NOTE D — 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 months ended September 30, 2018 and 2017 in the accompanying unaudited 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 18.69 and MXN 19.68 at September 30, 2018 and December 31, 2017, 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 18.94 and MXN 17.81 during the three months ended September 30, 2018 and 2017, respectively, and MXN 18.71 to MXN 19.38 and MXN 17.81 to MXN 20.30 during the nine months ended September 30, 2018 and 2017, respectively. The effect of the translation of the Company’s investment resulted in an increase to the investment of $0.8 million during the nine months ended September 30, 2018 and an increase to the investment of $1.3 million during the nine months ended September 30, 2017. These translation effects are recorded in accumulated other comprehensive income (loss). Included within prepaid expenses and other current assets at September 30, 2018 and December 31, 2017 are amounts due from Vasconia of $147,000 and $64,000, respectively. No amounts were due to Vasconia at September 30, 2018 or December 31, 2017.

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


	Three Months Ended
	September 30,
	2018						2017
	(in thousands)
	USD			MXN			USD			MXN
Net sales	$	41,222		$	780,938		$	40,184		$	715,577
Gross profit		7,762			147,039			7,553			134,507
Income from operations		1,063			20,136			1,766			31,440
Net income (loss)		(1,233	)		(23,361	)		(648	)		(11,538	)

	Nine Months Ended
	September 30,
	2018						2017
	(in thousands)
	USD			MXN			USD			MXN
Net Sales	$	128,853		$	2,452,673		$	118,743		$	2,236,897
Gross Profit		24,867			473,763			23,162			437,718
Income from operations		5,867			112,466			5,881			112,027
Net Income		862			17,484			1,754			35,168

The Company recorded equity in earnings of Vasconia, net of taxes, of $185,000 and $417,000, for the three and nine months ended September 30, 2018, respectively. The Company recorded equity in losses of Vasconia of $326,000 and equity in earnings of Vasconia of $672,000 for the three and nine months ended September 30, 2017, respectively. Equity in earnings for the three and nine months ended September 30, 2018, includes deferred tax benefit of $580,000 and $274,000, respectively, due to the requirement to record tax benefits for foreign currency translation gains and losses through other comprehensive income (loss), with a corresponding adjustment to deferred tax liabilities. Equity in earnings for the three and nine months ended September 30, 2017, includes deferred tax expense of $0.1 million and a deferred tax benefit of $0.2 million, respectively.

As of September 30, 2018 and December 31, 2017, the fair value (based upon Vasconia’s quoted stock price) of the Company’s investment in Vasconia was $32.8 million and $31.8 million, respectively. The carrying value of the Company’s investment in Vasconia was $24.8 million and $23.8 million as of September 30, 2018 and December 31, 2017, respectively.