracts. The ASU is effective for annual periods beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company adopted ASU No. 2021-08 on January 1, 2023, which did not have a material impact on the Company's financial position, results of operations and liquidity. ​ 92 92 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​2. ACQUISITIONS On February 17, 2022, the Company completed its acquisition of CANarchy Craft Brewery Collective LLC ("CANarchy"), a craft beer and hard seltzer company, for $329.5 million in cash (net of cash acquired), after certain working capital adjustments (the "CANarchy Transaction"). The CANarchy Transaction facilitates the Company's entry into the alcohol beverage sector and brings the Cigar CityTM family of brands including Jai Alai® IPA and Florida ManTM IPA, the Oskar BluesTM family of brands including Dale's Pale Ale®, Wild BasinTM Hard Seltzers, the Deep EllumTM family of brands including Dallas Blonde® and Deep EllumTM IPA, the Perrin Brewing CompanyTM family of brands including Black Ale, the Squatters® family of brands including Hop Rising® Double IPA, the Wasatch® family of brands including Apricot Hefeweizen, as well as certain other brands (collectively the "CANarchy Brands") to the Company's beverage portfolio. The transaction did not include CANarchy's stand-alone restaurants. The Company's organizational structure for its existing energy beverage business remains unchanged. CANarchy is functioning independently, retaining its own organizational structure and team.The Company accounted for the CANarchy Transaction in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations".The following table summarizes the final fair value allocations of the CANarchy Transaction:​​​​​​​​​​Identifiable ​​​​​Assets Acquired ​​​​​and Liabilities​​Consideration ​ Assumed TransferredIntangibles - trademarks (non-amortizing)​$ 89,500​$ - Intangibles - customer relationships (amortizing) ​ 54,500 ​ - Intangibles - permits (non-amortizing) ​ 6,000 ​ - Property and equipment ​ 81,285 ​ - Inventory ​ 18,300 ​ - Right-of-use assets ​ 12,836 ​ - Operating lease liabilities ​ (12,836) ​ - Working capital (excluding inventory) ​ (5,640) ​ - Other ​ (770) ​ - Goodwill ​ 86,298 ​ - Cash ​ 3,248 ​ 332,721Total​$ 332,721​$ 332,721​During the fourth quarter of 2022, the Company identified a measurement period adjustment to the Company's previous purchase accounting estimates for the CANarchy Transaction. The adjustments to the estimated values previously disclosed, resulted from the completed assessment of certain trademarks. As a result, Intangibles - trademarks (non-amortizing) decreased and Goodwill increased by $5.0 million, respectively, from amounts previously reported.The Company determined the fair values as follows:●Trademarks - relief-from-royalty method of the income approach●Customer relationships - distributor method of the income approach●Permits - with-and-without method of the income approach●Property and equipment - cost approach93 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ Net Income Per Common Share - In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable.Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production.The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021.Coca-Cola Consolidated, Inc. accounted for approximately 10%, 11% and 12% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively.Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 9% and 10% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively.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 ("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. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations.Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments.Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.Recent Accounting Pronouncements - In 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. Net Income Per Common Share - In accordance with FASB ASC 260, net income per common share, on a basic and diluted basis, is presented for all periods. Basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding during each period. Diluted net income per share is computed by dividing net income by the weighted average number of common and dilutive common equivalent shares outstanding. The calculation of common equivalent shares assumes the exercise of dilutive stock options, net of assumed treasury share repurchases at average market prices, as applicable. Concentration of Risk - Certain of the Company's products utilize components (raw materials and/or co-packing services) from a limited number of sources. A disruption in the supply of such components could significantly affect the Company's revenues from those products, as alternative sources of such components may not be available at commercially reasonable rates or within a reasonably short time period. The Company continues to endeavor to secure the availability of alternative sources for such components and minimize the risk of any disruption in production. The Coca-Cola Company ("TCCC"), through certain wholly-owned subsidiaries (the "TCCC Subsidiaries"), accounted for approximately 2% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021. Coca-Cola Consolidated, Inc. accounted for approximately 10%, 11% and 12% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively. Reyes Coca-Cola Bottling, LLC accounted for approximately 9%, 9% and 10% of the Company's net sales for the years ended December 31, 2023, 2022 and 2021, respectively. 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 ("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. The Company maintains reserves for estimated credit losses, and historically, such losses have been within management's expectations. Fair Value of Financial Instruments - The carrying value of the Company's financial instruments, including cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities, approximate fair value due to the relatively short maturity of the respective instruments. Use of Estimates - The preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements - In 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. 93 93 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​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.2. ACQUISITIONS Bang Energy​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 $16.1 million of acquisition costs related to the Bang Transaction. Acquisition costs are included in operating expenses within the consolidated statements of income.The following table summarizes the final fair value allocations of the Bang Transaction:​​​​​​​​​​Identifiable ​​​​​Assets​​​​​Acquired and ​​​​​(Liabilities)​​Consideration ​ Assumed TransferredIntangibles - trademarks (non-amortizing)​$ 209,000​$ - Intangibles - customer relationships (amortizing) ​ 23,000 ​ - Property and equipment, net ​ 143,200 ​ - Inventory ​ 30,496 ​ - Right-of-use assets ​ 12,523 ​ - Operating lease liabilities ​ (12,523) ​ - Working capital (excluding inventory) ​ 2,871 ​ - Other ​ 200 ​ - Cash ​ - ​ 363,385Bang Transaction Gain ​ - ​ 45,382Total​$ 408,767​$ 408,767​94 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 **Key changes:** - Reworded sentence: "​ SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS: ​ Included in accrued liabilities as of December 31, 2023, 2022 and 2021 were $15.4 million, $9.4 million and $14.0 million, respectively, related to net additions to other intangible assets." - Reworded sentence: "The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, 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 ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM 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.Treasury Stock Retirement - On March 10, 2023, the Company retired 170.0 million shares (stock split adjusted) of treasury stock owned by the Company." - Reworded sentence: "Adjustments to fair value 87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents" **Prior (2023):** ​ SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS: ​ Included in accrued liabilities as of December 31, 2022, 2021 and 2020 were $9.4 million, $14.0 million and $9.8 million, respectively, related to net additions to other intangible assets. Accounts payable included equipment purchases of $2.9 million, $0.6 million and $0.6 million as of December 31, 2022, 2021 and 2020, respectively. Accounts receivable included sales of available-for-sale short-term investments of $15.2 million as of December 31, 2022. No sales of available-for-sale investments were included in accounts receivable as of December 31, 2021 and 2020. See accompanying notes to consolidated financial statements. ​ ​ 86 86 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, Monster Hydro® Energy Water, Monster Hydro® Super Sport, Monster Super Fuel®, Monster Dragon Tea®, Reign Total Body Fuel®, Reign Inferno® Thermogenic Fuel, Reign Storm®, NOS®, Full Throttle®, Burn®, Mother®, Nalu®, Ultra Energy®, Play® and Power Play® (stylized), Relentless®, BPM®, BU®, Gladiator®, Samurai®, Live+®, Predator®, Fury® and True North®.The Company also develops, markets, sells and distributes craft beers, flavored malt beverages ("FMBs") and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands.Basis of Presentation - The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and include the accounts of the Company and its consolidated subsidiaries.Amounts previously classified in certain property and equipment balances totaling $20.1 million as of December 31, 2021 have been reclassified to assets under construction to conform to presentation as of December 31, 2022. See Note 9. Principles of Consolidation - The Company consolidates all entities that it controls by ownership of a majority voting interest. All intercompany balances and transactions have been eliminated in consolidation.Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value assessments are recorded to goodwill over the measurement period (not longer than twelve months). The acquisition method also requires that acquisition-related transaction and post-acquisition restructuring costs be charged to expense and requires the Company to recognize and measure certain assets and liabilities including those arising from contingencies and contingent consideration in a business combination.Cash and Cash Equivalents - The Company considers all highly liquid investments with an original maturity of three months or less from date of purchase to be cash equivalents. Throughout the year, the Company has had amounts on deposit at financial institutions that exceed the federally insured limits. The Company has not experienced any loss as a result of these deposits and does not expect to incur any losses in the future.87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS: ​ Included in accrued liabilities as of December 31, 2023, 2022 and 2021 were $15.4 million, $9.4 million and $14.0 million, respectively, related to net additions to other intangible assets. 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 $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. ​ ​ 86 86 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESOrganization - Monster Beverage Corporation (the "Company") was incorporated in the state of Delaware. The Company is a holding company and has no operating business except through its consolidated subsidiaries.Nature of Operations - The Company develops, markets, sells and distributes energy drink beverages and concentrates for energy drink beverages, primarily under the following brand names: Monster Energy®, Monster Energy Ultra®, Monster Rehab®, Monster Energy® Nitro, Java Monster®, Punch Monster®, Juice Monster®, 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 ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM 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.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. All intercompany balances and transactions have been eliminated in consolidation.Business Combinations - Business acquisitions are accounted for in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") 805 "Business Combinations". FASB ASC 805 requires the reporting entity to identify the acquirer, determine the acquisition date, recognize and measure the identifiable tangible and intangible assets acquired, the liabilities assumed and any non-controlling interest in the acquired entity, and recognize and measure goodwill or a gain from the purchase. The acquiree's results are included in the Company's consolidated financial statements from the date of acquisition. Assets acquired and liabilities assumed are recorded at their fair values and the excess of the purchase price over the amounts assigned is recorded as goodwill. Adjustments to fair value 87 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Operating Expenses **Key changes:** - Reworded sentence: "Total operating expenses were $1.84 billion for the year ended December 31, 2023, an increase of approximately $251.0 million, or 15.8% higher than total operating expenses of $1.59 billion for the year ended December 31, 2022." **Prior (2023):** Total operating expenses were $1.59 billion for the year ended December 31, 2022, an increase of approximately $278.8 million, or 21.3% higher than total operating expenses of $1.31 billion for the year ended December 31, 2021. The comparative operating expenses for the year ended December 31, 2021 included a $16.9 million reversal of amounts previously accrued in connection with an intellectual property claim. The increase in operating expenses was primarily due to increased general and administrative expenses of $92.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased out-bound fuel, freight and warehouse costs of $74.3 million, increased selling and marketing expenses of $59.9 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $57.0 million (of which $23.1 million was related to CANarchy). In addition, CANarchy related depreciation and amortization was $8.7 million for year ended December 31, 2022. The increase in operating expenses was partially offset by a decrease in distributor termination expenses of $5.3 million for the year ended December 31, 2022. Operating expenses as a percentage of net sales for the years ended December 31, 2022 and 2021 were 25.2% and 23.7%, respectively. Operating expenses for the year ended December 31, 2019 (pre COVID-19) were $1.12 billion, or 26.6% of net sales. **Current (2024):** Total operating expenses were $1.84 billion for the year ended December 31, 2023, an increase of approximately $251.0 million, or 15.8% higher than total operating expenses of $1.59 billion for the year ended December 31, 2022. ​ The increase in operating expenses was primarily due to increased general and administrative expenses of $80.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased selling and marketing expenses of $92.2 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $82.4 million. In addition, operating expenses for the year ended December 31, 2023 included $16.1 million of transaction costs related to the acquisition of Bang Energy and $42.7 million of impairment charges related to the Alcohol Brands segment (the "Alcohol Impairment Charges"). The Alcohol Impairment Charges, due in part to the continuing challenges in the craft beer and hard seltzer categories, relate to certain non-amortizing intangibles as well as property and equipment, acquired as part of the CANarchy transaction (as defined below in Note 2, "Acquisitions"). ​ Operating expenses as a percentage of net sales for the years ended December 31, 2023 and 2022 were 25.8% and 25.2%, respectively. --- ## Modified: Gross Profit Margins **Key changes:** - Reworded sentence: "​ During the year ended December 31, 2023, we experienced an improvement in our gross profit margins as compared to the year ended December 31, 2022." - Reworded sentence: "​ We continue to address the controllable challenges in our supply chain." **Prior (2023):** Since the beginning of the COVID-19 pandemic and the subsequent increased demand for our energy drinks, we prioritized ensuring product availability for our customers and consumers. This strategic direction has remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands. During the year ended December 31, 2022, we experienced a significant increase in cost of sales, resulting in a material decrease in both gross profit and gross profit as a percentage of net sales, relative to the comparative year ended December 31, 2021. The increase in cost of sales was primarily due to (i) increased ingredient and other input costs, including secondary packaging materials and increased co-packing fees, (ii) increased logistical costs, (iii) increased aluminum can costs and (iv) geographical and product sales mix. In the third and fourth quarters of 2022 we began to see an improvement in our gross profit margins as compared to the second quarter of 2022. This improvement was primarily attributable to (i) Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs. Furthermore, we experienced significant increases in distribution expenses, primarily the result of increased warehousing expenses, as well as increases in other logistical expenses, which adversely impacted operating costs. We continue to address the controllable challenges in our supply chain. **Current (2024):** ​ During the year ended December 31, 2023, we experienced an improvement in our gross profit margins as compared to the year ended December 31, 2022. This improvement was primarily attributable to (i) the Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs. ​ During the COVID-19 pandemic we prioritized ensuring product availability for our customers and consumers. This strategic direction remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands. ​ We continue to address the controllable challenges in our supply chain. --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ ​​​​​​​​​​​​​​​​​​Year Ended December 31, 2021​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S." **Prior (2023):** ​ commencement date. Additional payments based on the change in an index or rate, or payments based on a change in the Company's portion of real estate taxes and insurance, are recorded as a period expense when incurred. Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statement of income. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset's estimated useful life and is included in operating expenses in the consolidated statement of income. Interest expense on finance leases is calculated using the amortized cost basis and is included in other (expense) income, net in the consolidated statement of income. The Company's leases have remaining lease terms of less than one year to 11 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less. The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows:​​​​​​​​​​​​ 2022 2021 2020Operating lease cost $ 8,641​$ 4,614 $ 4,637​​​​​​​​​​Short-term lease cost​​ 3,705​ 5,218​ 3,408​​​​​​​​​​Variable lease cost​​ 773​ 710​ 719​​​​​​​​​​Finance leases:​​​​ ​​ ​Amortization of ROU assets​​ 545​ 546​ 626Interest on lease liabilities​​ 24​ 19​ 39Finance lease cost​​ 569​ 565​ 665​​​​​​​​​​Total lease cost​$ 13,688​$ 11,107​$ 9,429​Supplemental cash flow information for the years ended December 31, 2022, 2021 and 2020 were as follows:​​​​​​​​​​​​ 2022 2021 2020Cash paid for amounts included in the measurement of lease liabilities:​​ ​​ ​​ Operating cash flows from operating leases​$ 8,164​$ 4,123​$ 3,982Operating cash flows from finance leases​ 24​ 19​ 39Financing cash flows from finance leases​ 2,091​ 2,698​ 3,086​​​​​​​​​​ROU assets obtained in exchange for lease obligations:​ ​​ ​​ ​Finance leases​ 1,897​ 2,878​ 2,417Operating leases​ 22,962​ 4,313​ 3,003​ commencement date. Additional payments based on the change in an index or rate, or payments based on a change in the Company's portion of real estate taxes and insurance, are recorded as a period expense when incurred. Lease expense for operating leases, consisting of lease payments, is recognized on a straight-line basis over the lease term and is included in operating expenses in the consolidated statement of income. Lease expense for finance leases consists of the amortization of the ROU asset on a straight-line basis over the asset's estimated useful life and is included in operating expenses in the consolidated statement of income. Interest expense on finance leases is calculated using the amortized cost basis and is included in other (expense) income, net in the consolidated statement of income. The Company's leases have remaining lease terms of less than one year to 11 years, some of which include options to extend the leases for up to five years, and some of which include options to terminate the leases within one year. The Company has elected not to recognize ROU assets and lease liabilities for short-term operating leases that have a term of 12 months or less. options extend options terminate The components of lease cost for the years ended December 31, 2022, 2021 and 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Operating lease cost $ 8,641 ​ $ 4,614 $ 4,637 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Short-term lease cost ​ ​ 3,705 ​ 5,218 ​ 3,408 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Variable lease cost ​ ​ 773 ​ 710 ​ 719 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance leases: ​ ​ ​ ​ ​ ​ ​ Amortization of ROU assets ​ ​ 545 ​ 546 ​ 626 Interest on lease liabilities ​ ​ 24 ​ 19 ​ 39 Finance lease cost ​ ​ 569 ​ 565 ​ 665 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost ​ $ 13,688 ​ $ 11,107 ​ $ 9,429 ​ Supplemental cash flow information for the years ended December 31, 2022, 2021 and 2020 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 8,164 ​ $ 4,123 ​ $ 3,982 Operating cash flows from finance leases ​ 24 ​ 19 ​ 39 Financing cash flows from finance leases ​ 2,091 ​ 2,698 ​ 3,086 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ROU assets obtained in exchange for lease obligations: ​ ​ ​ ​ ​ ​ Finance leases ​ 1,897 ​ 2,878 ​ 2,417 Operating leases ​ 22,962 ​ 4,313 ​ 3,003 ​ 98 98 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ROU assets for operating and finance leases recognized in the accompanying consolidated balance sheets were comprised of the following at:​​​​​​​​​​​​​​​December 31, 2022​ Real Estate Equipment Total Balance Sheet LocationOperating leases​$ 37,682​$ 330​$ 38,012 Other AssetsFinance leases​ - ​ 1,598​ 1,598 Property and Equipment, net​​​​​​​​​​​​​​​December 31, 2021​ Real Estate Equipment Total Balance Sheet LocationOperating leases​$ 22,518​$ 639​$ 23,157 Other AssetsFinance leases​ - ​ 2,646​ 2,646 Property and Equipment, net​Operating and finance lease liabilities recognized in the consolidated balance sheets were as follows at:​​​​​​​​​​December 31, 2022​ Operating Leases Finance LeasesAccrued liabilities​$ 7,747​$ 757Other liabilities​ 29,586​ 41Total​$ 37,333​$ 798​​​​​​​​​​December 31, 2021​ Operating Leases Finance LeasesAccrued liabilities​$ 3,990​$ 960Other liabilities​ 17,389​ 41Total​$ 21,379​$ 1,001​The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows at:​​​​​​​​​December 31, 2022​​ Operating Leases Finance Leases Weighted-average remaining lease term (years) 6.7 0.8​Weighted-average discount rate 3.4% 3.6%​​​​​​​​​December 31, 2021​​ Operating Leases Finance Leases​Weighted-average remaining lease term (years) 8.1​ 0.7​Weighted-average discount rate 3.5% 1.3%​99 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ ​​​​​​​​​​​​​​​​​​Year Ended December 31, 2021​​​​​​​​​​​Latin​​​​​​​​​​​Asia Pacific​America​​​​​U.S. and​​​​(including​and​​​Net Sales Canada EMEA1 Oceania) Caribbean TotalMonster Energy® Drinks​$ 3,455,704​$ 1,004,005​$ 446,023​$ 314,941​$ 5,220,673Strategic Brands​ 158,390​ 99,423​ 26,811​ 10,138​ 294,762Other​ 25,917​ - ​ - ​ - ​ 25,917Total Net Sales​$ 3,640,011​$ 1,103,428​$ 472,834​$ 325,079​$ 5,541,352​1Europe, Middle East and Africa ("EMEA")2Effectively from February 17, 2022 to December 31, 2022Contract LiabilitiesAmounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2023 and 2022, the Company had $246.2 million and $267.1 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2023, 2022 and 2021, $40.0 million, $40.0 million and $41.5 million, respectively, of deferred revenue, was recognized in net sales. See Note 11.​4. LEASESThe 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 components of lease cost for the years ended December 31, 2023, 2022 and 2021 were as follows:​​​​​​​​​​​​ 2023 2022 2021Operating lease cost $ 12,060​$ 8,641 $ 4,614Short-term lease cost​​ 5,545​ 3,705​ 5,218Variable lease cost​​ 861​ 773​ 710​​​​​​​​​​Finance leases:​​​​ ​​ ​Amortization of right-of-use assets​​ 1,259​ 545​ 546Interest on lease liabilities​​ 255​ 24​ 19Finance lease cost​​ 1,514​ 569​ 565​​​​​​​​​​Total lease cost​$ 19,980​$ 13,688​$ 11,107​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Latin ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Asia Pacific ​ America ​ ​ ​ ​ ​ U.S. and ​ ​ ​ ​ (including ​ and ​ ​ ​ Net Sales Canada EMEA1 Oceania) Caribbean Total Monster Energy® Drinks ​ $ 3,455,704 ​ $ 1,004,005 ​ $ 446,023 ​ $ 314,941 ​ $ 5,220,673 Strategic Brands ​ 158,390 ​ 99,423 ​ 26,811 ​ 10,138 ​ 294,762 Other ​ 25,917 ​ - ​ - ​ - ​ 25,917 Total Net Sales ​ $ 3,640,011 ​ $ 1,103,428 ​ $ 472,834 ​ $ 325,079 ​ $ 5,541,352 ​ 1Europe, Middle East and Africa ("EMEA") 2Effectively from February 17, 2022 to December 31, 2022 Contract Liabilities Amounts received from certain bottlers/distributors at inception of their distribution contracts or at the inception of certain sales/marketing programs are accounted for as deferred revenue. As of December 31, 2023 and 2022, the Company had $246.2 million and $267.1 million of deferred revenue, respectively, which is included in current and long-term deferred revenue in the Company's accompanying consolidated balance sheet. During the years ended December 31, 2023, 2022 and 2021, $40.0 million, $40.0 million and $41.5 million, respectively, of deferred revenue, was recognized in net sales. See Note 11. ​ 4. LEASES 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. some which leases leases The components of lease cost for the years ended December 31, 2023, 2022 and 2021 were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Operating lease cost $ 12,060 ​ $ 8,641 $ 4,614 Short-term lease cost ​ ​ 5,545 ​ 3,705 ​ 5,218 Variable lease cost ​ ​ 861 ​ 773 ​ 710 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance leases: ​ ​ ​ ​ ​ ​ ​ Amortization of right-of-use assets ​ ​ 1,259 ​ 545 ​ 546 Interest on lease liabilities ​ ​ 255 ​ 24 ​ 19 Finance lease cost ​ ​ 1,514 ​ 569 ​ 565 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total lease cost ​ $ 19,980 ​ $ 13,688 ​ $ 11,107 ​ 98 98 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES 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:​​ 2023 2022 2021Cash paid for amounts included in the measurement of lease liabilities:​​ ​​ ​​ Operating cash flows from operating leases​$ 10,634​$ 8,164​$ 4,123Operating cash flows from finance leases​ 255​ 24​ 19Financing cash flows from finance leases​ 6,346​ 2,091​ 2,698​​​​​​​​​​ROU assets obtained in exchange for lease obligations:​ ​​ ​​ ​Finance leases​ 12,010​ 1,897​ 2,878Operating leases​ 30,342​ 22,962​ 4,313​Supplemental balance sheet information related to leases was as follows:​​​​​​​​​​​​​​December 31,​December 31,​ Balance Sheet Location​2023 2022Operating leases:​​​​​​​​Right-of-use assets​Other assets​$ 58,845​$ 38,012​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 11,088​$ 7,747Noncurrent lease liabilities​Other liabilities​​ 48,459​​ 29,586Total operating lease liabilities​​​$ 59,547​$ 37,333​​​​​​​​​Finance leases:​​​​​​​​Right-of-use assets​Property and equipment, net​$ 11,147​$ 1,598​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 6,449​$ 757Noncurrent lease liabilities​Other liabilities​​ 19​​ 41Total finance lease liabilities​​​$ 6,468​$ 798​Weighted-average remaining lease term and weighted-average discount rate for the Company's leases were as follows:​​​​​​​​​December 31,​December 31,​​ 2023 2022 Weighted-average remaining lease term in years:​​​​​Operating leases 6.3 6.7​Finance leases​ 0.7​ 0.8​​​​​​​Weighted-average discount rate:​​​​​Operating leases​ 4.7% 3.4%Finance leases 6.3% 3.6%​99 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Opinion on the Financial Statements **Key changes:** - Reworded sentence: "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")." **Prior (2023):** 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. **Current (2024):** 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. --- ## Modified: MONSTER BEVERAGE CORPORATION **Key changes:** - Reworded sentence: "Sacks Date: February 29, 2024 ​ ​ Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ ​ ​ ​ ​ /s/ HILTON H." - Reworded sentence: "Schlosberg ​ Date: February 29, 2024 ​ ​ Vice Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated." - Reworded sentence: "SACKS ​ Chairman of the Board of ​ February 29, 2024 Rodney C." - Reworded sentence: "SCHLOSBERG ​ Vice Chairman of the Board of Directors ​ February 29, 2024 Hilton H." - Reworded sentence: "KELLY ​ Chief Financial Officer (principal financial ​ February 29, 2024 Thomas J." **Prior (2023):** /s/ RODNEY C. SACKS Rodney C. Sacks Date: March 1, 2023 ​ ​ Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ ​ ​ ​ ​ /s/ HILTON H. SCHLOSBERG ​ Hilton H. Schlosberg ​ Date: March 1, 2023 ​ ​ Vice Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date ​ ​ ​ ​ ​ /s/ RODNEY C. SACKS ​ Chairman of the Board of ​ March 1, 2023 Rodney C. Sacks ​ Directors and Co-Chief Executive ​ ​ ​ ​ Officer (principal executive officer) ​ ​ ​ ​ ​ ​ ​ /s/ HILTON H. SCHLOSBERG ​ Vice Chairman of the Board of Directors ​ March 1, 2023 Hilton H. Schlosberg ​ and Co-Chief Executive Officer (principal ​ ​ ​ ​ executive officer) ​ ​ ​ ​ ​ ​ ​ /s/ THOMAS J. KELLY ​ Chief Financial Officer (principal financial ​ March 1, 2023 Thomas J. Kelly ​ officer, principal accounting officer) ​ ​ ​ ​ ​ ​ ​ /s/ ANA DEMEL ​ Director ​ March 1, 2023 Ana Demel ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ JAMES L. DINKINS ​ Director ​ March 1, 2023 James L. Dinkins ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ GARY P. FAYARD ​ Director ​ March 1, 2023 Gary P. Fayard ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ MARK J. HALL ​ Director ​ March 1, 2023 Mark J. Hall ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ TIFFANY M. HALL ​ Director ​ March 1, 2023 Tiffany M. Hall ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ JEANNE P. JACKSON ​ Director ​ March 1, 2023 Jeanne P. Jackson ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ STEVEN G. PIZULA ​ Director ​ March 1, 2023 Steven G. Pizula ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ MARK S. VIDERGAUZ ​ Director ​ March 1, 2023 Mark S. Vidergauz ​ ​ ​ ​ ​ ​ ​ 76 76 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE​​​PageMONSTER BEVERAGE CORPORATION AND SUBSIDIARIES​​​Report of Independent Registered Public Accounting Firm78​​Consolidated Balance Sheets as of December 31, 2022 and 202181​​Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 202082​​Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 202083​​Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 202084​​Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 202085​​Notes to Consolidated Financial Statements87​​Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020125​​​77 Table of Contents Table of Contents Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE​​​PageMONSTER BEVERAGE CORPORATION AND SUBSIDIARIES​​​Report of Independent Registered Public Accounting Firm78​​Consolidated Balance Sheets as of December 31, 2022 and 202181​​Consolidated Statements of Income for the years ended December 31, 2022, 2021 and 202082​​Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 202083​​Consolidated Statements of Stockholders' Equity for the years ended December 31, 2022, 2021 and 202084​​Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 202085​​Notes to Consolidated Financial Statements87​​Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2022, 2021 and 2020125​​​ **Current (2024):** /s/ RODNEY C. SACKS Rodney C. Sacks Date: February 29, 2024 ​ ​ Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ ​ ​ ​ ​ /s/ HILTON H. SCHLOSBERG ​ Hilton H. Schlosberg ​ Date: February 29, 2024 ​ ​ Vice Chairman of the Board of ​ ​ ​ ​ Directors and Co-Chief ​ ​ ​ ​ Executive Officer ​ ​ ​ Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date ​ ​ ​ ​ ​ /s/ RODNEY C. SACKS ​ Chairman of the Board of ​ February 29, 2024 Rodney C. Sacks ​ Directors and Co-Chief Executive ​ ​ ​ ​ Officer (principal executive officer) ​ ​ ​ ​ ​ ​ ​ /s/ HILTON H. SCHLOSBERG ​ Vice Chairman of the Board of Directors ​ February 29, 2024 Hilton H. Schlosberg ​ and Co-Chief Executive Officer (principal ​ ​ ​ ​ executive officer) ​ ​ ​ ​ ​ ​ ​ /s/ THOMAS J. KELLY ​ Chief Financial Officer (principal financial ​ February 29, 2024 Thomas J. Kelly ​ officer, principal accounting officer) ​ ​ ​ ​ ​ ​ ​ /s/ ANA DEMEL ​ Director ​ February 29, 2024 Ana Demel ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ JAMES L. DINKINS ​ Director ​ February 29, 2024 James L. Dinkins ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ GARY P. FAYARD ​ Director ​ February 29, 2024 Gary P. Fayard ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ MARK J. HALL ​ Director ​ February 29, 2024 Mark J. Hall ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ TIFFANY M. HALL ​ Director ​ February 29, 2024 Tiffany M. Hall ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ JEANNE P. JACKSON ​ Director ​ February 29, 2024 Jeanne P. Jackson ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ STEVEN G. PIZULA ​ Director ​ February 29, 2024 Steven G. Pizula ​ ​ ​ ​ ​ ​ ​ ​ ​ /s/ MARK S. VIDERGAUZ ​ Director ​ February 29, 2024 Mark S. Vidergauz ​ ​ ​ ​ ​ ​ ​ 76 76 Table of ContentsINDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE​​​PageMONSTER BEVERAGE CORPORATION AND SUBSIDIARIES​​​Reports of Independent Registered Public Accounting Firms78​​Consolidated Balance Sheets as of December 31, 2023 and 202281​​Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 202182​​Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 202183​​Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 202184​​Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 202185​​Notes to Consolidated Financial Statements87​​Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021124​​​77 Table of Contents Table of Contents Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE​​​PageMONSTER BEVERAGE CORPORATION AND SUBSIDIARIES​​​Reports of Independent Registered Public Accounting Firms78​​Consolidated Balance Sheets as of December 31, 2023 and 202281​​Consolidated Statements of Income for the years ended December 31, 2023, 2022 and 202182​​Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 202183​​Consolidated Statements of Stockholders' Equity for the years ended December 31, 2023, 2022 and 202184​​Consolidated Statements of Cash Flows for the years ended December 31, 2023, 2022 and 202185​​Notes to Consolidated Financial Statements87​​Financial Statement Schedule - Valuation and Qualifying Accounts for the years ended December 31, 2023, 2022 and 2021124​​​ --- ## Modified: Balance, December 31, 2023 **Key changes:** - Reworded sentence: "1,122,592 ​ $ 5,613 ​ $ 4,975,115 ​ $ 5,939,736 ​ $ (125,337) ​ (81,021) ​ $ (2,566,383) ​ $ 8,228,744 ​ 1Stock Split - The accompanying consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split." **Prior (2023):** 641,844 ​ $ 3,209 ​ $ 4,780,013 ​ $ 9,001,173 ​ $ (159,073) ​ (119,544) ​ $ (6,600,281) ​ $ 7,025,041 ​ See accompanying notes to consolidated financial statements. ​ 84 84 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​ 2022 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES:​​​​​​​​​Net income​$ 1,191,624​$ 1,377,475​$ 1,409,594Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​​​Depreciation and amortization​ 61,241​ 50,155​ 57,030Non-cash lease expense​​ 7,337​​ 4,107​​ 3,943Gain on disposal of property and equipment​ (185)​​ (1,013)​​ (350)Loss on impairment of intangibles​​ 2,200​​ - ​​ 8,700Stock-based compensation​ 64,109​ 70,483​ 70,289Deferred income taxes​ 48,182​​ 16,429​​ (156,873)Effect on cash of changes in operating assets and liabilities net of acquisition:​​​​​​​​​Accounts receivable​ (128,981)​ (254,228)​ (119,672)Inventories​ (347,712)​ (277,793)​ 30,304Prepaid expenses and other assets​ (38,268)​ (29,341)​ 1,024Prepaid income taxes​ (4,439)​ (10,919)​ 5,516Accounts payable​ 49,765​ 114,297​ 18,696Accrued liabilities​ (30,419)​ 71,586​ 26,113Accrued promotional allowances​ 50,821​ 31,498​ 13,762Accrued compensation​ 3,729​ 7,950​ 7,501Income taxes payable​ (16,860)​ 7,221​ 10,422Other liabilities​​ (4,540)​​ 492​​ (356)Deferred revenue​ (19,905)​ (22,658)​ (21,480)Net cash provided by operating activities​ 887,699​ 1,155,741​ 1,364,163​​​​​​​​​​CASH FLOWS FROM INVESTING ACTIVITIES:​​​​​​​​​Sales of available-for-sale investments​ 2,252,355​ 1,488,599​ 920,196Purchases of available-for-sale investments​​ (1,847,067)​​ (2,413,143)​​ (1,299,981)Acquisition of CANarchy, net of cash​ (329,472)​ - ​ - Purchases of property and equipment​ (188,726)​ (43,868)​ (48,722)Proceeds from sale of property and equipment​ 1,313​ 1,328​ 993Additions to intangibles​ (23,427)​ (13,585)​ (18,550)Increase in other assets​ (26,343)​ (11,353)​ (26,423)Net cash used in investing activities​ (161,367)​ (992,022)​ (472,487)​​​​​​​​​​CASH FLOWS FROM FINANCING ACTIVITIES:​​​​​​​​​Borrowings (payments) on debt​ 75​ 2,928​ (3,086)Issuance of common stock​ 64,015​ 45,723​ 72,936Purchases of common stock held in treasury​ (771,028)​ (13,830)​ (595,918)Net cash (used in) provided by financing activities​ (706,938)​ 34,821​ (526,068)​​​​​​​​​​Effect of exchange rate changes on cash and cash equivalents​ (38,715)​ (52,491)​ 16,848​​​​​​​​​​NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS​ (19,321)​ 146,049​ 382,456CASH AND CASH EQUIVALENTS, beginning of year​ 1,326,462​ 1,180,413​ 797,957CASH AND CASH EQUIVALENTS, end of year​$ 1,307,141​$ 1,326,462​$ 1,180,413​​​​​​​​​​SUPPLEMENTAL INFORMATION:​​​​​​​​​Cash paid during the year for:​​​​​​​​​Interest​$ 431​$ 134​$ 44Income taxes​$ 379,998​$ 420,521​$ 355,509​See accompanying notes to consolidated financial statements.​85 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​ 2022 2021 2020CASH FLOWS FROM OPERATING ACTIVITIES:​​​​​​​​​Net income​$ 1,191,624​$ 1,377,475​$ 1,409,594Adjustments to reconcile net income to net cash provided by operating activities:​​​​​​​​​Depreciation and amortization​ 61,241​ 50,155​ 57,030Non-cash lease expense​​ 7,337​​ 4,107​​ 3,943Gain on disposal of property and equipment​ (185)​​ (1,013)​​ (350)Loss on impairment of intangibles​​ 2,200​​ - ​​ 8,700Stock-based compensation​ 64,109​ 70,483​ 70,289Deferred income taxes​ 48,182​​ 16,429​​ (156,873)Effect on cash of changes in operating assets and liabilities net of acquisition:​​​​​​​​​Accounts receivable​ (128,981)​ (254,228)​ (119,672)Inventories​ (347,712)​ (277,793)​ 30,304Prepaid expenses and other assets​ (38,268)​ (29,341)​ 1,024Prepaid income taxes​ (4,439)​ (10,919)​ 5,516Accounts payable​ 49,765​ 114,297​ 18,696Accrued liabilities​ (30,419)​ 71,586​ 26,113Accrued promotional allowances​ 50,821​ 31,498​ 13,762Accrued compensation​ 3,729​ 7,950​ 7,501Income taxes payable​ (16,860)​ 7,221​ 10,422Other liabilities​​ (4,540)​​ 492​​ (356)Deferred revenue​ (19,905)​ (22,658)​ (21,480)Net cash provided by operating activities​ 887,699​ 1,155,741​ 1,364,163​​​​​​​​​​CASH FLOWS FROM INVESTING ACTIVITIES:​​​​​​​​​Sales of available-for-sale investments​ 2,252,355​ 1,488,599​ 920,196Purchases of available-for-sale investments​​ (1,847,067)​​ (2,413,143)​​ (1,299,981)Acquisition of CANarchy, net of cash​ (329,472)​ - ​ - Purchases of property and equipment​ (188,726)​ (43,868)​ (48,722)Proceeds from sale of property and equipment​ 1,313​ 1,328​ 993Additions to intangibles​ (23,427)​ (13,585)​ (18,550)Increase in other assets​ (26,343)​ (11,353)​ (26,423)Net cash used in investing activities​ (161,367)​ (992,022)​ (472,487)​​​​​​​​​​CASH FLOWS FROM FINANCING ACTIVITIES:​​​​​​​​​Borrowings (payments) on debt​ 75​ 2,928​ (3,086)Issuance of common stock​ 64,015​ 45,723​ 72,936Purchases of common stock held in treasury​ (771,028)​ (13,830)​ (595,918)Net cash (used in) provided by financing activities​ (706,938)​ 34,821​ (526,068)​​​​​​​​​​Effect of exchange rate changes on cash and cash equivalents​ (38,715)​ (52,491)​ 16,848​​​​​​​​​​NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS​ (19,321)​ 146,049​ 382,456CASH AND CASH EQUIVALENTS, beginning of year​ 1,326,462​ 1,180,413​ 797,957CASH AND CASH EQUIVALENTS, end of year​$ 1,307,141​$ 1,326,462​$ 1,180,413​​​​​​​​​​SUPPLEMENTAL INFORMATION:​​​​​​​​​Cash paid during the year for:​​​​​​​​​Interest​$ 431​$ 134​$ 44Income taxes​$ 379,998​$ 420,521​$ 355,509​See accompanying notes to consolidated financial statements.​ **Current (2024):** 1,122,592 ​ $ 5,613 ​ $ 4,975,115 ​ $ 5,939,736 ​ $ (125,337) ​ (81,021) ​ $ (2,566,383) ​ $ 8,228,744 ​ 1Stock 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. ​ 84 84 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​ 2023 2022 2021CASH FLOWS FROM OPERATING ACTIVITIES:​​​​​​​​​Net income​$ 1,630,988​$ 1,191,624​$ 1,377,475Adjustments to reconcile net income to​​​​​​​​​net cash provided by operating activities:​​​​​​​​​Depreciation and amortization​ 68,898​ 61,241​ 50,155Non-cash lease expense​​ 9,043​​ 7,337​​ 4,107Loss (gain) on disposal of property and equipment​ 166​​ (185)​​ (1,013)Gain on Bang Transaction​​ (45,382)​​ - ​​ - Loss on impairment of intangibles​​ 38,700​​ 2,200​​ - Loss on impairment of property and equipment​​ 4,336​​ - ​​ - Stock-based compensation​ 68,836​ 64,109​ 70,483Deferred income taxes​ 2,040​​ 48,182​​ 16,429Effect on cash of changes in operating assets and liabilities​​​​​​​​​net of acquisitions:​​​​​​​​​Accounts receivable​ (163,158)​ (128,981)​ (254,228)Inventories​ 7,898​ (347,712)​ (277,793)Prepaid expenses and other assets​ (10,215)​ (38,268)​ (29,341)Prepaid income taxes​ (18,833)​ (4,439)​ (10,919)Accounts payable​ 112,786​ 49,765​ 114,297Accrued liabilities​ (10,393)​ (30,419)​ 71,586Accrued promotional allowances​ 8,418​ 50,821​ 31,498Accrued compensation​ 13,398​ 3,729​ 7,950Income taxes payable​ 1,748​ (16,860)​ 7,221Other liabilities​​ 22,951​​ (4,540)​​ 492Deferred revenue​ (24,472)​ (19,905)​ (22,658)Net cash provided by operating activities​ 1,717,753​ 887,699​ 1,155,741​​​​​​​​​​CASH FLOWS FROM INVESTING ACTIVITIES:​​​​​​​​​Sales of available-for-sale investments​ 2,029,737​ 2,252,355​ 1,488,599Purchases of available-for-sale investments​​ (1,620,718)​​ (1,847,067)​​ (2,413,143)Acquisition of Bang Energy​​ (363,385)​​ - ​​ - Acquisition of CANarchy, net of cash​ - ​ (329,472)​ - Purchases of property and equipment​ (221,428)​ (188,726)​ (43,868)Proceeds from sale of property and equipment​ 2,520​ 1,313​ 1,328Additions to intangibles​ (13,296)​ (23,427)​ (13,585)Increase in other assets​ (6,825)​ (26,343)​ (11,353)Net cash used in investing activities​ (193,395)​ (161,367)​ (992,022)​​​​​​​​​​CASH FLOWS FROM FINANCING ACTIVITIES:​​​​​​​​​(Payments) borrowings on debt​ (13,914)​ 75​ 2,928Issuance of common stock​ 130,267​ 64,015​ 45,723Purchases of common stock held in treasury​ (658,952)​ (771,028)​ (13,830)Net cash (used in) provided by financing activities​ (542,599)​ (706,938)​ 34,821​​​​​​​​​​Effect of exchange rate changes on cash and cash equivalents​ 8,775​ (38,715)​ (52,491)​​​​​​​​​​NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS​ 990,534​ (19,321)​ 146,049CASH AND CASH EQUIVALENTS, beginning of year​ 1,307,141​ 1,326,462​ 1,180,413CASH AND CASH EQUIVALENTS, end of year​$ 2,297,675​$ 1,307,141​$ 1,326,462​​​​​​​​​​SUPPLEMENTAL INFORMATION:​​​​​​​​​Cash paid during the year for:​​​​​​​​​Interest​$ 363​$ 431​$ 134Income taxes​$ 423,224​$ 379,998​$ 420,521​See accompanying notes to consolidated financial statements.​85 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​ 2023 2022 2021CASH FLOWS FROM OPERATING ACTIVITIES:​​​​​​​​​Net income​$ 1,630,988​$ 1,191,624​$ 1,377,475Adjustments to reconcile net income to​​​​​​​​​net cash provided by operating activities:​​​​​​​​​Depreciation and amortization​ 68,898​ 61,241​ 50,155Non-cash lease expense​​ 9,043​​ 7,337​​ 4,107Loss (gain) on disposal of property and equipment​ 166​​ (185)​​ (1,013)Gain on Bang Transaction​​ (45,382)​​ - ​​ - Loss on impairment of intangibles​​ 38,700​​ 2,200​​ - Loss on impairment of property and equipment​​ 4,336​​ - ​​ - Stock-based compensation​ 68,836​ 64,109​ 70,483Deferred income taxes​ 2,040​​ 48,182​​ 16,429Effect on cash of changes in operating assets and liabilities​​​​​​​​​net of acquisitions:​​​​​​​​​Accounts receivable​ (163,158)​ (128,981)​ (254,228)Inventories​ 7,898​ (347,712)​ (277,793)Prepaid expenses and other assets​ (10,215)​ (38,268)​ (29,341)Prepaid income taxes​ (18,833)​ (4,439)​ (10,919)Accounts payable​ 112,786​ 49,765​ 114,297Accrued liabilities​ (10,393)​ (30,419)​ 71,586Accrued promotional allowances​ 8,418​ 50,821​ 31,498Accrued compensation​ 13,398​ 3,729​ 7,950Income taxes payable​ 1,748​ (16,860)​ 7,221Other liabilities​​ 22,951​​ (4,540)​​ 492Deferred revenue​ (24,472)​ (19,905)​ (22,658)Net cash provided by operating activities​ 1,717,753​ 887,699​ 1,155,741​​​​​​​​​​CASH FLOWS FROM INVESTING ACTIVITIES:​​​​​​​​​Sales of available-for-sale investments​ 2,029,737​ 2,252,355​ 1,488,599Purchases of available-for-sale investments​​ (1,620,718)​​ (1,847,067)​​ (2,413,143)Acquisition of Bang Energy​​ (363,385)​​ - ​​ - Acquisition of CANarchy, net of cash​ - ​ (329,472)​ - Purchases of property and equipment​ (221,428)​ (188,726)​ (43,868)Proceeds from sale of property and equipment​ 2,520​ 1,313​ 1,328Additions to intangibles​ (13,296)​ (23,427)​ (13,585)Increase in other assets​ (6,825)​ (26,343)​ (11,353)Net cash used in investing activities​ (193,395)​ (161,367)​ (992,022)​​​​​​​​​​CASH FLOWS FROM FINANCING ACTIVITIES:​​​​​​​​​(Payments) borrowings on debt​ (13,914)​ 75​ 2,928Issuance of common stock​ 130,267​ 64,015​ 45,723Purchases of common stock held in treasury​ (658,952)​ (771,028)​ (13,830)Net cash (used in) provided by financing activities​ (542,599)​ (706,938)​ 34,821​​​​​​​​​​Effect of exchange rate changes on cash and cash equivalents​ 8,775​ (38,715)​ (52,491)​​​​​​​​​​NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS​ 990,534​ (19,321)​ 146,049CASH AND CASH EQUIVALENTS, beginning of year​ 1,307,141​ 1,326,462​ 1,180,413CASH AND CASH EQUIVALENTS, end of year​$ 2,297,675​$ 1,307,141​$ 1,326,462​​​​​​​​​​SUPPLEMENTAL INFORMATION:​​​​​​​​​Cash paid during the year for:​​​​​​​​​Interest​$ 363​$ 431​$ 134Income taxes​$ 423,224​$ 379,998​$ 420,521​See accompanying notes to consolidated financial statements.​ --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 were as follows:​​ 2023 2022 2021Cash paid for amounts included in the measurement of lease liabilities:​​ ​​ ​​ Operating cash flows from operating leases​$ 10,634​$ 8,164​$ 4,123Operating cash flows from finance leases​ 255​ 24​ 19Financing cash flows from finance leases​ 6,346​ 2,091​ 2,698​​​​​​​​​​ROU assets obtained in exchange for lease obligations:​ ​​ ​​ ​Finance leases​ 12,010​ 1,897​ 2,878Operating leases​ 30,342​ 22,962​ 4,313​Supplemental balance sheet information related to leases was as follows:​​​​​​​​​​​​​​December 31,​December 31,​ Balance Sheet Location​2023 2022Operating leases:​​​​​​​​Right-of-use assets​Other assets​$ 58,845​$ 38,012​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 11,088​$ 7,747Noncurrent lease liabilities​Other liabilities​​ 48,459​​ 29,586Total operating lease liabilities​​​$ 59,547​$ 37,333​​​​​​​​​Finance leases:​​​​​​​​Right-of-use assets​Property and equipment, net​$ 11,147​$ 1,598​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 6,449​$ 757Noncurrent lease liabilities​Other liabilities​​ 19​​ 41Total finance lease liabilities​​​$ 6,468​$ 798​Weighted-average remaining lease term and weighted-average discount rate for the Company's leases were as follows:​​​​​​​​​December 31,​December 31,​​ 2023 2022 Weighted-average remaining lease term in years:​​​​​Operating leases 6.3 6.7​Finance leases​ 0.7​ 0.8​​​​​​​Weighted-average discount rate:​​​​​Operating leases​ 4.7% 3.4%Finance leases 6.3% 3.6%​ Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 were as follows: ​ ​ 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 10,634 ​ $ 8,164 ​ $ 4,123 Operating cash flows from finance leases ​ 255 ​ 24 ​ 19 Financing cash flows from finance leases ​ 6,346 ​ 2,091 ​ 2,698 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ROU assets obtained in exchange for lease obligations: ​ ​ ​ ​ ​ ​ Finance leases ​ 12,010 ​ 1,897 ​ 2,878 Operating leases ​ 30,342 ​ 22,962 ​ 4,313 ​ Supplemental balance sheet information related to leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ Balance Sheet Location ​ 2023 2022 Operating leases: ​ ​ ​ ​ ​ ​ ​ ​ Right-of-use assets ​ Other assets Other assets ​ $ 58,845 ​ $ 38,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current lease liabilities ​ Accrued liabilities Accrued liabilities ​ $ 11,088 ​ $ 7,747 Noncurrent lease liabilities ​ Other liabilities Other liabilities ​ ​ 48,459 ​ ​ 29,586 Total operating lease liabilities ​ ​ ​ $ 59,547 ​ $ 37,333 ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance leases: ​ ​ ​ ​ ​ ​ ​ ​ Right-of-use assets ​ Property and equipment, net Property and equipment, net ​ $ 11,147 ​ $ 1,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current lease liabilities ​ Accrued liabilities Accrued liabilities ​ $ 6,449 ​ $ 757 Noncurrent lease liabilities ​ Other liabilities Other liabilities ​ ​ 19 ​ ​ 41 Total finance lease liabilities ​ ​ ​ $ 6,468 ​ $ 798 ​ Weighted-average remaining lease term and weighted-average discount rate for the Company's leases were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 2022 Weighted-average remaining lease term in years: ​ ​ ​ ​ ​ Operating leases 6.3 6.7 ​ Finance leases ​ 0.7 ​ 0.8 ​ ​ ​ ​ ​ ​ ​ Weighted-average discount rate: ​ ​ ​ ​ ​ Operating leases ​ 4.7 % 3.4 % Finance leases 6.3 % 3.6 % ​ 99 99 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​The following table outlines maturities of the Company's lease liabilities as of December 31, 2023:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2024​$ 13,490​$ 6,6012025​ 11,555​ 172026​ 9,522​ 22027​​ 9,216​​ - 2028​ 7,706​ - 2029 and thereafter​​ 17,822​​ - Total lease payments​ 69,311​ 6,620Less imputed interest​ (9,764)​ (152)Total​$ 59,547​$ 6,468​As of December 31, 2023, the Company did not have any significant leases that had not yet commenced.​5." **Prior (2023):** ​ ROU assets for operating and finance leases recognized in the accompanying consolidated balance sheets were comprised of the following at:​​​​​​​​​​​​​​​December 31, 2022​ Real Estate Equipment Total Balance Sheet LocationOperating leases​$ 37,682​$ 330​$ 38,012 Other AssetsFinance leases​ - ​ 1,598​ 1,598 Property and Equipment, net​​​​​​​​​​​​​​​December 31, 2021​ Real Estate Equipment Total Balance Sheet LocationOperating leases​$ 22,518​$ 639​$ 23,157 Other AssetsFinance leases​ - ​ 2,646​ 2,646 Property and Equipment, net​Operating and finance lease liabilities recognized in the consolidated balance sheets were as follows at:​​​​​​​​​​December 31, 2022​ Operating Leases Finance LeasesAccrued liabilities​$ 7,747​$ 757Other liabilities​ 29,586​ 41Total​$ 37,333​$ 798​​​​​​​​​​December 31, 2021​ Operating Leases Finance LeasesAccrued liabilities​$ 3,990​$ 960Other liabilities​ 17,389​ 41Total​$ 21,379​$ 1,001​The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows at:​​​​​​​​​December 31, 2022​​ Operating Leases Finance Leases Weighted-average remaining lease term (years) 6.7 0.8​Weighted-average discount rate 3.4% 3.6%​​​​​​​​​December 31, 2021​​ Operating Leases Finance Leases​Weighted-average remaining lease term (years) 8.1​ 0.7​Weighted-average discount rate 3.5% 1.3%​ ROU assets for operating and finance leases recognized in the accompanying consolidated balance sheets were comprised of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Real Estate Equipment Total Balance Sheet Location Operating leases ​ $ 37,682 ​ $ 330 ​ $ 38,012 Other Assets Finance leases ​ - ​ 1,598 ​ 1,598 Property and Equipment, net ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Real Estate Equipment Total Balance Sheet Location Operating leases Operating leases ​ $ 22,518 ​ $ 639 ​ $ 23,157 Other Assets Finance leases Finance leases ​ - ​ 2,646 ​ 2,646 Property and Equipment, net ​ Operating and finance lease liabilities recognized in the consolidated balance sheets were as follows at: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ Operating Leases Finance Leases Accrued liabilities Accrued liabilities ​ $ 7,747 ​ $ 757 Other liabilities ​ 29,586 ​ 41 Total Total ​ $ 37,333 ​ $ 798 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ Operating Leases Finance Leases Accrued liabilities ​ $ 3,990 ​ $ 960 Other liabilities ​ 17,389 ​ 41 Total ​ $ 21,379 ​ $ 1,001 ​ The weighted-average remaining lease terms and weighted-average discount rates for operating and finance leases were as follows at: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2022 ​ ​ Operating Leases Finance Leases Weighted-average remaining lease term (years) 6.7 0.8 ​ Weighted-average discount rate 3.4 % 3.6 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2021 ​ ​ Operating Leases Finance Leases ​ Weighted-average remaining lease term (years) 8.1 ​ 0.7 ​ Weighted-average discount rate 3.5 % 1.3 % ​ 99 99 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​The following table reconciles the undiscounted future lease payments for operating and finance leases to the operating and finance leases recorded in the consolidated balance sheet at December 31, 2022:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2023​$ 8,854​$ 7692024​ 7,324​ 232025​ 5,242​ 172026​ 4,182​ 22027​​ 4,060​​ - 2028 and thereafter​ 12,349​ - Total lease payments​ 42,011​ 811Less imputed interest​ (4,678)​ (13)Total​$ 37,333​$ 798​As of December 31, 2022, the Company had an additional operating lease for office and warehouse space that had not yet commenced of $1.1 million. This operating lease will commence in 2023 with a term of four years. As of December 31, 2022, the Company did not have any significant additional finance leases that had not yet commenced.​5. INVESTMENTSThe following table summarizes the Company's investments at:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Continuous​Continuous​​​​​Gross​Gross​​​​Unrealized​Unrealized​​​​​Unrealized​Unrealized​​​​Loss Position​Loss Position​​Amortized​Holding​Holding​Fair​less than 12​greater than December 31, 2022 Cost Gains Losses Value Months 12 MonthsAvailable-for-sale​​​​​​​​​​​​​​​​​​Short-term:​​​​​​​​​​​​​​​​​​Commercial paper​$ 197,712​$ 1​$ 4​$ 197,709​$ 4​$ - Certificates of deposit​​ 10,078​​ - ​​ - ​​ 10,078​​ - ​​ - Municipal securities​ 211,791​​ 60​​ 612​​ 211,239​​ 612​​ - U.S. government agency securities​ 109,697​ 3​ 715​ 108,985​ 715​ - U.S. treasuries​​ 838,825​ 17​ 4,539​ 834,303​ 4,539​ - Long-term:​​​​​​​​​​​​​​​​​​U.S. government agency securities​​ 2,016​​ - ​​ 3​​ 2,013​​ 3​​ - U.S. treasuries​​ 53,215​​ 20​​ 71​​ 53,164​​ 71​​ - Variable rate demand notes​​ 6,266​​ - ​​ - ​​ 6,266​​ - ​​ - Total​$ 1,429,600​$ 101​$ 5,944​$ 1,423,757​$ 5,944​$ - ​100 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents **Current (2024):** ​ Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 were as follows:​​ 2023 2022 2021Cash paid for amounts included in the measurement of lease liabilities:​​ ​​ ​​ Operating cash flows from operating leases​$ 10,634​$ 8,164​$ 4,123Operating cash flows from finance leases​ 255​ 24​ 19Financing cash flows from finance leases​ 6,346​ 2,091​ 2,698​​​​​​​​​​ROU assets obtained in exchange for lease obligations:​ ​​ ​​ ​Finance leases​ 12,010​ 1,897​ 2,878Operating leases​ 30,342​ 22,962​ 4,313​Supplemental balance sheet information related to leases was as follows:​​​​​​​​​​​​​​December 31,​December 31,​ Balance Sheet Location​2023 2022Operating leases:​​​​​​​​Right-of-use assets​Other assets​$ 58,845​$ 38,012​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 11,088​$ 7,747Noncurrent lease liabilities​Other liabilities​​ 48,459​​ 29,586Total operating lease liabilities​​​$ 59,547​$ 37,333​​​​​​​​​Finance leases:​​​​​​​​Right-of-use assets​Property and equipment, net​$ 11,147​$ 1,598​​​​​​​​​Current lease liabilities​Accrued liabilities​$ 6,449​$ 757Noncurrent lease liabilities​Other liabilities​​ 19​​ 41Total finance lease liabilities​​​$ 6,468​$ 798​Weighted-average remaining lease term and weighted-average discount rate for the Company's leases were as follows:​​​​​​​​​December 31,​December 31,​​ 2023 2022 Weighted-average remaining lease term in years:​​​​​Operating leases 6.3 6.7​Finance leases​ 0.7​ 0.8​​​​​​​Weighted-average discount rate:​​​​​Operating leases​ 4.7% 3.4%Finance leases 6.3% 3.6%​ Supplemental cash flow information related to leases for the years ended December 31, 2023, 2022 and 2021 were as follows: ​ ​ 2023 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: ​ ​ ​ ​ ​ ​ Operating cash flows from operating leases ​ $ 10,634 ​ $ 8,164 ​ $ 4,123 Operating cash flows from finance leases ​ 255 ​ 24 ​ 19 Financing cash flows from finance leases ​ 6,346 ​ 2,091 ​ 2,698 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ROU assets obtained in exchange for lease obligations: ​ ​ ​ ​ ​ ​ Finance leases ​ 12,010 ​ 1,897 ​ 2,878 Operating leases ​ 30,342 ​ 22,962 ​ 4,313 ​ Supplemental balance sheet information related to leases was as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ Balance Sheet Location ​ 2023 2022 Operating leases: ​ ​ ​ ​ ​ ​ ​ ​ Right-of-use assets ​ Other assets Other assets ​ $ 58,845 ​ $ 38,012 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current lease liabilities ​ Accrued liabilities Accrued liabilities ​ $ 11,088 ​ $ 7,747 Noncurrent lease liabilities ​ Other liabilities Other liabilities ​ ​ 48,459 ​ ​ 29,586 Total operating lease liabilities ​ ​ ​ $ 59,547 ​ $ 37,333 ​ ​ ​ ​ ​ ​ ​ ​ ​ Finance leases: ​ ​ ​ ​ ​ ​ ​ ​ Right-of-use assets ​ Property and equipment, net Property and equipment, net ​ $ 11,147 ​ $ 1,598 ​ ​ ​ ​ ​ ​ ​ ​ ​ Current lease liabilities ​ Accrued liabilities Accrued liabilities ​ $ 6,449 ​ $ 757 Noncurrent lease liabilities ​ Other liabilities Other liabilities ​ ​ 19 ​ ​ 41 Total finance lease liabilities ​ ​ ​ $ 6,468 ​ $ 798 ​ Weighted-average remaining lease term and weighted-average discount rate for the Company's leases were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ December 31, ​ ​ 2023 2022 Weighted-average remaining lease term in years: ​ ​ ​ ​ ​ Operating leases 6.3 6.7 ​ Finance leases ​ 0.7 ​ 0.8 ​ ​ ​ ​ ​ ​ ​ Weighted-average discount rate: ​ ​ ​ ​ ​ Operating leases ​ 4.7 % 3.4 % Finance leases 6.3 % 3.6 % ​ 99 99 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​The following table outlines maturities of the Company's lease liabilities as of December 31, 2023:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2024​$ 13,490​$ 6,6012025​ 11,555​ 172026​ 9,522​ 22027​​ 9,216​​ - 2028​ 7,706​ - 2029 and thereafter​​ 17,822​​ - Total lease payments​ 69,311​ 6,620Less imputed interest​ (9,764)​ (152)Total​$ 59,547​$ 6,468​As of December 31, 2023, the Company did not have any significant leases that had not yet commenced.​5. INVESTMENTSThe following table summarizes the Company's investments at:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Continuous​Continuous​​​​​Gross​Gross​​​​Unrealized​Unrealized​​​​​Unrealized​Unrealized​​​​Loss Position​Loss Position​​Amortized​Holding​Holding​Fair​less than 12​greater than December 31, 2023 Cost Gains Losses Value Months 12 MonthsAvailable-for-sale​​​​​​​​​​​​​​​​​​Short-term:​​​​​​​​​​​​​​​​​​Commercial paper​$ 163,775​$ - ​$ 1​$ 163,774​$ 1​$ - Certificates of deposit​​ 15,590​​ - ​​ - ​​ 15,590​​ - ​​ - Municipal securities​ 361​​ - ​​ - ​​ 361​​ - ​​ - U.S. government agency securities​ 116,524​ 90​ 66​ 116,548​ 66​ - U.S. treasuries​​ 412,936​ 205​ 1,084​ 412,057​ 1,084​ - Corporate bonds​​ 247,340​​ 89​​ 154​​ 247,275​​ 154​​ - Long-term:​​​​​​​​​​​​​​​​​​U.S. government agency securities​​ 23,485​​ 51​​ 5​​ 23,531​​ 5​​ - U.S. treasuries​​ 35,896​​ 79​​ 8​​ 35,967​​ 8​​ - Corporate bonds​​ 16,903​​ 32​​ 2​​ 16,933​​ 2​​ - Total​$ 1,032,810​$ 546​$ 1,320​$ 1,032,036​$ 1,320​$ - ​100 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Tabular Dollars in Thousands, Except Per Share Amounts)​ Table of Contents Table of Contents --- ## Modified: Pricing Actions **Key changes:** - Reworded sentence: "We implemented pricing actions including (i) price increases effective April 1, 2022 (limited pack sizes), September 1, 2022 and April 1, 2023 (limited pack sizes) in the United States, (ii) price increases at various times in certain international markets during 2022 and 2023 and (iii) decreased promotional allowances as a percentage of net sales in certain markets during 2022 and 2023 (collectively, the "Pricing Actions")." **Prior (2023):** As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below. 45 45 Table of ContentsOur BusinessOverviewWe develop, market, sell and distribute 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®●True North®●NOS®●Full Throttle®●Burn®●Mother®●Nalu®●Ultra Energy®●Play® and Power Play® (stylized)●Relentless®●BPM®●BU®●Gladiator®●Samurai®●Live+®●Predator®●Fury®​We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands.We also develop, market, sell and distribute still and sparkling waters under the Monster® Tour WaterTM brand name.Our net sales of $6.31 billion for the year ended December 31, 2022 represented record annual net sales. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022.The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Our Monster Energy® Drinks segment represented 92.4% and 94.2% of our net sales for the years ended December 31, 2022 and 2021, respectively. Our Strategic Brands segment represented 5.6% and 5.3% of our net sales for the years ended December 31, 2022 and 2021, respectively. Our Alcohol Brands segment represented 1.6% of our net sales for the year ended December 31, 2022. Our Other segment represented 0.4% and 0.5% of our net sales for the years ended December 31, 2022 and 2021, respectively. Net changes in foreign currency exchange rates had an unfavorable impact on our net sales of the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022.Our growth strategy includes further developing our domestic markets, expanding our international business and growing our business into new sectors, such as the alcohol beverage sector. Net sales to customers outside the United States amounted to $2.36 billion and $2.04 billion for the years ended December 31, 2022 and 2021, respectively. Such sales were 46 Table of Contents Table of Contents Table of Contents Our BusinessOverviewWe develop, market, sell and distribute 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®●True North®●NOS®●Full Throttle®●Burn®●Mother®●Nalu®●Ultra Energy®●Play® and Power Play® (stylized)●Relentless®●BPM®●BU®●Gladiator®●Samurai®●Live+®●Predator®●Fury®​We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild BasinTM Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast UnleashedTM and a host of other brands.We also develop, market, sell and distribute still and sparkling waters under the Monster® Tour WaterTM brand name.Our net sales of $6.31 billion for the year ended December 31, 2022 represented record annual net sales. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $239.5 million for the year ended December 31, 2022.The vast majority of our net sales are derived from our Monster Energy® Drinks segment. Our Monster Energy® Drinks segment represented 92.4% and 94.2% of our net sales for the years ended December 31, 2022 and 2021, respectively. Our Strategic Brands segment represented 5.6% and 5.3% of our net sales for the years ended December 31, 2022 and 2021, respectively. Our Alcohol Brands segment represented 1.6% of our net sales for the year ended December 31, 2022. Our Other segment represented 0.4% and 0.5% of our net sales for the years ended December 31, 2022 and 2021, respectively. Net changes in foreign currency exchange rates had an unfavorable impact on our net sales of the Monster Energy® Drinks segment of approximately $222.3 million for the year ended December 31, 2022. Net changes in foreign currency exchange rates had an unfavorable impact on net sales in the Strategic Brands segment of approximately $17.2 million for the year ended December 31, 2022.Our growth strategy includes further developing our domestic markets, expanding our international business and growing our business into new sectors, such as the alcohol beverage sector. Net sales to customers outside the United States amounted to $2.36 billion and $2.04 billion for the years ended December 31, 2022 and 2021, respectively. Such sales were **Current (2024):** We implemented pricing actions including (i) price increases effective April 1, 2022 (limited pack sizes), September 1, 2022 and April 1, 2023 (limited pack sizes) in the United States, (ii) price increases at various times in certain international markets during 2022 and 2023 and (iii) decreased promotional allowances as a percentage of net sales in certain markets during 2022 and 2023 (collectively, the "Pricing Actions"). The Pricing Actions positively impacted gross profit margins in 2023. 45 45 Table of ContentsGross Profit Margins​During the year ended December 31, 2023, we experienced an improvement in our gross profit margins as compared to the year ended December 31, 2022. This improvement was primarily attributable to (i) the Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs.​During the COVID-19 pandemic we prioritized ensuring product availability for our customers and consumers. This strategic direction remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands.​We continue to address the controllable challenges in our supply chain.Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below.Our BusinessOverviewWe develop, market, sell and distribute 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®●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®●Fury®​We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM Hard Tea and a host of other brands.​We also develop, market, sell and distribute still and sparkling waters under the Monster Tour Water® brand name.​Our net sales of $7.14 billion for the year ended December 31, 2023 represented record annual net sales. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023.46 Table of Contents Table of Contents Table of Contents Gross Profit Margins​During the year ended December 31, 2023, we experienced an improvement in our gross profit margins as compared to the year ended December 31, 2022. This improvement was primarily attributable to (i) the Pricing Actions, (ii) our decreased reliance on imported cans and (iii) improved finished product inventory levels in closer proximity to our customers, resulting in a reduction of long-distance freight costs.​During the COVID-19 pandemic we prioritized ensuring product availability for our customers and consumers. This strategic direction remained in place throughout the global supply chain challenges and disruptions, despite adversely impacting our profitability. We continue to stand by our strategy to ensure product availability and solidify the continued long-term growth of our brands.​We continue to address the controllable challenges in our supply chain.Liquidity and Capital Resources As of the date of this filing, we expect to maintain substantial liquidity as we manage through the current environment as described in the "Liquidity and Capital Resources" section below.Our BusinessOverviewWe develop, market, sell and distribute 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®●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®●Fury®​We also develop, market, sell and distribute craft beers, FMBs and hard seltzers under a number of brands, including Jai Alai® IPA, Florida ManTM IPA, Dale's Pale Ale®, Wild Basin® Hard Seltzers, Dallas Blonde®, Deep EllumTM IPA, Perrin Brewing CompanyTM Black Ale, Hop Rising® Double IPA, Wasatch® Apricot Hefeweizen, The Beast Unleashed®, Nasty BeastTM Hard Tea and a host of other brands.​We also develop, market, sell and distribute still and sparkling waters under the Monster Tour Water® brand name.​Our net sales of $7.14 billion for the year ended December 31, 2023 represented record annual net sales. Net changes in foreign currency exchange rates had an unfavorable impact on net sales of approximately $146.7 million for the year ended December 31, 2023. --- ## Modified: Critical Audit Matter **Key changes:** - Reworded sentence: "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." **Prior (2023):** 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. 78 78 Table of ContentsAccrued Promotional Allowances - Refer to Note 3 to the financial statementsCritical Audit Matter DescriptionThe 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 AuditOur 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.79 Table of Contents Table of Contents Table of Contents Accrued Promotional Allowances - Refer to Note 3 to the financial statementsCritical Audit Matter DescriptionThe 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 AuditOur 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. **Current (2024):** 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. 78 78 Table of ContentsThe 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 AllowancesDescription 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​​​79 Table of Contents Table of Contents Table of Contents 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 AllowancesDescription 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​​​ 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. ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: (In Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET SALES ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ COST OF SALES ​ 3,345,821 ​ 3,136,483 ​ 2,432,839 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GROSS PROFIT ​ 3,794,206 ​ 3,174,567 ​ 3,108,513 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ 1,840,851 ​ 1,589,846 ​ 1,311,046 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING INCOME ​ 1,953,355 ​ 1,584,721 ​ 1,797,467 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST AND OTHER INCOME (EXPENSE), NET ​ 115,127 ​ (12,757) ​ 3,952 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INCOME BEFORE PROVISION FOR INCOME TAXES ​ 2,068,482 ​ 1,571,964 ​ 1,801,419 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROVISION FOR INCOME TAXES ​ ​ 437,494 ​ ​ 380,340 ​ ​ 423,944 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME PER COMMON SHARE1: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.56 ​ $ 1.13 ​ $ 1.30 Diluted ​ $ 1.54 ​ $ 1.12 ​ $ 1.29 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS1: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 1,044,887 ​ 1,053,558 ​ 1,057,526 Diluted ​ 1,057,981 ​ 1,066,442 ​ 1,071,278 ​ 1Stock Split - The accompanying consolidated financial statements and notes thereto have been retroactively updated to reflect the Stock Split." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET SALES ​ $ 6,311,050 ​ $ 5,541,352 ​ $ 4,598,638 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ COST OF SALES ​ 3,136,483 ​ 2,432,839 ​ 1,874,758 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GROSS PROFIT ​ 3,174,567 ​ 3,108,513 ​ 2,723,880 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ 1,589,846 ​ 1,311,046 ​ 1,090,727 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING INCOME ​ 1,584,721 ​ 1,797,467 ​ 1,633,153 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OTHER (EXPENSE) INCOME , NET ​ (12,757) ​ 3,952 ​ (6,996) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INCOME BEFORE PROVISION FOR INCOME TAXES ​ 1,571,964 ​ 1,801,419 ​ 1,626,157 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROVISION FOR INCOME TAXES ​ ​ 380,340 ​ ​ 423,944 ​ ​ 216,563 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 1,191,624 ​ $ 1,377,475 ​ $ 1,409,594 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME PER COMMON SHARE: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 2.26 ​ $ 2.61 ​ $ 2.66 Diluted ​ $ 2.23 ​ $ 2.57 ​ $ 2.64 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 526,779 ​ 528,763 ​ 529,639 Diluted ​ 533,221 ​ 535,639 ​ 534,807 ​ See accompanying notes to consolidated financial statements. ​ 82 82 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​ 2022 2021 2020Net income, as reported​$ 1,191,624​$ 1,377,475​$ 1,409,594Other comprehensive income (loss):​​​​​​​​​Change in foreign currency translation adjustment, net of tax​ (85,021)​ (71,158)​ 35,531Available-for-sale investments:​​​​​​​​​Change in net unrealized losses​ (4,887)​ (1,041)​ (110)Reclassification adjustment for net gains included in net income​ - ​ - ​ - Net change in available-for-sale investments​ (4,887)​ (1,041)​ (110)Other comprehensive income (loss)​ (89,908)​ (72,199)​ 35,421Comprehensive income​$ 1,101,716​$ 1,305,276​$ 1,445,015​See accompanying notes to consolidated financial statements.​83 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​ 2022 2021 2020Net income, as reported​$ 1,191,624​$ 1,377,475​$ 1,409,594Other comprehensive income (loss):​​​​​​​​​Change in foreign currency translation adjustment, net of tax​ (85,021)​ (71,158)​ 35,531Available-for-sale investments:​​​​​​​​​Change in net unrealized losses​ (4,887)​ (1,041)​ (110)Reclassification adjustment for net gains included in net income​ - ​ - ​ - Net change in available-for-sale investments​ (4,887)​ (1,041)​ (110)Other comprehensive income (loss)​ (89,908)​ (72,199)​ 35,421Comprehensive income​$ 1,101,716​$ 1,305,276​$ 1,445,015​See accompanying notes to consolidated financial statements.​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET SALES ​ $ 7,140,027 ​ $ 6,311,050 ​ $ 5,541,352 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ COST OF SALES ​ 3,345,821 ​ 3,136,483 ​ 2,432,839 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ GROSS PROFIT ​ 3,794,206 ​ 3,174,567 ​ 3,108,513 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING EXPENSES ​ 1,840,851 ​ 1,589,846 ​ 1,311,046 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ OPERATING INCOME ​ 1,953,355 ​ 1,584,721 ​ 1,797,467 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INTEREST AND OTHER INCOME (EXPENSE), NET ​ 115,127 ​ (12,757) ​ 3,952 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ INCOME BEFORE PROVISION FOR INCOME TAXES ​ 2,068,482 ​ 1,571,964 ​ 1,801,419 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ PROVISION FOR INCOME TAXES ​ ​ 437,494 ​ ​ 380,340 ​ ​ 423,944 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ NET INCOME PER COMMON SHARE1: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.56 ​ $ 1.13 ​ $ 1.30 Diluted ​ $ 1.54 ​ $ 1.12 ​ $ 1.29 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS1: ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 1,044,887 ​ 1,053,558 ​ 1,057,526 Diluted ​ 1,057,981 ​ 1,066,442 ​ 1,071,278 ​ 1Stock 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. ​ 82 82 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​ 2023 2022 2021Net income, as reported​$ 1,630,988​$ 1,191,624​$ 1,377,475Other comprehensive income (loss):​​​​​​​​​Change in foreign currency translation adjustment​ 24,241​ (85,021)​ (71,158)Available-for-sale investments:​​​​​​​​​Change in net unrealized gains (losses) ​ 5,085​ (4,887)​ (1,041)Net gains on commodity derivatives​ 4,410​ - ​ - Other comprehensive income (loss)​ 33,736​ (89,908)​ (72,199)Comprehensive income​$ 1,664,724​$ 1,101,716​$ 1,305,276​See accompanying notes to consolidated financial statements.​83 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​ 2023 2022 2021Net income, as reported​$ 1,630,988​$ 1,191,624​$ 1,377,475Other comprehensive income (loss):​​​​​​​​​Change in foreign currency translation adjustment​ 24,241​ (85,021)​ (71,158)Available-for-sale investments:​​​​​​​​​Change in net unrealized gains (losses) ​ 5,085​ (4,887)​ (1,041)Net gains on commodity derivatives​ 4,410​ - ​ - Other comprehensive income (loss)​ 33,736​ (89,908)​ (72,199)Comprehensive income​$ 1,664,724​$ 1,101,716​$ 1,305,276​See accompanying notes to consolidated financial statements.​ --- ## Modified: LIABILITIES AND STOCKHOLDERS' EQUITY **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 564,379 $ 444,265 Accrued liabilities ​ 183,988 172,991 Accrued promotional allowances ​ 269,061 255,631 Deferred revenue ​ 41,914 43,311 Accrued compensation ​ 87,392 72,463 Income taxes payable ​ 14,955 13,317 Total current liabilities ​ 1,161,689 1,001,978 ​ ​ ​ ​ ​ ​ ​ DEFERRED REVENUE ​ 204,251 223,800 ​ ​ ​ ​ ​ ​ ​ OTHER LIABILITIES ​ ​ 91,838 ​ ​ 42,286 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS' EQUITY1: ​ ​ ​ ​ ​ ​ Common stock - $0.005 par value; 5,000,000 shares authorized; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023;1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022 ​ ​ 5,613 ​ ​ 6,418 Additional paid-in capital ​ 4,975,115 4,776,804 Retained earnings ​ 5,939,736 9,001,173 Accumulated other comprehensive loss ​ (125,337) (159,073) Common stock in treasury, at cost; 81,021 shares and 239,088 shares as of December 31, 2023 and December 31, 2022, respectively ​ (2,566,383) (6,600,281) Total stockholders' equity ​ 8,228,744 7,025,041" **Prior (2023):** ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 444,265 $ 404,263 Accrued liabilities ​ 172,991 210,964 Accrued promotional allowances ​ 255,631 211,461 Deferred revenue ​ 43,311 42,530 Accrued compensation ​ 72,463 65,459 Income taxes payable ​ 13,317 30,399 Total current liabilities ​ 1,001,978 965,076 ​ ​ ​ ​ ​ ​ ​ DEFERRED REVENUE ​ 223,800 243,249 ​ ​ ​ ​ ​ ​ ​ OTHER LIABILITIES ​ ​ 42,286 ​ ​ 29,508 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS' EQUITY: ​ ​ ​ ​ ​ ​ Common stock - $0.005 par value; 1,250,000 shares authorized; 641,844 shares issued and 522,300 shares outstanding as of December 31, 2022; 640,043 shares issued and 529,323 shares outstanding as of December 31, 2021 ​ ​ 3,209 ​ ​ 3,200 Additional paid-in capital ​ 4,780,013 4,652,620 Retained earnings ​ 9,001,173 7,809,549 Accumulated other comprehensive loss ​ (159,073) (69,165) Common stock in treasury, at cost; 119,544 shares and 110,720 shares as of December 31, 2022 and December 31, 2021, respectively ​ (6,600,281) (5,829,253) Total stockholders' equity ​ 7,025,041 6,566,951 **Current (2024):** ​ ​ ​ ​ ​ ​ CURRENT LIABILITIES: ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 564,379 $ 444,265 Accrued liabilities ​ 183,988 172,991 Accrued promotional allowances ​ 269,061 255,631 Deferred revenue ​ 41,914 43,311 Accrued compensation ​ 87,392 72,463 Income taxes payable ​ 14,955 13,317 Total current liabilities ​ 1,161,689 1,001,978 ​ ​ ​ ​ ​ ​ ​ DEFERRED REVENUE ​ 204,251 223,800 ​ ​ ​ ​ ​ ​ ​ OTHER LIABILITIES ​ ​ 91,838 ​ ​ 42,286 ​ ​ ​ ​ ​ ​ ​ COMMITMENTS AND CONTINGENCIES (Note 13) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ STOCKHOLDERS' EQUITY1: ​ ​ ​ ​ ​ ​ Common stock - $0.005 par value; 5,000,000 shares authorized; 1,122,592 shares issued and 1,041,571 shares outstanding as of December 31, 2023;1,283,688 shares issued and 1,044,600 shares outstanding as of December 31, 2022 ​ ​ 5,613 ​ ​ 6,418 Additional paid-in capital ​ 4,975,115 4,776,804 Retained earnings ​ 5,939,736 9,001,173 Accumulated other comprehensive loss ​ (125,337) (159,073) Common stock in treasury, at cost; 81,021 shares and 239,088 shares as of December 31, 2023 and December 31, 2022, respectively ​ (2,566,383) (6,600,281) Total stockholders' equity ​ 8,228,744 7,025,041 --- ## Modified: Balance, January 1, 2021 **Key changes:** - Reworded sentence: "1,277,324 $ 6,386 $ 4,534,789 $ 6,432,074 $ 3,034 (221,130) $ (5,815,423) $ 5,160,860 Stock-based compensation - ​ ​ - ​ ​ 68,922 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 68,922 Stock options/awards 2,762 ​ ​ 14 ​ ​ 45,709 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 45,723 Unrealized gain (loss), net on available-for-sale securities - ​ - ​ - ​ - ​ (1,041) - ​ - ​ (1,041) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (310) ​ ​ (13,830) ​ ​ (13,830) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ (71,158) ​ - ​ ​ - ​ ​ (71,158) Net income - ​ ​ - ​ ​ - ​ ​ 1,377,475 ​ ​ - ​ - ​ ​ - ​ ​ 1,377,475" **Prior (2023):** ​ 638,662 ​ $ 3,193 ​ $ 4,537,982 ​ $ 6,432,074 ​ $ 3,034 ​ (110,565) ​ $ (5,815,423) ​ $ 5,160,860 Stock-based compensation - ​ ​ - ​ ​ 68,922 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 68,922 Exercise of stock options 1,381 ​ ​ 7 ​ ​ 45,716 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 45,723 Unrealized loss on available-for-sale securities - ​ ​ - ​ ​ - ​ ​ - ​ ​ (1,041) ​ - ​ ​ - ​ ​ (1,041) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (155) ​ ​ (13,830) ​ ​ (13,830) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ (71,158) ​ - ​ ​ - ​ ​ (71,158) Net income - ​ ​ - ​ ​ - ​ ​ 1,377,475 ​ ​ - ​ - ​ ​ - ​ ​ 1,377,475 **Current (2024):** 1,277,324 $ 6,386 $ 4,534,789 $ 6,432,074 $ 3,034 (221,130) $ (5,815,423) $ 5,160,860 Stock-based compensation - ​ ​ - ​ ​ 68,922 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 68,922 Stock options/awards 2,762 ​ ​ 14 ​ ​ 45,709 ​ ​ - ​ ​ - ​ - ​ ​ - ​ ​ 45,723 Unrealized gain (loss), net on available-for-sale securities - ​ - ​ - ​ - ​ (1,041) - ​ - ​ (1,041) Repurchase of common stock - ​ ​ - ​ ​ - ​ ​ - ​ ​ - ​ (310) ​ ​ (13,830) ​ ​ (13,830) Foreign currency translation - ​ ​ - ​ ​ - ​ ​ - ​ ​ (71,158) ​ - ​ ​ - ​ ​ (71,158) Net income - ​ ​ - ​ ​ - ​ ​ 1,377,475 ​ ​ - ​ - ​ ​ - ​ ​ 1,377,475 --- ## Modified: FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands) **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ --- ## Modified: FOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands) **Key changes:** - Reworded sentence: "​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net income, as reported ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustment ​ 24,241 ​ (85,021) ​ (71,158) Available-for-sale investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in net unrealized gains (losses) ​ 5,085 ​ (4,887) ​ (1,041) Net gains on commodity derivatives ​ 4,410 ​ - ​ - Other comprehensive income (loss) ​ 33,736 ​ (89,908) ​ (72,199) Comprehensive income ​ $ 1,664,724 ​ $ 1,101,716 ​ $ 1,305,276 ​ See accompanying notes to consolidated financial statements." **Prior (2023):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 2021 2020 Net income, as reported ​ $ 1,191,624 ​ $ 1,377,475 ​ $ 1,409,594 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustment, net of tax ​ (85,021) ​ (71,158) ​ 35,531 Available-for-sale investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in net unrealized losses ​ (4,887) ​ (1,041) ​ (110) Reclassification adjustment for net gains included in net income ​ - ​ - ​ - Net change in available-for-sale investments ​ (4,887) ​ (1,041) ​ (110) Other comprehensive income (loss) ​ (89,908) ​ (72,199) ​ 35,421 Comprehensive income ​ $ 1,101,716 ​ $ 1,305,276 ​ $ 1,445,015 ​ See accompanying notes to consolidated financial statements. ​ 83 83 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​​​​​​​​​​​​​​Other​​​​​​Total​​Common Stock​Additional​Retained​Comprehensive​Treasury Stock​Stockholders'​ Shares Amount Paid-in Capital Earnings (Loss) Income Shares Amount EquityBalance, January 1, 2020 636,460 $ 3,182 $ 4,397,511 $ 5,022,480 $ (32,387) (99,762) $ (5,219,505) $ 4,171,281Stock-based compensation - ​​ - ​​ 67,546​​ - ​​ - ​ - ​​ - ​​ 67,546Exercise of stock options 2,202​​ 11​​ 72,925​​ - ​​ - ​ - ​​ - ​​ 72,936Unrealized loss on available-for-sale securities - ​ - ​ - ​ - ​ (110) - ​ - ​ (110)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (10,803)​​ (595,918)​​ (595,918)Foreign currency translation - ​​ - ​​ - ​​ - ​​ 35,531​ - ​​ - ​​ 35,531Net income - ​​ - ​​ - ​​ 1,409,594​​ - ​ - ​​ - ​​ 1,409,594Balance, December 31, 2020​ 638,662​$ 3,193​$ 4,537,982​$ 6,432,074​$ 3,034​ (110,565)​$ (5,815,423)​$ 5,160,860Stock-based compensation - ​​ - ​​ 68,922​​ - ​​ - ​ - ​​ - ​​ 68,922Exercise of stock options 1,381​​ 7​​ 45,716​​ - ​​ - ​ - ​​ - ​​ 45,723Unrealized loss on available-for-sale securities - ​​ - ​​ - ​​ - ​​ (1,041)​ - ​​ - ​​ (1,041)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (155)​​ (13,830)​​ (13,830)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (71,158)​ - ​​ - ​​ (71,158)Net income - ​​ - ​​ - ​​ 1,377,475​​ - ​ - ​​ - ​​ 1,377,475Balance, December 31, 2021 640,043 $ 3,200 $ 4,652,620 $ 7,809,549 $ (69,165)​ (110,720) $ (5,829,253) $ 6,566,951Stock-based compensation ​ - ​​ - ​​ 63,387​​ - ​​ - ​ - ​​ - ​​ 63,387Exercise of stock options ​ 1,801​​ 9​​ 64,006​​ - ​​ - ​ - ​​ - ​​ 64,015Unrealized loss on available-for-sale securities​ - ​​ - ​​ - ​​ - ​​ (4,887)​ - ​​ - ​​ (4,887)Repurchase of common stock ​ - ​​ - ​​ - ​​ - ​​ - ​ (8,824)​​ (771,028)​​ (771,028)Foreign currency translation ​ - ​​ - ​​ - ​​ - ​​ (85,021)​ - ​​ - ​​ (85,021)Net income - ​​ - ​​ - ​​ 1,191,624​​ - ​ - ​​ - ​​ 1,191,624Balance, December 31, 2022 641,844​$ 3,209​$ 4,780,013​$ 9,001,173​$ (159,073)​ (119,544)​$ (6,600,281)​$ 7,025,041​See accompanying notes to consolidated financial statements.​84 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020 (In Thousands)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​​​​​​​​​​​​​​Other​​​​​​Total​​Common Stock​Additional​Retained​Comprehensive​Treasury Stock​Stockholders'​ Shares Amount Paid-in Capital Earnings (Loss) Income Shares Amount EquityBalance, January 1, 2020 636,460 $ 3,182 $ 4,397,511 $ 5,022,480 $ (32,387) (99,762) $ (5,219,505) $ 4,171,281Stock-based compensation - ​​ - ​​ 67,546​​ - ​​ - ​ - ​​ - ​​ 67,546Exercise of stock options 2,202​​ 11​​ 72,925​​ - ​​ - ​ - ​​ - ​​ 72,936Unrealized loss on available-for-sale securities - ​ - ​ - ​ - ​ (110) - ​ - ​ (110)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (10,803)​​ (595,918)​​ (595,918)Foreign currency translation - ​​ - ​​ - ​​ - ​​ 35,531​ - ​​ - ​​ 35,531Net income - ​​ - ​​ - ​​ 1,409,594​​ - ​ - ​​ - ​​ 1,409,594Balance, December 31, 2020​ 638,662​$ 3,193​$ 4,537,982​$ 6,432,074​$ 3,034​ (110,565)​$ (5,815,423)​$ 5,160,860Stock-based compensation - ​​ - ​​ 68,922​​ - ​​ - ​ - ​​ - ​​ 68,922Exercise of stock options 1,381​​ 7​​ 45,716​​ - ​​ - ​ - ​​ - ​​ 45,723Unrealized loss on available-for-sale securities - ​​ - ​​ - ​​ - ​​ (1,041)​ - ​​ - ​​ (1,041)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (155)​​ (13,830)​​ (13,830)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (71,158)​ - ​​ - ​​ (71,158)Net income - ​​ - ​​ - ​​ 1,377,475​​ - ​ - ​​ - ​​ 1,377,475Balance, December 31, 2021 640,043 $ 3,200 $ 4,652,620 $ 7,809,549 $ (69,165)​ (110,720) $ (5,829,253) $ 6,566,951Stock-based compensation ​ - ​​ - ​​ 63,387​​ - ​​ - ​ - ​​ - ​​ 63,387Exercise of stock options ​ 1,801​​ 9​​ 64,006​​ - ​​ - ​ - ​​ - ​​ 64,015Unrealized loss on available-for-sale securities​ - ​​ - ​​ - ​​ - ​​ (4,887)​ - ​​ - ​​ (4,887)Repurchase of common stock ​ - ​​ - ​​ - ​​ - ​​ - ​ (8,824)​​ (771,028)​​ (771,028)Foreign currency translation ​ - ​​ - ​​ - ​​ - ​​ (85,021)​ - ​​ - ​​ (85,021)Net income - ​​ - ​​ - ​​ 1,191,624​​ - ​ - ​​ - ​​ 1,191,624Balance, December 31, 2022 641,844​$ 3,209​$ 4,780,013​$ 9,001,173​$ (159,073)​ (119,544)​$ (6,600,281)​$ 7,025,041​See accompanying notes to consolidated financial statements.​ **Current (2024):** ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 2022 2021 Net income, as reported ​ $ 1,630,988 ​ $ 1,191,624 ​ $ 1,377,475 Other comprehensive income (loss): ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in foreign currency translation adjustment ​ 24,241 ​ (85,021) ​ (71,158) Available-for-sale investments: ​ ​ ​ ​ ​ ​ ​ ​ ​ Change in net unrealized gains (losses) ​ 5,085 ​ (4,887) ​ (1,041) Net gains on commodity derivatives ​ 4,410 ​ - ​ - Other comprehensive income (loss) ​ 33,736 ​ (89,908) ​ (72,199) Comprehensive income ​ $ 1,664,724 ​ $ 1,101,716 ​ $ 1,305,276 ​ See accompanying notes to consolidated financial statements. ​ 83 83 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​​​​​​​​​​​​​​Other​​​​​​Total​​Common Stock1​Additional​Retained​Comprehensive​Treasury Stock​Stockholders'​ Shares Amount Paid-in Capital1 Earnings (Loss) Income Shares1 Amount EquityBalance, January 1, 2021 1,277,324 $ 6,386 $ 4,534,789 $ 6,432,074 $ 3,034 (221,130) $ (5,815,423) $ 5,160,860Stock-based compensation - ​​ - ​​ 68,922​​ - ​​ - ​ - ​​ - ​​ 68,922 Stock options/awards 2,762​​ 14​​ 45,709​​ - ​​ - ​ - ​​ - ​​ 45,723 Unrealized gain (loss), net on available-for-sale securities - ​ - ​ - ​ - ​ (1,041) - ​ - ​ (1,041)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (310)​​ (13,830)​​ (13,830)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (71,158)​ - ​​ - ​​ (71,158)Net income - ​​ - ​​ - ​​ 1,377,475​​ - ​ - ​​ - ​​ 1,377,475Balance, December 31, 2021​ 1,280,086​$ 6,400​$ 4,649,420​$ 7,809,549​$ (69,165)​ (221,440)​$ (5,829,253)​$ 6,566,951Stock-based compensation - ​​ - ​​ 63,387​​ - ​​ - ​ - ​​ - ​​ 63,387 Stock options/awards 3,602​​ 18​​ 63,997​​ - ​​ - ​ - ​​ - ​​ 64,015 Unrealized gain (loss), net on available-for-sale securities - ​​ - ​​ - ​​ - ​​ (4,887)​ - ​​ - ​​ (4,887)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (17,648)​​ (771,028)​​ (771,028)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (85,021)​ - ​​ - ​​ (85,021)Net income - ​​ - ​​ - ​​ 1,191,624​​ - ​ - ​​ - ​​ 1,191,624Balance, December 31, 2022 1,283,688 $ 6,418 $ 4,776,804 $ 9,001,173 $ (159,073)​ (239,088) $ (6,600,281) $ 7,025,041Stock-based compensation ​ - ​​ - ​​ 67,664​​ - ​​ - ​ - ​​ - ​​ 67,664 Stock options/awards​ 8,904​​ 45​​ 130,222​​ - ​​ - ​ - ​​ - ​​ 130,267 Unrealized gain (loss), net on available-for-sale securities ​ - ​​ - ​​ - ​​ - ​​ 5,085​ - ​​ - ​​ 5,085Retirement of treasury stock ​ (170,000)​​ (850)​​ 425​​ (4,692,425)​​ - ​ 170,000​​ 4,692,850​​ - Repurchase of common stock ​ - ​​ - ​​ - ​​ - ​​ - ​ (11,933)​​ (658,952)​​ (658,952)Foreign currency translation ​ - ​​ - ​​ - ​​ - ​​ 24,241​ - ​​ - ​​ 24,241 Net gains on commodity derivatives ​ - ​​ - ​​ - ​​ - ​​ 4,410​ - ​​ - ​​ 4,410Net income - ​​ - ​​ - ​​ 1,630,988​​ - ​ - ​​ - ​​ 1,630,988Balance, December 31, 2023 1,122,592​$ 5,613​$ 4,975,115​$ 5,939,736​$ (125,337)​ (81,021)​$ (2,566,383)​$ 8,228,744​1Stock 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.​84 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021 (In Thousands)​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Accumulated​​​​​​​​​​​​​​​​​​​​​Other​​​​​​Total​​Common Stock1​Additional​Retained​Comprehensive​Treasury Stock​Stockholders'​ Shares Amount Paid-in Capital1 Earnings (Loss) Income Shares1 Amount EquityBalance, January 1, 2021 1,277,324 $ 6,386 $ 4,534,789 $ 6,432,074 $ 3,034 (221,130) $ (5,815,423) $ 5,160,860Stock-based compensation - ​​ - ​​ 68,922​​ - ​​ - ​ - ​​ - ​​ 68,922 Stock options/awards 2,762​​ 14​​ 45,709​​ - ​​ - ​ - ​​ - ​​ 45,723 Unrealized gain (loss), net on available-for-sale securities - ​ - ​ - ​ - ​ (1,041) - ​ - ​ (1,041)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (310)​​ (13,830)​​ (13,830)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (71,158)​ - ​​ - ​​ (71,158)Net income - ​​ - ​​ - ​​ 1,377,475​​ - ​ - ​​ - ​​ 1,377,475Balance, December 31, 2021​ 1,280,086​$ 6,400​$ 4,649,420​$ 7,809,549​$ (69,165)​ (221,440)​$ (5,829,253)​$ 6,566,951Stock-based compensation - ​​ - ​​ 63,387​​ - ​​ - ​ - ​​ - ​​ 63,387 Stock options/awards 3,602​​ 18​​ 63,997​​ - ​​ - ​ - ​​ - ​​ 64,015 Unrealized gain (loss), net on available-for-sale securities - ​​ - ​​ - ​​ - ​​ (4,887)​ - ​​ - ​​ (4,887)Repurchase of common stock - ​​ - ​​ - ​​ - ​​ - ​ (17,648)​​ (771,028)​​ (771,028)Foreign currency translation - ​​ - ​​ - ​​ - ​​ (85,021)​ - ​​ - ​​ (85,021)Net income - ​​ - ​​ - ​​ 1,191,624​​ - ​ - ​​ - ​​ 1,191,624Balance, December 31, 2022 1,283,688 $ 6,418 $ 4,776,804 $ 9,001,173 $ (159,073)​ (239,088) $ (6,600,281) $ 7,025,041Stock-based compensation ​ - ​​ - ​​ 67,664​​ - ​​ - ​ - ​​ - ​​ 67,664 Stock options/awards​ 8,904​​ 45​​ 130,222​​ - ​​ - ​ - ​​ - ​​ 130,267 Unrealized gain (loss), net on available-for-sale securities ​ - ​​ - ​​ - ​​ - ​​ 5,085​ - ​​ - ​​ 5,085Retirement of treasury stock ​ (170,000)​​ (850)​​ 425​​ (4,692,425)​​ - ​ 170,000​​ 4,692,850​​ - Repurchase of common stock ​ - ​​ - ​​ - ​​ - ​​ - ​ (11,933)​​ (658,952)​​ (658,952)Foreign currency translation ​ - ​​ - ​​ - ​​ - ​​ 24,241​ - ​​ - ​​ 24,241 Net gains on commodity derivatives ​ - ​​ - ​​ - ​​ - ​​ 4,410​ - ​​ - ​​ 4,410Net income - ​​ - ​​ - ​​ 1,630,988​​ - ​ - ​​ - ​​ 1,630,988Balance, December 31, 2023 1,122,592​$ 5,613​$ 4,975,115​$ 5,939,736​$ (125,337)​ (81,021)​$ (2,566,383)​$ 8,228,744​1Stock 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.​ --- ## Modified: Gross Profit **Key changes:** - Reworded sentence: "Gross profit was $3.79 billion for the year ended December 31, 2023, an increase of approximately $619.6 million, or 19.5% higher than the gross profit of $3.17 billion for the year ended December 31, 2022." **Prior (2023):** Gross profit was $3.17 billion for the year ended December 31, 2022, an increase of approximately $66.1 million, or 2.1% higher than the gross profit of $3.11 billion for the year ended December 31, 2021. 52 52 Table of ContentsGross profit as a percentage of net sales decreased to 50.3% for the year ended December 31, 2022 from 56.1% for the year ended December 31, 2021. The decrease for the year ended December 31, 2022 was primarily the result of increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, increased ingredient and other input costs, including secondary packaging materials, increased aluminum can costs attributable to higher aluminum commodity pricing, increased co-packing fees, production inefficiencies and geographical sales mix. Operating Expenses Total operating expenses were $1.59 billion for the year ended December 31, 2022, an increase of approximately $278.8 million, or 21.3% higher than total operating expenses of $1.31 billion for the year ended December 31, 2021. The comparative operating expenses for the year ended December 31, 2021 included a $16.9 million reversal of amounts previously accrued in connection with an intellectual property claim. The increase in operating expenses was primarily due to increased general and administrative expenses of $92.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased out-bound fuel, freight and warehouse costs of $74.3 million, increased selling and marketing expenses of $59.9 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $57.0 million (of which $23.1 million was related to CANarchy). In addition, CANarchy related depreciation and amortization was $8.7 million for year ended December 31, 2022. The increase in operating expenses was partially offset by a decrease in distributor termination expenses of $5.3 million for the year ended December 31, 2022.Operating expenses as a percentage of net sales for the years ended December 31, 2022 and 2021 were 25.2% and 23.7%, respectively. Operating expenses for the year ended December 31, 2019 (pre COVID-19) were $1.12 billion, or 26.6% of net sales.Operating Income Operating income was $1.58 billion for the year ended December 31, 2022, a decrease of approximately $212.7 million, or 11.8% lower than operating income of $1.80 billion for the year ended December 31, 2021. Operating income as a percentage of net sales decreased to 25.1% for the year ended December 31, 2022 from 32.4% for the year ended December 31, 2021. Operating income for the year ended December 31, 2022 decreased primarily as a result of the increase in operating expenses as well as the decrease in the gross profit as a percentage of net sales.Operating income was $316.3 million and $402.8 million for the years ended December 31, 2022 and 2021, respectively, for our operations in EMEA, Asia Pacific, Latin America and the Caribbean. Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $1.85 billion for the year ended December 31, 2022, a decrease of approximately $140.7 million, or 7.1% lower than operating income of $1.99 billion for the year ended December 31, 2021. The decrease in operating income for the Monster Energy® Drinks segment was primarily the result of an increase in operating expenses as well as a decrease in gross profit as a percentage of net sales.Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $197.7 million for the year ended December 31, 2022, an increase of approximately $24.0 million, or 13.8% higher than operating income of $173.7 million for the year ended December 31, 2021. The increase in operating income for the Strategic Brands segment was primarily the result of a $30.6 million increase in gross profit.Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The operating loss for the year ended December 31, 2022 was due in part to (i) excess depreciation and amortization as well as the fair value treatment of purchased inventory, all relating to the CANarchy Transaction, (ii) increased input costs and an underutilization 53 Table of Contents Table of Contents Table of Contents Gross profit as a percentage of net sales decreased to 50.3% for the year ended December 31, 2022 from 56.1% for the year ended December 31, 2021. The decrease for the year ended December 31, 2022 was primarily the result of increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, increased ingredient and other input costs, including secondary packaging materials, increased aluminum can costs attributable to higher aluminum commodity pricing, increased co-packing fees, production inefficiencies and geographical sales mix. Operating Expenses Total operating expenses were $1.59 billion for the year ended December 31, 2022, an increase of approximately $278.8 million, or 21.3% higher than total operating expenses of $1.31 billion for the year ended December 31, 2021. The comparative operating expenses for the year ended December 31, 2021 included a $16.9 million reversal of amounts previously accrued in connection with an intellectual property claim. The increase in operating expenses was primarily due to increased general and administrative expenses of $92.9 million, including travel and entertainment, professional service fees (including legal and accounting) and depreciation and amortization, increased out-bound fuel, freight and warehouse costs of $74.3 million, increased selling and marketing expenses of $59.9 million, including sponsorships and endorsements, point of sale, premiums and allocated trade development, and increased payroll expenses of $57.0 million (of which $23.1 million was related to CANarchy). In addition, CANarchy related depreciation and amortization was $8.7 million for year ended December 31, 2022. The increase in operating expenses was partially offset by a decrease in distributor termination expenses of $5.3 million for the year ended December 31, 2022.Operating expenses as a percentage of net sales for the years ended December 31, 2022 and 2021 were 25.2% and 23.7%, respectively. Operating expenses for the year ended December 31, 2019 (pre COVID-19) were $1.12 billion, or 26.6% of net sales.Operating Income Operating income was $1.58 billion for the year ended December 31, 2022, a decrease of approximately $212.7 million, or 11.8% lower than operating income of $1.80 billion for the year ended December 31, 2021. Operating income as a percentage of net sales decreased to 25.1% for the year ended December 31, 2022 from 32.4% for the year ended December 31, 2021. Operating income for the year ended December 31, 2022 decreased primarily as a result of the increase in operating expenses as well as the decrease in the gross profit as a percentage of net sales.Operating income was $316.3 million and $402.8 million for the years ended December 31, 2022 and 2021, respectively, for our operations in EMEA, Asia Pacific, Latin America and the Caribbean. Operating income for the Monster Energy® Drinks segment, exclusive of corporate and unallocated expenses, was $1.85 billion for the year ended December 31, 2022, a decrease of approximately $140.7 million, or 7.1% lower than operating income of $1.99 billion for the year ended December 31, 2021. The decrease in operating income for the Monster Energy® Drinks segment was primarily the result of an increase in operating expenses as well as a decrease in gross profit as a percentage of net sales.Operating income for the Strategic Brands segment, exclusive of corporate and unallocated expenses, was $197.7 million for the year ended December 31, 2022, an increase of approximately $24.0 million, or 13.8% higher than operating income of $173.7 million for the year ended December 31, 2021. The increase in operating income for the Strategic Brands segment was primarily the result of a $30.6 million increase in gross profit.Operating loss for the Alcohol Brands segment, exclusive of corporate and unallocated expenses, was $31.5 million for the year ended December 31, 2022 (effectively from February 17, 2022 to December 31, 2022). The operating loss for the year ended December 31, 2022 was due in part to (i) excess depreciation and amortization as well as the fair value treatment of purchased inventory, all relating to the CANarchy Transaction, (ii) increased input costs and an underutilization Gross profit as a percentage of net sales decreased to 50.3% for the year ended December 31, 2022 from 56.1% for the year ended December 31, 2021. The decrease for the year ended December 31, 2022 was primarily the result of increased freight rates and fuel costs, including costs relating to the importation of aluminum cans, increased ingredient and other input costs, including secondary packaging materials, increased aluminum can costs attributable to higher aluminum commodity pricing, increased co-packing fees, production inefficiencies and geographical sales mix. **Current (2024):** Gross profit was $3.79 billion for the year ended December 31, 2023, an increase of approximately $619.6 million, or 19.5% higher than the gross profit of $3.17 billion for the year ended December 31, 2022. ​ Gross profit as a percentage of net sales increased to 53.1% for the year ended December 31, 2023 from 50.3% for the year ended December 31, 2022. The increase for the year ended December 31, 2023 was primarily the result of the Pricing Actions, decreased freight-in costs as well as decreased aluminum can costs. --- ## Modified: December 31, **Key changes:** - Reworded sentence: "​ 2023 2022 ASSETS ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 2,297,675 ​ $ 1,307,141 Short-term investments ​ 955,605 1,362,314 Accounts receivable, net ​ 1,193,964 1,016,203 Inventories ​ 971,406 935,631 Prepaid expenses and other current assets ​ 116,195 109,823 Prepaid income taxes ​ 54,151 33,785 Total current assets ​ 5,588,996 4,764,897 ​ ​ ​ ​ ​ ​ ​ INVESTMENTS ​ 76,431 61,443 PROPERTY AND EQUIPMENT, net ​ 890,796 516,897 DEFERRED INCOME TAXES, net ​ 175,003 177,039 GOODWILL ​ 1,417,941 1,417,941 OTHER INTANGIBLE ASSETS, net ​ 1,427,139 1,220,410 OTHER ASSETS ​ 110,216 134,478" **Prior (2023):** ​ 2022 2021 ASSETS ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 1,307,141 ​ $ 1,326,462 Short-term investments ​ 1,362,314 1,749,727 Accounts receivable, net ​ 1,016,203 896,658 Inventories ​ 935,631 593,357 Prepaid expenses and other current assets ​ 109,823 82,668 Prepaid income taxes ​ 33,785 33,238 Total current assets ​ 4,764,897 4,682,110 ​ ​ ​ ​ ​ ​ ​ INVESTMENTS ​ 61,443 99,419 PROPERTY AND EQUIPMENT, net ​ 516,897 313,753 DEFERRED INCOME TAXES ​ 177,039 225,221 GOODWILL ​ 1,417,941 1,331,643 OTHER INTANGIBLE ASSETS, net ​ 1,220,410 1,072,386 OTHER ASSETS ​ 134,478 80,252 **Current (2024):** ​ 2023 2022 ASSETS ​ ​ ​ ​ ​ ​ CURRENT ASSETS: ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 2,297,675 ​ $ 1,307,141 Short-term investments ​ 955,605 1,362,314 Accounts receivable, net ​ 1,193,964 1,016,203 Inventories ​ 971,406 935,631 Prepaid expenses and other current assets ​ 116,195 109,823 Prepaid income taxes ​ 54,151 33,785 Total current assets ​ 5,588,996 4,764,897 ​ ​ ​ ​ ​ ​ ​ INVESTMENTS ​ 76,431 61,443 PROPERTY AND EQUIPMENT, net ​ 890,796 516,897 DEFERRED INCOME TAXES, net ​ 175,003 177,039 GOODWILL ​ 1,417,941 1,417,941 OTHER INTANGIBLE ASSETS, net ​ 1,427,139 1,220,410 OTHER ASSETS ​ 110,216 134,478 --- ## Modified: (Tabular Dollars in Thousands, Except Per Share Amounts) **Key changes:** - Reworded sentence: "​ The following table outlines maturities of the Company's lease liabilities as of December 31, 2023:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2024​$ 13,490​$ 6,6012025​ 11,555​ 172026​ 9,522​ 22027​​ 9,216​​ - 2028​ 7,706​ - 2029 and thereafter​​ 17,822​​ - Total lease payments​ 69,311​ 6,620Less imputed interest​ (9,764)​ (152)Total​$ 59,547​$ 6,468​As of December 31, 2023, the Company did not have any significant leases that had not yet commenced.​5." **Prior (2023):** ​ The following table reconciles the undiscounted future lease payments for operating and finance leases to the operating and finance leases recorded in the consolidated balance sheet at December 31, 2022:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2023​$ 8,854​$ 7692024​ 7,324​ 232025​ 5,242​ 172026​ 4,182​ 22027​​ 4,060​​ - 2028 and thereafter​ 12,349​ - Total lease payments​ 42,011​ 811Less imputed interest​ (4,678)​ (13)Total​$ 37,333​$ 798​As of December 31, 2022, the Company had an additional operating lease for office and warehouse space that had not yet commenced of $1.1 million. This operating lease will commence in 2023 with a term of four years. As of December 31, 2022, the Company did not have any significant additional finance leases that had not yet commenced.​5. INVESTMENTSThe following table summarizes the Company's investments at:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Continuous​Continuous​​​​​Gross​Gross​​​​Unrealized​Unrealized​​​​​Unrealized​Unrealized​​​​Loss Position​Loss Position​​Amortized​Holding​Holding​Fair​less than 12​greater than December 31, 2022 Cost Gains Losses Value Months 12 MonthsAvailable-for-sale​​​​​​​​​​​​​​​​​​Short-term:​​​​​​​​​​​​​​​​​​Commercial paper​$ 197,712​$ 1​$ 4​$ 197,709​$ 4​$ - Certificates of deposit​​ 10,078​​ - ​​ - ​​ 10,078​​ - ​​ - Municipal securities​ 211,791​​ 60​​ 612​​ 211,239​​ 612​​ - U.S. government agency securities​ 109,697​ 3​ 715​ 108,985​ 715​ - U.S. treasuries​​ 838,825​ 17​ 4,539​ 834,303​ 4,539​ - Long-term:​​​​​​​​​​​​​​​​​​U.S. government agency securities​​ 2,016​​ - ​​ 3​​ 2,013​​ 3​​ - U.S. treasuries​​ 53,215​​ 20​​ 71​​ 53,164​​ 71​​ - Variable rate demand notes​​ 6,266​​ - ​​ - ​​ 6,266​​ - ​​ - Total​$ 1,429,600​$ 101​$ 5,944​$ 1,423,757​$ 5,944​$ - ​ The following table reconciles the undiscounted future lease payments for operating and finance leases to the operating and finance leases recorded in the consolidated balance sheet at December 31, 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Undiscounted Future Lease Payments ​ ​ Operating Leases Finance Leases 2023 ​ $ 8,854 ​ $ 769 2024 ​ 7,324 ​ 23 2025 ​ 5,242 ​ 17 2026 ​ 4,182 ​ 2 2027 ​ ​ 4,060 ​ ​ - 2028 and thereafter ​ 12,349 ​ - Total lease payments ​ 42,011 ​ 811 Less imputed interest ​ (4,678) ​ (13) Total ​ $ 37,333 ​ $ 798 ​ As of December 31, 2022, the Company had an additional operating lease for office and warehouse space that had not yet commenced of $1.1 million. This operating lease will commence in 2023 with a term of four years. As of December 31, 2022, the Company did not have any significant additional finance leases that had not yet commenced. ​ **Current (2024):** ​ The following table outlines maturities of the Company's lease liabilities as of December 31, 2023:​​​​​​​​​ Undiscounted Future Lease Payments​​Operating Leases Finance Leases2024​$ 13,490​$ 6,6012025​ 11,555​ 172026​ 9,522​ 22027​​ 9,216​​ - 2028​ 7,706​ - 2029 and thereafter​​ 17,822​​ - Total lease payments​ 69,311​ 6,620Less imputed interest​ (9,764)​ (152)Total​$ 59,547​$ 6,468​As of December 31, 2023, the Company did not have any significant leases that had not yet commenced.​5. INVESTMENTSThe following table summarizes the Company's investments at:​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Continuous​Continuous​​​​​Gross​Gross​​​​Unrealized​Unrealized​​​​​Unrealized​Unrealized​​​​Loss Position​Loss Position​​Amortized​Holding​Holding​Fair​less than 12​greater than December 31, 2023 Cost Gains Losses Value Months 12 MonthsAvailable-for-sale​​​​​​​​​​​​​​​​​​Short-term:​​​​​​​​​​​​​​​​​​Commercial paper​$ 163,775​$ - ​$ 1​$ 163,774​$ 1​$ - Certificates of deposit​​ 15,590​​ - ​​ - ​​ 15,590​​ - ​​ - Municipal securities​ 361​​ - ​​ - ​​ 361​​ - ​​ - U.S. government agency securities​ 116,524​ 90​ 66​ 116,548​ 66​ - U.S. treasuries​​ 412,936​ 205​ 1,084​ 412,057​ 1,084​ - Corporate bonds​​ 247,340​​ 89​​ 154​​ 247,275​​ 154​​ - Long-term:​​​​​​​​​​​​​​​​​​U.S. government agency securities​​ 23,485​​ 51​​ 5​​ 23,531​​ 5​​ - U.S. treasuries​​ 35,896​​ 79​​ 8​​ 35,967​​ 8​​ - Corporate bonds​​ 16,903​​ 32​​ 2​​ 16,933​​ 2​​ - Total​$ 1,032,810​$ 546​$ 1,320​$ 1,032,036​$ 1,320​$ - ​ The following table outlines maturities of the Company's lease liabilities as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Undiscounted Future Lease Payments ​ ​ Operating Leases Finance Leases 2024 ​ $ 13,490 ​ $ 6,601 2025 ​ 11,555 ​ 17 2026 ​ 9,522 ​ 2 2027 ​ ​ 9,216 ​ ​ - 2028 ​ 7,706 ​ - 2029 and thereafter ​ ​ 17,822 ​ ​ - Total lease payments Total lease payments ​ 69,311 ​ 6,620 Less imputed interest Less imputed interest ​ (9,764) ​ (152) Total ​ $ 59,547 ​ $ 6,468 ​ As of December 31, 2023, the Company did not have any significant leases that had not yet commenced. ​ --- ## Modified: Total Liabilities and Stockholders' Equity **Key changes:** - Reworded sentence: "​ $ 9,686,522 $ 8,293,105 ​ 1Stock 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." **Prior (2023):** ​ $ 8,293,105 $ 7,804,784 ​ See accompanying notes to consolidated financial statements. ​ 81 81 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020(In Thousands, Except Per Share Amounts)​​​​​​​​​​​ 2022 2021 2020​​​​​​​​​​NET SALES​$ 6,311,050​$ 5,541,352​$ 4,598,638​​​​​​​​​​COST OF SALES​ 3,136,483​ 2,432,839​ 1,874,758​​​​​​​​​​GROSS PROFIT​ 3,174,567​ 3,108,513​ 2,723,880​​​​​​​​​​OPERATING EXPENSES​ 1,589,846​ 1,311,046​ 1,090,727​​​​​​​​​​OPERATING INCOME​ 1,584,721​ 1,797,467​ 1,633,153​​​​​​​​​​OTHER (EXPENSE) INCOME , NET​ (12,757)​ 3,952​ (6,996)​​​​​​​​​​INCOME BEFORE PROVISION FOR INCOME TAXES​ 1,571,964​ 1,801,419​ 1,626,157​​​​​​​​​​PROVISION FOR INCOME TAXES​​ 380,340​​ 423,944​​ 216,563​​​​​​​​​​NET INCOME​$ 1,191,624​$ 1,377,475​$ 1,409,594​​​​​​​​​​NET INCOME PER COMMON SHARE:​​​​​​​​​Basic​$ 2.26​$ 2.61​$ 2.66Diluted​$ 2.23​$ 2.57​$ 2.64​​​​​​​​​​WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:​​​​​​​​​Basic​ 526,779​ 528,763​ 529,639Diluted​ 533,221​ 535,639​ 534,807​See accompanying notes to consolidated financial statements.​82 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020(In Thousands, Except Per Share Amounts)​​​​​​​​​​​ 2022 2021 2020​​​​​​​​​​NET SALES​$ 6,311,050​$ 5,541,352​$ 4,598,638​​​​​​​​​​COST OF SALES​ 3,136,483​ 2,432,839​ 1,874,758​​​​​​​​​​GROSS PROFIT​ 3,174,567​ 3,108,513​ 2,723,880​​​​​​​​​​OPERATING EXPENSES​ 1,589,846​ 1,311,046​ 1,090,727​​​​​​​​​​OPERATING INCOME​ 1,584,721​ 1,797,467​ 1,633,153​​​​​​​​​​OTHER (EXPENSE) INCOME , NET​ (12,757)​ 3,952​ (6,996)​​​​​​​​​​INCOME BEFORE PROVISION FOR INCOME TAXES​ 1,571,964​ 1,801,419​ 1,626,157​​​​​​​​​​PROVISION FOR INCOME TAXES​​ 380,340​​ 423,944​​ 216,563​​​​​​​​​​NET INCOME​$ 1,191,624​$ 1,377,475​$ 1,409,594​​​​​​​​​​NET INCOME PER COMMON SHARE:​​​​​​​​​Basic​$ 2.26​$ 2.61​$ 2.66Diluted​$ 2.23​$ 2.57​$ 2.64​​​​​​​​​​WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:​​​​​​​​​Basic​ 526,779​ 528,763​ 529,639Diluted​ 533,221​ 535,639​ 534,807​See accompanying notes to consolidated financial statements.​ **Current (2024):** ​ $ 9,686,522 $ 8,293,105 ​ 1Stock 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. ​ 81 81 Table of ContentsMONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021(In Thousands, Except Per Share Amounts)​​​​​​​​​​​ 2023 2022 2021​​​​​​​​​​NET SALES​$ 7,140,027​$ 6,311,050​$ 5,541,352​​​​​​​​​​COST OF SALES​ 3,345,821​ 3,136,483​ 2,432,839​​​​​​​​​​GROSS PROFIT​ 3,794,206​ 3,174,567​ 3,108,513​​​​​​​​​​OPERATING EXPENSES​ 1,840,851​ 1,589,846​ 1,311,046​​​​​​​​​​OPERATING INCOME​ 1,953,355​ 1,584,721​ 1,797,467​​​​​​​​​​INTEREST AND OTHER INCOME (EXPENSE), NET​ 115,127​ (12,757)​ 3,952​​​​​​​​​​INCOME BEFORE PROVISION FOR INCOME TAXES​ 2,068,482​ 1,571,964​ 1,801,419​​​​​​​​​​PROVISION FOR INCOME TAXES​​ 437,494​​ 380,340​​ 423,944​​​​​​​​​​NET INCOME​$ 1,630,988​$ 1,191,624​$ 1,377,475​​​​​​​​​​NET INCOME PER COMMON SHARE1:​​​​​​​​​Basic​$ 1.56​$ 1.13​$ 1.30Diluted​$ 1.54​$ 1.12​$ 1.29​​​​​​​​​​WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS1:​​​​​​​​​Basic​ 1,044,887​ 1,053,558​ 1,057,526Diluted​ 1,057,981​ 1,066,442​ 1,071,278​1Stock 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.​82 Table of Contents Table of Contents Table of Contents MONSTER BEVERAGE CORPORATION AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF INCOMEFOR THE YEARS ENDED DECEMBER 31, 2023, 2022 AND 2021(In Thousands, Except Per Share Amounts)​​​​​​​​​​​ 2023 2022 2021​​​​​​​​​​NET SALES​$ 7,140,027​$ 6,311,050​$ 5,541,352​​​​​​​​​​COST OF SALES​ 3,345,821​ 3,136,483​ 2,432,839​​​​​​​​​​GROSS PROFIT​ 3,794,206​ 3,174,567​ 3,108,513​​​​​​​​​​OPERATING EXPENSES​ 1,840,851​ 1,589,846​ 1,311,046​​​​​​​​​​OPERATING INCOME​ 1,953,355​ 1,584,721​ 1,797,467​​​​​​​​​​INTEREST AND OTHER INCOME (EXPENSE), NET​ 115,127​ (12,757)​ 3,952​​​​​​​​​​INCOME BEFORE PROVISION FOR INCOME TAXES​ 2,068,482​ 1,571,964​ 1,801,419​​​​​​​​​​PROVISION FOR INCOME TAXES​​ 437,494​​ 380,340​​ 423,944​​​​​​​​​​NET INCOME​$ 1,630,988​$ 1,191,624​$ 1,377,475​​​​​​​​​​NET INCOME PER COMMON SHARE1:​​​​​​​​​Basic​$ 1.56​$ 1.13​$ 1.30Diluted​$ 1.54​$ 1.12​$ 1.29​​​​​​​​​​WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS1:​​​​​​​​​Basic​ 1,044,887​ 1,053,558​ 1,057,526Diluted​ 1,057,981​ 1,066,442​ 1,071,278​1Stock 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.​ --- *Data sourced from SEC EDGAR. Last updated 2026-05-10.*