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 Lakelands 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 booksas the debt has been repaid as a result of this 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 | ||||
