Pro Forma Notes to Unaudited Condensed Combined Statements of Income for Qualytextil Acquisition
Contract Categories:
Business Finance
›
Financing Agreements
Summary
This document provides notes to the unaudited pro forma combined income statements for the three months ended April 30, 2008, related to Lakeland's acquisition of Qualytextil. It details adjustments for interest expense that would have been incurred on a loan used to finance the purchase, using Lakeland’s weighted average interest rate plus a 0.40% premium. It also explains the tax rate applied to the interest expense and the removal of Qualytextil’s prior interest expense, as its debt was repaid in the transaction.
EX-10.26 5 v176896_ex10-26.htm
Exhibit 10.26
NOTES TO: PROFORMA UNAUDITED CONDENSED COMBINED STATEMENTS OF INCOME
Three months ended April 30, 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 | 3.93 | % | ||
| Additional interest expense on purchase loan pro forma | $ | 131 | ||
| 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 25.0%, 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 | $ | 47 | ||
| (2) Adjustment to add back interest expense on Qualytextil books as the debt has been repaid as a result of this transaction | ||||
