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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

Quarterly Report Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2021

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)

(951) 739 - 6200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

Common Stock

MNST

Nasdaq Global Select Market

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  X    No__

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).

Yes  X   No __

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes __ No   X   

The registrant had 528,885,811 shares of common stock, par value $0.005 per share, outstanding as of July 30, 2021.

Table of Contents

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

JUNE 30, 2021

INDEX

Part I.

FINANCIAL INFORMATION

Page No.

Item 1.

Condensed Consolidated Financial Statements (Unaudited)

Condensed Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020

3

Condensed Consolidated Statements of Income for the Three- and Six-Months Ended June 30, 2021 and 2020

4

Condensed Consolidated Statements of Comprehensive Income for the Three- and Six-Months Ended June 30, 2021 and 2020

5

Condensed Consolidated Statements of Stockholders’ Equity for the Three- and Six-Months Ended June 30, 2021 and 2020

6

Condensed Consolidated Statements of Cash Flows for the Six-Months Ended June 30, 2021 and 2020

7

Notes to Condensed Consolidated Financial Statements

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

31

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

47

Item 4.

Controls and Procedures

48

Part II.

OTHER INFORMATION

Item 1.

Legal Proceedings

48

Item 1A.

Risk Factors

48

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

48

Item 3.

Defaults Upon Senior Securities

48

Item 4.

Mine Safety Disclosures

48

Item 5.

Other Information

48

Item 6.

Exhibits

49

Signatures

50

2

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2021 AND DECEMBER 31, 2020

(In Thousands, Except Par Value) (Unaudited)

June 30, 

December 31, 

    

2021

    

2020

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

1,584,239

$

1,180,413

Short-term investments

 

968,952

 

 

881,354

Accounts receivable, net

 

909,169

 

 

666,012

Inventories

 

382,890

 

 

333,085

Prepaid expenses and other current assets

 

83,086

 

 

55,358

Prepaid income taxes

 

22,339

 

 

24,733

Total current assets

 

3,950,675

 

 

3,140,955

INVESTMENTS

 

91,033

 

 

44,291

PROPERTY AND EQUIPMENT, net

 

309,178

 

 

314,656

DEFERRED INCOME TAXES, net

 

241,297

 

 

241,650

GOODWILL

 

1,331,643

 

 

1,331,643

OTHER INTANGIBLE ASSETS, net

 

1,058,323

 

 

1,059,046

OTHER ASSETS

 

89,394

 

 

70,475

Total Assets

$

7,071,543

 

$

6,202,716

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Accounts payable

$

362,900

 

$

296,800

Accrued liabilities

 

172,498

 

 

142,653

Accrued promotional allowances

 

227,414

 

 

186,658

Deferred revenue

 

46,656

 

 

45,429

Accrued compensation

 

46,770

 

 

55,015

Income taxes payable

 

31,289

 

 

23,433

Total current liabilities

 

887,527

 

 

749,988

DEFERRED REVENUE

 

252,056

 

 

264,436

OTHER LIABILITIES

26,462

27,432

COMMITMENTS AND CONTINGENCIES (Note 12)

STOCKHOLDERS’ EQUITY:

Common stock - $0.005 par value; 1,250,000 shares authorized; 639,576 shares issued and 528,857 shares outstanding as of June 30, 2021; 638,662 shares issued and 528,097 shares outstanding as of December 31, 2020

3,198

3,193

Additional paid-in capital

 

4,597,333

 

 

4,537,982

Retained earnings

 

7,151,030

 

 

6,432,074

Accumulated other comprehensive (loss) income

 

(16,822)

 

 

3,034

Common stock in treasury, at cost; 110,719 shares and 110,565 shares as of June 30, 2021 and December 31, 2020, respectively

 

(5,829,241)

 

 

(5,815,423)

Total stockholders’ equity

 

5,905,498

 

 

5,160,860

Total Liabilities and Stockholders’ Equity

$

7,071,543

 

$

6,202,716

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE- AND SIX- MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands, Except Per Share Amounts) (Unaudited)

Three-Months Ended

Six-Months Ended

June 30, 

June 30, 

    

2021

    

2020

    

2021

    

2020

NET SALES

$

1,461,934

$

1,093,896

$

2,705,751

$

2,155,993

COST OF SALES

 

625,096

 

434,427

 

1,153,976

 

859,329

GROSS PROFIT

 

836,838

 

659,469

 

1,551,775

 

1,296,664

OPERATING EXPENSES

 

310,863

 

252,205

 

611,652

 

524,412

OPERATING INCOME

 

525,975

 

407,264

940,123

 

772,252

INTEREST and OTHER INCOME (EXPENSE), net

 

872

 

(1,796)

 

111

 

(923)

INCOME BEFORE PROVISION FOR INCOME TAXES

 

526,847

 

405,468

940,234

 

771,329

PROVISION FOR INCOME TAXES

123,085

94,099

221,278

181,125

NET INCOME

$

403,762

$

311,369

$

718,956

$

590,204

NET INCOME PER COMMON SHARE:

Basic

$

0.76

$

0.59

$

1.36

$

1.11

Diluted

$

0.75

$

0.59

$

1.34

$

1.10

WEIGHTED AVERAGE NUMBER OF SHARES OF COMMON STOCK AND COMMON STOCK EQUIVALENTS:

Basic

 

528,653

 

526,911

 

528,425

 

531,486

Diluted

 

535,557

 

531,191

 

535,324

 

535,897

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands) (Unaudited)

Three-Months Ended

    

Six-Months Ended

June 30, 

June 30, 

    

2021

    

2020

    

2021

2020

Net income, as reported

$

403,762

$

311,369

$

718,956

$

590,204

Other comprehensive income (loss):

Change in foreign currency translation adjustment

 

8,235

 

9,044

 

(19,696)

 

(21,555)

Available-for-sale investments:

Change in net unrealized (losses) gains

 

(183)

 

200

 

(160)

 

504

Reclassification adjustment for net gains included in net income

 

 

 

 

Net change in available-for-sale investments

 

(183)

 

200

 

(160)

 

504

Other comprehensive income (loss)

 

8,052

 

9,244

 

(19,856)

 

(21,051)

Comprehensive income

$

411,814

$

320,613

$

699,100

$

569,153

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE- AND SIX-MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands) (Unaudited)

Accumulated

Other

Total

Common stock

Additional

Retained

Comprehensive

Treasury stock

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Earnings

    

(Loss) Income

    

Shares

    

Amount

    

Equity

Balance, December 31, 2020

638,662

$

3,193

$

4,537,982

$

6,432,074

$

3,034

(110,565)

$

(5,815,423)

$

5,160,860

Stock-based compensation

 

17,949

17,949

Exercise of stock options

 

492

3

6,758

6,761

Unrealized gain, net on available-for-sale securities

 

 

 

 

 

24

 

 

 

24

Repurchase of common stock

 

(150)

(13,419)

(13,419)

Foreign currency translation

 

(27,932)

(27,932)

Net income

 

315,194

315,194

Balance, March 31, 2021

 

639,154

 

$

3,196

 

$

4,562,689

 

$

6,747,268

 

$

(24,874)

(110,715)

 

$

(5,828,842)

 

$

5,459,437

Stock-based compensation

 

16,921

16,921

Exercise of stock options

 

422

2

17,723

17,725

Unrealized loss, net on available-for-sale securities

 

 

 

 

 

(183)

 

 

 

(183)

Repurchase of common stock

 

(4)

(399)

(399)

Foreign currency translation

 

8,235

8,235

Net income

 

403,762

403,762

Balance, June 30, 2021

 

639,576

 

$

3,198

 

$

4,597,333

 

$

7,151,030

 

$

(16,822)

(110,719)

 

$

(5,829,241)

 

$

5,905,498

Accumulated

Other

Total

Common stock

Additional

Retained

Comprehensive

Treasury stock

Stockholders’

    

Shares

    

Amount

    

Paid-in Capital

    

Earnings

    

Loss

    

Shares

    

Amount

    

Equity

Balance, December 31, 2019

636,460

$

3,182

$

4,397,511

$

5,022,480

$

(32,387)

(99,762)

$

(5,219,505)

$

4,171,281

Stock-based compensation

 

17,098

17,098

Exercise of stock options

 

644

4

13,971

13,975

Unrealized gain, net on available-for-sale securities

 

 

 

 

 

304

 

 

 

304

Repurchase of common stock

 

(10,503)

(579,948)

(579,948)

Foreign currency translation

 

(30,599)

(30,599)

Net income

 

278,835

278,835

Balance, March 31, 2020

 

637,104

 

$

3,186

 

$

4,428,580

 

$

5,301,315

 

$

(62,682)

(110,265)

 

$

(5,799,453)

 

$

3,870,946

Stock-based compensation

 

15,936

15,936

Exercise of stock options

 

820

4

29,863

29,867

Unrealized gain, net on available-for-sale securities

 

 

 

 

 

200

 

 

 

200

Repurchase of common stock

 

(298)

(15,822)

(15,822)

Foreign currency translation

 

9,044

9,044

Net income

 

311,369

311,369

Balance, June 30, 2020

 

637,924

$

3,190

$

4,474,379

$

5,612,684

$

(53,438)

(110,563)

$

(5,815,275)

$

4,221,540

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands) (Unaudited)

Six-Months Ended

June 30, 

    

2021

    

2020

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

718,956

$

590,204

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

27,489

32,057

Gain on disposal of property and equipment

(822)

(179)

Impairment of intangibles

4,000

Stock-based compensation

35,691

33,034

Deferred income taxes

353

Effect on cash of changes in operating assets and liabilities:

Accounts receivable

(239,700)

(231,782)

Distributor receivables

160

188

Inventories

(52,541)

14,181

Prepaid expenses and other assets

(28,232)

(23,394)

Prepaid income taxes

2,452

7,245

Accounts payable

63,619

(6,772)

Accrued liabilities

29,883

31,691

Accrued promotional allowances

42,665

3,079

Accrued distributor terminations

(140)

Accrued compensation

(10,782)

(10,932)

Income taxes payable

7,696

8,278

Other liabilities

621

83

Deferred revenue

(10,922)

(10,383)

Net cash provided by operating activities

586,586

440,458

CASH FLOWS FROM INVESTING ACTIVITIES:

Sales of available-for-sale investments

660,965

719,616

Purchases of available-for-sale investments

(795,467)

(425,973)

Purchases of property and equipment

(15,522)

(29,116)

Proceeds from sale of property and equipment

1,024

590

Additions to intangibles

(9,926)

(13,085)

Increase in other assets

(21,236)

(1,338)

Net cash (used in) provided by investing activities

(180,162)

250,694

CASH FLOWS FROM FINANCING ACTIVITIES:

Borrowings of (payments on) debt

3,624

(1,680)

Issuance of common stock

24,486

43,842

Purchases of common stock held in treasury

(13,818)

(595,770)

Net cash provided by (used in) financing activities

14,292

(553,608)

Effect of exchange rate changes on cash and cash equivalents

(16,890)

(14,175)

NET INCREASE IN CASH AND CASH EQUIVALENTS

403,826

123,369

CASH AND CASH EQUIVALENTS, beginning of period

1,180,413

797,957

CASH AND CASH EQUIVALENTS, end of period

$

1,584,239

$

921,326

SUPPLEMENTAL INFORMATION:

Cash paid during the period for:

Interest

$

52

$

29

Income taxes

$

215,803

$

164,956

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX-MONTHS ENDED JUNE 30, 2021 AND 2020

(In Thousands) (Unaudited) (Continued)

SUPPLEMENTAL DISCLOSURE OF NON-CASH ITEMS

Included in accrued liabilities as of June 30, 2021 and 2020 were $1.3 million and $12.6 million, respectively, related to net additions to other intangible assets.

See accompanying notes to condensed consolidated financial statements.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

1.

BASIS OF PRESENTATION

Reference is made to the Notes to Consolidated Financial Statements, in Monster Beverage Corporation and Subsidiaries (the “Company”) Annual Report on Form 10-K for the year ended December 31, 2020 for a summary of significant accounting policies utilized by the Company and its consolidated subsidiaries and other disclosures, which should be read in conjunction with this Quarterly Report on Form 10-Q (“Form 10-Q”).

The Company’s condensed consolidated financial statements included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and Securities and Exchange Commission (“SEC”) rules and regulations applicable to interim financial reporting.  They do not include all the information and footnote disclosures normally included in annual financial statements prepared in accordance with GAAP.  The information set forth in these interim condensed consolidated financial statements for the three- and six-months ended June 30, 2021 and 2020, respectively, is unaudited and reflects all adjustments, which include only normal recurring adjustments and which in the opinion of management are necessary to make the interim condensed consolidated financial statements not misleading.  Results of operations for periods covered by this report may not necessarily be indicative of results of operations for the full year.

The preparation of financial statements in conformity with GAAP necessarily requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.  Actual results could differ from these estimates.

2.

RECENT ACCOUNTING PRONOUNCEMENTS

In December 2019, the Financial Accounting Standards Board issued Accounting Standards Update (“ASU”) No. 2019-12, “Simplifying the Accounting for Income Taxes”, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes. ASU No. 2019-12 removes certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. ASU No. 2019-12 also amends other aspects of the guidance to help simplify and promote consistent application of GAAP. The guidance was effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted. The adoption of ASU No. 2019-12 did not have a material impact on the Company’s financial position, results of operations and liquidity.

3.

REVENUE RECOGNITION

The Company has three operating and reportable segments: (i) Monster Energy® Drinks segment (“Monster Energy® Drinks”), which is primarily comprised of the Company’s Monster Energy® drinks and Reign Total Body Fuel® high performance energy drinks, (ii) Strategic Brands segment (“Strategic Brands”), which is primarily comprised of the various energy drink brands acquired from The Coca-Cola Company (“TCCC”) in 2015 as well as the Company’s affordable energy brands, and (iii) Other segment (“Other”), which is comprised of certain products sold by American Fruits and Flavors, LLC, a wholly-owned subsidiary of the Company, to independent third-party customers (the “AFF Third-Party Products”).

The Company’s Monster Energy® Drinks segment generates net operating revenues by selling ready-to-drink packaged energy drinks primarily to bottlers and full service beverage bottlers/distributors (“bottlers/distributors”). In some cases, the Company sells ready-to-drink packaged energy drinks directly to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, drug stores, foodservice customers, value stores, e-commerce retailers and the military.

The Company’s Strategic Brands segment primarily generates net operating revenues by selling “concentrates” and/or “beverage bases” to authorized bottling and canning operations. Such bottlers generally combine the concentrates and/or beverage bases with sweeteners, water and other ingredients to produce ready-to-drink packaged energy drinks. The ready-to-drink packaged energy drinks are then sold by such bottlers to other bottlers/distributors and to retail grocery and specialty chains, wholesalers, club stores, mass merchandisers, convenience chains, foodservice customers, drug stores, value stores, e-commerce retailers and the military. To a lesser extent, the Strategic Brands segment generates net operating revenues by selling certain ready-to-drink packaged energy drinks to bottlers/distributors.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

The majority of the Company’s revenue is recognized when it satisfies a single performance obligation by transferring control of its products to a customer. Control is generally transferred when the Company’s products are either shipped or delivered based on the terms contained within the underlying contracts or agreements. Certain of the Company’s bottlers/distributors may also perform a separate function as a co-packer on the Company’s behalf. In such cases, control of the Company’s products passes to such bottlers/distributors when they notify the Company that they have taken possession or transferred the relevant portion of the Company’s finished goods. The Company’s general payment terms are short-term in duration. The Company does not have significant financing components or payment terms. The Company did not have any material unsatisfied performance obligations as of June 30, 2021 and December 31, 2020.

The Company excludes from revenues all taxes assessed by a governmental authority that are imposed on the sale of its products and collected from customers.

Distribution expenses to transport the Company’s products, where applicable, and warehousing expense after manufacture are accounted for within operating expenses.

Promotional and other allowances (variable consideration) recorded as a reduction to net sales, primarily include consideration given to the Company’s bottlers/distributors or retail customers including, but not limited to the following:

discounts granted off list prices to support price promotions to end-consumers by retailers;
reimbursements given to the Company’s bottlers/distributors for agreed portions of their promotional spend with retailers, including slotting, shelf space allowances and other fees for both new and existing products;
the Company’s agreed share of fees given to bottlers/distributors and/or directly to retailers for advertising, in-store marketing and promotional activities;
the Company’s agreed share of slotting, shelf space allowances and other fees given directly to retailers, club stores and/or wholesalers;
incentives given to the Company’s bottlers/distributors and/or retailers for achieving or exceeding certain predetermined sales goals;
discounted or free products;
contractual fees given to the Company’s bottlers/distributors related to sales made directly by the Company to certain customers that fall within the bottlers’/distributors’ sales territories; and
commissions to TCCC based on the Company’s sales to certain wholly-owned subsidiaries of TCCC (the “TCCC Subsidiaries”) and/or to certain companies accounted for under the equity method by TCCC (the “TCCC Related Parties”).

The Company’s promotional allowance programs with its bottlers/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, typically ranging from one week to one year. The Company’s promotional and other allowances are calculated based on various programs with bottlers/distributors and retail customers, and accruals are established at the time of initial product sale for the Company’s anticipated liabilities. These accruals are based on agreed upon terms as well as the Company’s historical experience with similar programs and require management’s judgment with respect to estimating consumer participation and/or bottler/distributor and retail customer performance levels. Differences between such estimated expenses and actual expenses for promotional and other allowance costs have historically been insignificant and are recognized in earnings in the period such differences are determined.

Amounts received pursuant to new and/or amended distribution agreements entered into with certain bottlers/distributors relating to the costs associated with terminating the Company’s prior distributors, are accounted for as deferred revenue and recognized as revenue ratably over the anticipated life of the respective distribution agreements, generally over 20 years.

The Company also enters into license agreements that generate revenues associated with third-party sales of non-beverage products bearing the Company’s trademarks including, but not limited to, clothing, hats, t-shirts, jackets, helmets and automotive wheels.

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MONSTER BEVERAGE CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Tabular Dollars in Thousands, Except Per Share Amounts) (Unaudited)

Management believes that adequate provision has been made for cash discounts, returns and spoilage based on the Company’s historical experience.

Disaggregation of Revenue

The following tables disaggregate the Company’s revenue by geographical markets and reportable segments:

Three-Months Ended June 30, 2021

    

    

    

    

Latin

    

America

 

U.S. and

and

 

Net Sales

Canada

EMEA1

Asia Pacific

Caribbean

Total

Monster Energy® Drinks

$

895,362

$

269,807

$

118,934

$

82,991

$

1,367,094

Strategic Brands

 

49,388

 

27,875

 

7,006

 

2,666

 

86,935

Other

 

7,905

 

 

 

 

7,905

Total Net Sales

$

952,655

$

297,682

$

125,940

$

85,657

$

1,461,934

Three-Months Ended June 30, 2020

    

    

    

    

Latin

    

America

U.S. and

and

Net Sales

Canada

EMEA1

Asia Pacific

Caribbean

Total

Monster Energy® Drinks

$

746,946

$

129,921

$

112,832

$

37,987

$

1,027,686

Strategic Brands

41,155

 

12,794