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Equity Investments
 6 Months Ended
Jun. 30, 2011
Equity Investments  
Equity Investments

NOTE B — EQUITY INVESTMENTS

The Company owns a 30% interest in Grupo Vasconia S.A.B. ("Vasconia"). The Company accounts for its investment in Vasconia using the equity method of accounting and records its proportionate share of Vasconia's net income in the Company's statement of operations. Accordingly, the Company has recorded its proportionate share of Vasconia's net income (reduced for amortization expense related to the customer relationships acquired) for the three and six month periods ended June 30, 2011 and 2010 in the accompanying condensed consolidated statements of operations. The value of the Company's investment balance has been translated from Mexican Pesos ("MXN") to U.S. Dollars ("USD") using the spot rate of MXN 11.78 and MXN 12.83 at June 30, 2011 and 2010, respectively. The Company's proportionate share of Vasconia's net income has been translated from MXN to USD using the average daily exchange rate of MXN 11.74 and MXN 12.55 during the three months ended June 30, 2011 and 2010, respectively, and MXN 11.91 and MXN 12.66 during the six months ended June 30, 2011 and 2010, respectively. The effect of the translation of the Company's investment resulted in an increase to the investment balance of $1.0 million during the six months ended June 30, 2011 and a decrease to the investment balance of $130,000 during the six months ended June 30, 2010 (also see Note J). These translation effects are recorded in accumulated other comprehensive loss. Included in prepaid expenses and other current assets at June 30, 2011 and December 31, 2010 are amounts due from Vasconia of $111,000 and $102,000, respectively. During the three months ended June 30, 2011, the Company received a cash dividend of $466,000 from Vasconia related to its 2010 earnings, which is accounted for as a reduction to the cost basis of the investment.

Summarized income statement information for Vasconia in USD and MXN is as follows:

 

     Three Months Ended
June 30,		  
     2011      2010  
     (in thousands)  
     USD      MXN      USD      MXN  

Net Sales

    $ 30,909       $ 362,784       $ 25,326       $ 317,802   

Gross Profit

      8,364         98,168         7,694         96,548   

Income from operations

      3,127         36,697         3,370         42,284   

Net Income

      2,116         24,838         1,801         22,599   
     Six Months Ended
June 30,		  
     2011      2010  
     (in thousands)  
     USD      MXN      USD      MXN  

Net Sales

    $ 59,480       $ 708,261       $ 50,464       $ 638,927   

Gross Profit

      16,447         195,905         15,023         190,169   

Income from operations

      6,452         76,903         6,904         87,430   

Net Income

      4,247         50,606         4,117         52,191   

The Company recorded equity in earnings of Vasconia, net of taxes, of $544,000 and $478,000 for the three months ended June 30, 2011 and 2010, respectively, and $1.0 million and $1.1 million for the six months ended June 30, 2011 and 2010, respectively.

The Company also has a 50% joint venture investment in World Alliance Enterprises Limited, a Hong-Kong based company that primarily sells kitchenware and cutlery products to retailers other than in North and South America. During the three months ended June 30, 2011, the Company recorded equity in earnings of $315,000, net of taxes. This reflects the cumulative results of this investment through June 30, 2011. Operating activities of this investment for the remainder of 2011 is expected to be immaterial.