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TheStreet Open House

Monster Beverage Reports 2012 Fourth Quarter And Full Year Financial Results

Gross profit as a percentage of net sales was 51.7 percent for the year ended December 31, 2012, compared with 52.5 percent a year earlier.

Operating expenses for the 2012 year increased to $515.0 million from $437.9 million for 2011. Operating income for the year ended December 31, 2012 increased 20.6 percent to $550.6 million from $456.4 million a year ago. 

Net income for the twelve months of 2012 rose 18.8 percent to $340.0 million, or $1.86 per diluted share, compared with $286.2 million, or $1.53 per diluted share, for 2011. 

Investor Conference Call

The Company will host an investor conference call today, February 27, 2013, at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time). The conference call will be open to all interested investors through a live audio web broadcast via the internet at www.monsterbevcorp.com in the "Events & Presentations" section. For those who are not able to listen to the live broadcast, the call will be archived for approximately one year on the website.

Monster Beverage Corporation

Based in Corona, California, Monster Beverage Corporation is a marketer and distributor of energy drinks and alternative beverages. The Company markets and distributes Monster Energy® brand energy drinks, Monster Energy Extra Strength Nitrous Technology® brand energy drinks, Java Monster® brand non-carbonated coffee + energy drinks, X-Presso Monster® brand non-carbonated espresso energy drinks, M3® Monster Energy® Super Concentrate energy drinks, Monster Rehab® non-carbonated energy drinks with electrolytes, Ubermonster® energy drinks, Worx Energy® shots, and Peace Tea® iced teas, as well as Hansen's® natural sodas, apple juice and juice blends, multi-vitamin juices, Junior Juice® beverages, Blue Sky® beverages, Hubert's® Lemonades, Vidration® vitamin enhanced waters, and PRE® Probiotic drinks. For more information, visit www.monsterbevcorp.com .

Note Regarding Use of Non-GAAP Measures

Gross sales is 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 overall Company performance. The use of gross sales 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 sales provides a useful measure of our operating performance. Gross sales is not a measure that is recognized under accounting principles generally accepted in the United States of America ("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 sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.

Caution Concerning Forward-Looking Statements

Certain statements made in this announcement 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, regarding the expectations of management with respect to our future operating results and other future events including revenues and profitability. Management cautions that these statements are based on management's current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside of the control of the Company, that could cause actual results and events to differ materially from the statements made herein. Such risks and uncertainties include, but are not limited to, the following: unanticipated litigation concerning the Company's products; the current uncertainty and volatility in the national and global economy; changes in consumer preferences; changes in demand due to both domestic and international economic conditions; activities and strategies of competitors, including the introduction of new products and competitive pricing and/or marketing of similar products; actual performance of the parties under the new distribution agreements; potential disruptions arising out of the transition of certain territories to new distributors; changes in sales levels by existing distributors; unanticipated costs incurred in connection with the termination of existing distribution agreements or the transition to new distributors; changes in the price and/or availability of raw materials; other supply issues, including the availability of products and/or suitable production facilities; product distribution and placement decisions by retailers; changes in governmental regulation; the imposition of new and/or increased excise and/or sales or other taxes on our products; criticism of energy drinks and/or the energy drink market generally; the impact of proposals to limit or restrict the sale of energy drinks to minors and/or persons below a specified age and/or restrict the venues and/or the size of containers in which energy drinks can be sold; political, legislative or other governmental actions or events, including the outcome of any state attorney general and/or government or quasi-government agency inquiries, in one or more regions in which we operate. For a more detailed discussion of these and other risks that could affect our operating results, see the Company's reports filed with the Securities and Exchange Commission. The Company's actual results could differ materially from those contained in the forward-looking statements. The Company assumes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

 (tables below)

 
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER INFORMATION
FOR THE THREE-AND TWELVE-MONTHS ENDED DECEMBER 31, 2012 AND 2011
(In Thousands, Except Per Share Amounts) (Unaudited)
 
  Three-Months Ended Twelve-Months Ended
  December 31, December 31,
  2012 2011 2012 2011
Gross sales, net of discounts and returns* $ 545,044 $ 467,310 $ 2,373,499 $ 1,950,490
         
Less: Promotional and other allowances** 73,527 57,353 312,797 247,260
         
Net sales 471,517 409,957 2,060,702 1,703,230
         
Cost of sales 227,629 195,713 995,046 808,921
         
Gross profit 243,888 214,244 1,065,656 894,309
Gross profit margin as a percentage of net sales 51.7% 52.3% 51.7% 52.5%
         
Operating expenses 130,008 110,847 515,033 437,886
Operating expenses as a percentage of net sales 27.6% 27.0% 25.0% 25.7%
         
Operating income 113,880 103,397 550,623 456,423
Operating income as a percentage of net sales 24.2% 25.2% 26.7% 26.8%
         
Other (expense) income:        
Interest and other (expense) income, net (2,511) 1,055  (2,256) 1,619
Gain (loss) on investment and put option, net 202 78 787 (772)
 Total other (expense) income (2,309) 1,133  (1,469) 847
         
Income before provision for income taxes 111,571 104,530 549,154 457,270
         
Provision for income taxes 43,589 39,994 209,134 171,051
         
Net income $ 67,982 $ 64,536 $ 340,020 $ 286,219
Net income as a percentage of net sales 14.4% 15.7% 16.5% 16.8%
         
Net income per common share:      
 Basic $ 0.40 $ 0.37 $ 1.96 $ 1.62
 Diluted $ 0.39 $ 0.35 $ 1.86 $  1.53
         
Weighted average number of shares of common stock  and common stock equivalents:        
  Basic 168,846 174,124 173,712 176,212
  Diluted 176,112 184,926 183,083 186,674
         
Case sales (in thousands)        
(in 192-ounce case equivalents) 46,386 39,431 202,918 164,661
Average net sales price per case $ 10.17 $ 10.40 $ 10.16 $ 10.34

* Gross sales is 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 overall Company performance. The use of gross sales 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 sales provides a useful measure of our operating performance. Gross sales 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 sales may not be comparable to similarly titled measures used by other companies, as gross sales has been defined by our internal reporting practices. In addition, gross sales may not be realized in the form of cash receipts as promotional payments and allowances may be deducted from payments received from certain customers.

** Although the expenditures described in this line item are determined in accordance with GAAP and meet GAAP requirements, the disclosure thereof does not conform with 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 primarily include consideration given to the Company's 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 the Company's 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) the Company's agreed share of fees given to distributors and/or directly to retailers for advertising, in-store marketing and promotional activities; (iv) the Company's agreed share of slotting, shelf space allowances and other fees given directly to retailers; (v) incentives given to the Company's distributors and/or retailers for achieving or exceeding certain predetermined sales goals; (vi) discounted or free products; (vii) contractual fees given to the Company's distributors related to sales made by the Company direct to certain customers that fall within the distributors' sales territories; and (viii) commissions paid to our customers. 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 constitute a material portion of our marketing activities. The Company's promotional allowance programs with its numerous 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.

 
 
MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND DECEMBER 31, 2011
(In Thousands, Except Par Value) (Unaudited) 
 
  December 31, 2012 December 31, 2011
ASSETS    
CURRENT ASSETS:    
Cash and cash equivalents $ 222,514 $ 359,331
Short-term investments 97,042 411,282
Trade accounts receivable, net 236,044 218,072
Distributor receivables 666 669
Inventories 203,106 155,613
Prepaid expenses and other current assets 24,983 20,912
Prepaid income taxes 33,709 370
Deferred income taxes 17,004 16,428
Total current assets 835,068 1,182,677
     
INVESTMENTS 21,393 23,194
PROPERTY AND EQUIPMENT, net 69,137 45,151
DEFERRED INCOME TAXES 59,503 58,576
INTANGIBLES, net 54,648 48,396
OTHER ASSETS 3,576 4,405
   Total Assets $ 1,043,325 $ 1,362,399
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
CURRENT LIABILITIES:    
Accounts payable $ 127,330 $ 113,446
Accrued liabilities 38,916 31,966
Accrued promotional allowances 91,208 87,746
Deferred revenue 12,695 11,583
Accrued compensation 12,926 10,353
Income taxes payable 5,470 10,996
Total current liabilities 288,545 266,090
     
DEFERRED REVENUE 110,383 117,151
     
STOCKHOLDERS' EQUITY:    
Common stock -- $0.005 par value; 240,000 shares authorized; 203,759 shares issued and 165,776 outstanding as of December 31, 2012; 198,729 shares issued and 174,277 outstanding as of December 31, 2011  1,019 994
Additional paid-in capital 287,953 229,301
Retained earnings 1,508,664 1,168,644
Accumulated other comprehensive income (loss) 2,074 (1,547)
Common stock in treasury, at cost; 37,983 and 24,452 shares as of December 31, 2012 and December 31, 2011, respectively (1,155,313) (418,234)
Total stockholders' equity 644,397 979,158
  Total Liabilities and Stockholders' Equity $ 1,043,325 $ 1,362,399

 

CONTACT: Rodney C. Sacks
         Chairman and Chief Executive Officer
         (951) 739-6200
         
         Hilton H. Schlosberg
         Vice Chairman
         (951) 739-6200
         
         Roger S. Pondel / Judy Lin Sfetcu
         PondelWilkinson Inc.
         (310) 279-5980

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