SOURCE: Lakeland Industries, Inc.

May 14, 2008 09:54 ET

Lakeland Industries Completes Acquisition of Brazilian Protective Apparel Supplier Qualytextil S.A.

Wachovia Bank, N.A. Increases Lakeland's Revolving Line of Credit to $30 Million

RONKONKOMA, NY--(Marketwire - May 14, 2008) - Lakeland Industries, Inc. (NASDAQ: LAKE), a market leader in protective apparel, today announced that it has completed the acquisition of Brazilian protective apparel supplier Qualytextil S.A. Under the terms of the transaction, Lakeland paid approximately USD$13.3 million at closing. Terms also include an earnout based on Qualytextil meeting specific increased earnings before interest, taxes, depreciation and amortization (EBITDA) targets in 2010. The acquisition was funded by existing cash and borrowings from a commercial line of credit, and is expected to be accretive to Lakeland's earnings per share. Adjusted pro forma EBITDA, as defined in the agreement, for the twelve months ended December 2007 was approximately USD$1.9 million. Sales for this period were approximately USD$10.3 million with gross margins reaching 50%.

Qualytextil, based in Salvador Bahia, Brazil, was founded in 1999 and serves the Brazil Protective Clothing market in the following areas: firemen's turnout gear, conductive and electric arc garments, chemical protective garments, occupational, multilayer and waterproof operational garments, aluminized and molten metal lines of protective clothing. With an in-house sales force of 20 employees and 28 outside sales representatives, it covers the entire country, selling directly to end users. Qualytextil markets products directly to major state owned companies and agencies and the main oil and chemical companies in Brazil. As the latest addition to Lakeland's expanding international presence, Qualytextil's regional Brazilian operations, including manufacturing, sales and marketing, warehousing, and distribution, benefit from State provided tax incentives, favorable labor rates, and proximity to economical transportation for distribution of garments throughout Brazil and into neighboring countries.

"The primary goal of this acquisition was to accelerate our entry into high growth markets outside of North America," said Christopher Ryan, CEO of Lakeland. "Qualytextil's obvious strengths in Brazil will be fortified by Lakeland's international expertise and broadening product development efforts. Collectively, we are well positioned to expand our business into other Latin American countries where there is increasing demand for industrial and workplace garments. We are particularly excited by Qualytextil's ability to reap the benefits of the Mercosur Treaty of 1994, which establishes favorable trade agreements among member nations. The Mercosur Treaty currently extends benefits to companies in Brazil, Argentina, Paraguay, Uruguay, and Venezuela as full member nations, plus Chile and Peru as associated members. The acquisition of Qualytextil should result in Lakeland becoming more profitable, diversifying its international operations, and positioning us to capitalize on some of the greatest opportunities for growth anywhere in the world."

Commenting on the completion of the acquisition, Marcos Vieira, President of Qualytextil, said, "Since we announced our intent to join the Lakeland family, the Qualytextil team has responded with approval by delivering an increase in both sales and profits. With the added resources and support of Lakeland, we are now more energized than ever to build upon Qualytextil's success to date toward becoming a more dominant force throughout Brazil and all of Latin America."

As part of the process to close on the Qualytextil acquisition, Wachovia Bank, N.A. has extended Lakeland's revolving credit to $30 million, has reviewed and approved the acquisition, and reworked several covenants to accommodate the transaction. Mr. Ryan further commented, "We are appreciative of the support given to Lakeland by Wachovia Bank and believe the expanding relationship underscores their confidence in our ability to execute on our strategy for future growth."

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 800 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 may other federal and state agencies.

Safe Harbor Statement: This press release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, including statements, without limitation, regarding our expectations, beliefs, intentions or strategies regarding the future. We intend that such forward-looking statements be subject to the safe-harbor provided by the Private Securities Litigation Reform Act of 1995. All statements that are not historical are forward-looking. Forward-looking statements may relate to, but are not limited to, the timing of the execution of any definitive agreements relating to the transaction or the expected closing of the acquisition, the ultimate purchase price to be paid to acquire Qualytextil, the benefits and synergies of the transaction, the future opportunities for the combined company, the size and growth of product markets, and the potential impact of the proposed acquisition on shareholder value, pro forma revenue, earnings and combined operations. Such forward-looking statements are based upon current information and expectations. These estimates and statements speak only as of the date on which they are made, are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict.

Therefore, actual outcomes and results could materially differ from what is expressed, implied, or forecasted in such forward-looking statements. Factors that could cause actual outcomes or results to differ materially include, among others, the following: (1) the possibility that we and Qualytextil may not be able to successfully negotiate definitive purchase and sale documents, (2) our ability to successfully integrate Qualytextil's operations and employees, (3) general economic factors, (4) general industry trends, (5) the potential effects on the combined company of competition in the protective apparel market, (6) growth rates in the market for protective apparel, (7) shifts in demand by potential customers, (8) market acceptance of new or enhanced products developed, marketed or sold by the combined company, (9) delays in scheduled product availability dates, (10) actions or announcements by competitors, (11) reduction in sales to or loss of any significant customers, (12) the dependence on intellectual property licensed from third parties, (13) each company's ability to attract and retain qualified personnel, (14) each company's ability to contain costs, (15) changes in the political climate in Brazil, and (16) other risks described in our filings with the Securities and Exchange Commission, including, but not limited to, our latest Annual Report on Form 10-K and our latest Quarterly Report on Form 10-Q, copies of which may be obtained from If any of these risks or uncertainties materialize or any of the assumptions prove incorrect, our results could differ materially and adversely from our expectations in these statements. We assume no obligation, and do not intend, to update these forward-looking statements except as the law may require.

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