Monster Beverage Corp
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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Reports of Independent Registered Public Accounting Firms
To the Stockholders and the Board of Directors of Monster Beverage Corporation and Subsidiaries
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Monster Beverage Corporation and Subsidiaries (the Company) as of December 31, 2023, the related consolidated statements of income, comprehensive income, stockholders' equity and cash flows for the year ended December 31, 2023, and the related notes and financial statement schedule listed in the Index in Item 15(a) (collectively referred to as the“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
As described in Note 1, in 2023 the Company’s Board of Directors approved a two-for-one stock split distributed in the form of a stock dividend, and all references to number of shares and per share information in the consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis. We audited the adjustments that were applied to restate the number of shares and per share information reflected in the 2022 and 2021 consolidated financial statements. Our procedures included (a) agreeing the authorization for the two-for-one stock split to the Company’s underlying records obtained from management, and (b) testing the mathematical accuracy of the restated number of shares, basic and diluted earnings per share, common stock repurchased and other applicable disclosures such as equity-based compensation. In our opinion, such adjustments are appropriate and have been properly applied. However, we were not engaged to audit, review, or apply any procedures to the 2022 and 2021 consolidated financial statements of the Company other than with respect to such adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2022 and 2021 consolidated financial statements taken as a whole.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgment.
The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates.
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| | | 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. |
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| | /s/ Ernst & Young LLP |
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| We have served as the Company's auditor since 2023. | |
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| Irvine, California | |
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| February 29, 2024 | |
To the Board of Directors and Stockholders of
Corona, California
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.
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.
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