##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission file number 001-13023
 Thermadyne Holdings Corporation
  Delaware
(State or Other Jurisdiction of 
Incorporation or Organization)
    
    74-2482571
(I.R.S. Employer Identification No.)16052 Swingley Ridge Road, Suite 300,
Chesterfield, MO
(Address of Principal Executive Offices)
    
    63017
(Zip Code)
 (636) 728-3000
  þ o
  o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ(Do not check if a smaller reporting company)
  o þ




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##### 



THERMADYNE HOLDINGS CORPORATION
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    23Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    29Item 6. Exhibits
    
    
    29SIGNATURES
    
    
    30EX-31.1EX-31.2EX-32.1EX-32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1.
 THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 June 30,
    
    
    December 31,2010
    
    
    2009(unaudited)Current Assets:Cash and cash equivalents
    
    $
    12,908
    
    
    $
    14,886Accounts receivable, less allowance for doubtful accounts of
$500 and $400, respectively
    
    
    64,938
    
    
    
    56,589Inventories
    
    
    80,368
    
    
    
    74,381Prepaid expenses and other
    
    
    8,964
    
    
    
    9,255Deferred tax assets
    
    
    3,008
    
    
    
    3,008Total current assets
    
    
    170,186
    
    
    
    158,119Property, plant and equipment, net of accumulated depreciation
of $58,075 and $55,082, respectively
    
    
    45,887
    
    
    
    46,687Goodwill
    
    
    186,334
    
    
    
    187,818Intangibles, net
    
    
    57,347
    
    
    
    58,451Other assets
    
    
    3,072
    
    
    
    3,870Total assets
    
    $
    462,826
    
    
    $
    454,945Current Liabilities:Working capital facility
    
    $
    9,662
    
    
    $
    9,643Current maturities of long-term obligations
    
    
    3,080
    
    
    
    8,915Accounts payable
    
    
    32,894
    
    
    
    9,598Accrued and other liabilities
    
    
    30,990
    
    
    
    23,119Accrued interest
    
    
    8,345
    
    
    
    7,608Income taxes payable
    
    
    2,695
    
    
    
    705Deferred tax liabilities
    
    
    2,793
    
    
    
    2,793Total current liabilities
    
    
    90,459
    
    
    
    62,381Long-term obligations, less current maturities
    
    
    179,933
    
    
    
    198,466Deferred tax liabilities
    
    
    49,059
    
    
    
    52,835Other long-term liabilities
    
    
    12,629
    
    
    
    13,471Stockholders equity:Common stock, $0.01 par value:Authorized  25,000,000 sharesIssued and outstanding  13,546,797 shares at June 30, 2010 and
13,539,998 shares at December 31, 2009
    
    
    135
    
    
    
    135Additional paid-in capital
    
    
    189,085
    
    
    
    188,791Accumulated deficit
    
    
    (60,196
    )
    
    
    (65,063
    )Accumulated other comprehensive income
    
    
    1,722
    
    
    
    3,929Total shareholders equity
    
    
    130,746
    
    
    
    127,792Total liabilities and shareholders equity
    
    $
    462,826
    
    
    $
    454,945
  3




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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share data)

(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    108,596
    
    
    $
    84,805
    
    
    $
    205,213
    
    
    $
    168,116Cost of goods sold
    
    
    71,365
    
    
    
    59,860
    
    
    
    135,597
    
    
    
    121,811Gross margin
    
    
    37,231
    
    
    
    24,945
    
    
    
    69,616
    
    
    
    46,305Selling, general and administrative expenses
    
    
    25,082
    
    
    
    18,268
    
    
    
    46,849
    
    
    
    37,710Amortization of intangibles
    
    
    680
    
    
    
    672
    
    
    
    1,357
    
    
    
    1,343Operating income
    
    
    11,469
    
    
    
    6,005
    
    
    
    21,410
    
    
    
    7,252Other income (expenses):Interest, net
    
    
    (5,939
    )
    
    
    (4,911
    )
    
    
    (12,275
    )
    
    
    (9,544
    )Amortization of deferred financing costs
    
    
    (251
    )
    
    
    (237
    )
    
    
    (515
    )
    
    
    (473
    )Loss on debt extinguishment
    
    
    (1,867
    )
    
    
    
    
    
    
    (1,867
    )
    
    
    Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    3,412
    
    
    
    857
    
    
    
    6,753
    
    
    
    (2,765
    )Income tax provision (benefit)
    
    
    841
    
    
    
    275
    
    
    
    1,886
    
    
    
    (851
    )Net income (loss) from continuing operations
    
    $
    2,571
    
    
    $
    582
    
    
    $
    4,867
    
    
    $
    (1,914
    )Income from discontinued operations, net of tax
    
    
    
    
    
    
    1,933
    
    
    
    
    
    
    
    1,933Net income
    
    $
    2,571
    
    
    $
    2,515
    
    
    $
    4,867
    
    
    $
    19Basic and Diluted income (loss) per shareContinuing operations
    
    $
    0.19
    
    
    $
    0.04
    
    
    $
    0.36
    
    
    $
    (0.14
    )Discontinued operations
    
    
    
    
    
    
    0.14
    
    
    
    
    
    
    
    0.14Net income
    
    $
    0.19
    
    
    $
    0.18
    
    
    $
    0.36
    
    
    $
    
  4




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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


(In thousands)

(Unaudited)
 Six Months Ended June 30,2010
    
    
    2009Cash flows from continuing operations:Cash flows from operating activities:Net income
    
    $
    4,867
    
    
    $
    19Adjustments to reconcile net income to net cash provided by (used in) operating activities:Income from discontinued operations
    
    
    
    
    
    
    (1,933
    )Depreciation and amortization
    
    
    6,831
    
    
    
    6,203Deferred income taxes
    
    
    (2,268
    )
    
    
    (1,893
    )Stock compensation expense
    
    
    248
    
    
    
    (668
    )Net periodic post-retirement benefits
    
    
    348
    
    
    
    9Loss on debt extinguishment
    
    
    1,867
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (9,493
    )
    
    
    18,034Inventories
    
    
    (6,834
    )
    
    
    21,861Prepaids
    
    
    320
    
    
    
    1,283Accounts payable
    
    
    23,426
    
    
    
    (9,809
    )Accrued and other liabilities
    
    
    8,183
    
    
    
    (9,088
    )Accrued interest
    
    
    737
    
    
    
    695Accrued taxes
    
    
    2,093
    
    
    
    (2,937
    )Other long-term liabilities
    
    
    (970
    )
    
    
    (513
    )Other, net
    
    
    (510
    )
    
    
    Net cash provided by operating activities
    
    
    28,845
    
    
    
    21,263Cash flows from investing activities:Capital expenditures
    
    
    (4,474
    )
    
    
    (3,973
    )Other
    
    
    (253
    )
    
    
    (134
    )Net cash used in investing activities
    
    
    (4,727
    )
    
    
    (4,107
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    1,161
    
    
    
    8,923Repayments of Working Capital Facility
    
    
    (1,142
    )
    
    
    (29,388
    )Borrowings under Second-Lien Facility and other
    
    
    
    
    
    
    75Repayments of Second-Lien Facility and other
    
    
    (25,731
    )
    
    
    (235
    )Exercise of employee stock purchases and stock options
    
    
    46
    
    
    
    64Advances from (to) discontinued operations
    
    
    
    
    
    
    1,933Termination payment from derivative counterparty
    
    
    
    
    
    
    2,313Other, net
    
    
    
    
    
    
    (600
    )Net cash used in financing activities
    
    
    (25,666
    )
    
    
    (16,915
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    (430
    )
    
    
    905Net cash provided by (used in) continuing operations
    
    
    (1,978
    )
    
    
    1,146Net cash used in discontinued operations
    
    
    
    
    
    
    (368
    )Total increase (decrease) in cash and cash equivalents
    
    
    (1,978
    )
    
    
    778Total cash and cash equivalents beginning of period
    
    
    14,886
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    12,908
    
    
    $
    13,279Income taxes paid
    
    $
    2,252
    
    
    $
    3,888Interest paid
    
    $
    11,405
    
    
    $
    9,800
   5




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THERMADYNE HOLDINGS CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(Dollars in thousands, except share data)
 1. Organization and Basis of Presentation
    2. Significant Accounting Policies
 Product Warranty Programs
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of period
    
    $
    2,400
    
    
    $
    2,709
    
    
    $
    2,300
    
    
    $
    2,961Charged to expenses
    
    
    1,200
    
    
    
    672
    
    
    
    2,091
    
    
    
    1,404Warranty payments
    
    
    (980
    )
    
    
    (722
    )
    
    
    (1,771
    )
    
    
    (1,706
    )Balance at end of period
    
    $
    2,620
    
    
    $
    2,659
    
    
    $
    2,620
    
    
    $
    2,659
 Fair Value
  Recent Accounting Pronouncements
  6




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3. Discontinued Operations
  4. Inventories
  June 30,
    
    
    December 31,2010
    
    
    2009Raw materials and component parts
    
    $
    29,742
    
    
    $
    25,410Work-in-process
    
    
    3,607
    
    
    
    4,216Finished goods
    
    
    55,650
    
    
    
    53,27289,000
    
    
    
    82,898LIFO reserve
    
    
    (8,632
    )
    
    
    (8,517
    )$
    80,368
    
    
    $
    74,381
 5. Intangible Assets
  June 30,
    
    
    December 31,2010
    
    
    2009Goodwill
    
    $
    186,334
    
    
    $
    187,818Patents and customer relationships
    
    
    42,994
    
    
    
    42,741Trademarks
    
    
    33,403
    
    
    
    33,403262,731
    
    
    
    263,962Accumulated amortization of patents and customer relationships
    
    
    (19,050
    )
    
    
    (17,693
    )$
    243,681
    
    
    $
    246,269
   7




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Carrying Amountof GoodwillBalance as of January 1, 2010
    
    $
    187,818Foreign currency translation
    
    
    (1,484
    )Balance as of June 30, 2010
    
    $
    186,334
 6. Debt and Capital Lease Obligations
  June 30,
    
    
    December 31,2010
    
    
    2009Working Capital Facility
    
    $
    9,662
    
    
    $
    9,643Second Lien Facility
    
    
    
    
    
    
    25,000Issuance discount on Second Lien Facility
    
    
    
    
    
    
    (1,703
    )Senior Subordinated Notes, due February 1, 2014, 9 1/4% interest
payable semiannually on February 1 and August 1
    
    
    172,327
    
    
    
    172,327Capital leases
    
    
    9,029
    
    
    
    9,869Other
    
    
    1,657
    
    
    
    1,888192,675
    
    
    
    217,024Current maturities and working capital facility
    
    
    (12,742
    )
    
    
    (18,558
    )$
    179,933
    
    
    $
    198,466
 Working Capital Facility
   Second Lien Agreement
  8




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Senior Subordinated Notes
   Parent Company Financial Information
  Covenant Compliance
  7. Derivative Instruments
  9




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##### Table of Contents



8. Comprehensive Income
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    2,571
    
    
    $
    2,515
    
    
    $
    4,867
    
    
    $
    19Cumulative foreign currency translation gains
(losses), net of tax
    
    
    (2,878
    )
    
    
    5,529
    
    
    
    (2,378
    )
    
    
    4,244Pension and post-retirement liabilities
    
    
    99
    
    
    
    60
    
    
    
    171
    
    
    
    132Comprehensive income (loss)
    
    $
    (208
    )
    
    $
    8,104
    
    
    $
    2,660
    
    
    $
    4,395
 9. Income Taxes
    10. Contingencies
     11. Stock Options and Stock-Based Compensation
  10




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Weighted-Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicTotal Employee and Director Stock Options
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOptions outstanding at January 1, 2010
    
    
    1,190,578
    
    
    $
    12.72Granted
    
    
    203,373
    
    
    $
    7.79Exercised
    
    
    (732
    )
    
    $
    4.98Forfeited or expired
    
    
    (257,782
    )
    
    $
    14.59Options outstanding at June 30, 2010
    
    
    1,135,437
    
    
    $
    11.41
    
    
    
    5.2
    
    
    $
    1,235Vested options exercisable at June 30, 2010
    
    
    653,353
    
    
    $
    12.86
    
    
    
    4.5
    
    
    $
    213Non-Vested Stock OptionsNon-vested options outstanding at January 1, 2010
    
    
    538,604Granted
    
    
    203,373Vested
    
    
    (22,677
    )Forfeited or expired
    
    
    (237,216
    )Non-vested options outstanding at June 30, 2010
    
    
    482,084
    
    
    $
    9.45
    
    
    
    6.7
    
    
    $
    1,022
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12. Earnings (Loss) Per Share
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Income (loss) applicable to common sharesContinuing operations
    
    $
    2,571
    
    
    $
    582
    
    
    $
    4,867
    
    
    $
    (1,914
    )Discontinued operations
    
    $
    
    
    
    $
    1,933
    
    
    $
    
    
    
    $
    1,933Net income
    
    $
    2,571
    
    
    $
    2,515
    
    
    $
    4,867
    
    
    $
    19Denominator:Weighted average shares for basic earnings per share
    
    
    13,546,309
    
    
    
    13,527,105
    
    
    
    13,544,579
    
    
    
    13,520,168Dilutive effect of stock options and restrictive shares
    
    
    191,926
    
    
    
    94,723
    
    
    
    125,416
    
    
    
    58,381Weighted average shares for diluted earnings per share
    
    
    13,738,235
    
    
    
    13,621,828
    
    
    
    13,669,994
    
    
    
    13,578,549Basic and diluted income (loss) per share amounts:Continuing operations
    
    $
    0.19
    
    
    $
    0.04
    
    
    $
    0.36
    
    
    $
    (0.14
    )Discontinued operations
    
    $
    
    
    
    $
    0.14
    
    
    $
    
    
    
    $
    0.14Net income per share
    
    $
    0.19
    
    
    $
    0.18
    
    
    $
    0.36
    
    
    $
    
  13. Employee Benefit Plans
  Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended June 30,
    
    
    Three Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of the net periodic benefit cost:Interest Cost
    
    $
    318
    
    
    $
    321
    
    
    $
    
    
    
    $
    5Expected return on plan assets
    
    
    (279
    )
    
    
    (235
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    146
    
    
    
    161
    
    
    
    (36
    )
    
    
    Net periodic benefit cost
    
    $
    185
    
    
    $
    247
    
    
    $
    (36
    )
    
    $
    5
 Pension Benefits
    
    
    Other Postretirement BenefitsSix Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of the net periodic benefit cost:Interest Cost
    
    $
    636
    
    
    $
    642
    
    
    $
    
    
    
    $
    9Expected return on plan assets
    
    
    (558
    )
    
    
    (470
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    292
    
    
    
    322
    
    
    
    (72
    )
    
    
    Net periodic benefit cost
    
    $
    370
    
    
    $
    494
    
    
    $
    (72
    )
    
    $
    9
 12




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14. Segment Information
  Geographic Information
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Sales:Americas
    
    $
    73,865
    
    
    $
    58,348
    
    
    $
    141,185
    
    
    $
    119,057Asia-Pacific
    
    
    28,451
    
    
    
    21,269
    
    
    
    51,786
    
    
    
    37,572Europe/ Middle East
    
    
    6,280
    
    
    
    5,188
    
    
    
    12,242
    
    
    
    11,487Total
    
    $
    108,596
    
    
    $
    84,805
    
    
    $
    205,213
    
    
    $
    168,116
  June 30,
    
    
    December 31,2010
    
    
    2009Identifiable Assets
(excluding working capital
and intangibles):Americas
    
    $
    39,445
    
    
    $
    40,365Asia-Pacific
    
    
    7,786
    
    
    
    8,043Europe/Middle East
    
    
    1,421
    
    
    
    1,844$
    48,652
    
    
    $
    50,252
 Product Line Information
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales:Gas equipment
    
    $
    40,173
    
    
    $
    29,028
    
    
    $
    75,015
    
    
    $
    58,500Filler metals including hardfacing
    
    
    21,853
    
    
    
    19,626
    
    
    
    43,141
    
    
    
    38,522Arc accessories including torches, related consumable parts and accessories
    
    
    18,601
    
    
    
    14,656
    
    
    
    34,359
    
    
    
    29,963Plasma power supplies, torches and related consumable parts
    
    
    16,913
    
    
    
    12,801
    
    
    
    32,141
    
    
    
    25,831Welding equipment
    
    
    11,056
    
    
    
    8,694
    
    
    
    20,557
    
    
    
    15,300$
    108,596
    
    
    $
    84,805
    
    
    $
    205,213
    
    
    $
    168,116
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15. Restructuring and Other Charges
  16. Condensed Consolidating Financial Statements
   14




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    9,633
    
    
    $
    3,275
    
    
    $
    
    
    
    $
    12,908Accounts receivable, net
    
    
    
    
    
    
    57,780
    
    
    
    7,158
    
    
    
    
    
    
    
    64,938Inventories
    
    
    
    
    
    
    71,745
    
    
    
    8,623
    
    
    
    
    
    
    
    80,368Prepaid expenses and other
    
    
    
    
    
    
    6,803
    
    
    
    2,161
    
    
    
    
    
    
    
    8,964Deferred tax assets
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    3,008Total current assets
    
    
    
    
    
    
    148,969
    
    
    
    21,217
    
    
    
    
    
    
    
    170,186Property, plant and equipment, net
    
    
    
    
    
    
    42,769
    
    
    
    3,118
    
    
    
    
    
    
    
    45,887Goodwill
    
    
    
    
    
    
    186,334
    
    
    
    
    
    
    
    
    
    
    
    186,334Intangibles, net
    
    
    
    
    
    
    50,490
    
    
    
    6,857
    
    
    
    
    
    
    
    57,347Other assets
    
    
    1,771
    
    
    
    5,525
    
    
    
    
    
    
    
    (4,224
    )
    
    
    3,072Investment in and advances to subsidiaries
    
    
    240,716
    
    
    
    
    
    
    
    
    
    
    
    (240,716
    )
    
    
    Total assets
    
    $
    242,487
    
    
    $
    434,087
    
    
    $
    31,192
    
    
    $
    (244,940
    )
    
    $
    462,826LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    9,662
    
    
    $
    
    
    
    $
    
    
    
    $
    9,662Current maturities of long-term obligations
    
    
    463
    
    
    
    2,415
    
    
    
    202
    
    
    
    
    
    
    
    3,080Accounts payable
    
    
    
    
    
    
    27,581
    
    
    
    5,313
    
    
    
    
    
    
    
    32,894Accrued and other liabilities
    
    
    
    
    
    
    27,585
    
    
    
    3,405
    
    
    
    
    
    
    
    30,990Accrued interest
    
    
    8,257
    
    
    
    88
    
    
    
    
    
    
    
    
    
    
    
    8,345Income taxes payable
    
    
    
    
    
    
    2,583
    
    
    
    112
    
    
    
    
    
    
    
    2,695Deferred tax liabilities
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    
    
    
    
    2,793Total current liabilities
    
    
    8,720
    
    
    
    72,707
    
    
    
    9,032
    
    
    
    
    
    
    
    90,459Long-term obligations, less current maturities
    
    
    172,327
    
    
    
    7,212
    
    
    
    394
    
    
    
    
    
    
    
    179,933Deferred tax liabilities
    
    
    
    
    
    
    49,059
    
    
    
    
    
    
    
    
    
    
    
    49,059Other long-term liabilities
    
    
    1,195
    
    
    
    10,870
    
    
    
    564
    
    
    
    
    
    
    
    12,629Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    189,085
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,085Accumulated deficit
    
    
    (60,196
    )
    
    
    68,768
    
    
    
    (66,215
    )
    
    
    (2,553
    )
    
    
    (60,196
    )Accumulated other comprehensive income
(loss)
    
    
    1,722
    
    
    
    (30,439
    )
    
    
    (9,207
    )
    
    
    39,646
    
    
    
    1,722Total shareholders equity (deficit)
    
    
    130,746
    
    
    
    38,329
    
    
    
    (75,422
    )
    
    
    37,093
    
    
    
    130,746Net equity (deficit) and advances to / from subsidiaries
    
    
    (70,501
    )
    
    
    255,910
    
    
    
    96,624
    
    
    
    (282,033
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    242,487
    
    
    $
    434,087
    
    
    $
    31,192
    
    
    $
    (244,940
    )
    
    $
    462,826
 15




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2009
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    11,740
    
    
    $
    3,146
    
    
    $
    
    
    
    $
    14,886Accounts receivable, net
    
    
    
    
    
    
    50,422
    
    
    
    6,167
    
    
    
    
    
    
    
    56,589Inventories
    
    
    
    
    
    
    66,205
    
    
    
    8,176
    
    
    
    
    
    
    
    74,381Prepaid expenses and other
    
    
    
    
    
    
    7,714
    
    
    
    1,541
    
    
    
    
    
    
    
    9,255Deferred tax assets
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    3,008Total current assets
    
    
    
    
    
    
    139,089
    
    
    
    19,030
    
    
    
    
    
    
    
    158,119Property, plant and equipment, net
    
    
    
    
    
    
    43,233
    
    
    
    3,454
    
    
    
    
    
    
    
    46,687Goodwill
    
    
    
    
    
    
    187,818
    
    
    
    
    
    
    
    
    
    
    
    187,818Intangibles, net
    
    
    
    
    
    
    50,737
    
    
    
    7,714
    
    
    
    
    
    
    
    58,451Other assets
    
    
    2,019
    
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    3,870Investment in and advances to subsidiaries
    
    
    225,881
    
    
    
    
    
    
    
    
    
    
    
    (225,881
    )
    
    
    Total assets
    
    $
    227,900
    
    
    $
    422,728
    
    
    $
    30,198
    
    
    $
    (225,881
    )
    
    $
    454,945LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    9,643
    
    
    $
    
    
    
    $
    
    
    
    $
    9,643Current maturities of long-term obligations
    
    
    463
    
    
    
    8,239
    
    
    
    213
    
    
    
    
    
    
    
    8,915Accounts payable
    
    
    
    
    
    
    6,953
    
    
    
    2,645
    
    
    
    
    
    
    
    9,598Accrued and other liabilities
    
    
    
    
    
    
    19,275
    
    
    
    3,844
    
    
    
    
    
    
    
    23,119Accrued interest
    
    
    7,527
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    7,608Income taxes payable
    
    
    
    
    
    
    896
    
    
    
    (191
    )
    
    
    
    
    
    
    705Deferred tax liabilities
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    
    
    
    
    2,793Total current liabilities
    
    
    7,990
    
    
    
    47,880
    
    
    
    6,511
    
    
    
    
    
    
    
    62,381Long-term obligations, less current maturities
    
    
    172,327
    
    
    
    25,569
    
    
    
    570
    
    
    
    
    
    
    
    198,466Deferred tax liabilities
    
    
    
    
    
    
    52,835
    
    
    
    
    
    
    
    
    
    
    
    52,835Other long-term liabilities
    
    
    1,426
    
    
    
    11,430
    
    
    
    615
    
    
    
    
    
    
    
    13,471Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    188,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,791Accumulated deficit
    
    
    (65,062
    )
    
    
    54,870
    
    
    
    (67,783
    )
    
    
    12,912
    
    
    
    (65,063
    )Accumulated other comprehensive income
(loss)
    
    
    3,929
    
    
    
    (22,636
    )
    
    
    (6,312
    )
    
    
    28,948
    
    
    
    3,929Total shareholders equity (deficit)
    
    
    127,793
    
    
    
    32,234
    
    
    
    (74,095
    )
    
    
    41,860
    
    
    
    127,792Net equity (deficit) and advances to / from subsidiaries
    
    
    (81,636
    )
    
    
    252,780
    
    
    
    96,597
    
    
    
    (267,741
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    227,900
    
    
    $
    422,728
    
    
    $
    30,198
    
    
    $
    (225,881
    )
    
    $
    454,945
 16




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    117,738
    
    
    $
    10,902
    
    
    $
    (20,044
    )
    
    $
    108,596Cost of goods sold
    
    
    
    
    
    
    83,854
    
    
    
    7,419
    
    
    
    (19,908
    )
    
    
    71,365Gross margin
    
    
    
    
    
    
    33,884
    
    
    
    3,483
    
    
    
    (136
    )
    
    
    37,231Selling, general and administrative expenses
    
    
    231
    
    
    
    23,164
    
    
    
    1,687
    
    
    
    
    
    
    
    25,082Amortization of intangibles
    
    
    
    
    
    
    680
    
    
    
    
    
    
    
    
    
    
    
    680Operating income (loss)
    
    
    (231
    )
    
    
    10,040
    
    
    
    1,796
    
    
    
    (136
    )
    
    
    11,469Other income (expenses):Interest, net
    
    
    (4,839
    )
    
    
    (1,090
    )
    
    
    (10
    )
    
    
    
    
    
    
    (5,939
    )Amortization of deferred financing costs
    
    
    (124
    )
    
    
    (127
    )
    
    
    
    
    
    
    
    
    
    
    (251
    )Equity in net income (loss) of subsidiaries
    
    
    7,765
    
    
    
    
    
    
    
    
    
    
    
    (7,765
    )
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    (1,867
    )
    
    
    
    
    
    
    
    
    
    
    (1,867
    )Income (loss) from continuing operations before income
tax provision
    
    
    2,571
    
    
    
    6,956
    
    
    
    1,786
    
    
    
    (7,901
    )
    
    
    3,412Income tax provision
    
    
    
    
    
    
    393
    
    
    
    448
    
    
    
    
    
    
    
    841Net income (loss)
    
    $
    2,571
    
    
    $
    6,563
    
    
    $
    1,338
    
    
    $
    (7,901
    )
    
    $
    2,571
 17




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    223,956
    
    
    $
    19,864
    
    
    $
    (38,607
    )
    
    $
    205,213Cost of goods sold
    
    
    
    
    
    
    160,064
    
    
    
    13,778
    
    
    
    (38,245
    )
    
    
    135,597Gross margin
    
    
    
    
    
    
    63,892
    
    
    
    6,086
    
    
    
    (362
    )
    
    
    69,616Selling, general and administrative expenses
    
    
    248
    
    
    
    42,789
    
    
    
    3,812
    
    
    
    
    
    
    
    46,849Amortization of intangibles
    
    
    
    
    
    
    1,357
    
    
    
    
    
    
    
    
    
    
    
    1,357Operating income (loss)
    
    
    (248
    )
    
    
    19,746
    
    
    
    2,274
    
    
    
    (362
    )
    
    
    21,410Other income (expense):Interest, net
    
    
    (9,741
    )
    
    
    (2,489
    )
    
    
    (45
    )
    
    
    
    
    
    
    (12,275
    )Amortization of deferred financing costs
    
    
    (247
    )
    
    
    (268
    )
    
    
    
    
    
    
    
    
    
    
    (515
    )Equity in net income (loss) of subsidiaries
    
    
    15,103
    
    
    
    
    
    
    
    
    
    
    
    (15,103
    )
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    (1,867
    )
    
    
    
    
    
    
    
    
    
    
    (1,867
    )Income (loss) from continuing operations before income
tax provision
    
    
    4,867
    
    
    
    15,122
    
    
    
    2,229
    
    
    
    (15,465
    )
    
    
    6,753Income tax provision
    
    
    
    
    
    
    1,224
    
    
    
    662
    
    
    
    
    
    
    
    1,886Net income (loss)
    
    $
    4,867
    
    
    $
    13,898
    
    
    $
    1,567
    
    
    $
    (15,465
    )
    
    $
    4,867
 18




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    92,513
    
    
    $
    7,220
    
    
    $
    (14,928
    )
    
    $
    84,805Cost of goods sold
    
    
    
    
    
    
    69,223
    
    
    
    5,707
    
    
    
    (15,070
    )
    
    
    59,860Gross margin
    
    
    
    
    
    
    23,290
    
    
    
    1,513
    
    
    
    142
    
    
    
    24,945Selling, general and administrative expenses
    
    
    (66
    )
    
    
    16,659
    
    
    
    1,675
    
    
    
    
    
    
    
    18,268Amortization of intangibles
    
    
    
    
    
    
    673
    
    
    
    (1
    )
    
    
    
    
    
    
    672Operating income (loss)
    
    
    66
    
    
    
    5,958
    
    
    
    (161
    )
    
    
    142
    
    
    
    6,005Other income (expenses):Interest, net
    
    
    (4,259
    )
    
    
    (636
    )
    
    
    (16
    )
    
    
    
    
    
    
    (4,911
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (112
    )
    
    
    
    
    
    
    
    
    
    
    (237
    )Equity in net income (loss) of subsidiaries
    
    
    6,833
    
    
    
    
    
    
    
    
    
    
    
    (6,833
    )
    
    
    Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    2,515
    
    
    
    5,210
    
    
    
    (177
    )
    
    
    (6,691
    )
    
    
    857Income tax provision
    
    
    
    
    
    
    201
    
    
    
    74
    
    
    
    
    
    
    
    275Income (loss) from continuing operations
    
    
    2,515
    
    
    
    5,009
    
    
    
    (251
    )
    
    
    (6,691
    )
    
    
    582Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1,933
    
    
    
    
    
    
    
    1,933Net income (loss)
    
    $
    2,515
    
    
    $
    5,009
    
    
    $
    1,682
    
    
    $
    (6,691
    )
    
    $
    2,515
 19




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    182,538
    
    
    $
    12,817
    
    
    $
    (27,239
    )
    
    $
    168,116Cost of goods sold
    
    
    
    
    
    
    138,869
    
    
    
    10,290
    
    
    
    (27,348
    )
    
    
    121,811Gross margin
    
    
    
    
    
    
    43,669
    
    
    
    2,527
    
    
    
    109
    
    
    
    46,305Selling, general and administrative expenses
    
    
    (668
    )
    
    
    35,418
    
    
    
    2,960
    
    
    
    
    
    
    
    37,710Amortization of intangibles
    
    
    
    
    
    
    1,344
    
    
    
    (1
    )
    
    
    
    
    
    
    1,343Operating income (loss)
    
    
    668
    
    
    
    6,907
    
    
    
    (432
    )
    
    
    109
    
    
    
    7,252Other income (expense):Interest, net
    
    
    (8,242
    )
    
    
    (1,274
    )
    
    
    (28
    )
    
    
    
    
    
    
    (9,544
    )Amortization of deferred financing costs
    
    
    (250
    )
    
    
    (223
    )
    
    
    
    
    
    
    
    
    
    
    (473
    )Equity in net income (loss) of subsidiaries
    
    
    7,843
    
    
    
    
    
    
    
    
    
    
    
    (7,843
    )
    
    
    Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    19
    
    
    
    5,410
    
    
    
    (460
    )
    
    
    (7,734
    )
    
    
    (2,765
    )Income tax provision
    
    
    
    
    
    
    (1,041
    )
    
    
    190
    
    
    
    
    
    
    
    (851
    )Income (loss) from continuing operations
    
    
    19
    
    
    
    6,451
    
    
    
    (650
    )
    
    
    (7,734
    )
    
    
    (1,914
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1,933
    
    
    
    
    
    
    
    1,933Net income (loss)
    
    $
    19
    
    
    $
    6,451
    
    
    $
    1,283
    
    
    $
    (7,734
    )
    
    $
    19
 20




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    5,861
    
    
    $
    35,021
    
    
    $
    3,428
    
    
    $
    (15,465
    )
    
    $
    28,845Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,217
    )
    
    
    (257
    )
    
    
    
    
    
    
    (4,474
    )Other
    
    
    
    
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    (253
    )Net cash used in investing activities
    
    
    
    
    
    
    (4,217
    )
    
    
    (510
    )
    
    
    
    
    
    
    (4,727
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    1,161
    
    
    
    
    
    
    
    
    
    
    
    1,161Repayments under Working Capital Facility
    
    
    
    
    
    
    (1,142
    )
    
    
    
    
    
    
    
    
    
    
    (1,142
    )Borrowings of Second-Lien Facility and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of Second-Lien Facility and other
    
    
    
    
    
    
    (25,656
    )
    
    
    (75
    )
    
    
    
    
    
    
    (25,731
    )Exercise of employee stock purchases
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Advances to / from discontinued operations
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Termination payment from derivative counterparty
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes in net equity
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (5,907
    )
    
    
    (6,995
    )
    
    
    (2,563
    )
    
    
    15,465
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (5,861
    )
    
    
    (32,632
    )
    
    
    (2,638
    )
    
    
    15,465
    
    
    
    (25,666
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (279
    )
    
    
    (151
    )
    
    
    
    
    
    
    (430
    )Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (2,107
    )
    
    
    129
    
    
    
    
    
    
    
    (1,978
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (2,107
    )
    
    
    129
    
    
    
    
    
    
    
    (1,978
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    11,740
    
    
    
    3,146
    
    
    
    
    
    
    
    14,886Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    9,633
    
    
    $
    3,275
    
    
    $
    
    
    
    $
    12,908
 21




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (332
    )
    
    $
    27,443
    
    
    $
    1,886
    
    
    $
    (7,734
    )
    
    $
    21,263Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,056
    )
    
    
    83
    
    
    
    
    
    
    
    (3,973
    )Other
    
    
    
    
    
    
    (155
    )
    
    
    21
    
    
    
    
    
    
    
    (134
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (4,211
    )
    
    
    104
    
    
    
    
    
    
    
    (4,107
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    8,923
    
    
    
    
    
    
    
    
    
    
    
    8,923Repayments under Working Capital Facility
    
    
    
    
    
    
    (29,388
    )
    
    
    
    
    
    
    
    
    
    
    (29,388
    )Borrowings of other debt
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Repayments of other debt
    
    
    
    
    
    
    (235
    )
    
    
    
    
    
    
    
    
    
    
    (235
    )Changes in net equity and advances to / from
discontinued operations
    
    
    (2,710
    )
    
    
    (2,576
    )
    
    
    (515
    )
    
    
    7,734
    
    
    
    1,933Other
    
    
    3,042
    
    
    
    (1,111
    )
    
    
    (154
    )
    
    
    
    
    
    
    1,777Net cash provided by (used in) financing activities
    
    
    332
    
    
    
    (24,312
    )
    
    
    (669
    )
    
    
    7,734
    
    
    
    (16,915
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    861
    
    
    
    44
    
    
    
    
    
    
    
    905Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (219
    )
    
    
    1,365
    
    
    
    
    
    
    
    1,146Net cash used in discontinued operations
    
    
    
    
    
    
    1,954
    
    
    
    (2,322
    )
    
    
    
    
    
    
    (368
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    1,735
    
    
    
    (957
    )
    
    
    
    
    
    
    778Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    6,301
    
    
    
    6,200
    
    
    
    
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    8,036
    
    
    $
    5,243
    
    
    $
    
    
    
    $
    13,279
  22




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##### Table of Contents



Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
    Cautionary Statement Concerning Forward-looking Statements
  23




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##### Table of Contents



Key Indicators
    RESULTS OF OPERATIONS
  Net sales
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % Change
    
    
    2010
    
    
    2009
    
    
    % ChangeNet sales summary:U.S.
    
    $
    58,706
    
    
    $
    47,553
    
    
    
    23.5
    %
    
    $
    111,626
    
    
    $
    98,004
    
    
    
    13.9
    %International
    
    
    49,890
    
    
    
    37,252
    
    
    
    33.9
    %
    
    
    93,587
    
    
    
    70,112
    
    
    
    33.5
    %Consolidated
    
    $
    108,596
    
    
    $
    84,805
    
    
    
    28.1
    %
    
    $
    205,213
    
    
    $
    168,116
    
    
    
    22.1
    %
   24




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##### Table of Contents



Gross margin
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % Change
    
    
    2010
    
    
    2009
    
    
    % ChangeGross margin
    
    $
    37,231
    
    
    $
    24,945
    
    
    
    49.3
    %
    
    $
    69,616
    
    
    $
    46,305
    
    
    
    50.3
    %Gross margin as a percent of net sales
    
    
    34.3
    %
    
    
    29.4
    %
    
    
    
    
    
    
    33.9
    %
    
    
    27.5
    %
  Selling, general and administrative expenses
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % Change
    
    
    2010
    
    
    2009
    
    
    % ChangeSelling, general and
administrative expenses
    
    $
    25,082
    
    
    $
    18,268
    
    
    
    37.3
    %
    
    $
    46,849
    
    
    $
    37,710
    
    
    
    24.2
    %SG&A as a percent of net sales
    
    
    23.1
    %
    
    
    21.5
    %
    
    
    
    
    
    
    22.8
    %
    
    
    22.4
    %
   Interest, net
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % Change
    
    
    2010
    
    
    2009
    
    
    % ChangeInterest, net
    
    $
    5,939
    
    
    $
    4,911
    
    
    
    20.9
    %
    
    $
    12,275
    
    
    $
    9,544
    
    
    
    28.6
    %
   25




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##### Table of Contents



Loss on Debt Extinguishment
  Income tax provision (benefit)
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2010
    
    2009
    
    % Change
    
    2010
    
    2009
    
    % ChangeIncome tax provision (benefit)
    
    $
    841
    
    
    $
    275
    
    
    
    205.8
    %
    
    $
    1,886
    
    
    $
    (851
    )
    
    NM
  Discontinued Operations
  RECENT ACCOUNTING PRONOUNCEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
   (Dollars in thousands)
    
    Six Months EndedJune 30,Net cash provided by (used in):
    
    2010
    
    
    2009Operating activities
    
    $
    28,845
    
    
    $
    21,263Investing activities
    
    
    (4,727
    )
    
    
    (4,107
    )Financing activities
    
    
    (25,666
    )
    
    
    (16,915
    )Effect of exchange rates
    
    
    (430
    )
    
    
    905Cash provided
    
    $
    (1,978
    )
    
    $
    1,146
 26




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##### Table of Contents



Operating Activities
  
    
    Accounts receivable increased $9.5 million during the six months ended June 30, 2010 due
to increased sales, compared to the $18.0 million decrease during the same period in 2009
during which sales declined substantially.
    
    Inventory increases used $6.8 million of cash through the first six months of 2010 due
to increased customer demand. Inventory declined in the first six months of 2009 due to
substantial declines in demand and provided $21.9 million of cash.
    
    Accounts payable increased in the first six months of 2010 providing $23.4 million of
cash which includes the beneficial impact of approximately $14 million of early payment of
supplier invoices during the fourth quarter of 2009. These early payments reduced the cash
usage requirements in the first half of 2010. In the first half of 2009 accounts payable
were reduced, utilizing $9.8 million of cash. During 2009, the Company was paying vendors
for previous materials purchases while reducing new purchases in connection with reducing
inventory levels.
    
    Accrued liabilities increased in the first six months of 2010, providing $11.0 million
of cash, due primarily to increases in incentive compensation, customer rebates and income
tax accruals. This amount is net of the $9.2 million for payment of the semi-annual
interest due on the Senior Subordinated Notes and accruals during the quarter for interest
and incentive compensation. During the first six months of 2009, accrued liabilities were
reduced by $11.3 million due to cash payment of employee severance, customer rebates,
incentive compensation and the $8.5 million of semi-annual interest due on the Senior
Subordinated Notes.
 Investing Activities
  Financing Activities
     27




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
     
 Item 4.
    
    Controls and Procedures
  28




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##### Table of Contents



Item 1.
    
    Legal Proceedings
 Contingencies
 
 Item 6.
    
    Exhibits
 *31.1
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **31.2
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**32.1
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002. **32.2
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith. 29




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:
    /s/ Steven A. SchummSteven A. SchummExecutive Vice President, Chief Financial and Administrative Officer
(Principal Financial and Accounting Officer)  30




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 EXHIBIT INDEX
 Exhibit No.
    
    
    
    Exhibit*31.1
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **31.2
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**32.1
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002. **32.2
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002.*
 
 *
    
    Filed herewith. 31