Merrill_42989_Apex_242157_Cover_Outside.pdf 1 4/19/16 11:39 PM Merrill_42989_Apex_242157_Cover_Inside.pdf 1 4/19/16 11:38 PM TO OUR STOCKHOLDERS 2015 represented not only our 23rd consecutive record year of increased gross sales but also a transitional year in the history of our Company. In June 2015, the Company completed the transactions that it had entered into with The Coca-Cola Company ("Coca-Cola") in August 2014, pursuant to which (1) Coca-Cola became our largest individual shareholder at 16.7%; (2) we acquired Coca-Cola’s worldwide energy drink business; (3) we sold our non-energy drink business to Coca-Cola; and (4) we transitioned the major portion of our energy drink distribution in the United States to Coca-Cola bottlers and commenced with transitions to the Coca-Cola system bottlers internationally. We have been actively engaged in negotiating distribution agreements and terms with Coca-Cola system bottlers internationally and have made good progress in this regard, which we believe will enhance our long term growth prospects internationally. Gross sales rose to $3.1 billion in 2015, crossing the $3.0 billion threshold for the first time, from $2.8 billion in 2014. Net sales were $2.7 billion for the 2015 year, compared to $2.5 billion in 2014. Our Monster Energy® drinks are now sold in approximately 120 countries and territories around the world. The energy drink brands we acquired from Coca-Cola are sold in approximately 111 countries and territories. We sell both Monster and the Coca-Cola energy brands in a vast majority of geographies worldwide. However, there are many countries in which we are only selling one of these brands, which provides us with the opportunity to introduce additional brands in these geographies in the near future. I would like to express my gratitude for the support and leadership shown, in particular relating to the negotiations with Coca-Cola and the closing of the transactions, by Mr. Hilton Schlosberg, our President, Chief Operating Officer and Chief Financial Officer, and would also like to express my gratitude to the direction and guidance provided by Mr. Mark Hall our Chief Marketing Officer, who is now actively engaged in repositioning the Coca-Cola acquired brands. During the year we sadly bade farewell to the management team and employees of the former Warehouse (Hansen) division who have transitioned to the VEB Division of Coca-Cola, and wish them well and success in their future endeavors. I would also like to express my personal thanks to our consumers, stockholders, customers, bottlers and distribution partners and suppliers for their continued support. To our management and employees, my sincere thanks and appreciation for all their efforts, which are evidenced by our continued success. To our stockholders, thank you for the trust you have placed in our management team. We have an exciting road ahead of us and look forward to enhancing our future performance. Sincerely, Rodney C. Sacks Chairman and Chief Executive Officer 1 2 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-K (Mark One) [ X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2015 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _____ Commission File Number 001-18761 MONSTER BEVERAGE CORPORATION (Exact name of registrant as specified in its charter) Delaware 47-1809393 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1 Monster Way Corona, California 92879 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code: (951) 739 - 6200 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of each exchange on which registered Common Stock, $.005 par value per share Nasdaq Global Select Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No 3 Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company (Do not check if a smaller reporting company) Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act.) Yes No The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $24,970,779,420 computed by reference to the closing sale price for such stock on the NASDAQ Global Select Market on June 30, 2015, the last business day of the registrant’s most recently completed second fiscal quarter. The number of shares of the registrant’s common stock, $0.005 par value per share (being the only class of common stock of the registrant), outstanding on February 4, 2016 was 202,919,837 shares. DOCUMENTS INCORPORATED BY REFERENCE: Portions of the registrant’s Definitive Proxy Statement to be filed subsequent to the date hereof with the Commission pursuant to Regulation 14A in connection with the registrant’s 2016 Annual Meeting of Stockholders are incorporated by reference into Part III of this Report. Such Definitive Proxy Statement will be filed with the Securities and Exchange Commission no later than 120 days after the conclusion of the registrant’s fiscal year ended December 31, 2015. 4 MONSTER BEVERAGE CORPORATION FORM 10-K TABLE OF CONTENTS Item Number Page Number PART I 1. Business 6 1A. Risk Factors 22 1B. Unresolved Staff Comments 32 2. Properties 32 3. Legal Proceedings 33 4. Mine Safety Disclosures 35 PART II 5. Market for the Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 35 6. Selected Financial Data 37 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 38 7A. Quantitative and Qualitative Disclosures about Market Risk 62 8. Financial Statements and Supplementary Data 63 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 63 9A. Controls and Procedures 63 9B. Other Information 65 PART III 10. Directors, Executive Officers and Corporate Governance 65 11. Executive Compensation 65 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 65 13. Certain Relationships and Related Transactions, and Director Independence 66 14. Principal Accounting Fees and Services 66 PART IV 15. Exhibits and Financial Statement Schedules 66 Signatures 67 5 PART I ITEM 1. BUSINESS As a result of the TCCC Transaction (as defined and described below), Monster Beverage 1990 Corporation (formerly Monster Beverage Corporation) (“Old Monster”) effected a holding company reorganization on June 12, 2015, pursuant to which it became a wholly owned subsidiary of New Laser Corporation, which then changed its name to “Monster Beverage Corporation”. When this report uses the words “the Company” “we”, “us”, and “our”, these words refer to Monster Beverage Corporation and its subsidiaries, unless the context otherwise requires. We are a holding company and conduct no operating business except through our consolidated subsidiaries. Acquisitions and Divestitures On June 12, 2015, Old Monster, now a wholly owned subsidiary of the Company, completed the transactions contemplated by the definitive agreements entered into with The Coca-Cola Company (“TCCC”) on August 14, 2014, which provided for a long-term strategic relationship in the global energy drink category (the “TCCC Transaction”). Also, on June 12, 2015, Old Monster effected a holding company reorganization in connection with the TCCC Transaction by merging New Laser Merger Corp., a wholly owned subsidiary of the Company into Old Monster, with Old Monster surviving as a wholly owned subsidiary of the Company (the “Holding Company Reorganization”), and the Company changed its name from New Laser Corporation to “Monster Beverage Corporation.” In the Holding Company Reorganization, each Old Monster common share, par value $0.005 per share, outstanding immediately prior to consummation of the Holding Company Reorganization (other than any Old Monster common shares owned by Old Monster immediately prior to the closing of the TCCC Transaction, which were cancelled) was converted automatically into the right to receive one Company common share, par value $0.005 per share.