Rodney C. Sacks - Chairman, Chief Executive Officer, Member of Executive Committee and Chairman of Hansen Beverage Company Thomas J. Kelly - Senior Vice President of Finance Hilton H.

Schlosberg - Vice Chairman, President, Chief Financial Officer, Chief Operating Officer, Principal Accounting Officer, Secretary, Controller and Member of Executive Committee.

William B. Chappell - SunTrust Robinson Humphrey, Inc., Research Division Nik Modi - RBC Capital Markets, LLC, Research Division John A. Faucher - JP Morgan Chase & Co, Research Division Judy E. Hong - Goldman Sachs Group Inc., Research Division Vivien Nicole Azer - Cowen and Company, LLC, Research Division.

Good day, ladies and gentlemen, and welcome to the Monster Beverage Corporation Third Quarter 2014 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Chairman and CEO, Mr. Rodney Sacks. Mr. Sacks, you may begin your conference..

Good afternoon, ladies and gentlemen. Thank you for attending this call. I'm Rodney Sacks. Hilton Schlosberg, our Vice Chairman and President, is here with me; as is Tom Kelly, our Senior Vice President of Finance.

Before we begin, I'd like to remind listeners that certain statements made during this call 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, and which are based on currently available information regarding the expectations of management with respect to revenues, profitability, future business, future events, financial performance and trends.

Management cautions that these statements are based on our current knowledge and expectations and are subject to certain risks and uncertainties, many of which are outside the control of the company, that may cause actual results to differ materially from the forward-looking statements made during this call.

Please refer to our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K filed March 3, 2014, as well as our most recent report on Form 10-Q filed August 8, 2014, including the sections contained therein entitled Risk Factors and Forward-looking Statements, for a discussion on specific risks and uncertainties that may affect our performance.

The company assumes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.

An explanation of the non-GAAP measure of gross sales and certain expenditures, which may be mentioned during the course of this call, is provided in the notes designated with asterisks in the condensed consolidated statements of income and other information attached to the earnings release dated November 6, 2014.

A copy of this information is also available on our website at monsterbevcorp.com in the Financial Information section. In August 2014, Monster Beverage and The Coca-Cola Company entered into definitive agreements for a long-term strategic partnership that we believe will accelerate growth for Monster in the fast growing global energy drink category.

Under the agreements, The Coca-Cola Company will acquire an approximate 16.7% ownership interest in Monster, following the issuance of shares to The Coca-Cola Company and will transfer ownership of its worldwide energy business to Monster, which in turn will transfer its nonenergy business to the Coca-Cola Company.

Monster and The Coca-Cola Company will amend their current distribution agreements in the U.S. and Canada to expand distribution into additional territories. Additionally, the Coca-Cola Company will become Monster's preferred distribution partner globally and Monster will become The Coca-Cola Company's exclusive energy play.

We believe that this partnership will strategically align both companies for the long term by combining the strength of The Coca-Cola Company's worldwide bottling system with Monster's dedicated focus and expertise as a leading energy player globally.

We believe that this distribution arrangement will accelerate Monster's opportunity to grow internationally. The transaction, which is subject to customary closing conditions, is expected to close in early 2015.

We're excited by the addition of The Coca-Cola Company energy brands to our Monster portfolio, which will provide us with complementary product offerings in many geographies as well as access to new channels, including vending and specialty accounts.

As previously communicated, we plan to review all options available after the transaction closes, and we received the funds due to the company in terms of the agreements to return a substantial amount of cash to our shareholders. Turning to the business.

During the third quarter, trends in the beverage industry continued to show weakness, although sales in the energy drink category continued to grow in the mid-single digits. In the third quarter, the company achieved record gross sales of $738.1 million, up 7.5% from the $686.6 million. Net sales were $636 million, up 7.7% from $590.4 million.

Our original Monster Green energy drink continued to perform well and grew in excess of the growth of the category in the United States as a whole. Sales of our Ultra line continued to show good growth in the United States during the third quarter. During the quarter, we launched Monster Energy Ultra Black as a summer promotion with 7-Eleven.

This promotion was successful, and we are evaluating whether to launch Ultra Black as a permanent item in 2015. We launched Monster Energy Unleaded, which is a carbonated version of our Green energy drink but contains no caffeine, at the end of the quarter.

We also launched Monster Energy Ultra Sunrise, a carbonated energy drink, which contains 0 calories and 0 sugar and which is our fourth permanent item in our Ultra line at the end of the quarter. Finally, during the quarter, we launched M3 Monster Super Concentrate in glass bottles as well as a coffee Monster Energy drink in Japan.

During the quarter, we also repositioned Übermonster, which was previously sold in 500 ml glass bottles, into 18.6 ounce resealable cans and lined price Übermonster with Monster Energy import. In addition, our repositioned Punch Monster and Juice Monster lines are both achieving increased distribution and sales.

Gross profit as a percentage of net sales was up 1.7 percentage points to 53.8% from 52.1% in the third quarter of last year.

The increase in gross profit as a percentage of net sales was largely attributable to lower cost of certain sweeteners and certain other raw materials, price increases in our 24-ounce Monster Energy brand energy drinks and our Peace Tea line as well as changes in product sales mix.

Gross profit percentages achieved in the third quarter both in North America as well as internationally were higher than in the comparable quarter in 2013. Operating income was up 25.4% to $189.9 million from $151.4 million in the 2013 comparable quarter.

During the third quarter, our operating income was positively affected by the operating income contributed by international operations, particularly Europe and Japan. Operating income was also higher in Mexico.

In fact, our operations outside of North America delivered operating income of $9.4 million as compared to an operating loss of $5.2 million in the same quarter last year. Consolidated selling expenses in dollars were lower than last year although general and administrative expenses were higher due to increased payroll expenses.

While sponsorship expenses were marginally higher than last year, in dollars, they were lower as a percentage of net sales. Cost of our TDM MET program were lower, largely driven by reductions in those programs in Europe. Additionally, premiums in point-of-sale costs were lower.

Results for the 2014 third quarter continued to be impacted by expenses related to regulatory matters and litigation concerning the advertising, marketing, promotion ingredients, usage, safety and sales of the company's Monster Energy brand energy drinks.

Such expenses were $4.9 million in the 2014 third quarter compared with $6 million for the 2013 third quarter. Foreign currency losses during the quarter increased primarily due to our foreign currency transactions in Australia, Canada, Chile, Japan, Mexico and South Africa.

The effective tax rate decreased from 38.8% to 35.6%, primarily due to profits earned in certain foreign subsidiaries that had no related tax expense as a result of the prior establishment of valuation allowances on their respective deferred tax assets.

Net income was $121.6 million, up 31.9% over net income of $92.2 million earned during the same period last year. Diluted earnings per share increased 31.7% to $0.70 from $0.53 in the 2013 comparable quarter.

According to the Nielsen reports for the 13 weeks through October 25, 2014, all outlets combined, namely convenience, grocery, drug and mass merchandisers, sales in dollars in the energy drink category, including shots, increased by 4.8% versus the same period a year ago.

Sales of Monster grew 8% in the 13-week period while sales of Red Bull increased by 6.2%. Sales of Rockstar decreased by 8.6%. 5-Hour decreased by 6.1%, and AMP decreased by 9.6%. Sales of NOS increased by 33.9%, and Full Throttle increased by 5%.

According to Nielsen reports, for the 4 weeks ended October 25, 2014, sales of energy drinks in the convenience and gas channel in dollars increased by 4.8% over the comparable period in 2013. Sales of Monster increased by 7.4% over the comparable period last year, while sales of Red Bull increased by 6.8%.

And NOS was up 14.7%, Rockstar was down 13.3%, 5-Hour was down 8.1%, and AMP was down 9.5%.

According to Nielsen for the 4 weeks ended October 25, 2014, Monster's market share of the energy drink category in the convenience and gas channel, including energy shots in dollars, increased by 0.09 points over the comparable period a year ago to 36.3%, against Red Bull's share, which was lower than Monster's market share at 34%; Rockstar's share was lower at 6.7%; 5-Hour's share was lower at 8.7%; while NOS' share was higher at 4.1%.

According to Nielsen, in the 4 weeks ended October 25, 2014, sales of Energy + Coffee Drinks in dollars in the convenience and gas channel increased 11.7% over the same period last year. Java Monster was 6.3% higher than in the comparable period last year, while Starbucks' Doubleshot Energy was 18.7% higher.

Java Monster's sales continued to exceed those of Starbucks' Doubleshot Energy. According to Nielsen, in the convenience and gas channel in Canada for the 12 weeks ended October 18, 2014, the energy drink category declined 1%, while Monster sales decreased 11%. Our market share decreased 2.7 points to 26.2% over the comparable period last year.

Red Bull sales increased 3%, and its market share increased 1.7 points to 38.9%. Rockstar's sales increased 14%, and its market share increased 2.3 points to 17.5%.

Monster's market share was negatively impacted over this period by Red Bull's summer edition launch with 7-Eleven and Monster's failure to have a comparable promotional activity this year with 7-Eleven, due to conflicting priorities from our distribution partner in Canada.

According to Nielsen, for all outlets combined in Mexico, the energy drink category grew 17.6% in the month of September 2014. Monster sales increased 18.2%. Our market share increased 0.2 points to 33.8% against the comparable period last year. Red Bull sales decreased 14.8%, and its market share decreased by 8.8 points to 23.1%.

Boost's sales increased 7.1%, and its market share decreased 1.4 points to 14.1%. Vive 100, new in 2013, has grown to 19.1% market share, while Coke's market share, represented by Burn and Gladiator together, decreased 3.9 points to 6.4%.

The Nielsen statistics for Mexico covers single months, which is a short period that may often be materially influenced positively and/or negatively by sales in the OXXO convenience chain, which dominates the market.

Sales in the OXXO convenience chain in turn can be materially influenced by promotions that may be undertaken in that chain by one or more energy drink brands during a particular month. Consequently, such activities could have a significant impact on the monthly Nielsen statistics for Mexico.

According to Nielsen in the 13-week periods ended September and October 2014 -- the actual 13-week periods varied by a few weeks between different markets and countries -- Monster's retail market share in value as compared to the same period last year grew from 7.8% to 7.9% in Belgium; from 8.3% to 9.8% in Germany; From 10.6% to 11.4% in Great Britain; from 22% to 22.7% in Spain; and from 7.2% to 8% in Sweden.

Monster's retail market share in value for the 13 weeks ending September/October 2014 as compared to the same periods last year decreased from 21.1% to 19% in South Africa, although volume was up; and in France from 17.5% to 16.7%.

According to IRI, Monster's market share in Greece for the 13 weeks to the end of September increased from 22.9% to 27.3%. I would like to point out that the Nielsen and IRI numbers in EMEA should only be used as a guide because the channels read by Nielsen and IRI in the EMEA vary from country to country.

According to Nielsen for the month of September 2014, in Chile, Monster's retail market share in value increased to 11.8% as compared to 8.8% last year; and in Brazil, Monster's market share for the month of September 2014 grew from 3.5% to 5.7% as compared to the same period last year.

Net sales for the company's DSD segment increased 7.6% to $609.9 million for the 3 months ended September 30, 2014, from $566.8 million in the same period in 2013. Contribution margin for the DSD segment increased 19.4% from $194.9 million to $232.7 million.

Gross sales of our Original Monster Green energy drink continued to increase in the quarter, as did sales of both our Ultra and Java Monster lines. The increase in sales of these products was partially offset by lower sales in certain SKUs, including Monster Energy Absolutely Zero, Lo-Carb Monster Energy and the Monster Rehab line and Import.

Gross sales of Peace Tea for the third quarter were higher than in the comparable period in 2013. Net sales for the company's Warehouse segment increased 10.1% to $26 million, from $23.7 million for the 3 months ended September 30, 2014, primarily due to increased sales by volume of aseptic juices and Hubert's Lemonades.

Contribution margin increased from a loss of $2.2 million in the prior year third quarter to a profit of $0.6 million. For the 3 months ended September 30, 2014, gross sales to retail groceries, specialty chains and wholesalers represented 3% of gross sales, down from 4% in the comparable period in 2013.

Gross sales to club stores, drug chains and mass merchandisers represented 10% of sales, up from 9% in the comparable period in 2013. Gross sales to full-service distributors represented 62% of sales, down from 63% in the comparable period in 2013. Gross sales internationally represented 24% of sales, up from 22% in 2013.

Other sales of 1% for the period were lower than the 2% in the comparable period in 2013. Gross sales to customers outside the United States in the third quarter amounted to $173.2 million compared to $151.6 million in the same quarter in 2013.

Included in such sales were sales to the company's military customers, which are delivered in the United States and transshipped to the military and their customers overseas. Net sales in Europe, Middle East and Africa in the third quarter of 2014 in dollars were at $75 million, 7% higher than the same period last year.

Monster continues to gain momentum and increased its market-shared retail in EMEA and in particular, in Greece, Spain, Great Britain, Italy, Germany and Sweden. We're continuing to see the benefits of the strategic changes implemented last year.

Our EMEA division traded profitably during the third quarter of 2014, which contributed to the reduction in the effective tax rate of the company. Net sales in Asia-Pacific grew 79.4% versus the comparable quarter last year, while net sales in South America grew 65.6% over the comparable 2013 third quarter.

In Mexico, growth sales were marginally higher for the quarter. Japan contributed a meaningful operating profit as sales there continued to increase. Our distributor in Brazil continues to secure increased distribution in sales. We are continuing with our expansion strategy in international markets.

Although we decided to defer proposed launches in certain countries for the future following the strategic partnership that was entered into with The Coca-Cola Company during the quarter.

We are continuing with our strategy to secure local production in certain of our international markets in order to improve gross margins, reduce freight, reduce damages and assist in mitigating the effects of exchange rate fluctuations. The Coca-Cola Company partnership should also help in achieving this objective.

In the interim, we are continuing with our plan to produce Monster in India as well as in South Africa. Distribution expenses on a consolidated basis as a percentage of net sales in the third quarter were 4.5% versus 4.6% in the comparable quarter in 2013.

Other selling expenses as a percentage of net sales were 10.1% higher in the quarter versus 12% in the comparable period in 2013. While sponsorships and endorsement costs were marginally higher in dollars, they were lower as a percentage of net sales.

Premiums, point-of-sale costs and the TDM MET program costs were lower during the quarter, both in dollars and as a percentage of net sales. General and administrative expenses were lower, although payroll costs was slightly higher, with the result that overall general and administrative costs increased 1.4% in the third quarter.

Included in general and administrative costs were increased professional service costs, of which $2.6 million related to The Coca-Cola transaction. We are continuing to work towards reducing our overall operating costs in our international markets. Our effective tax rate in the 2014 third quarter was 35.6% compared to 38.8% in the 2013 third quarter.

The decrease in the effective tax rate was primarily the result of profits earned in foreign subsidiaries that have no related tax expense as a result of the prior establishment of valuation allowance on their deferred tax assets. During the third quarter, no share repurchases were made under the board-authorized share repurchase program.

Turning to the balance sheet. Cash and cash equivalents amounted to $408.3 million compared to $211.3 million at December 31, 2013. Short-term investments, of which auction rate securities comprised $4.8 million were $588 million compared to $402.2 million at December 31, 2013.

Long-term investments increased to $28.4 million from $9.8 million at December 31, 2013. Accounts receivable net increased to $330.2 million from $291.6 million at December 31, 2013. Days outstanding for trade accounts receivables were 40.5 days at September 30, 2014, and 44.7 days at September 30, 2013, compared to 40.1 days at December 31, 2013.

Inventories decreased to $205.4 million from $221.4 million at December 31, 2013. Average days of inventory was 62.9 days at September 30, 2014, which was lower than the 78.7 days of inventory at September 30, 2013, and lower than the 75.6 days of inventory at December 31, 2013.

We are planning to launch Monster Energy Ultra Citron and Monster Rehab, Peach Tea and Energy early in 2015.

Due to the strong response received to our summer promotion of the Monster Energy Valentino Rossi drink in Europe and South Africa, we have decided to convert that item into a permanent SKU in the existing countries in which it is being sold and to launch it in additional European countries in 2015.

Gross sales in October 2014 were approximately 9.2% higher than in October 2013. The increase in gross sales in the United States were 7.4% and the North America was 9.1%.

We caution again that sales in a single month and over a short period are often disproportionately impacted by various factors such as, for example, selling days, days of the week in which holidays fall and the timing of promotions in retail stores, and should not necessarily be imputed to or regarded as indicative of results for the full quarter or any future period.

On the litigation front, the litigation between the company and the City Attorney of San Francisco is proceeding through the discovery process stage, the court has issued an order setting the case for a 2-week bench trial beginning in February 8, 2016.

On August 6, 2014, the Attorney General for the State of New York issued a second subpoena seeking additional documents and the deposition of a company employee. The company has moved to quash the second subpoena. The briefing on the motion is currently ongoing.

In the Kona federal securities case, plaintiffs have filed a motion seeking approval of the settlement. The settlement class members have until December 1, 2014, to object to opt out of the settlement and the final approval hearing is scheduled for January, 29, 2015.

Again, once finalized, the settlement will result in the action being dismissed with prejudice. The proposed settlement contains no admission of liability or wrongdoing on the part of any of the defendants, each of whom continues to deny all the allegations. The full amount of the settlement will be paid by the company's insurance carriers.

The company assumes no obligation to update any statements made with respect to ongoing litigation and regulatory matters, including with respect to the foregoing disclosures, whether as to new information, future events or otherwise other than as required by law.

Given the current litigation and pending regulatory requests, we will refrain from answering questions or commenting further on these specific subjects. We are happy, of course, to answer questions that you may have about our products in general or about the third quarter as best as we can after we've concluded our discussion on the business.

In conclusion, I would like to summarize some recent positive points. North American and international gross margins are healthy. Our 2014 third quarter gross margins in North America as well as internationally, generally, were higher than in the comparable quarter in 2013. U.S.

Nielsen market statistics show the energy category continues to grow, that Monster Energy's growth is still outpacing the growth of the category as a whole.

The new additions to the Monster family that were introduced during 2013 and this year are continuing to gain market share and contributing positively to the overall increase in the company's sales.

Our recently repositioned Punch Monster and Juice Monster lines were positively received by distributors and consumers, and both distribution and sales of those lines continue to increase.

We believe that Monster Unleaded and Ultra Sunrise lines that were introduced at the end of the quarter will commence contributing to sales in the fourth quarter and through 2015. Unleaded with no caffeine is designed to attract new consumers, as well as to increase usage occasions by existing Monster Green energy drink consumers.

Turning to international markets. We are pleased with the performance of our international expansion, particularly in Japan, Spain, Germany, Great Britain, Sweden, Greece and Brazil. I would like to open the floor to questions about the quarter. Thank you..

[Operator Instructions] Our first question comes from Bill Chappell of SunTrust..

Just on the international business. Trying to understand 2 things.

One, how much of an impact did the Canadian, I guess, 7-Eleven issue have on the total business? And then two, kind of longer term, as we look at the Coke partnership, does that change your near-term plan? Do you pullback? Do we expect some transition issues until it's signed? Just trying to understand if maybe there were countries that you were planning on going into or planning on expanding that you might, kind of, put on hold until everything is done.

And how we should look at that over the next couple of quarters..

The markets were not, at this point, major markets or markets that, I think, would really impact the results in -- certainly in the near term, but we just, obviously, felt it was important for at least -- make the disclosure that we had in fact deferred some of those introductions.

Going forward, we just believe that we are going to continue to go forward pretty much as planned.

There always is, obviously, a little bit of an effect on this -- on our results through the interim stage, because while we, obviously, are encouraging our distributors to continue giving the brand the same level of attention and investment, and we've tried to assure them that we will, obviously, compensate them appropriately, there is still some distributors who will naturally pull back and because of concerns as to whether they will continue to keep the brand and when there will be a transition.

So that uncertainty, clearly, will have some effect. Although we don't believe it will be major, we do believe there will be some effect. But we really can't tell more than that. We are obviously starting to make plans for the transition. But again, until the transaction closes, there is -- we are limited in what we can do.

But we are looking to close the transaction early in 2015 as we previously have indicated..

Our next question comes from Nik Modi of RBC Capital Markets..

Just 2 quick ones for me.

On Rehab, Rodney, I was wondering if you could provide any perspective on that? And are there any plans there to kind of get that brand reinvigorated? And then the second question is our understanding is trends in the energy drink category are really taking off at Walmart and I was just hoping you can provide some context on kind of what's going on there.

Is it just more cold cooler placement up by the register? If you could just give us some context on that?.

I think that if you look at Rehab, the drop off that we -- or the decrease that we had experienced at the time we introduced -- or pretty much close to the time we introduced the Ultra line, has fallen off and the numbers are looking much better. That's still a major line for us.

We have taken steps to just focus consumers on what the product is and to try and communicate better to consumers that it's an iced tea, that it's not carbonated.

We are looking at some slight changes to the graphics, probably to align it more with a tea product, as opposed to, sort of, a carbonated energy drink, which has a stronger presence in a black can, traditionally.

And we also believe that by some other minor adjustments, which we'll make to the line, we believe that we will have a good prospect of, basically, improving sales going forward. We are also introducing the Peach Tea, which is a nice variant. And so we believe that, that line will continue to grow again, but that's part of what we're doing.

There was obviously some impact on that line from the introduction of the Ultra. We are seeing more of a comeback on -- also on our Lo-Carb now in the last quarter, that had dropped off more significantly in previous quarters and the numbers are improving on that product as well.

And then finally, with regard to Absolutely Zero, which did have some fall off as well from the -- at that same time as we introduced the Ultra line, we have -- we're also taking steps to redesign the can and do things, and we're actually making some further improvements to the redesigned can.

So we are hopeful we'll be able to get those sub lines or -- growing again..

Maybe I just could comment on Walmart. What's happened at Walmart is that they expanded the category both on the warm and on the cold shelf. We've invested in cooler placement with the organization, and I really would encourage you to visit a few stores and see the expanded sets and the positioning that we have now in the Walmart stores.

It's actually very, very interesting, and we're excited with it..

Our next question comes from Amit Sharma of BMO Capital Markets..

Hello?.

Our next question comes from Steve Powers of UBS..

We're not -- we're hearing silence..

Our next question comes from John Faucher of JP Morgan..

Seems to be something wrong with the line. We are not getting any of the participants. We can't hear anything. [Technical Difficulty].

So just 2 quick questions here, I hope. One, can you talk a little bit about foreign exchange and the impact on the international business as we look at it? Obviously, there's been a lot of volatility.

So can you talk a little bit about -- less so on the top line but more so on the margins, how you feel like you're situated to deal with some of this volatility in terms of transactional FX, et cetera? And then a separate question, which is as you talk about returning some of this cash to shareholders, can you talk about what your criteria are going to be and how we should think about that as we head into 2015?.

Hilton will discuss the foreign exchange, John..

John, we hedged our balance sheet transactions in various currencies and the results -- the overall results in the fourth -- in the third quarter was not a material amount, and you'll see that in the Q that will be released, hopefully, tomorrow.

Turning on -- turning to the cash that we are -- that we're discussing and we'll be discussing more with the board tomorrow, there are a number of programs that we are looking at and a number of opportunities to return cash to shareholders that is kind of premature at this stage as the board will be in discussions on this point tomorrow..

Okay. If I can just follow up on the FX piece in terms of -- less so on the balance sheet transactions but more so, let's say, on dollar-based raw materials in foreign countries and finished goods and things like that.

Is that something where you think that can have a meaningful impact on some of the international profitability, again, given some of the swings you're having in these currencies?.

It hasn't to date, and we don't anticipate that it will to any significant degree. You're talking, in the quarter, of a foreign exchange loss in basically of the order of $1 million that was expensed against the income statement..

Our next question comes from Judy Hong of Goldman Sachs..

[indiscernible] additional growth in the third quarter; 14%, pretty solid. It looks like EMEA was a little bit softer but you had very good growth from Japan, Asia Pacific and Brazil. So can you just talk about maybe some of the underlying market trends that you're seeing in some of your key European markets.

And then how much benefit you're seeing in markets like Japan's, where you've had some of the innovations rollout and whether there was any timing benefit in that number. And then I guess on a longer-term basis, I know we've talked about the Coke partnership enabling you to become more profitable in international markets.

But just wanted to see if you can give us any, kind of, road map as to how quickly you can envision the profitability ramping up in those markets once the deal closes?.

The international markets are quite a mixed bag. While the growth, obviously, was slower in EMEA, overall, there were some markets that were nice and then some markets faced some competition in some cases from some lower-priced entrees, for example, in South Africa. And the same thing even in South America.

These results, again, were led by a number of countries, but there were countries within the region that were also softer and some of that is just to do with timing. In the case of France, if you look at the numbers, there was -- if you remember, at the end of last year, there was a buy-in before -- in advance of the introduction of a tax in France.

And then during the quarter, there was a lower stockholding this quarter than had been compared to last year, where there was, sort of, an increased larger stockholding. So that affected the French results. So these are things that are making or resulting in our results being quite choppy.

We're hoping that as we are able to go forward and as the brands get bigger and more established in these countries, that sort of influence from stockholding -- changes in stockholdings will continue to diminish.

Again, some of the stockholding buy-ins and longer delivery times for some of the South American and Asian markets also affected the results, because we were -- if you also look at the stockholding levels and if you look at sales out, they remain healthy in a number of countries.

We're positive, but if you look at the sales in at any one quarter, you may find that the results are actually negative. And so you've got to look at the actual underlying business. And while the trends remained solid, we are having this choppiness in some of the results from various countries.

So we think that will start getting smoothed out better as we continue to become more -- both effective -- becoming more established in these different countries and also in many countries going into the Coke system. We don't really have a program yet. We're still at the very preliminary stages of actually understanding the Coke system.

We need to be able to have discussions and meetings with various Coke bottlers. We need to achieve a consensus and agreement on margin -- the value chains and margins, and making decisions exactly when we're going to switch to which and in which countries.

And that, at the moment, is a complicated matrix and we really can't, I think, speculate to that going forward. I don't know if you'd like to add anything on that, Hilton..

I just would like to -- yes, I'd like add to Judy about a comment on Europe, which was spot on, in fact. There was a destocking, we believe, that took place in July in Europe -- with our distribution partners in Europe. And that was quite -- that was quite noticeable..

I think that's all. You can see the numbers, obviously, you gain from the October numbers. Again, it's a single month but yet we have seen a pickup in October in Europe, particularly..

Our next question comes from Vivien Azer from Cowen and Company..

My question has to do with your average net sales per case and the 2.5% growth that you saw in the third quarter. You mentioned price increases on the 24-ounce packaging.

So I'm curious whether you could give us a sense for the balance between pricing and mix, in terms of that 2.5% growth in average net sales per case?.

It's in the Q. The Q will be released, as I said, hopefully, within next 24 hours, if not, on Monday. So it's all there..

Okay, fair enough. Then maybe a bigger picture question that relates to that metric. It's impressive the growth that you're seeing in your average net sales per case but at the same time, you're seeing consistent deceleration in terms of your net sales growth.

So can you talk, kind of, high level how you think about the balance between volumes versus pricing and mix? And how important it is for you guys to generate outsized volume growth because the 5% growth that you saw this quarter is the weakest that we've seen in a number of years..

I think that's actually a situation that is relating to where the market has been and where the market is going. We spoke a little bit about where the October numbers are, and the growth in October.

At this time, we're not planning to have any price increases on our major [ph] product lines, but that, in fact, may change as we move forward into next year. So from our perspective on pricing, it's steady as she goes. We'll be absorbing the Coca-Cola transaction early in 2015. That's a concentrate model and that will affect average pricing as well.

So I hope that answered your question, but I'm not sure what specific issue you were getting at..

There are no further questions in queue..

On behalf of Monster, I would like to thank everyone for their continued interest in the company. Continue to believe in the company and our growth strategy and remain committed to continue to develop and differentiate our brands and to expand the company both at home and abroad.

We are particularly excited by the new opportunities that we are going -- we have going forward with a robust portfolio of energy drink products comprised of our Monster Energy drink line together with The Coca-Cola Company's energy brands.

We believe that our agreement with The Coca-Cola Company will enable us to focus on our core energy business while leveraging the strength of The Coca-Cola Company's powerful distribution and bottling system on a worldwide scale.

We reiterate that our products are safe, are properly labeled and the caffeine content of the Monster is approximately 10 milligrams per ounce, less than 0.5 milligrams per ounce of the caffeine labels contained in Starbucks and other coffee house brewed coffee.

In other words, a medium Starbucks 16-ounce sized brewed coffee contains approximately 330 milligrams of caffeine, which is more than double the approximately 160 milligrams of caffeine that is contained in the same sized Monster Energy drink.

More than 12 billion Monster Energy drinks have been sold and safely consumed around the world over the past 12 years. Thank you very much for your attendance..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program, and you may all disconnect..