EQUITY INVESTMENTS

12 Months Ended

Dec. 31, 2011

NOTE C — EQUITY INVESTMENTS

The Company owns a 30% interest in Grupo Vasconia, S.A.B. (“Vasconia”). The investment is accounted for using the equity method of accounting. 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 years ended December 31, 2011, 2010 and 2009 in the accompanying 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 13.95 and MXN 12.39 at December 31, 2011 and 2010, respectively. The Company’s proportionate share of Vasconia’s net income has been translated from MXN to USD using the average exchange rates of MXN 11.74 to 13.62, MXN 12.37 to 12.79 and MXN 13.05 to 14.32 during the years ended December 31, 2011, 2010 and 2009, respectively. The effect of the translation of the Company’s investment resulted in a decrease of the investment of $0.5 million during the year ended December 31, 2011 and an increase of the investment of $1.1 million and $0.5 million during the years ended December 31, 2010 and 2009, respectively. These translation effects are recorded in accumulated other comprehensive loss. The Company received cash dividends of $466,000 and $398,000 from Vasconia during the years ended December 31, 2011 and 2010, respectively. Included in prepaid expenses and other currents assets at December 31, 2011 and 2010 are amounts due from Vasconia of $216,000 and $102,000, respectively.

Summarized income statement information for the years ended December 31, 2011, 2010 and 2009, as well as summarized balance sheet information as of December 31, 2011 and 2010, for Vasconia in USD and MXN is as follows:


	Year Ended December 31,
	2011				2010				2009
	(in thousands)
	USD		MXN		USD		MXN		USD		MXN
Income Statement
Net Sales	$	132,310	$	1,647,479	$	113,454	$	1,430,528	$	94,633	$	1,276,126
Gross Profit		38,143		476,501		32,451		409,263		26,251		353,500
Income from operations		17,254		216,715		15,122		190,862		11,803		159,531
Net Income		11,395		142,698		9,910		125,115		8,306		111,709


	December 31,
	2011				2010
	(in thousands)
	USD		MXN		USD		MXN
Balance Sheet
Current assets	$	54,262	$	756,792	$	55,944	$	693,118
Non-current assets		42,904		598,382		32,506		402,733
Current liabilities		14,645		204,254		16,299		201,936
Non-current liabilities		7,310		101,953		5,516		68,340

The Company recorded equity in earnings of Vasconia, net of taxes, of $2.9 million, $2.7 million and $2.2 million for the years ended December 31, 2011, 2010 and 2009, 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 year ended December 31, 2011, the Company recorded equity in earnings of $447,000. This reflects the cumulative results of this investment through December 31, 2011.

In January 2011, the Company, together with Vasconia and unaffiliated partners, formed Housewares Corporation of Asia Limited (“HCA”), a Hong Kong-based company, to supply direct import kitchenware products to retailers in North, Central and South America. The Company paid $105,000 for a 40% equity interest in this entity during 2011. The operating results of HCA were not significant through December 31, 2011.

On December 9, 2011, the Company acquired a 40% equity interest in GS Internacional S/A (“GSI”), a leading wholesale distributor of branded housewares products in Brazil. The consideration for this equity investment amounted to $7.6 million, which consisted of cash consideration of $5.0 million and consideration payable of $2.6 million. During the period of December 9, 2011 through December 31, 2011, the Company’s equity in earnings of GSI were not significant.

In February 2012, the Company entered into a joint venture to distribute Mikasa^® products in China, which will require an initial investment of $500,000 by the Company.

The Company incurred acquisition costs of $2.0 million in 2011, which have been recorded in Selling, General and Administrative Expenses in the consolidated statement of operations.

The Company evaluated the disclosure requirements of ASC Topic No. 860, Transfers and Servicing, and determined that at December 31, 2011, the Company did not have a controlling voting interest or variable interest in any of its investments and therefore continued accounting for the investments using the equity method of accounting.

- Definition

The entire disclosure for equity investment, or group of investments, for which combined disclosure is appropriate, including: (a) the name of each investee and percentage of ownership of common stock, (b) accounting policies for investments in common stock, (c) difference between the amount at which the investment is carried and the amount of underlying equity in net assets and the accounting treatment of the difference, (d) the total fair value of each identified investment for which a market value is available, (e) summarized information as to assets, liabilities, and results of operations of the investees (for investments in unconsolidated subsidiaries, common stock of joint ventures, or other investments using the equity method), and (f) material effects of possible conversions, exercises, or contingent issuances of the investee. Other disclosures include (a) the names of any investee in which the investor owns 20 percent or more of the voting stock and investment is not accounted for using the equity method, and the reasons why not, and (b) the names of any investee in which the investor owns less than 20 percent of the voting stock and the investment is accounted for using the equity method, and the reasons why it is.

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