EQUITY INVESTMENTS

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

The Company owns 24.7% of the outstanding capital stock of 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 years ended December 31, 2021, 2020 and 2019 in the accompanying 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, net of taxes, in the accompanying consolidated statements of operations for the year ended December 31, 2021.

On July 29, 2021, the Company sold 2.2 million shares further reducing its ownership from approximately 27% to 24.7% 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, net of taxes, in the accompanying consolidated statements of operations for the year ended December 31, 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 rate of MXN 20.46 and MXN 19.88 at December 31, 2021 and 2020, respectively.

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


	Year Ended December 31,
	2021	2020	2019
Average exchange rate (MXN to USD)	20.01 - 20.74	19.91 - 23.31	19.11 - 19.42

The effect of the translation of the Company’s investment, as well as the translation of Vasconia’s balance sheet, resulted in an increase of the investment of $1.0 million during the year ended December 31, 2021 and a decrease of the investment of $2.7 million during the year ended December 31, 2020. These translation effects are recorded in accumulated other comprehensive loss. The Company received cash dividends of $0.2 million, $0.1 million and $0.1 million, from Vasconia during the years ended December 31, 2021, 2020 and 2019, respectively.

The amounts due to and due from Vasconia as of December 31, 2021 and 2020 are as follows (in thousands):


Vasconia due to and due from balances	Balance Sheet Location	December 31, 2021		December 31, 2020
Amounts due from Vasconia	Prepaid expenses and other current assets	$	80	$	55
Amounts due to Vasconia	Accrued expenses and Accounts payable	$	(146)	(91)

Summarized income statement information for the years ended December 31, 2021, 2020 and 2019, as well as summarized balance sheet information as of December 31, 2021 and 2020, for Vasconia, calculated in accordance with U.S. GAAP, in USD and MXN is as follows:


	Year Ended December 31,
	2021				2020				2019
	(in thousands)
	USD		MXN		USD		MXN		USD		MXN
Income Statement
Net sales	$	240,186	$	4,871,845	$	156,391	$	3,330,855	$	159,746	$	3,074,398
Gross profit	52,574		1,064,557		24,947		540,244		34,032		654,342
Income (loss) from operations	15,536		313,156		(102)		6,674		8,620		165,287
Net income	7,017		141,972		5,566		108,678		1,757		28,892


	December 31,
	2021				2020
	(in thousands)
	USD		MXN		USD		MXN
Balance Sheet
Current assets	$	127,544	$	2,609,038	$	94,820	$	1,885,323
Non-current assets	123,938		2,535,273		100,140		1,991,116
Current liabilities	93,365		1,909,870		69,241		1,376,742
Non-current liabilities	57,753		1,181,398		48,419		962,723

The Company recorded equity in earnings of Vasconia, net of taxes, of $1.8 million, $1.5 million and $0.5 million for the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, the fair value (based on Level 1 inputs using the quoted stock price) of the Company’s investment in Vasconia was $31.5 million. The carrying value of the Company’s investment in Vasconia was $22.3 million.

Lifetime Brands Do Brasil Participacoes Ltda., a 100% owned subsidiary of Lifetime Brands, Inc., 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 during the year ended December 31, 2020. The Company included this loss within equity in earnings, net of taxes.