Pro Forma Adjustment Notes for Qualytextil Acquisition Loan—Fiscal Year Ended January 31, 2008
Contract Categories:
Business Finance
›
Financing Agreements
Summary
This document provides notes explaining adjustments made to the pro forma unaudited condensed combined statements of income for the fiscal year ended January 31, 2008. It details how interest expense was calculated for a loan used to finance the purchase of Qualytextil, including the assumed interest rate and related tax effects. The notes also explain the removal of Qualytextil's prior interest expense, as its debt was repaid through the transaction. These adjustments help present a more accurate financial picture following the acquisition.
EX-10.25 4 v176896_ex10-25.htm
Exhibit 10.25
NOTES TO: PROFORMA UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME
Fiscal year ended January 31, 2008
| Adjustment Needed | ||||
| (1) Adjustment to reflect interest- Expense that would have been incurred on loan to finance purchase of Qualytextil | $ | 13,344 | ||
| Interest rate assumed on proforma loan. Used Lakeland’s actual weighted average interest rate for the period + 40 BPS which is the pricing adjustment created by the higher leverage resulting from the purchase price borrowing | 5.91 | % | ||
| Additional interest expense on purchase loan pro forma | $ | 789 | ||
| Tax rate - The Company considers the rate of 36% to be appropriate as it represents the applicable tax effect on interest expense incurred on the loan assumed in USD. The Company did not use the effective tax rate which is 32.3%, since the rate is affected by various factors not relevant to the current transaction including income from various foreign subsidiaries, deductions etc. | 36 | % | ||
| Tax benefit on additional interest expense | $ | 284 | ||
| (2) Adjustment to add back interest expense on Qualytextil books as the debt has been repaid as a result of this transaction | ||||
