RONKONKOMA, N.Y., Aug. 6, 2015 /PRNewswire/ -- Lakeland
Industries, Inc. (NASDAQ: LAKE), a leading global manufacturer of
industrial protective clothing for industry, municipalities,
healthcare and to first responders on the federal, state and local
levels, today announced that on July 31,
2015 it completed a conditional closing of the sale of its
wholly-owned Brazilian subsidiary ("Lakeland Brazil") to a company
owned by a current manager of the subsidiary. This sale is
pursuant to a shares transfer agreement previously signed on
June 19, 2015 which set out the
details to finalize the Company's exit from Brazil. The sale, which shall be deemed to
have been consummated as of July 31,
2015, is subject to acceptance of the shares transfer on the
Commercial Registry by the Brazilian authorities, which is expected
to be completed within approximately the next thirty
days. Although no assurances can be given in that regard, the
Company expects Commercial Registry processing of the shares
transfer will not adversely affect the closing.
![Lakeland Industries Logo. Lakeland Industries Logo.](http://photos.prnewswire.com/prnvar/20120611/NY21959LOGO)
In exchange for receiving the shares entitling full ownership of
Lakeland Brazil, the new owner has assumed all liabilities and
obligations of Lakeland Brazil, whether arising prior to, on or
after the closing date of the shares transfer. In contemplation of
the shares transfer, the Company provided approximately
US$1,130,000 through August 1, 2015 to Lakeland Brazil and has agreed
to provide additional amount of approximately US$95,000 on September 1,
2015 to support certain operational costs of Lakeland
Brazil. In addition, the Company has agreed to provide partial
funding in respect of certain labor court case reimbursements over
the next two years. There are further bonus payments of
US$150,000 conditional upon Lakeland
Brazil's new owner not declaring bankruptcy or reorganizing after
12 months from the date of share transfer and an additional
US$100,000 under similar
circumstances after 24 months. The Company believes the
transfer of Lakeland Brazil and its commitment to contingency
coverage relating to labor court claims over the next two years
will be more than offset by the anticipated U.S. tax benefit of
approximately US$9.5 million to be
gained through a worthless stock deduction for the Brazil business that the Company will claim on
its U.S. tax return for the fiscal year ended January 31, 2015.
The conditional closing of the transaction announced today
includes the transfer by Lakeland Brazil of its Brazilian land
ownership to the Company. The Company's exposure to certain
liabilities arising in connection with the prior operations of
Lakeland Brazil and the Company's claiming of the tax deduction is
more fully disclosed in the Company's filings with the Securities
and Exchange Commission. The Company estimates that the
transactions involved with the completion of its exit from
Brazil will result in a loss of
approximately $1.2 million to be
reflected on its income statement and an increase of approximately
$46,000 to stockholders equity as a
result of recording this transaction.
Christopher J. Ryan, President
and Chief Executive Officer of Lakeland Industries, commented, "We
are pleased to have completed this process which has been an
extraordinary drain on our management team. The Company may
now focus all of its energy on driving organic growth in the 12
regions around the world in which we operate. In turn, we'll
be in a better position to improve our manufacturing leverage,
operating efficiencies, profitability and cash flow. With our
improved outlook and without the burden of Brazil, we'll have a broader runway to bolster
our sales and marketing efforts and concentrate on new product
innovations. We are very excited and revitalized by the
completion of this exit process as well as concluding a three year
turnaround that has put Lakeland Industries in a stronger position
as we enter our next chapter of growth.
"Lakeland continues to gain brand awareness around the world
which we believe will enhance our growth prospects. We've
proven Lakeland's manufacturing and delivery platform is unique,
which helped us win large contracts from epidemics, including
Ebola, Avian Flu, and MERS, because we have the capability to
produce and ship product quickly, meeting the demanding
requirements of customers. We believe this demonstrated an
important competitive advantage in execution and reputation which
is increasingly making us a go-to choice not only for the major
infectious disease emergencies that occur every year or two, but
also for the many oil and chemical spills that occur on a regular
basis.
"Our existing product lines are suitable for most every need
within the industrial protective apparel industry. We have proven
that we are among the leaders in product quality while possessing
the ability to ramp up production based on market
demand. Additionally, now that that we have the time
to focus on them, a number of new initiatives being
implemented -- including end-user market diversification
and upgraded information systems and inventory management
procedures -- are expected to deliver further benefits to our
profitability and ability to serve our customers better. These
are the results we are looking to achieve that will ultimately lead
to building more shareholder value."
About Lakeland Industries, Inc.:
Lakeland Industries, Inc. (NASDAQ: LAKE) manufactures and sells
a comprehensive line of safety garments and accessories for the
industrial protective clothing market. The Company's products
are sold by a direct sales force and through independent sales
representatives to a network of over 1,000 safety and mill supply
distributors. These distributors in turn supply end user industrial
customers such as chemical/petrochemical, automobile, steel, glass,
construction, smelting, janitorial, pharmaceutical and high
technology electronics manufacturers, as well as hospitals and
laboratories. In addition, Lakeland supplies federal, state, and
local government agencies, fire and police departments, airport
crash rescue units, the Department of Defense, the Centers for
Disease Control and Prevention, and many other federal and state
agencies. For more information concerning Lakeland, please
visit the Company online at www.lakeland.com.
"Safe Harbor" Statement under the Private Securities Litigation
Reform Act of 1995: Forward-looking statements involve risks,
uncertainties and assumptions as described from time to time in
Press Releases and Forms 8-K, registration statements, quarterly
and annual reports and other reports and filings filed with the
Securities and Exchange Commission or made by management. All
statements, other than statements of historical facts, which
address Lakeland's expectations of sources or uses for capital or
which express the Company's expectation for the future with respect
to financial performance or operating strategies can be identified
as forward-looking statements. As a result, there can be no
assurance that Lakeland's future results will not be materially
different from those described herein as "believed," "projected,"
"planned," "intended," "anticipated," "estimated" or "expected," or
other words which reflect the current view of the Company with
respect to future events. We caution readers that these
forward-looking statements speak only as of the date hereof.
The Company hereby expressly disclaims any obligation or
undertaking to release publicly any updates or revisions to any
such statements to reflect any change in the Company's expectations
or any change in events conditions or circumstances on which such
statement is based.
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SOURCE Lakeland Industries, Inc.