INVESTMENTS

9 Months Ended

Sep. 30, 2021

Equity Method Investments and Joint Ventures [Abstract]

As of September 30, 2021, the Company owned approximately 25% of the outstanding capital stock of 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 condensed consolidated statements 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, 2021 and 2020 in the accompanying unaudited condensed consolidated statements of operations.

On June 30, 2021, Vasconia sold shares, which diluted the Company’s investment ownership from approximately 30% to approximately 27%. The Company recorded a non-cash gain of $1.7 million, increasing the Company’s investment balance. Additionally, a loss of $2.0 million was recognized for the proportionate share of the diluted ownership for amounts previously recognized in accumulated other comprehensive loss. The net loss of $0.3 million was included in equity in earnings (losses), net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the nine months ended September 30, 2021.

On July 29, 2021, the Company sold 2.2 million shares further reducing its ownership from approximately 27% to approximately 25% in Vasconia for net cash proceeds of approximately $3.1 million, as a result the Company recorded a gain of $1.0 million, after decreasing the Company’s investment balance. The gain on the sale resulted in a tax expense of $0.1 million. Additionally, a loss of $1.4 million was recognized for the proportionate share of the reduced ownership for amounts previously recognized in accumulated other comprehensive loss. The net loss, including taxes, of $0.5 million was included in equity in earnings (losses), net of taxes, in the accompanying unaudited condensed consolidated statements of operations for the three and nine months ended September 30, 2021. The Company continues to apply the equity method of accounting.

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 20.54 and MXN 19.88 at September 30, 2021 and December 31, 2020, respectively.

The Company’s proportionate share of Vasconia’s net income has been translated from MXN to USD using the following exchange rates:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Average exchange rate (USD to MXN)	20.01	22.06	20.01 - 20.33	19.91 - 23.31

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in an increase to the investment of $1.3 million and a decrease of $3.4 million during the nine months ended September 30, 2021 and 2020, respectively. These translation effects are recorded in accumulated other comprehensive loss.

Summarized income statement information for the three and nine months ended September 30, 2021 and 2020 for Vasconia in USD and MXN is as follows (in thousands):


	Three Months Ended September 30,
	2021				2020
	USD		MXN		USD		MXN
Net sales	$	61,783	$	1,236,289	$	39,565	$	872,647
Gross profit	12,958		259,285		9,556		210,770
Income from operations	3,886		77,756		2,957		65,229
Net income	2,952		59,063		536		11,812


	Nine Months Ended September 30,
	2021				2020
	USD		MXN		USD		MXN
Net sales	$	174,468	$	3,508,858	$	99,932	$	2,171,695
Gross profit	40,837		821,125		21,025		459,731
Income from operations	14,169		284,799		3,821		87,229
Net income (loss)	4,562		91,063		(36)		(6,344)

The Company recorded equity in earnings of Vasconia, net of taxes, of $0.7 million and $1.2 million for the three and nine months ended September 30, 2021, respectively. The Company recorded equity in earnings (losses) of Vasconia, net of taxes, of $0.1 million and $(0.2) million for the three and nine months ended September 30, 2020, respectively.

Included within the Company's unaudited condensed consolidated balance sheets were the following amounts due to and due from Vasconia (in thousands):


Vasconia due to and due from balances	Balance Sheet Location	September 30, 2021		December 31, 2020
Amounts due from Vasconia	Prepaid expenses and other current assets	$	69	$	55
Amounts due to Vasconia	Accrued expenses and Accounts payable	(58)		(91)

As of September 30, 2021 and December 31, 2020, the fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia was $33.7 million and $32.8 million, respectively. The carrying value of the Company’s investment in Vasconia was $22.1 million and $20.0 million as of September 30, 2021 and December 31, 2020, respectively.

Lifetime Brands Do Brasil Participacoes Ltda., a 100% owned subsidiary of the Company, was dissolved on May 5, 2020. The subsidiary held a note receivable relating to the 2016 sale of its 40% equity interest in GS International S/A (“GSI”), a wholesale distributor of branded housewares products in Brazil, which was accounted for as an equity method investment. The final installment due on the note receivable was received prior to dissolution of the subsidiary. Foreign currency translation losses of $0.2 million, which were previously recorded as a component of stockholder’s equity within accumulated other comprehensive loss, were recognized in earnings upon dissolution of this subsidiary for the nine months ended September 30, 2020. The Company included this loss within equity in earnings (losses), net of taxes.