NOTE C — INVESTMENTS

The Company owns approximately a 30% interest in Grupo Vasconia S.A.B. (“Vasconia”), an integrated manufacturer of aluminum products and one of Mexico’s largest housewares companies. Shares of Vasconia’s capital stock are traded on the Bolsa Mexicana de Valores, the Mexican Stock Exchange. The Quotation Key is VASCONI. 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, 2015 and 2014 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 rates of MXN 15.68 and MXN 14.74 at June 30, 2015 and December 31, 2014, 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 15.31 and MXN 12.99 during the three months ended June 30, 2015 and 2014, respectively, and MXN 15.13 to 15.19 and MXN 13.00 to 13.10 during the six months ended June 30, 2015 and 2014, respectively. The effect of the translation of the Company’s investment resulted in a decrease to the investment of $0.8 million and an increase to the investment of $0.6 million during the six months ended June 30, 2015 and 2014, respectively (also see Note K). These translation effects are recorded in accumulated other comprehensive loss. Included within accrued expenses at June 30, 2015 are amounts due to Vasconia of $35,000. Included in prepaid expenses and other current assets at December 31, 2014 are amounts due from Vasconia of $33,000.

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


	Three Months Ended June 30,
	2015				2014
	(in thousands)
	USD		MXN		USD		MXN
Net sales	$	49,650	$	760,472	$	48,462	$	629,527
Gross profit		10,646		163,063		8,978		116,624
Income from operations		3,862		59,150		2,223		28,874
Net income		2,318		35,510		1,367		17,756


	Six Months Ended June 30,
	2015				2014
		(in thousands)
		USD		MXN		USD		MXN
Net Sales	$	96,989	$	1,467,907	$	91,712	$	1,201,723
Gross Profit		20,082		304,075		16,816		220,320
Income from operations		6,609		100,198		3,977		52,082
Net Income		3,564		54,122		1,476		19,194

The Company recorded equity in earnings of Vasconia, net of taxes, of $2,000 and $0.3 million for the three months ended June 30, 2015 and 2014, respectively and $0.3 million for the six months ended June 30, 2015 and 2014, respectively. Equity in earnings for the three and six months ended June 30, 2015 includes a deferred tax expense of $0.6 million due to the requirement to record tax benefits for foreign currency translation losses through other comprehensive income (loss), with a corresponding adjustment to deferred tax liabilities.

As of June 30, 2015 and December 31, 2014, the fair value (based upon Vasconia’s quoted stock price) of the Company’s investment in Vasconia was $31.5 million and $30.8 million, respectively. The carrying value of the Company’s investment in Vasconia was $26.3 million and $27.8 million as of June 30, 2015 and December 31, 2014, respectively.

The Company has a 40% equity interest in GS Internacional S/A (“GSI”), a leading wholesale distributor of branded housewares products in Brazil, which the Company acquired in December 2011. As of June 30, 2015 and December 31, 2014, the carrying value of the Company’s investment in GSI was $0 and therefore the Company has not recorded its share of equity in losses in the three and six months ended June 30, 2015. The Company will continue to monitor the operating results of GSI and will record equity in earnings when the equity in earnings exceeds the Company’s previously unrecognized losses. The Company recorded equity in losses of GSI of $234,000 and $447,000, net of taxes for the three and six months ended June 30, 2014, respectively.

The Company evaluated the disclosure requirements of ASC Topic No. 860, Transfers and Servicing, and determined that at June 30, 2015, 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.