##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 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
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    30Item 4. Controls and Procedures
    
    
    30PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    31Item 1A. Risk Factors
    
    
    31Item 6. Exhibits
    
    
    32SIGNATURES
    
    
    33EX-31.1EX-31.2EX-32.1EX-32.2
  
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##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 Item 1.
 THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
(Unaudited)
 September 30,
    
    
    December 31,2010
    
    
    2009Current Assets:Cash and cash equivalents
    
    $
    11,345
    
    
    $
    14,886Accounts receivable, less allowance for doubtful accounts of
$500 and $400, respectively
    
    
    71,330
    
    
    
    56,589Inventories
    
    
    86,139
    
    
    
    74,381Prepaid expenses and other
    
    
    9,702
    
    
    
    9,255Deferred tax assets
    
    
    3,008
    
    
    
    3,008Total current assets
    
    
    181,524
    
    
    
    158,119Property, plant and equipment, net of accumulated depreciation
of $62,374 and $55,082, respectively
    
    
    46,644
    
    
    
    46,687Goodwill
    
    
    188,782
    
    
    
    187,818Intangibles, net
    
    
    56,741
    
    
    
    58,451Other assets
    
    
    2,835
    
    
    
    3,870Total assets
    
    $
    476,526
    
    
    $
    454,945Current Liabilities:Working capital facility
    
    $
    12,556
    
    
    $
    9,643Current maturities of long-term obligations
    
    
    2,905
    
    
    
    8,915Accounts payable
    
    
    28,995
    
    
    
    9,598Accrued and other liabilities
    
    
    37,317
    
    
    
    23,119Accrued interest
    
    
    3,133
    
    
    
    7,608Income taxes payable
    
    
    3,726
    
    
    
    705Deferred tax liabilities
    
    
    2,793
    
    
    
    2,793Total current liabilities
    
    
    91,425
    
    
    
    62,381Long-term obligations, less current maturities
    
    
    179,505
    
    
    
    198,466Deferred tax liabilities
    
    
    52,805
    
    
    
    52,835Other long-term liabilities
    
    
    12,289
    
    
    
    13,471Stockholders equity:Common stock, $0.01 par value:Authorized  25,000,000 shares Issued
and outstanding  13,552,073 shares at
September 30, 2010 and 13,539,998 shares
at December 31, 2009
    
    
    136
    
    
    
    135Additional paid-in capital
    
    
    189,414
    
    
    
    188,791Accumulated deficit
    
    
    (55,375
    )
    
    
    (65,063
    )Accumulated other comprehensive income
    
    
    6,327
    
    
    
    3,929Total shareholders equity
    
    
    140,502
    
    
    
    127,792Total liabilities and shareholders equity
    
    $
    476,526
    
    
    $
    454,945
  3




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
(Unaudited)
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    106,483
    
    
    $
    89,501
    
    
    $
    311,696
    
    
    $
    257,617Cost of goods sold
    
    
    69,439
    
    
    
    60,706
    
    
    
    205,036
    
    
    
    182,517Gross margin
    
    
    37,044
    
    
    
    28,795
    
    
    
    106,660
    
    
    
    75,100Selling, general and administrative expenses
    
    
    23,936
    
    
    
    21,767
    
    
    
    70,785
    
    
    
    59,477Amortization of intangibles
    
    
    681
    
    
    
    673
    
    
    
    2,038
    
    
    
    2,016Operating income
    
    
    12,427
    
    
    
    6,355
    
    
    
    33,837
    
    
    
    13,607Other income (expenses):Interest, net
    
    
    (4,995
    )
    
    
    (5,577
    )
    
    
    (17,270
    )
    
    
    (15,121
    )Amortization of deferred financing costs
    
    
    (238
    )
    
    
    (276
    )
    
    
    (753
    )
    
    
    (749
    )Settlement of retiree medical obligations
    
    
    
    
    
    
    5,863
    
    
    
    
    
    
    
    5,863Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    (1,867
    )
    
    
    Income from continuing operations before income
tax provision and discontinued operations
    
    
    7,194
    
    
    
    6,365
    
    
    
    13,947
    
    
    
    3,600Income tax provision
    
    
    2,373
    
    
    
    2,639
    
    
    
    4,259
    
    
    
    1,788Net income from continuing operations
    
    $
    4,821
    
    
    $
    3,726
    
    
    $
    9,688
    
    
    $
    1,812Income from discontinued operations, net of tax
    
    
    
    
    
    
    1,118
    
    
    
    
    
    
    
    3,051Net income
    
    $
    4,821
    
    
    $
    4,844
    
    
    $
    9,688
    
    
    $
    4,863Basic income per shareContinuing operations
    
    $
    0.36
    
    
    $
    0.27
    
    
    $
    0.72
    
    
    $
    0.13Discontinued operations
    
    
    
    
    
    
    0.09
    
    
    
    
    
    
    
    0.23Net income
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.72
    
    
    $
    0.36Diluted income per share:Continuing operations
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.71
    
    
    $
    0.13Discontinued operations
    
    
    
    
    
    
    0.08
    
    
    
    
    
    
    
    0.22Net income
    
    $
    0.35
    
    
    $
    0.35
    
    
    $
    0.71
    
    
    $
    0.35
  4




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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
(Unaudited)
 Nine Months Ended September 30,2010
    
    
    2009Cash flows from continuing operations:Cash flows from operating activities:Net income
    
    $
    9,688
    
    
    $
    4,863Adjustments to reconcile net income to net cash provided by (used in) operating activities:Income from discontinued operations
    
    
    
    
    
    
    (3,051
    )Depreciation and amortization
    
    
    10,067
    
    
    
    9,601Deferred income taxes
    
    
    (1,266
    )
    
    
    (270
    )Stock compensation expense (gain)
    
    
    522
    
    
    
    (616
    )Net periodic post-retirement benefits
    
    
    608
    
    
    
    (6,055
    )Loss on debt extinguishment
    
    
    1,867
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (13,231
    )
    
    
    18,598Inventories
    
    
    (10,062
    )
    
    
    28,774Prepaids
    
    
    (28
    )
    
    
    887Accounts payable
    
    
    18,066
    
    
    
    (9,872
    )Accrued and other liabilities
    
    
    13,059
    
    
    
    (6,350
    )Accrued interest
    
    
    (4,475
    )
    
    
    (3,416
    )Accrued taxes
    
    
    2,814
    
    
    
    (1,936
    )Other long-term liabilities
    
    
    (1,607
    )
    
    
    (796
    )Other, net
    
    
    (544
    )
    
    
    Net cash provided by operating activities
    
    
    25,478
    
    
    
    30,361Cash flows from investing activities:Capital expenditures
    
    
    (5,921
    )
    
    
    (4,626
    )Other
    
    
    (328
    )
    
    
    (245
    )Net cash used in investing activities
    
    
    (6,249
    )
    
    
    (4,871
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    15,927
    
    
    
    8,923Repayments of Working Capital Facility
    
    
    (13,014
    )
    
    
    (41,454
    )Borrowings under Second-Lien Facility and other
    
    
    
    
    
    
    25,075Repayments of Second-Lien Facility and other
    
    
    (26,305
    )
    
    
    (16,630
    )Exercise of employee stock purchases and stock options
    
    
    102
    
    
    
    95Advances from (to) discontinued operations
    
    
    
    
    
    
    2,398Termination payment from derivative counterparty
    
    
    
    
    
    
    2,313Other, net
    
    
    
    
    
    
    (818
    )Net cash used in financing activities
    
    
    (23,291
    )
    
    
    (20,098
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    521
    
    
    
    1,552Net cash provided by (used in) continuing operations
    
    
    (3,541
    )
    
    
    6,944Cash flows from discontinued operationsLoss from discontinued operations
    
    
    
    
    
    
    (585
    )Total increase (decrease) in cash and cash equivalents
    
    
    (3,541
    )
    
    
    6,359Total cash and cash equivalents beginning of period
    
    
    14,886
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    11,345
    
    
    $
    18,860Income taxes paid
    
    $
    3,697
    
    
    $
    3,928Interest paid
    
    $
    21,761
    
    
    $
    19,531
   5




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##### Table of Contents



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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Balance at beginning of period
    
    $
    2,620
    
    
    $
    2,659
    
    
    $
    2,300
    
    
    $
    2,961Charged to expenses
    
    
    1,100
    
    
    
    950
    
    
    
    3,190
    
    
    
    2,354Warranty payments
    
    
    (920
    )
    
    
    (1,109
    )
    
    
    (2,690
    )
    
    
    (2,815
    )Balance at end of period
    
    $
    2,800
    
    
    $
    2,500
    
    
    $
    2,800
    
    
    $
    2,500
 Fair Value
  Recent Accounting Pronouncements
  6




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##### Table of Contents



3. Discontinued Operations
    Brazil
    
    
    South Africa
    
    
    TotalThree Months Ended September 30, 2009
    
    $
    1,118
    
    
    
    
    
    
    $
    1,118Nine Months Ended September 30, 2009
    
    
    1,118
    
    
    $
    1,933
    
    
    
    3,051
 4. Inventories
  September 30,
    
    
    December 31,2010
    
    
    2009Raw materials and component parts
    
    $
    28,935
    
    
    $
    25,410Work-in-process
    
    
    3,578
    
    
    
    4,216Finished goods
    
    
    62,258
    
    
    
    53,27294,771
    
    
    
    82,898LIFO reserve
    
    
    (8,632
    )
    
    
    (8,517
    )$
    86,139
    
    
    $
    74,381
 5. Intangible Assets
  September 30,
    
    
    December 31,2010
    
    
    2009Goodwill
    
    $
    188,782
    
    
    $
    187,818Patents and customer relationships
    
    
    43,068
    
    
    
    42,741Trademarks
    
    
    33,403
    
    
    
    33,403265,253
    
    
    
    263,962Accumulated amortization of
patents and customer
relationships
    
    
    (19,730
    )
    
    
    (17,693
    )$
    245,523
    
    
    $
    246,269
  7




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##### Table of Contents



Carrying Amountof GoodwillBalance as of January 1, 2010
    
    $
    187,818Foreign currency translation
    
    
    964Balance as of September 30, 2010
    
    $
    188,782
 6. Debt and Capital Lease Obligations
  September 30,
    
    
    December 31,2010
    
    
    2009Working Capital Facility
    
    $
    12,556
    
    
    $
    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
    
    
    8,542
    
    
    
    9,869Other
    
    
    1,542
    
    
    
    1,888194,966
    
    
    
    217,024Current maturities and working capital facility
    
    
    (15,461
    )
    
    
    (18,558
    )$
    179,505
    
    
    $
    198,466
 Working Capital Facility
  8




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##### Table of Contents



Second Lien Agreement
  Senior Subordinated Notes
   Parent Company Financial Information
  Covenant Compliance
  9




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##### Table of Contents



7. Derivative Instruments
 In February 2004, the Company entered into an interest rate swap arrangement to convert a
portion of the fixed rate exposure on its Senior Subordinated Notes to variable rates. On
February 1, 2009, the swap arrangement was terminated by the counterparty pursuant to terms
of the arrangement and a $3,000 payment was received by the Company in conjunction with this
termination and is being amortized as a reduction of interest expense over the remaining
term of the Notes.
 8. Comprehensive Income
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    4,821
    
    
    $
    4,844
    
    
    $
    9,688
    
    
    $
    4,863Cumulative foreign currency
translation gains (losses), net of
tax
    
    
    4,528
    
    
    
    2,323
    
    
    
    2,151
    
    
    
    6,568Pension and
post-retirement liabilities
    
    
    77
    
    
    
    (1,483
    )
    
    
    247
    
    
    
    (1,352
    )Comprehensive income (loss)
    
    $
    9,426
    
    
    $
    5,684
    
    
    $
    12,086
    
    
    $
    10,079
 9. Income Taxes
    10. Contingencies
     10




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11. Stock Options and Stock-Based Compensation
       Weighted-Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicTotal Employee and Director Stock Options
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueOptions outstanding at January 1, 2010
    
    
    1,190,578
    
    
    $
    12.72
    
    
    
    5.5
    
    
    $
    239Granted
    
    
    203,373
    
    
    $
    7.79Exercised
    
    
    (3,330
    )
    
    $
    6.69Forfeited or expired
    
    
    (288,082
    )
    
    $
    14.48Options outstanding at September 30, 2010
    
    
    1,102,539
    
    
    $
    11.37
    
    
    
    4.9
    
    
    $
    3,285Vested options exercisable at September 30, 2010
    
    
    634,704
    
    
    $
    12.67
    
    
    
    4.2
    
    
    $
    1,138Non-Vested Stock OptionsNon-vested options outstanding at January 1,
2010
    
    
    538,604Granted
    
    
    203,373Vested
    
    
    (39,524
    )Forfeited or expired
    
    
    (234,618
    )Non-vested options outstanding at September 30,
2010
    
    
    467,835
    
    
    $
    9.59
    
    
    
    6.3
    
    
    $
    2,147
 11




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##### Table of Contents



Restricted SharesRestricted shares outstanding at January 1, 2010
    
    $
    383,628Granted during 2010
    
    
    117,278Forfeited or expired
    
    
    (70,856
    )Restricted
shares outstanding at September 30, 2010
    
    $
    430,050
  12. Earnings Per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Numerator:Income applicable to common sharesContinuing operations
    
    $
    4,821
    
    
    $
    3,726
    
    
    $
    9,688
    
    
    $
    1,812Discontinued operations
    
    $
    
    
    
    $
    1,118
    
    
    $
    
    
    
    $
    3,051Net income
    
    $
    4,821
    
    
    $
    4,844
    
    
    $
    9,688
    
    
    $
    4,863Denominator:Weighted average shares for basic earnings per share
    
    
    13,550,244
    
    
    
    13,537,019
    
    
    
    13,546,488
    
    
    
    13,525,386Dilutive effect of stock options and restrictive
shares
    
    
    260,101
    
    
    
    111,640
    
    
    
    170,311
    
    
    
    76,134Weighted average shares for diluted earnings per
share
    
    
    13,810,345
    
    
    
    13,648,659
    
    
    
    13,716,799
    
    
    
    13,601,520Basic income per share amounts:Continuing operations
    
    $
    0.36
    
    
    $
    0.27
    
    
    $
    0.72
    
    
    $
    0.13Discontinued operations
    
    $
    
    
    
    $
    0.09
    
    
    $
    
    
    
    $
    0.23Net income per share
    
    $
    0.36
    
    
    $
    0.36
    
    
    $
    0.72
    
    
    $
    0.36Diluted income per share amounts:Continuing operations
    
    $
    0.35
    
    
    $
    0.27
    
    
    $
    0.71
    
    
    $
    0.13Discontinued operations
    
    $
    
    
    
    $
    0.08
    
    
    $
    
    
    
    $
    0.22Net income per share
    
    $
    0.35
    
    
    $
    0.35
    
    
    $
    0.71
    
    
    $
    0.35
  12




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13. Employee Benefit Plans
  Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended September 30,
    
    
    Three Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of the net periodic benefit cost:Interest cost
    
    $
    318
    
    
    $
    321
    
    
    $
    
    
    
    $
    Expected return on plan assets
    
    
    (279
    )
    
    
    (235
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    146
    
    
    
    161
    
    
    
    (36
    )
    
    
    (201
    )Settlement gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,863
    )Net periodic benefit cost
    
    $
    185
    
    
    $
    247
    
    
    $
    (36
    )
    
    $
    (6,064
    )
 Pension Benefits
    
    
    Other Postretirement BenefitsNine Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of the net periodic benefit cost:Interest cost
    
    $
    954
    
    
    $
    963
    
    
    $
    
    
    
    $
    9Expected return on plan assets
    
    
    (837
    )
    
    
    (705
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    439
    
    
    
    483
    
    
    
    (108
    )
    
    
    (201
    )Settlement gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,863
    )Net periodic benefit cost
    
    $
    556
    
    
    $
    741
    
    
    $
    (108
    )
    
    $
    (6,055
    )
  14. Segment Information
  Geographic Information
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net Sales:Americas
    
    $
    70,568
    
    
    $
    60,319
    
    
    $
    211,753
    
    
    $
    179,376Asia-Pacific
    
    
    29,812
    
    
    
    23,956
    
    
    
    81,598
    
    
    
    61,528Europe/ Middle East
    
    
    6,103
    
    
    
    5,226
    
    
    
    18,345
    
    
    
    16,713Total
    
    $
    106,483
    
    
    $
    89,501
    
    
    $
    311,696
    
    
    $
    257,617
 13




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##### Table of Contents



September 30,
    
    
    December 31,2010
    
    
    2009Identifiable Assets (excluding working capital and intangibles):Americas
    
    $
    38,774
    
    
    $
    40,365Asia-Pacific
    
    
    8,881
    
    
    
    8,043Europe/Middle East
    
    
    1,518
    
    
    
    1,844$
    49,173
    
    
    $
    50,252
 Product Line Information
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales:Gas equipment
    
    $
    38,519
    
    
    $
    31,718
    
    
    $
    113,534
    
    
    $
    90,218Filler metals including hardfacing
    
    
    21,877
    
    
    
    20,738
    
    
    
    65,018
    
    
    
    59,259Arc accessories including
torches, related consumable parts
and accessories
    
    
    19,428
    
    
    
    15,249
    
    
    
    53,788
    
    
    
    45,213Plasma power supplies, torches
and related consumable parts
    
    
    16,459
    
    
    
    12,873
    
    
    
    48,599
    
    
    
    38,705Welding equipment
    
    
    10,200
    
    
    
    8,923
    
    
    
    30,757
    
    
    
    24,222$
    106,483
    
    
    $
    89,501
    
    
    $
    311,696
    
    
    $
    257,617
 15. Restructuring and Other Charges
  16. Subsequent Events
 Agreement to be Acquired by Irving Place Capital
   14




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##### Table of Contents



Limitation in Use of Net Operating Losses
  Legal Proceeding
  17. Condensed Consolidating Financial Statements
   15




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    7,252
    
    
    $
    4,093
    
    
    $
    
    
    
    $
    11,345Accounts receivable, net
    
    
    
    
    
    
    60,054
    
    
    
    11,276
    
    
    
    
    
    
    
    71,330Inventories
    
    
    
    
    
    
    74,452
    
    
    
    11,687
    
    
    
    
    
    
    
    86,139Prepaid expenses and other
    
    
    
    
    
    
    7,610
    
    
    
    2,092
    
    
    
    
    
    
    
    9,702Deferred tax assets
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    3,008Total current assets
    
    
    
    
    
    
    152,376
    
    
    
    29,148
    
    
    
    
    
    
    
    181,524Property, plant and equipment, net
    
    
    
    
    
    
    43,292
    
    
    
    3,352
    
    
    
    
    
    
    
    46,644Goodwill
    
    
    
    
    
    
    188,782
    
    
    
    
    
    
    
    
    
    
    
    188,782Intangibles, net
    
    
    
    
    
    
    49,282
    
    
    
    7,459
    
    
    
    
    
    
    
    56,741Other assets
    
    
    1,648
    
    
    
    5,526
    
    
    
    
    
    
    
    (4,339
    )
    
    
    2,835Investment in and advances to subsidiaries
    
    
    252,742
    
    
    
    
    
    
    
    
    
    
    
    (252,742
    )
    
    
    Total assets
    
    $
    254,390
    
    
    $
    439,258
    
    
    $
    39,959
    
    
    $
    (257,081
    )
    
    $
    476,526LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    12,556
    
    
    $
    
    
    
    $
    
    
    
    $
    12,556Current maturities of long-term obligations
    
    
    463
    
    
    
    2,227
    
    
    
    215
    
    
    
    
    
    
    
    2,905Accounts payable
    
    
    
    
    
    
    23,708
    
    
    
    5,287
    
    
    
    
    
    
    
    28,995Accrued and other liabilities
    
    
    
    
    
    
    33,125
    
    
    
    4,192
    
    
    
    
    
    
    
    37,317Accrued interest
    
    
    3,016
    
    
    
    117
    
    
    
    
    
    
    
    
    
    
    
    3,133Income taxes payable
    
    
    
    
    
    
    2,934
    
    
    
    792
    
    
    
    
    
    
    
    3,726Deferred tax liabilities
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    
    
    
    
    2,793Total current liabilities
    
    
    3,479
    
    
    
    77,460
    
    
    
    10,486
    
    
    
    
    
    
    
    91,425Long-term obligations, less current maturities
    
    
    172,327
    
    
    
    6,789
    
    
    
    389
    
    
    
    
    
    
    
    179,505Deferred tax liabilities
    
    
    
    
    
    
    52,805
    
    
    
    
    
    
    
    
    
    
    
    52,805Other long-term liabilities
    
    
    1,079
    
    
    
    10,575
    
    
    
    635
    
    
    
    
    
    
    
    12,289Shareholders equity (deficit):Common stock
    
    
    136
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    136Additional paid-in-capital
    
    
    189,414
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,414Accumulated deficit
    
    
    (55,374
    )
    
    
    75,940
    
    
    
    (64,539
    )
    
    
    (11,402
    )
    
    
    (55,375
    )Accumulated other comprehensive income (loss)
    
    
    6,327
    
    
    
    (32,238
    )
    
    
    (12,152
    )
    
    
    44,390
    
    
    
    6,327Total shareholders equity (deficit)
    
    
    140,503
    
    
    
    43,702
    
    
    
    (76,691
    )
    
    
    32,988
    
    
    
    140,502Net equity (deficit) and advances to / from subsidiaries
    
    
    (62,998
    )
    
    
    247,927
    
    
    
    105,140
    
    
    
    (290,069
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    254,390
    
    
    $
    439,258
    
    
    $
    39,959
    
    
    $
    (257,081
    )
    
    $
    476,526
 16




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##### Table of Contents



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
 17




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    114,425
    
    
    $
    10,564
    
    
    $
    (18,506
    )
    
    $
    106,483Cost of goods sold
    
    
    
    
    
    
    80,392
    
    
    
    7,423
    
    
    
    (18,376
    )
    
    
    69,439Gross margin
    
    
    
    
    
    
    34,033
    
    
    
    3,141
    
    
    
    (130
    )
    
    
    37,044Selling, general and administrative expenses
    
    
    275
    
    
    
    23,842
    
    
    
    728
    
    
    
    (909
    )
    
    
    23,936Amortization of intangibles
    
    
    
    
    
    
    681
    
    
    
    
    
    
    
    
    
    
    
    681Operating income (loss)
    
    
    (275
    )
    
    
    9,510
    
    
    
    2,413
    
    
    
    779
    
    
    
    12,427Other income (expenses):Interest, net
    
    
    (4,408
    )
    
    
    (616
    )
    
    
    29
    
    
    
    
    
    
    
    (4,995
    )Amortization of deferred financing costs
    
    
    (124
    )
    
    
    (114
    )
    
    
    
    
    
    
    
    
    
    
    (238
    )Equity in net income (loss) of subsidiaries
    
    
    9,628
    
    
    
    
    
    
    
    
    
    
    
    (9,628
    )
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income (loss) from continuing operations before income
tax provision
    
    
    4,821
    
    
    
    8,780
    
    
    
    2,442
    
    
    
    (8,849
    )
    
    
    7,194Income tax provision
    
    
    
    
    
    
    1,608
    
    
    
    765
    
    
    
    
    
    
    
    2,373Net income (loss)
    
    $
    4,821
    
    
    $
    7,172
    
    
    $
    1,677
    
    
    $
    (8,849
    )
    
    $
    4,821
 18




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    338,381
    
    
    $
    30,428
    
    
    $
    (57,113
    )
    
    $
    311,696Cost of goods sold
    
    
    
    
    
    
    240,456
    
    
    
    21,201
    
    
    
    (56,621
    )
    
    
    205,036Gross margin
    
    
    
    
    
    
    97,925
    
    
    
    9,227
    
    
    
    (492
    )
    
    
    106,660Selling, general and administrative expenses
    
    
    523
    
    
    
    66,631
    
    
    
    4,540
    
    
    
    (909
    )
    
    
    70,785Amortization of intangibles
    
    
    
    
    
    
    2,038
    
    
    
    
    
    
    
    
    
    
    
    2,038Operating income (loss)
    
    
    (523
    )
    
    
    29,256
    
    
    
    4,687
    
    
    
    417
    
    
    
    33,837Other income (expense):Interest, net
    
    
    (14,149
    )
    
    
    (3,105
    )
    
    
    (16
    )
    
    
    
    
    
    
    (17,270
    )Amortization of deferred financing costs
    
    
    (371
    )
    
    
    (382
    )
    
    
    
    
    
    
    
    
    
    
    (753
    )Equity in net income (loss) of subsidiaries
    
    
    24,731
    
    
    
    
    
    
    
    
    
    
    
    (24,731
    )
    
    
    Loss on debt extinguishment
    
    
    
    
    
    
    (1,867
    )
    
    
    
    
    
    
    
    
    
    
    (1,867
    )Income (loss) from continuing operations before income
tax provision
    
    
    9,688
    
    
    
    23,902
    
    
    
    4,671
    
    
    
    (24,314
    )
    
    
    13,947Income tax provision
    
    
    
    
    
    
    2,832
    
    
    
    1,427
    
    
    
    
    
    
    
    4,259Net income (loss)
    
    $
    9,688
    
    
    $
    21,070
    
    
    $
    3,244
    
    
    $
    (24,314
    )
    
    $
    9,688
 19




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    80,434
    
    
    $
    7,808
    
    
    $
    1,259
    
    
    $
    89,501Cost of goods sold
    
    
    
    
    
    
    54,327
    
    
    
    5,970
    
    
    
    409
    
    
    
    60,706Gross margin
    
    
    
    
    
    
    26,107
    
    
    
    1,838
    
    
    
    850
    
    
    
    28,795Selling, general and administrative expenses
    
    
    52
    
    
    
    20,253
    
    
    
    1,462
    
    
    
    
    
    
    
    21,767Amortization of intangibles
    
    
    
    
    
    
    672
    
    
    
    1
    
    
    
    
    
    
    
    673Operating income (loss)
    
    
    (52
    )
    
    
    5,182
    
    
    
    375
    
    
    
    850
    
    
    
    6,355Other income (expenses):Interest, net
    
    
    (4,479
    )
    
    
    (1,087
    )
    
    
    (11
    )
    
    
    
    
    
    
    (5,577
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (150
    )
    
    
    (1
    )
    
    
    
    
    
    
    (276
    )Equity in net income (loss) of subsidiaries
    
    
    9,500
    
    
    
    
    
    
    
    
    
    
    
    (9,500
    )
    
    
    Settlement of retiree medical obligations
    
    
    
    
    
    
    5,863
    
    
    
    
    
    
    
    
    
    
    
    5,863Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    4,844
    
    
    
    9,808
    
    
    
    363
    
    
    
    (8,650
    )
    
    
    6,365Income tax provision
    
    
    
    
    
    
    2,401
    
    
    
    238
    
    
    
    
    
    
    
    2,639Income (loss) from continuing operations
    
    
    4,844
    
    
    
    7,407
    
    
    
    125
    
    
    
    (8,650
    )
    
    
    3,726Loss from discontinued operations, net of tax
    
    
    
    
    
    
    1,954
    
    
    
    (836
    )
    
    
    
    
    
    
    1,118Net income (loss)
    
    $
    4,844
    
    
    $
    9,361
    
    
    $
    (711
    )
    
    $
    (8,650
    )
    
    $
    4,844
 20




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    262,972
    
    
    $
    20,625
    
    
    $
    (25,980
    )
    
    $
    257,617Cost of goods sold
    
    
    
    
    
    
    193,196
    
    
    
    16,260
    
    
    
    (26,939
    )
    
    
    182,517Gross margin
    
    
    
    
    
    
    69,776
    
    
    
    4,365
    
    
    
    959
    
    
    
    75,100Selling, general and administrative expenses
    
    
    (616
    )
    
    
    55,671
    
    
    
    4,422
    
    
    
    
    
    
    
    59,477Amortization of intangibles
    
    
    
    
    
    
    2,016
    
    
    
    
    
    
    
    
    
    
    
    2,016Operating income (loss)
    
    
    616
    
    
    
    12,089
    
    
    
    (57
    )
    
    
    959
    
    
    
    13,607Other income (expense):Interest, net
    
    
    (12,721
    )
    
    
    (2,361
    )
    
    
    (39
    )
    
    
    
    
    
    
    (15,121
    )Amortization of deferred financing costs
    
    
    (375
    )
    
    
    (373
    )
    
    
    (1
    )
    
    
    
    
    
    
    (749
    )Equity in net income (loss) of subsidiaries
    
    
    17,343
    
    
    
    
    
    
    
    
    
    
    
    (17,343
    )
    
    
    Settlement of retiree medical obligations
    
    
    
    
    
    
    5,863
    
    
    
    
    
    
    
    
    
    
    
    5,863Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    4,863
    
    
    
    15,218
    
    
    
    (97
    )
    
    
    (16,384
    )
    
    
    3,600Income tax provision
    
    
    
    
    
    
    1,360
    
    
    
    428
    
    
    
    
    
    
    
    1,788Income (loss) from continuing operations
    
    
    4,863
    
    
    
    13,858
    
    
    
    (525
    )
    
    
    (16,384
    )
    
    
    1,812Loss from discontinued operations, net of tax
    
    
    
    
    
    
    1,954
    
    
    
    1,097
    
    
    
    
    
    
    
    3,051Net income (loss)
    
    $
    4,863
    
    
    $
    15,812
    
    
    $
    572
    
    
    $
    (16,384
    )
    
    $
    4,863
 21




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    5,723
    
    
    $
    40,507
    
    
    $
    (777
    )
    
    $
    (19,975
    )
    
    $
    25,478Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (5,429
    )
    
    
    (492
    )
    
    
    
    
    
    
    (5,921
    )Other
    
    
    
    
    
    
    (583
    )
    
    
    255
    
    
    
    
    
    
    
    (328
    )Net cash used in investing activities
    
    
    
    
    
    
    (6,012
    )
    
    
    (237
    )
    
    
    
    
    
    
    (6,249
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    15,927
    
    
    
    
    
    
    
    
    
    
    
    15,927Repayments under Working Capital Facility
    
    
    
    
    
    
    (13,014
    )
    
    
    
    
    
    
    
    
    
    
    (13,014
    )Borrowings of Second-Lien Facility and other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of Second-Lien Facility and other
    
    
    
    
    
    
    (26,172
    )
    
    
    (133
    )
    
    
    
    
    
    
    (26,305
    )Exercise of employee stock purchases
    
    
    102
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102Changes in Net Equity
    
    
    (5,825
    )
    
    
    (16,211
    )
    
    
    2,061
    
    
    
    19,975
    
    
    
    Net cash provided by (used in) financing activities
    
    
    (5,723
    )
    
    
    (39,470
    )
    
    
    1,928
    
    
    
    19,975
    
    
    
    (23,291
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    487
    
    
    
    33
    
    
    
    
    
    
    
    521Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (4,488
    )
    
    
    947
    
    
    
    
    
    
    
    (3,541
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (4,488
    )
    
    
    947
    
    
    
    
    
    
    
    (3,541
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    11,740
    
    
    
    3,146
    
    
    
    
    
    
    
    14,886Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    7,252
    
    
    $
    4,093
    
    
    $
    
    
    
    $
    11,345
 22




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (177
    )
    
    $
    42,187
    
    
    $
    4,735
    
    
    $
    (16,384
    )
    
    $
    30,361Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,560
    )
    
    
    (66
    )
    
    
    
    
    
    
    (4,626
    )Other
    
    
    
    
    
    
    (43
    )
    
    
    (202
    )
    
    
    
    
    
    
    (245
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (4,603
    )
    
    
    (268
    )
    
    
    
    
    
    
    (4,871
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    8,923
    
    
    
    
    
    
    
    
    
    
    
    8,923Repayments under Working Capital Facility
    
    
    
    
    
    
    (41,454
    )
    
    
    
    
    
    
    
    
    
    
    (41,454
    )Borrowings of Second-Lien Facility and other
    
    
    
    
    
    
    25,075
    
    
    
    
    
    
    
    
    
    
    
    25,075Repayments of Second-Lien Facility and other
    
    
    
    
    
    
    (16,391
    )
    
    
    (239
    )
    
    
    
    
    
    
    (16,630
    )Changes in net equity and advances to / from discontinued operations
    
    
    (3,680
    )
    
    
    (9,155
    )
    
    
    (1,151
    )
    
    
    16,384
    
    
    
    2,398Other
    
    
    3,857
    
    
    
    (2,266
    )
    
    
    (1
    )
    
    
    
    
    
    
    1,590Net cash provided by (used in) financing activities
    
    
    177
    
    
    
    (35,268
    )
    
    
    (1,391
    )
    
    
    16,384
    
    
    
    (20,098
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    1,434
    
    
    
    118
    
    
    
    
    
    
    
    1,552Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    3,750
    
    
    
    3,194
    
    
    
    
    
    
    
    6,944Net cash used in discontinued operations
    
    
    
    
    
    
    1,954
    
    
    
    (2,539
    )
    
    
    
    
    
    
    (585
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    5,704
    
    
    
    655
    
    
    
    
    
    
    
    6,359Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    6,301
    
    
    
    6,200
    
    
    
    
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    12,005
    
    
    $
    6,855
    
    
    $
    
    
    
    $
    18,860
   23




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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
  24




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##### Table of Contents



Key Indicators
    RESULTS OF OPERATIONS
  Net sales
 Three Months Ended September 30,
    
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2010
    
    
    2009
    
    

% Change
    
    
    2010
    
    
    2009
    
    

% ChangeNet sales
    
    $
    106,483
    
    
    $
    89,501
    
    
    
    19.0
    %
    
    $
    311,696
    
    
    $
    257,617
    
    
    
    21.0
    %Net sales summary:U.S.
    
    $
    57,207
    
    
    $
    48,771
    
    
    
    17.3
    %
    
    $
    168,833
    
    
    $
    146,775
    
    
    
    15.0
    %International
    
    
    49,276
    
    
    
    40,730
    
    
    
    21.0
    %
    
    
    142,863
    
    
    
    110,842
    
    
    
    28.9
    %Consolidated
    
    $
    106,483
    
    
    $
    89,501
    
    
    
    19.0
    %
    
    $
    311,696
    
    
    $
    257,617
    
    
    
    21.0
    %
   25




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##### Table of Contents



Gross margin
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2010
    
    2009
    

% Change
    
    2010
    
    2009
    

% ChangeGross margin
    
    $
    37,044
    
    
    $
    28,795
    
    
    
    28.6
    %
    
    $
    106,660
    
    
    $
    75,100
    
    
    
    42.0
    %Gross margin as a percent of net sales
    
    
    34.8
    %
    
    
    32.2
    %
    
    
    
    
    
    
    34.2
    %
    
    
    29.2
    %
  Selling, general and administrative expenses
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2010
    
    2009
    

% Change
    
    2010
    
    2009
    

% ChangeSelling,
general and administrative expenses
    
    $
    23,936
    
    
    $
    21,767
    
    
    
    10.0
    %
    
    $
    70,785
    
    
    $
    59,477
    
    
    
    19.0
    %SG&A as a percent of net sales
    
    
    22.5
    %
    
    
    24.3
    %
    
    
    
    
    
    
    22.7
    %
    
    
    23.1
    %
   Interest, net
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2010
    
    2009
    
    % Change
    
    2010
    
    2009
    
    % ChangeInterest, net
    
    $
    4,995
    
    
    $
    5,577
    
    
    
    (10.4
    %)
    
    $
    17,270
    
    
    $
    15,121
    
    
    
    14.2
    %
   26




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##### Table of Contents



Loss on Debt Extinguishment
  Income tax provision
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2010
    
    2009
    
    % Change
    
    2010
    
    2009
    

% ChangeIncome tax provision (benefit)
    
    $
    2,373
    
    

    $
    2,639
    
    
    
    (10.1
    %)
    
    $
    4,259
    
    
    $
    1,788
    
    
    
    138.2
    %
   Discontinued Operations
   RECENT ACCOUNTING PRONOUNCEMENTS
  27




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
   Nine Months EndedSeptember 30,(Dollars in thousands)
    
    2010
    
    
    2009Net cash provided by (used in):Operating activities
    
    $
    25,478
    
    
    $
    30,361Investing activities
    
    
    (6,249
    )
    
    
    (4,871
    )Financing activities
    
    
    (23,291
    )
    
    
    (20,098
    )Effect of exchange rates
    
    
    521
    
    
    
    1,552Cash provided
    
    $
    (3,541
    )
    
    $
    6,944
 Operating Activities
  
    
    Accounts receivable increased $13.2 million during the nine months ended September 30,
2010 due to increased sales, compared to the $18.6 million decrease during the same period
in 2009 in which sales declined substantially.
    
    Inventory changes used $10.1 million of cash through the first nine months of 2010 due
to increased customer demand. Inventory declined in the first nine months of 2009 due to
substantial declines in demand and provided $28.8 million of cash.
    
    Accounts payable increased in the first nine months of 2010 providing $18.1 million of
cash which includes the beneficial impact of approximately $14.0 million of early payment
of supplier invoices during the fourth quarter of 2009. These early payments reduced the
cash usage requirements for the nine months ended September 30, 2010. For the nine months
ended September 30, 2009, accounts payable were reduced, utilizing $9.9 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 nine months of 2010, providing $11.4 million
of cash, due primarily to increases in incentive compensation, customer rebates and income
tax accruals. This amount is net of payments of semi-annual interest due on the Senior
Subordinated Notes and accruals during the quarter for interest payments. During the first
nine months of 2009, accrued liabilities were reduced by $11.7 million due to cash payment
of employee severance, customer rebates, incentive compensation and payment of semi-annual
interest due on the Senior Subordinated Notes.
 Investing Activities
  28




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##### Table of Contents



Financing Activities
        Agreement to be Acquired by Irving Place Capital
  29




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
     
 Item 4. Controls and Procedures
  30




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##### Table of Contents



Item 1. Legal Proceedings
   
 Item 1A. Risk Factors
   There are risks and uncertainties associated with the proposed merger with an affiliate of Irving
Place Capital.
   Our business could be adversely impacted as a result of uncertainty related to the proposed merger
with an affiliate of Irving Place Capital.
  
    
    the attention of our management may be directed to transaction-related considerations
and may be diverted from the day-to-day operations of our business and pursuit of our
strategic initiatives
    
    our employees may experience uncertainty about their future roles at the Company, which
might adversely affect our ability to retain and hire key managers and other employees; and
    
    customers and suppliers may experience uncertainty about the Companys future and seek
alternative business relationships with third parties or seek to alter their business
relationships with the Company.
 31




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##### Table of Contents



Failure to complete the proposed merger could negatively impact our business, financial condition,
results of operations or stock price.
  
    
    the current price of our common stock may reflect a market assumption that the proposed
merger will occur, meaning that a failure to complete the proposed merger could result in a
decline in the price of our common stock;
    
    we may be required to pay a termination fee of $6,440,000, plus up to an aggregate of
$2,000,000 of documented reasonable out-of-pocket fees and expenses incurred by Parent and
Merger Subsidiary in connection with the merger agreement if the merger agreement is
terminated under certain circumstances, which would negatively affect our liquidity;
    
    we expect to incur substantial transaction costs in connection with the proposed merger,
whether or not it is completed; and
    
    we would not realize any of the anticipated benefits of having completed the proposed
merger.
 
 Item 6. Exhibits
 2.1
    
    
    
    Agreement and Plan of Merger, dated as of October 5, 2010, by and among
Thermadyne Holdings Corporation, Razor Holdco Inc. and Razor Merger Sub
Inc. (incorporated by reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K (File No. 001-13023) filed on October 6, 2010).*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.*99.1
    
    
    
    Limited Guarantee, dated October 5, 2010, by Irving Place Capital
Partners III, L.P. (incorporated by reference to Exhibit 99.1 to the
Companys Current Report on Form 8-K (File No. 001-13023) filed on
October 6, 2010).
 
 *
    
    Filed herewith. 32




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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)  33




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 EXHIBIT INDEX
 Exhibit No.
    
    
    
    Exhibit2.1
    
    
    
    Agreement and Plan of Merger, dated as of October 5, 2010, by and among
Thermadyne Holdings Corporation, Razor Holdco Inc. and Razor Merger Sub
Inc. (incorporated by reference to Exhibit 2.1 to the Companys Current
Report on Form 8-K (File No. 001-13023) filed on October 6, 2010).*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.*99.1
    
    
    
    Limited Guarantee, dated October 5, 2010, by Irving Place Capital
Partners III, L.P. (incorporated by reference to Exhibit 99.1 to the
Companys Current Report on Form 8-K (File No. 001-13023) filed on
October 6, 2010).
 
 *
    
    Filed herewith. 34