Is this filing from Monster Beverage Corp?

No. The filing is from Hansen Natural Corporation (ticker HANS), which later renamed itself Monster Beverage Corporation. It covers fiscal year 1999 and was signed March 30, 2000.

What drove revenue growth in 1999?

Net sales grew 34.2% to $72.3 million. The main drivers were energy and other functional drinks in 8.2-ounce slim cans, the Signature Soda line launched in January 1999, Healthy Start juices, children's multi-vitamin drinks, and 64-ounce Smoothies. Sales outside California reached 39% of the total, up from about 34%.

Why did gross margin decline?

Gross margin fell to 46.4% from 49.3% because the product mix shifted toward lower-margin products. Management attributed the decline to this mix change rather than to input cost increases.

What are the main operational risks?

The 8.2-ounce slim cans are made by only one U.S. can manufacturer, and a key co-packer has had difficulties producing the functional drinks and Smoothies. The company is working on alternative co-packers, but these could bring higher packing and freight costs. Dependence on a few large customers, one of which provided about 25% of sales, is another concentration risk.

How is the company financed, and what are the near-term obligations?

The company relies on a Comerica facility with a $3 million revolving line (no borrowings outstanding at year-end; it expires May 1, 2000 and renewal is not assured) and a term loan with $1.33 million outstanding. Management believes operating cash flow and available credit are sufficient through 2000, including the planned share buybacks.

MNST 10-K FY1999 Annual Report — Revenue, Net Income, EPS

01—Abstract

Summary

Summary of the 10-K filed March 30, 2000. Cited figures are marked; the original filing is the authoritative source.

This fiscal 1999 Form 10-K is filed by Hansen Natural Corporation (Nasdaq Small-Cap: HANS), not Monster Beverage Corp as the request states.

Hansen is the predecessor company that later became Monster Beverage, and the filing describes its Hansen's-brand 'alternative' beverage business, including natural sodas, juices, and functional energy drinks. The company reported 1999 net sales of $72.3 million^a, up 34.2% from $53.9 million, with net income of $4.5 million (diluted EPS $0.43, up from $0.34). Growth was driven by the 8.2-ounce slim-can functional drinks, the new Signature Soda line, Healthy Start juices, and children's multi-vitamin drinks.

Profitability was mixed. Gross margin fell to 46.4% from 49.3% because of a shift in product mix, and selling, general and administrative expenses rose 25.3% on higher freight, advertising, and promotion spending. Operating income still grew to $7.5 million^b from $6.0 million.

Working capital improved to $9.0 million, but cash fell to $2.0 million^c as inventory (up to $9.9 million) and receivables (up to $3.8 million) absorbed cash. Operating cash flow was $1.3 million, well below 1998's $4.4 million, and total assets were $28.7 million with equity of $18.6 million. Investors should weigh several risks.

One customer accounted for about 25%^d of 1999 sales, and a co-packer that makes the 8.2-ounce functional drinks and 11.5-ounce Smoothies has had production difficulties, with only one U.S. can manufacturer for slim cans. The Comerica revolving line expires May 1, 2000, and insiders (Sacks and Schlosberg) control about 44% of the shares. The company began a 1,000,000-share buyback in March 2000 and does not pay dividends.

02—Key points

Key Highlights

Net sales rose 34.2% to $72.3 million in 1999, led by sales of functional drinks in 8.2-ounce slim cans and the new Signature Soda line
Net income increased 26% to $4.5 million; diluted EPS was $0.43 versus $0.34 in 1998
Gross margin declined to 46.4% from 49.3% due to an unfavorable shift in product mix
Operating expenses rose 26.5% to $26.0 million, driven by freight, advertising, and promotional spending
One customer represented about 25% of 1999 sales, and a co-packer for slim-can functional drinks and Smoothies has had production problems
Cash declined to $2.0 million and operating cash flow fell to $1.3 million as inventory rose to $9.9 million; working capital was $9.0 million
Board authorized a 1,000,000-share repurchase in May 1999, with purchases beginning in March 2000; no dividends are paid

03—Questions

Frequently Asked Questions

Is this filing from Monster Beverage Corp?
No. The filing is from Hansen Natural Corporation (ticker HANS), which later renamed itself Monster Beverage Corporation. It covers fiscal year 1999 and was signed March 30, 2000.
What drove revenue growth in 1999?
Net sales grew 34.2% to $72.3 million. The main drivers were energy and other functional drinks in 8.2-ounce slim cans, the Signature Soda line launched in January 1999, Healthy Start juices, children's multi-vitamin drinks, and 64-ounce Smoothies. Sales outside California reached 39% of the total, up from about 34%.
Why did gross margin decline?
Gross margin fell to 46.4% from 49.3% because the product mix shifted toward lower-margin products. Management attributed the decline to this mix change rather than to input cost increases.
What are the main operational risks?
The 8.2-ounce slim cans are made by only one U.S. can manufacturer, and a key co-packer has had difficulties producing the functional drinks and Smoothies. The company is working on alternative co-packers, but these could bring higher packing and freight costs. Dependence on a few large customers, one of which provided about 25% of sales, is another concentration risk.
How is the company financed, and what are the near-term obligations?
The company relies on a Comerica facility with a $3 million revolving line (no borrowings outstanding at year-end; it expires May 1, 2000 and renewal is not assured) and a term loan with $1.33 million outstanding. Management believes operating cash flow and available credit are sufficient through 2000, including the planned share buybacks.

04—Continue

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