Document:

ex10-24.htm

    Exhibit
10.24

    

    

    Lakeland
Industries, Inc.

    UNAUDITED
CONDENSED COMBINED PRO FORMA FINANCIAL
 STATEMENTS

    

     

    The statements contained in this
section may be deemed to be forward-looking statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended, and
Section 27A of the Securities Act of 1933, as amended. Such statements are
intended to be covered by the safe harbor to “forward-looking statements”
provided by the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are typically identified by the words “believe”,
“expect”, “anticipate”, “intend”, “estimate” and similar expressions. These
forward-looking statements are based largely on management’s expectations and
are subject to a number of uncertainties. Actual results could differ materially
from these forward-looking statements. Neither Lakeland nor Qualytextil
undertakes any obligation to update publicly or revise any forward-looking
statements.

     

    The
unaudited condensed combined pro forma statements of income are presented to
give effect to the acquisition of Qualytextil as if it had occurred on
February 1, 2007. The unaudited condensed combined pro forma balance sheet
is presented to give effect to the acquisition of Qualytextil as if it had
occurred on April 30, 2008. This pro forma information is based on, and should
be read in conjunction with, the historical financial statements of Lakeland for the
year ended January 31, 2008, included in our Annual Report on Form 10-K
filed on April 14, 2008, and the historical financial statements of Qualytextil
for the year ended December 31, 2007 and the three months ended April 30,
2008, which are included elsewhere in this Form 8-K/A. We have not adjusted the
historical financial statements for the year ended December 31, 2007 or January
31, 2008 of either Lakeland or Qualytextil for any costs recognized during the
year that may be considered to be nonrecurring.

     

    The
unaudited condensed combined pro forma statement of income for the year ended
January 31, 2008, combines information from the audited historical consolidated
statement of income of Lakeland for the year ended January 31, 2008, and the
U.S. GAAP historical consolidated income statement information of Qualytextil
for the year ended December 31, 2007. The unaudited condensed combined pro
forma balance sheet combines information from the unaudited historical
consolidated balance sheet of Lakeland as of April 30, 2008 and U.S. GAAP
historical consolidated balance sheet information of Qualytextil as of April 30,
2008.

    

    All
unaudited interim financial statements furnished herein reflect all adjustments
which are, in the opinion of management, necessary to present a fair statement
of the results for the interim periods presented. All such adjustments are of a
normal and recurring nature.

    

    The
results for the three months ended April 30, 2008 for Qualytextil was
significantly impacted by a strike of customs workers in Brazil which began in
mid-March 2008 and ended in mid-May 2008, and affected virtually all imports and
exports in Brazil. Qualytextil was impacted by this strike in that shipments of
certain raw materials imported into Brazil were blocked and thus there were many
orders which could not be completed. Most of such sales have been completed
subsequently. The results of Qualytextil for the three month period from
February to April 2008, accordingly, are not representative of its results for a
full fiscal year or for normal results for this period.

    

    The
historical U.S. GAAP Qualytextil balance sheet information included in the
unaudited condensed combined pro forma financial statements was derived from
Qualytextil’s audited balance sheet as of April 30, 2008 prepared in accordance
with generally accepted accounting principles adopted in Brazil, based on the
Corporation Law, and the accounting procedures issued by CVM – Comissão de
Valores Mobiliários (Brazilian Exchange Commission) and IBRACON – Instituto dos
Auditores Independentes do Brasil (the Brazilian Independent Auditors
Institute). On December 28, 2007, Brazil enacted the law 11,638/07 which changed
several aspects of Law 6,404 (Publicity Traded Company) effective beginning in
2008, in order to adjust accounting practices adopted in Brazil to the
International Financial Reporting Standards (IFRS). None of the financial
statements contained herein have been prepared in compliance with IFRS. The
historical balance sheet information for assets and liabilities was converted to
U.S. GAAP and translated into U.S. dollars using an exchange rate 1.6872BRL =
US$1.00 at April 30, 2008. Certain amounts in the Qualytextil historical balance
sheet information were reclassified to be consistent with Lakeland’s balance
sheet presentation. The historical U.S. GAAP Qualytextil consolidated income
statement information included in the unaudited condensed combined pro forma
financial statements was derived from Qualytextil’s audited consolidated income
statement for the year ended December 31, 2007 and the unaudited three
months ended April 30, 2008, prepared in accordance with generally accepted
accounting principles adopted in Brazil, as detailed above. The historical
income statement information was converted to U.S. GAAP and translated into U.S.
dollars using an exchange rate of 1.9472BRL = U.S. $1.00 for the year ended
December 31, 2007 and

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    1.71288BRL
= US$1.00  for the period ended April 30, 2008, respectively. These
rates represent the average monthly exchange rates. Certain amounts in the
Qualytextil historical income statement information were reclassified to be
consistent with Lakeland’s income statement presentation. Reconciliations of
equity as of December 31, 2007 and net income for the year ended
December 31, 2007 between Brazilian GAAP and U.S. GAAP are included in
an exhibit included elsewhere in this Current Report on
Form 8-K/A.

     

    The
allocation of the preliminary purchase price as reflected in these condensed
combined pro forma financial statements has been based upon the total initial
purchase price paid to the sellers of Qualytextil by Lakeland and preliminary
estimates of the fair value of the Qualytextil assets acquired and liabilities
assumed as of the date of the acquisition. Management is currently assessing the
fair values of tangible and intangible assets acquired and liabilities assumed.
This preliminary allocation of the purchase price is dependent upon certain
estimates and assumptions. The fair value estimates for the purchase price
allocation are preliminary and have been made solely for the purpose of
developing such pro forma condensed combined financial statements.

     

    The
unaudited condensed combined pro forma financial statements were prepared using
the assumptions described below and in the related notes. The historical
financial information has been adjusted to give effect to pro forma events that
are 1) directly attributable to the acquisition, 2) factually supportable, and
3) with respect to the statement of income, expected to have a continuing impact
on the combined results. The unaudited condensed combined pro forma financial
statements do not include liabilities resulting from acquisition planning, nor
do they include certain cost savings or operating synergies (or costs associated
with realizing such savings or synergies) that may result from the acquisition.
Amounts preliminarily allocated to goodwill may significantly increase or
decrease and amounts allocated to intangible assets with finite lives may
increase or decrease significantly, which could result in a material increase or
decrease in amortization expense related to acquired intangible assets from that
which is estimated in these unaudited condensed combined pro forma financial
statements. Therefore, the actual amounts recorded may differ materially from
the information presented in the accompanying unaudited condensed combined pro
forma financial statements.

     

    

    The
unaudited condensed combined pro forma financial statements are provided for
illustrative purposes only. They do not purport to represent what Lakeland’s
consolidated results of operations and financial position would have been had
the transaction actually occurred as of the dates indicated, and they do not
purport to project Lakeland’s future consolidated results of operations or
financial position.ex10-25.htm

    Exhibit
10.25

     

    
      	
              PROFORMA
      UNAUDITED CONDENSED COMBINED  STATEMENTS  OF
      INCOME

            	 	
              Combined

            	 
	 
      	 	
              Historical

            	 	 	 	 	 	 	 	
              Pro
      forma

            	 
	
               ($000
      USD)

            	 	 	 	 	
              QUALYTEXTIL

            	 	 	 	 	 	 	 	 	 	 
	
              Fiscal
      Year ended January 31, 2008

            	 	
              AS
      REPORTED

            	 	 	
              US
      GAAP /USD

            	 	 	
              Adjustment

            	 	 	
              Adjustment

            	 	 	 	 
	
              Income
      Statement Data:

            	 	
              1/31/08

            	 	 	
              12/31/07

            	 	 	
               (1)

            	 	 	
               (2)

            	 	 	
              1/31/08

            	 
	
              Net
      sales

            	 	$	95,740	 	 	$	8,518	 	 	$	-	 	 	$	-	 	 	$	104,258	 
	
              Cost
      of goods sold

            	 	 	73,383	 	 	 	4,324	 	 	 	-	 	 	 	-	 	 	 	77,707	 
	
              Gross
      profit

            	 	 	22,357	 	 	 	4,194	 	 	 	-	 	 	 	-	 	 	 	26,551	 
	
              Operating
      expenses

            	 	 	17,374	 	 	 	2,847	 	 	 	-	 	 	 	-	 	 	 	20,221	 
	
              Operating
      profit

            	 	 	4,983	 	 	 	1,347	 	 	 	-	 	 	 	-	 	 	 	6,330	 
	
              Other
      income

            	 	 	145	 	 	 	14	 	 	 	-	 	 	 	-	 	 	 	159	 
	
              Interest
      expense

            	 	 	(330	)	 	 	(680	)	 	 	(789	)	 	 	680	 	 	 	(1,119	)
	
              Interest
      income

            	 	 	67	 	 	 	2	 	 	 	-	 	 	 	-	 	 	 	69	 
	
              Income
      before income taxes

            	 	 	4,865	 	 	 	683	 	 	 	(789	)	 	 	680	 	 	 	5,439	 
	
              Income
      tax expense

            	 	 	1,574	 	 	 	104	 	 	 	(284	)	 	 	104	 	 	 	1,498	 
	
              Net
      Income

            	 	$	3,291	 	 	$	579	 	 	$	(505	)	 	$	576	 	 	$	3,942	 
	
              Net
      income per share

            	 	$	0.60	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0.71	 
	
                
       # shares used for basic EPS

            	 	 	5,522,751	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	5,522,751	 
	
              ACCRETIVE
      TO EPS:

            	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	$	0.11	 

    

     

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      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

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