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 nine month periods ended September 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 17.01 and MXN 14.74 at September 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 16.41 and MXN 13.11 during the three months ended September 30, 2015 and 2014, respectively, and MXN 14.94 to 16.41 and MXN 13.05 to 13.11 during the nine months ended September 30, 2015 and 2014, respectively. The effect of the translation of the Company’s investment resulted in a decrease to the investment of $5.1 million and $1.3 million during the nine months ended September 30, 2015 and 2014, respectively (also see Note K). These translation effects are recorded in accumulated other comprehensive income (loss). Included in prepaid expenses and other current assets at December 31, 2014 are amounts due from Vasconia of $33,000.

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


	Three Months Ended September 30,
	2015				2014
	(in thousands)
	USD		MXN		USD		MXN
Net sales	$	42,759	$	701,631	$	45,635	$	598,197
Gross profit		7,755		127,258		8,173		107,134
Income from operations		2,134		35,012		1,720		22,547
Net income		1,210		19,859		1,173		15,381


	Nine Months Ended September 30,
	2015				2014
		(in thousands)
		USD		MXN		USD		MXN
Net Sales	$	139,748	$	2,169,538	$	137,348	$	1,799,920
Gross Profit		27,838		431,333		24,989		327,454
Income from operations		8,742		135,210		5,697		74,628
Net Income		4,774		73,981		2,649		34,575

The Company recorded equity in earnings (losses) of Vasconia, net of taxes, of $(0.5) million and $0.3 million for the three months ended September 30, 2015 and 2014, respectively and $(0.2) million and $0.6 million for the nine months ended September 30, 2015 and 2014, respectively. Equity in losses for the three and nine months ended September 30, 2015 includes deferred tax expense of $0.8 million and $1.3 million, respectively, 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 September 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 $24.0 million and $27.8 million as of September 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 September 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 nine months ended September 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 $5.5 million and $5.9 million, net of taxes, for the three and nine months ended September 30, 2014, respectively. The equity in losses, net of tax, for the three and nine months ended September 30, 2014, include a $5.2 million impairment charge recorded by the Company for the other-than-temporary impairment of its interest in GSI.

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