##### 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 June 30, 2007
 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 0-23378
 Thermadyne Holdings Corporation
  Delaware
    
    74-2482571(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)16052 Swingley Ridge Road,
Suite 300, Chesterfield, MO
    
    63017(Address of Principal Executive Offices)
    
    (Zip Code)
 (636) 728-3000
  þ o
  o þ o
  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
    
    
    6-25Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    26-32Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4. Controls and Procedures
    
    
    33PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    34Item 4. Submission of Matters to a Vote of Security Holders
    
    
    34Item 6. Exhibits
    
    
    34Item 9. Recent Developments
    
    
    34SIGNATURES
    
    
    36Section 302 CEO CertificationSection 302 CFO CertificationSection 906 CEO CertificationSection 302 CFO Certification
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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)
 June 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)Current Assets:Cash and cash equivalents
    
    $
    10,061
    
    
    $
    11,310Accounts receivable, less allowance for doubtful accounts of
$1,844 and $2,483, respectively
    
    
    91,477
    
    
    
    79,249Inventories
    
    
    99,977
    
    
    
    98,364Prepaid expenses and other
    
    
    6,565
    
    
    
    6,425Assets held for sale
    
    
    4,899
    
    
    
    16,493Deferred tax assets
    
    
    1,104
    
    
    
    1,104Total current assets
    
    
    214,083
    
    
    
    212,945Property, plant and equipment, net of accumulated depreciation
of $42,415 and $37,206, respectively
    
    
    44,217
    
    
    
    43,334Goodwill
    
    
    185,452
    
    
    
    189,282Intangibles, net
    
    
    64,565
    
    
    
    65,931Other assets
    
    
    6,237
    
    
    
    6,633Total assets
    
    $
    514,554
    
    
    $
    518,125Current Liabilities:Working capital facility
    
    $
    25,403
    
    
    $
    17,606Current maturities of long-term obligations
    
    
    3,010
    
    
    
    1,378Accounts payable
    
    
    34,628
    
    
    
    32,298Accrued and other liabilities
    
    
    27,897
    
    
    
    34,519Accrued interest
    
    
    8,492
    
    
    
    8,252Income taxes payable
    
    
    3,941
    
    
    
    1,248Liabilities related to assets held for sale
    
    
    7,708
    
    
    
    11,279Total current liabilities
    
    
    111,079
    
    
    
    106,580Long-term obligations, less current maturities
    
    
    220,964
    
    
    
    238,012Deferred tax liabilities
    
    
    46,602
    
    
    
    46,456Other long-term liabilities
    
    
    24,444
    
    
    
    23,266Minority interest
    
    
    358
    
    
    
    307Stockholders equity:Common stock, $0.01 par value:Authorized  25,000,000 sharesIssued and outstanding  13,353,182 shares at June 30,
2007 and
13,335,517 shares at December 31, 2006
    
    
    134
    
    
    
    133Additional paid-in capital
    
    
    185,737
    
    
    
    184,804Accumulated deficit
    
    
    (85,566
    )
    
    
    (88,618
    )Accumulated other comprehensive income
    
    
    10,802
    
    
    
    7,185Total stockholders equity
    
    
    111,107
    
    
    
    103,504Total liabilities and stockholders equity
    
    $
    514,554
    
    
    $
    518,125
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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 June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    128,434
    
    
    $
    114,319
    
    
    $
    245,649
    
    
    $
    226,219Cost of goods sold
    
    
    90,138
    
    
    
    82,217
    
    
    
    169,269
    
    
    
    162,020Gross margin
    
    
    38,296
    
    
    
    32,102
    
    
    
    76,380
    
    
    
    64,199Selling, general and administrative expenses
    
    
    26,739
    
    
    
    29,396
    
    
    
    53,022
    
    
    
    53,599Amortization of intangibles
    
    
    726
    
    
    
    723
    
    
    
    1,452
    
    
    
    1,444Net periodic postretirement benefits
    
    
    138
    
    
    
    528
    
    
    
    276
    
    
    
    1,056Operating income
    
    
    10,693
    
    
    
    1,455
    
    
    
    21,630
    
    
    
    8,100Other expenses:Interest
    
    
    (7,269
    )
    
    
    (6,316
    )
    
    
    (14,331
    )
    
    
    (12,461
    )Amortization of deferred financing costs
    
    
    (353
    )
    
    
    (332
    )
    
    
    (706
    )
    
    
    (664
    )Minority interest
    
    
    (31
    )
    
    
    (14
    )
    
    
    (53
    )
    
    
    (75
    )Income (loss) from continuing operations before
income tax provision and discontinued operations
    
    
    3,040
    
    
    
    (5,207
    )
    
    
    6,540
    
    
    
    (5,100
    )Income tax provision
    
    
    1,333
    
    
    
    1,284
    
    
    
    3,616
    
    
    
    2,101Income (loss) from continuing operations
    
    
    1,707
    
    
    
    (6,491
    )
    
    
    2,924
    
    
    
    (7,201
    )Income (loss) from discontinued operations, net of tax
    
    
    (59
    )
    
    
    1,200
    
    
    
    128
    
    
    
    532Net income (loss)
    
    $
    1,648
    
    
    $
    (5,291
    )
    
    $
    3,052
    
    
    $
    (6,669
    )Basic income (loss) per share:Continuing operations
    
    $
    0.13
    
    
    $
    (0.49
    )
    
    $
    0.22
    
    
    $
    (0.54
    )Discontinued operations
    
    $
    (0.01
    )
    
    
    0.09
    
    
    
    0.01
    
    
    
    0.04Net income (loss)
    
    $
    0.12
    
    
    $
    (0.40
    )
    
    $
    0.23
    
    
    $
    (0.50
    )Diluted income (loss) per share:Continuing operations
    
    $
    0.13
    
    
    $
    (0.49
    )
    
    $
    0.22
    
    
    $
    (0.54
    )Discontinued operations
    
    $
    (0.01
    )
    
    
    0.09
    
    
    
    0.01
    
    
    
    0.04Net income (loss)
    
    $
    0.12
    
    
    $
    (0.40
    )
    
    $
    0.23
    
    
    $
    (0.50
    )
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Six Months Ended June 30,2007
    
    
    2006Cash flows from continuing operationsCash flows from operating activities:Net income (loss)
    
    $
    3,052
    
    
    $
    (6,669
    )Adjustments to reconcile net income (loss) to net cash used in operating activities:(Income) loss from discontinued operations
    
    
    (128
    )
    
    
    (532
    )Minority interest
    
    
    53
    
    
    
    75Depreciation and amortization
    
    
    6,592
    
    
    
    8,904Deferred taxes
    
    
    627
    
    
    
    (1,159
    )Changes in operating assets and liabilities
    
    
    (12,952
    )
    
    
    (15,317
    )Other, net
    
    
    (1,035
    )
    
    
    1,689Net cash used in operating activities
    
    
    (3,791
    )
    
    
    (13,009
    )Cash flows from investing activities:Capital expenditures
    
    
    (4,519
    )
    
    
    (2,240
    )Net proceeds from sales of assets
    
    
    13,783
    
    
    
    16,455Purchase of minority interest
    
    
    
    
    
    
    (3,954
    )Other
    
    
    (427
    )
    
    
    Net cash provided by investing activities
    
    
    8,837
    
    
    
    10,261Cash flows from financing activities:Net borrowings (repayments) under revolving credit facility
    
    
    7,797
    
    
    
    (4,139
    )Net repayments under other credit facilities
    
    
    (14,533
    )
    
    
    (755
    )Advances
from (to) discontinued operations
    
    
    (938
    )
    
    
    2,619Other, net
    
    
    934
    
    
    
    318Net cash used in financing activities
    
    
    (6,740
    )
    
    
    (1,957
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    445
    
    
    
    377Net cash used in continuing operations
    
    
    (1,249
    )
    
    
    (4,328
    )Cash flows from discontinued operationsNet cash provided by (used in) operating activities
    
    
    (99
    )
    
    
    2,404Net cash used in investing activities
    
    
    (871
    )
    
    
    (1,124
    )Net cash provided by (used in) financing activities
    
    
    1,148
    
    
    
    (2,571
    )Effect of exchange rates on cash and cash equivalents
    
    
    (9
    )
    
    
    (302
    )Net cash provided by (used in) discontinued operations
    
    
    169
    
    
    
    (1,593
    )Total decrease in cash and cash equivalents
    
    
    (1,080
    )
    
    
    (5,921
    )Total cash and cash equivalents beginning of period
    
    
    11,310
    
    
    
    15,562Total cash and cash equivalents end of period
    
    $
    10,230
    
    
    $
    9,641Continuing operationsCash and cash equivalents beginning of period
    
    $
    11,310
    
    
    $
    13,187Net cash used in continuing operations
    
    
    (1,249
    )
    
    
    (4,328
    )Cash and cash equivalents end of period
    
    $
    10,061
    
    
    $
    8,859Discontinued operationsCash and cash equivalents beginning of period
    
    $
    
    
    
    $
    2,375Net cash provided by (used in) discontinued operations
    
    
    169
    
    
    
    (1,593
    )Cash and cash equivalents end of period
    
    $
    169
    
    
    $
    782Income taxes paid
    
    $
    1,966
    
    
    $
    3,821Interest paid
    
    $
    13,177
    
    
    $
    12,018
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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (Dollars in thousands, except per share data)
 1.
    
    Organization and Basis of PresentationThermadyne Holdings Corporation (Thermadyne or the Company), a Delaware corporation, is
a global designer and manufacturer of cutting and welding products, including equipment,
accessories and consumables.The accompanying unaudited condensed consolidated financial statements have been prepared in
accordance with U.S. generally accepted accounting principles for interim financial
information and the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required by U.S.
generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments, consisting of normal recurring accruals, considered
necessary for a fair presentation have been included in these condensed consolidated
financial statements. The combined results of operations of the Company for the three months
and six months ended June 30, 2007 are not necessarily indicative of the results that may be
expected for the year ending December 31, 2007. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Companys annual
report on Form 10-K for the year ended December 31, 2006.The preparation of financial statements requires use of estimates and assumptions that
affect the amounts reported in Thermadynes condensed consolidated financial statements and
accompanying notes. Actual results could differ from these estimates.Certain information for 2006, primarily accounts related to discontinued operations, has
been reclassified to conform to the 2007 presentation.2.
    
    Significant Accounting PoliciesProduct Warranty ProgramsVarious products are sold with product warranty programs. Provisions for warranty programs
are made based on historical experience as the products are sold and adjusted periodically
based on current estimates of anticipated warranty costs. The following table provides the
activity in the warranty accrual for the three months and six months ended June 30, 2007 and
2006:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of period
    
    $
    3,162
    
    
    $
    2,866
    
    
    $
    2,978
    
    
    $
    3,007Charged to costs and expenses
    
    
    1,298
    
    
    
    929
    
    
    
    2,459
    
    
    
    1,347Deductions
    
    
    (1,154
    )
    
    
    (857
    )
    
    
    (2,131
    )
    
    
    (1,416
    )Balance at end of period
    
    $
    3,306
    
    
    $
    2,938
    
    
    $
    3,306
    
    
    $
    2,938
 Fair ValueThe carrying values of the obligations outstanding under the Working Capital Facility, the
Second-Lien Facility and other long-term obligations, excluding the Senior Subordinated
Notes, approximate fair values since these obligations are fully secured and have varying
interest charges based on current market rates. The estimated fair value of the Companys
Senior Subordinated Notes of $179,375 and $162,750 at June 30, 2007 and December 31, 2006,
respectively, is based on available market information.
 6




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Income TaxesIn accordance with Statement of Position 90-7, Financial Reporting by Entities in
Reorganization Under the Bankruptcy Code(SOP 90-7), the deferred tax benefit from the
reduction in the valuation allowance related to pre-emergence bankruptcy deferred tax assets
is recognized as a reduction in goodwill associated with fresh start accounting. Therefore,
any reduction in valuation allowances associated with pre-emergence net operating losses will
not reduce the Companys provision for taxes. A further discussion of the Companys
accounting for income taxes is provided in Note 9 to the condensed consolidated financial
statements.Recent Accounting PronouncementsFair Value Measurements.In September 2006, the FASB issued SFAS No. 157, Fair Value
Measurements, (SFAS No. 157). SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles and expands disclosures
about fair value measurements. SFAS No. 157 is effective for financial statements issued for
fiscal years beginning after November 15, 2007 and interim periods within those fiscal
years. The impact of SFAS No. 157 is not expected to have a significant impact on the
financial condition, results of operations, cash flows or disclosures of the Company.Fair Value Option. In February 2007, the FASB issued SFAS No. 159, The Fair Value Option
for Financial Assets and Financial Liabilities  Including an Amendment of SFAS No. 115
(SFAS No. 159). SFAS No. 159 permits entities to choose to measure many financial
instruments and certain other items at fair value. SFAS 159 is effective for fiscal years
beginning after November 15, 2007 and interim periods within those fiscal years. The company
is in the process of assessing the impact of SFAS 159 on its consolidated financial
statements.3.
    
    Discontinued OperationsOn December 30, 2006, the Company committed to a plan to sell its South Africa
operations. On February 5, 2007, the Company entered into an agreement to sell the
South African subsidiaries. The sale closed on May 25, 2007 with receipt of $13,800 net
cash received at closing and a $4,200 three-year term note receivable stated in South
African Rand bearing interest at 14% per annum. A loss of $9,200 (net of $6,300 of tax)
was recorded in 2006 as a component of discontinued operations. The assets and
liabilities were classified as held for sale at December 31, 2006. During the second
quarter of 2007, the Company corrected intercompany accounting by $2,900 and goodwill
impairment by $2,200 from the amounts previously recorded in 2006 which resulted in a
non-cash gain of $700, net of tax, which is included in the net results of discontinued
operations for the three months ended June 30, 2007. In
addition, the Company also had routine revisions in estimates related
to discontinued operations in South Africa.On December 30, 2006, the Company also committed to a plan to sell its Brazilian
manufacturing operations. A loss of approximately $15,200 million (net of $1,200
million of tax) was recorded in the fourth quarter of 2006 based on the estimated net
realizable value of the assets related to the operation. This was recorded as a
component of discontinued operations. The related assets and liabilities are classified
as held for sale at both June 30, 2007 and December 31, 2006. The Company expects to
dispose of the Brazilian operation in 2007. During the second quarter of 2007, the
Company corrected reserves previously established to record certain
tax and related interest
obligations which resulted in a loss of $400, net of tax, which is included in the net
results of discontinued operations for the three months ended June 30, 2007.During the second quarter of 2007, the Company reduced the net realizable value of remaining
tax recoveries and recorded a $300 charge related to its 2005 Soltec disposition to
$1,100.On April 11, 2006, the Company completed the disposition of Tec.Mo Srl (TecMo), an
indirect wholly-owned subsidiary which manufactures generic cutting and welding torches and
consumables, to Siparex, an investment fund in France and the general manager of TecMo. Net
cash proceeds from this transaction of approximately $7,540 were used to repay a portion of
the Companys outstanding working capital facility.
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The tables below sets forth certain information related to
the South Africa, Brazil, Soltec, and
TecMo operations included in discontinued operations for the three month and six month
periods ended June 30, 2007 and 2006:
 Three Months Ended June 30, 2007SouthAfrica
    
    Brazil
    
    Soltec
    
    TotalNet sales
    
    $
    7,213
    
    
    $
    3,946
    
    
    
    
    
    
    $
    11,159Operating expenses
    
    
    (6,614
    )
    
    
    (4,049
    )
    
    
    
    
    
    
    (10,663
    )Other expenses
    
    
    (7
    )
    
    
    (15
    )
    
    
    
    
    
    
    (22
    )Income tax provision
    
    
    (228
    )
    
    
    
    
    
    
    
    
    
    
    (228
    )Adjustment in carrying value of related assets
and reserves, net of tax
    
    
    394
    
    
    
    (400
    )
    
    
    (299
    )
    
    
    (305
    )Net income (loss) from discontinued operations
    
    $
    758
    
    
    $
    (518
    )
    
    $
    (299
    )
    
    $
    (59
    )
 Six Months Ended June 30, 2007SouthAfrica
    
    Brazil
    
    Soltec
    
    TotalNet sales
    
    $
    19,399
    
    
    $
    6,759
    
    
    
    
    
    
    $
    26,158Operating expenses
    
    
    (17,547
    )
    
    
    (7,325
    )
    
    
    
    
    
    
    (24,872
    )Other expenses
    
    
    (229
    )
    
    
    (109
    )
    
    
    
    
    
    
    (338
    )Income tax provision
    
    
    (515
    )
    
    
    
    
    
    
    
    
    
    
    (515
    )Adjustment in carrying value of related assets
and reserves, net of tax
    
    
    394
    
    
    
    (400
    )
    
    
    (299
    )
    
    
    (305
    )Net income (loss) from discontinued operations
    
    $
    1,502
    
    
    $
    (1,075
    )
    
    $
    (299
    )
    
    $
    128
 Three Months Ended June 30, 2006SouthAfrica
    
    Brazil
    
    TecMo
    
    TotalNet sales
    
    $
    8,647
    
    
    $
    4,549
    
    
    $
    
    
    
    $
    13,196Operating expenses
    
    
    (7,217
    )
    
    
    (4,600
    )
    
    
    
    
    
    
    (11,817
    )Other expenses
    
    
    9
    
    
    
    (220
    )
    
    
    
    
    
    
    (211
    )Income tax benefit
    
    
    25
    
    
    
    7
    
    
    
    
    
    
    
    32Net income (loss) from discontinued operations
    
    $
    1,464
    
    
    $
    (264
    )
    
    $
    
    
    
    $
    1,200
 Six Months Ended June 30, 2006SouthAfrica
    
    Brazil
    
    TecMo
    
    TotalNet sales
    
    $
    16,453
    
    
    $
    7,702
    
    
    $
    2,774
    
    
    $
    26,929Operating expenses
    
    
    (14,210
    )
    
    
    (8,341
    )
    
    
    (2,789
    )
    
    
    (25,340
    )Other expenses
    
    
    (14
    )
    
    
    (569
    )
    
    
    (7
    )
    
    
    (590
    )Income tax (provision) benefit
    
    
    (208
    )
    
    
    9
    
    
    
    (268
    )
    
    
    (467
    )Net income (loss) from discontinued operations
    
    $
    2,021
    
    
    $
    (1,199
    )
    
    $
    (290
    )
    
    $
    532
 8




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Selected balance sheet items for the discontinued operations classified as held for sale
as of June 30, 2007 and December 31, 2006 are as follows:
 At June 30, 2007SouthAfrica
    
    Brazil
    
    Soltec
    
    TotalCash
    
    $
    
    
    
    $
    169
    
    
    $
    
    
    
    $
    169Accounts receivable
    
    
    
    
    
    
    709
    
    
    
    
    
    
    
    709Inventories
    
    
    
    
    
    
    1,873
    
    
    
    
    
    
    
    1,873Property and equipment, net
    
    
    
    
    
    
    1,716
    
    
    
    
    
    
    
    1,716Goodwill and other intangible assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    
    
    
    
    432
    
    
    
    
    
    
    
    432$
    
    
    
    $
    4,899
    
    
    $
    
    
    
    $
    4,899Accounts payable and other liabilities
    
    $
    
    
    
    $
    7,708
    
    
    $
    
    
    
    $
    7,708
 At December 31, 2006SouthAfrica
    
    Brazil
    
    TotalCash
    
    $
    
    
    
    $
    
    
    
    $
    Accounts receivable
    
    
    4,984
    
    
    
    569
    
    
    
    5,553Inventories
    
    
    7,273
    
    
    
    2,252
    
    
    
    9,525Property and equipment, net
    
    
    
    
    
    
    1,109
    
    
    
    1,109Goodwill and other intangible assets
    
    
    
    
    
    
    
    
    
    
    Other assets
    
    
    
    
    
    
    306
    
    
    
    306$
    12,257
    
    
    $
    4,236
    
    
    $
    16,493Accounts payable and other liabilities
    
    $
    4,372
    
    
    $
    6,907
    
    
    $
    11,279
 4.
    
    InventoriesThe composition of inventories was as follows:
 June 30,
    
    
    December 31,2007
    
    
    2006Raw materials
    
    $
    21,727
    
    
    $
    19,347Work-in-process
    
    
    20,670
    
    
    
    30,166Finished goods
    
    
    68,734
    
    
    
    58,531111,131
    
    
    
    108,044LIFO reserve
    
    
    (11,154
    )
    
    
    (9,680
    )$
    99,977
    
    
    $
    98,364
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5.
    
    Intangible AssetsThe composition of intangibles was as follows:
 June 30,
    
    
    December 31,2007
    
    
    2006Goodwill
    
    $
    185,452
    
    
    $
    189,282Patents and customer relationships
    
    
    42,105
    
    
    
    42,019Trademarks
    
    
    33,403
    
    
    
    33,403260,960
    
    
    
    264,704Accumulated amortization
    
    
    (10,943
    )
    
    
    (9,491
    )$
    250,017
    
    
    $
    255,213
 Goodwill and trademarks are tested for impairment annually or more frequently if events
occur or circumstances change that would more likely than not reduce the fair value of the
reporting unit below its carrying value. The impairment analysis is completed on a
consolidated enterprise level. Comparable market value, market capitalization and the
present value of expected future cash flows are used to estimate fair value. Significant
judgments and estimates about future conditions are used to estimate future cash flows.
Unforeseen events and changes in circumstances and market conditions, including general
economic and competitive conditions could result in significant changes in those estimates.
The most recent test was performed as of October 1, 2006 at which time no impairment was
found. The utilization of pre-emergence bankruptcy loss carryforwards are treated as a
reduction in goodwill rather than a reduction of the provision for taxes on the statement of
operations. The Company currently anticipates utilizing a portion of these loss
carryforwards and accordingly has reduced goodwill. Prior to this period, there was no
utilization of loss carryforwards.The change in the carrying amount of goodwill was as follows:
 Carrying Amountof GoodwillBalance as of December 31, 2006
    
    $
    189,282Adjustment related to discontinued operations
    
    
    (2,217
    )Reduction in balance due to utilization of
pre-emergence bankruptcy deferred tax assets
    
    
    (1,722
    )Foreign currency translation
    
    
    109Balance as of June 30, 2007
    
    $
    185,452
 Amortization of intangibles with identifiable lives amounted to $726 and $ 1,452 of expense
for the three month and six month periods ended June 30, 2007, respectively, and to $733 and
$1,453 of expense for the three month and six month periods ended June 30, 2006.
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6.
    
    Debt and Capital Lease ObligationsThe composition of debt and capital lease obligations was as follows:
 June 30,
    
    
    December 31,2007
    
    
    2006Working Capital Facility
    
    $
    25,403
    
    
    $
    17,606Second-Lien Facility
    
    
    36,000
    
    
    
    50,000Senior Subordinated Notes, due February 1, 2014, 9 1/4% interest
payable semiannually on February 1 and August 1
    
    
    175,000
    
    
    
    175,000Capital leases
    
    
    14,099
    
    
    
    14,761Other
    
    
    (1,125
    )
    
    
    (371
    )249,377
    
    
    
    256,996Current maturities and working capital facility
    
    
    (28,413
    )
    
    
    (18,984
    )$
    220,964
    
    
    $
    238,012
 Recent Financing AmendmentsOn June 29, 2007, the Company and certain of its subsidiaries entered into the Third Amended
and Restated Credit Agreement with General Electric Capital Corporation as agent and lender
(the Amended GE Credit Agreement). The Amended GE Credit Agreement: (i) extends the
maturity date to June 29, 2012; (ii) increases the revolving credit commitment to $100,000
(the Working Capital Facility), which includes (a) a new cash flow facility of up to
$20,000 with interest at LIBOR plus 2.50%, (b) an asset based facility and (c) a new $8,000
property, plant equipment facility; (iii) provides for lower interest rate percentages
applicable to the asset based borrowings that range from LIBOR plus 1.50% to 2.25% depending
upon the fixed charge coverage ratio; (iv) extends the time period for the 1% prepayment fee
to November 30, 2008; and (v) substitutes a senior leverage ratio of 2.75 for the previous
total leverage ratio. Borrowings under the Working Capital Facility may not exceed 85% of
eligible receivables plus the lesser of (i) 85% of the net orderly liquidation value of
eligible inventories or (ii) 65% of the book value of inventories less customary reserves
plus machinery at appraised value not to exceed $8,000. Borrowings under the cash flow
facility are dependent on a minimum fixed charge coverage and EBITDA amount. At June 30,
2007, $13,500 of letters of credit were outstanding. Unused availability was $42,400 as of
June 30, 2007 with $8,000 restricted until a collateral valuation is completed, with
completion expected during August 2007.Also on June 29, 2007, the Company entered into Amendment No. 19 and Waiver to the Second
Lien Credit Agreement between the Company and Credit Suisse, as administrative agent and
collateral agent, and the lenders party thereto (the Second Lien Facility Amendment) to:
(i) extend the maturity date to November 7, 2010 and (ii) lower the interest rates from
LIBOR plus 4.50% to LIBOR plus 2.75%. Certain lenders party to the Second Lien Facility
Amendment are affiliates of the holder of approximately 34% of the Companys outstanding
shares of common stock, which holder employs one of the Companys directors. The terms of
the Second Lien Credit Agreement, as amended, were negotiated at arms-length, and the
Company believes that the terms of the Second Lien Facility are as favorable as could be
obtained from an unaffiliated lender. In connection with this Amendment, the Company
prepaid $14,000 of the loans reducing the Second Lien Facility from $50,000 to $36,000 .Parent Company Financial InformationBorrowings under the Companys financing agreements are the obligations of Thermadyne
Industries, Inc. (Industries), the Companys
principal operating subsidiary and certain of
Industries subsidiaries. Certain borrowing agreements contain restrictions on the
ability for the subsidiaries to dividend cash and other assets to the parent company,
Thermadyne Holdings, Inc. At June 30, 2007 and December 31, 2006, the only asset carried on
the parent company books of Thermadyne Holdings Corporation was its investment in its
operating subsidiaries and the only liabilities were the $175,000 of Senior Subordinated
Notes. As a result of the limited assets and liabilities at
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the parent company level, separate financial statements have not been presented for
Thermadyne Holdings Corporation.Covenant ComplianceAt June 30, 2007, the Company was in compliance with its financial covenants. The Company
expects to remain in compliance with the financial covenants during 2007 by achieving its
2007 financial plan, which includes realizing sales of new products being introduced in
2007, the continuing impact of 2006 price increases for existing products, and successfully
implementing certain cost reduction initiatives including its global continuous improvement
program referred to as TCP and its program for foreign sourcing of manufacturing. If the
Company is not successful in achieving its 2007 financial plan, the Company may not be in
compliance with the financial covenants and would seek amendments to its borrowing
arrangements, as necessary. There can be no assurance that the Company could obtain such
amendments. Failure to obtain such amendments would result in a default under certain
borrowing arrangements and could result in a material adverse impact on the Companys
financial condition.7.
    
    Derivative InstrumentsAs of June 30, 2007, the Company recorded a fair value adjustment to the portion of its
fixed rate long-term debt that is hedged. A fair value adjustment of $1,380 was recorded
for the three month period ended June 30, 2007 as an increase to long-term obligations, with
the related value for the interest rate swaps non-current portion recorded in other
long-term liabilities. At June 30, 2007, the fair value of the interest rate swap of $2,661
has been recorded as a component of other long-term liabilities. Interest rate
differentials associated with the interest rate swap are recorded as an adjustment to a
current asset or liability, with the offset to interest expense over the life of the
interest rate swap. For the three months and six months ended June 30, 2007, the Company
realized an increase in its interest expense as a result of the interest rate swap of $114
and $173, respectively. For the three months and six months ended June 30, 2006, the Company
realized an increase in its interest expense as a result of the interest rate swap of $149
and $192, respectively.8.
    
    Comprehensive Income (Loss)Comprehensive income (loss) for the three month and six month periods ended June 30, 2007
and 2006, was as follows:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    1,648
    
    
    $
    (5,291
    )
    
    $
    3,052
    
    
    $
    (6,669
    )Foreign currency translation
    
    
    3,395
    
    
    
    (680
    )
    
    
    3,617
    
    
    
    (1,220
    )Comprehensive income (loss)
    
    $
    5,043
    
    
    $
    (5,971
    )
    
    $
    6,669
    
    
    $
    (7,889
    )
 9.
    
    Income TaxesThe Company accounts for income taxes in accordance with SFAS No. 109, Accounting for Income
Taxes(SFAS No. 109) which requires that deferred tax assets and liabilities be recognized
using enacted tax rates for the effect of temporary differences between the financial
reporting and tax bases of recorded assets and liabilities. SFAS No. 109 also requires that
deferred tax assets be reduced by a valuation allowance if it is more likely than not that
some portion of or all of the deferred tax asset will not be realized.The deferred tax benefit from the reduction in the valuation allowance related to
pre-emergence bankruptcy net operating loss carryovers must be recognized as a reduction in
goodwill recorded in with fresh start accounting. Therefore, any reduction in the valuation
allowance will not reduce the Companys provision for taxes. For the three month and six
month periods ended June 30, 2007, the Company reduced its valuation allowance on the
related deferred tax asset and made a corresponding reduction in goodwill of $700 and
$1,700, respectively. The Company has included the utilization of a portion of its
pre-emergence bankruptcy NOLs in the calculation of its income taxes payable as utilization
is currently anticipated in 2007. Income tax payments in 2007 will primarily relate to
state
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and foreign taxes. The Company currently has $70,300 of pre-emergence NOL carry forwards
which, if utilized, the related income tax benefit will reduce goodwill, and $60,800
post-emergence NOL carry forwards which, if utilized, would not impact goodwill.In addition, the Companys 2007 income tax provision reflects the inclusion of the foreign
source income of certain foreign subsidiaries without a corresponding benefit for related
future foreign tax credits. These matters combined to create a high effective
tax rate which the Company anticipates will continue for the foreseeable future.In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes (FIN 48). FIN 48 prescribes the income tax amounts to be recorded in the
financial statements as the amount most likely to be realized assuming a review by tax
authorities having all relevant information and applying current conventions. FIN 48 also
clarifies the financial statement classification of potential tax-related penalties and
interest and sets forth new disclosures regarding unrecognized tax benefits. The Company
adopted the Interpretation as of January 1, 2007.The Company has $9,000 of unrecognized tax benefits in the financial statements as of June
30, 2007. The adoption of FIN 48 did not have a significant impact on this amount.
Included in the Companys unrecognized tax benefits are $7,300 of uncertain tax positions
that would affect our effective tax rate if recognized. The Company does not expect any
significant increases or decreases to its unrecognized tax benefits within 12 months of this
reporting date.The Companys policy is to include both interest and penalties on underpayments of income
taxes in its income tax provision. This policy was continued after the adoption of FIN 48.
At June 30, 2007, the total interest and penalties accrued was $1,300.The Companys U.S. federal income tax returns for tax years 2003 and beyond remain subject
to examination by the Internal Revenue Service. The Companys state income tax returns for
2002 through 2006 remain subject to examination by various state taxing authorities. The
Companys material foreign subsidiaries local country tax returns remain open to
examination as follows: Australia (2002-2006), Canada (2001-2006), United Kingdom
(2000-2006) and Italy (1999-2006). No extensions of the various statutes of limitations
have currently been granted.10.
    
    ContingenciesThe Company and certain of its wholly owned subsidiaries are defendants in various legal
actions, primarily related to product liability. While there is uncertainty relating to any
litigation, management is of the opinion that the outcome of such litigation will not have a
material adverse effect on the Companys financial condition or results of operations. At
June 30, 2007, the Company was a co-defendant in approximately 661 cases alleging manganese
induced illness. Manganese is an essential element of steel and contained in all welding
filler metals. The Company is one of a large number of defendants. The claimants allege that
exposure to manganese contained in the welding filler metals caused the plaintiffs to
develop adverse neurological conditions, including a condition known as manganism. The
Judicial Panel on Multidistrict Litigation has consolidated a large number of these cases
for pretrial proceedings in the Northern District of Ohio. As of June 30, 2007, 390 of the
661 cases naming the Company are pending in the multidistrict proceeding. Between June 1,
2003 and June 30, 2007, the Company was dismissed from approximately 801 other cases with
similar allegations. Through June 30, 2007, the Company has made no payments or settlements
to plaintiffs for these allegations.The Company is party to certain environmental matters. Any related obligations are not
expected to have a material effect on the Companys business or financial condition or
results of operations.All other legal proceedings and actions involving the Company are of an ordinary and routine
nature and are incidental to the operations of the Company. Management believes that such
proceedings should not, individually or in the aggregate, have a material adverse effect on
the Companys business or financial condition or on the results of operations.
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11.
    
    Stock Options and Stock-Based Compensation.The Company adopted SFAS No. 123(R), Share-Based Payment, on January 1, 2006. SFAS No.
123(R) requires all share-based payments to employees, including grants of employee stock
options, to be recognized in the income statement based on their fair values. The Company
utilizes the modified prospective method in which compensation cost is recognized beginning
with the effective date, (a) based on the requirements of SFAS No. 123(R) for all
share-based payments granted after the effective date and (b) based on the requirements of
SFAS No. 123 for all awards granted to employees prior to the effective date of SFAS No.
123(R) that remain unvested on the effective date. The Company recorded compensation cost of
$420 and $720 as selling, general and administrative expense for the three month and six
month periods ended June 30, 2007 and $284 and $400 for the three month and six month
periods ended June 30, 2006, respectively.The estimated fair value of stock option grants is computed using the Black-Scholes-Merton
option-pricing model. Expected volatility is based on historical periods generally
commensurate with the expected life of options and expected life is based on historical
experience. Stock option expense is recognized in the consolidated condensed statements of
operations ratably over the vesting period based on the number of options that are expected
to ultimately vest. The following table presents the assumptions used in valuing options
granted during the three months ended June 30, 2007 and 2006:
 June 30,
    
    June 30,2007
    
    2006Weighted average fair value
    
    $
    5.98
    
    
    $
    6.46Assumptions used:Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    37.90
    %
    
    
    40.72
    %Risk-free interest rate
    
    
    4.53
    %
    
    
    4.97
    %Expected life
    
    6 years
    
    6 years
 As of June 30, 2007, options to purchase 1,568,713 shares were outstanding under the
Directors Plan, the Stock Incentive Plan and other specific agreements. Changes in stock
options during the six months ended June 30, 2007, are as follows:
 Weighted-AverageWeighted
    
    RemainingAverage
    
    Contractual
    
    AggregateEmployee and Director Stock Options
    
    Shares
    
    Exercise Price
    
    Term
    
    Intrinsic Value(in years)Options outstanding at December 31, 2006
    
    
    1,313,063
    
    
    $
    13.28Granted
    
    
    254,100
    
    
    $
    14.93Exercised
    
    
    (11,582
    )
    
    $
    12.58Forfeited or expired
    
    
    (32,068
    )
    
    $
    13.82Options outstanding at June 30, 2007
    
    
    1,523,513
    
    
    $
    13.55
    
    
    
    8.1
    
    
    $
    4,954Options exercisable at June 30, 2007
    
    
    725,363
    
    
    $
    13.17
    
    
    
    7.4
    
    
    $
    2,632
 There were 11,582 and 4,412 options exercised in the three-month period
ended June 30, 2007 and 2006. There were 11,582 and 4,412
options exercised in the six-month period ended June 30, 2007
and 2006. The value of the options exercised in the three-month period
ended June 30, 2007 and 2006 was $146 and $71, respectively. The value of the options
exercised in the six-month period ended June 30, 2007 and 2006 was $146 and $71,
respectively. The fair value of options vested during the three-month and six-month periods
ended June 30, 2007 was $43 and $681, respectively.
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In May 2007, the Company also granted 45,200 restricted shares to various employees which
vest over 3 years if established performance targets related to return on invested operating
capital are achieved.At June 30, 2007, the total stock-based compensation cost related to non-vested awards not
yet recognized was approximately $4,012 million and the weighted average period over which
this amount is expected to be recognized was approximately 2.3 years.12.
    
    Earnings (Loss) Per ShareThe calculation of net income (loss) per share follows:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income (loss) :Continuing operations
    
    $
    1,707
    
    
    $
    (6,491
    )
    
    $
    2,924
    
    
    $
    (7,201
    )Discontinued operations
    
    
    (59
    )
    
    
    1,200
    
    
    
    128
    
    
    
    532Net income (loss)
    
    $
    1,648
    
    
    $
    (5,291
    )
    
    $
    3,052
    
    
    $
    (6,669
    )Denominator:Denominator for basic earnings per share  Weighted
average shares for basic earnings per share
    
    
    13,344
    
    
    
    13,328
    
    
    
    13,341
    
    
    
    13,327Dilutive effect of stock options
    
    
    170
    
    
    
    
    
    
    
    52
    
    
    
    Denominator for diluted earnings per share  Weighted
average shares for diluted earnings per share
    
    
    13,514
    
    
    
    13,328
    
    
    
    13,393
    
    
    
    13,327Basic income (loss) per share amounts:Continuing operations
    
    $
    0.13
    
    
    $
    (0.49
    )
    
    $
    0.22
    
    
    $
    (0.54
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.09
    
    
    
    0.01
    
    
    
    0.04Net income (loss)
    
    $
    0.12
    
    
    $
    (0.40
    )
    
    $
    0.23
    
    
    $
    (0.50
    )Diluted income (loss) per share amounts:Continuing operations
    
    $
    0.13
    
    
    $
    (0.49
    )
    
    $
    0.22
    
    
    $
    (0.54
    )Discontinued operations
    
    
    (0.01
    )
    
    
    0.09
    
    
    
    0.01
    
    
    
    0.04Net income (loss)
    
    $
    0.12
    
    
    $
    (0.40
    )
    
    $
    0.23
    
    
    $
    (0.50
    )
 The effects of options and warrants have not been considered in the determination of
net income (loss) per share for the three months and six months ended June 30, 2006 because
the result would have been antidilutive. Shares underlying options and warrants not
included in the calculation for both the three months and six months ended June 30, 2006
were 1,215,613.All Class B and Class C warrants that were outstanding at December 31, 2005 expired on May
23, 2006. There were no warrants exercised during the three months or six months ended
June 30, 2006.
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13.
    
    Employee Benefit PlansNet periodic pension and other postretirement benefit costs include the following
components:
 Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended June 30,
    
    
    Three Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Components of the net periodic benefit cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    289Interest Cost
    
    
    312
    
    
    
    286
    
    
    
    138
    
    
    
    260Expected return on plan assets
    
    
    (312
    )
    
    
    (286
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21
    )Net periodic benefit cost
    
    $
    
    
    
    $
    
    
    
    $
    138
    
    
    $
    528
 Pension Benefits
    
    
    Other Postretirement BenefitsSix Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Components of the net periodic benefit cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    578Interest Cost
    
    
    624
    
    
    
    572
    
    
    
    276
    
    
    
    520Expected return on plan assets
    
    
    (624
    )
    
    
    (572
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (42
    )Net periodic benefit cost
    
    $
    
    
    
    $
    
    
    
    $
    276
    
    
    $
    1,056
 14.
    
    Segment InformationThe Companys continuing operations are comprised of several product lines and operating
locations. The similarity of products, paths to market, end users, and production processes
result in performance evaluation and decisions regarding allocation of resources being made
on a combined basis. Accordingly, management has concluded the Company operates in one
segment. Reportable geographic regions are the Americas (United States, Canada and Mexico),
Europe and Australia/Asia.Summarized financial information concerning the Companys geographic regions for its
continuing operations is shown in the following table:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Sales:Americas
    
    $
    95,290
    
    
    $
    86,244
    
    
    $
    184,086
    
    
    $
    173,375Europe
    
    
    8,833
    
    
    
    7,277
    
    
    
    17,575
    
    
    
    14,537Australia / Asia
    
    
    24,311
    
    
    
    20,798
    
    
    
    43,988
    
    
    
    38,307$
    128,434
    
    
    $
    114,319
    
    
    $
    245,649
    
    
    $
    226,219
 June 30,
    
    
    December 31,2007
    
    
    2006Identifiable Assets:Americas
    
    $
    39,543
    
    
    $
    38,942Australia / Asia
    
    
    8,948
    
    
    
    8,936Europe
    
    
    1,964
    
    
    
    2,089$
    50,455
    
    
    $
    49,967
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15.
    
    Minority InterestsMinority shareholders hold 10% of one of the Companys Italian subsidiaries. The shareholder
agreement with this Italian subsidiary includes provisions that allow the minority
shareholder to put its ownership in the entity back to the Company and, conversely, provide
the Company a call option to purchase the outstanding minority interest. The exercise
period for the put and call options associated with the minority interest in the Italian
subsidiary expires on December 31, 2010. The purchase price of the option is determined
based on a specific formula outlined in the shareholder agreement. At June 30, 2007, the
maximum payment to satisfy the put option is $732 based on the formula in the agreement.16.
    
    Condensed Consolidating Financial StatementsCertain of the Companys wholly owned subsidiaries (Guarantor Subsidiaries) fully and
unconditionally provided guarantees under the Companys various borrowing arrangements and
are jointly and severally liable for certain payments under these agreements. Each of the
Guarantor Subsidiaries is wholly owned by the Company.The following financial information presents the guarantors and non-guarantor as of June 30,
2007 and December 31, 2006, in accordance with Rule 3-10 of Regulation S-X. The condensed
consolidating financial information includes the accounts of the Company, which has no
independent assets or operations, the combined accounts of the Guarantor Subsidiaries and
the combined accounts of the non-guarantor subsidiaries for the periods indicated. Separate
financial statements of each of the Guarantor Subsidiaries are not presented because
management has determined such information is not material in assessing the financial
condition, cash flows or results of operations of the Company and its subsidiaries. This
information was prepared on the same basis as the consolidated financial statements:
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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2007
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    7,670
    
    
    $
    2,391
    
    
    $
    
    
    
    $
    10,061Accounts receivable, net
    
    
    
    
    
    
    82,600
    
    
    
    8,877
    
    
    
    
    
    
    
    91,477Inventories
    
    
    (83
    )
    
    
    89,303
    
    
    
    10,757
    
    
    
    
    
    
    
    99,977Prepaid expenses and other
    
    
    
    
    
    
    5,656
    
    
    
    909
    
    
    
    
    
    
    
    6,565Assets held for sale
    
    
    
    
    
    
    
    
    
    
    4,899
    
    
    
    
    
    
    
    4,899Current deferred tax assets
    
    
    
    
    
    
    1,104
    
    
    
    
    
    
    
    
    
    
    
    1,104Total current assets
    
    
    (83
    )
    
    
    186,333
    
    
    
    27,833
    
    
    
    
    
    
    
    214,083Property, plant and equipment, net
    
    
    
    
    
    
    36,618
    
    
    
    7,599
    
    
    
    
    
    
    
    44,217Goodwill
    
    
    
    
    
    
    185,452
    
    
    
    
    
    
    
    
    
    
    
    185,452Intangibles, net
    
    
    
    
    
    
    64,565
    
    
    
    
    
    
    
    
    
    
    
    64,565Other assets
    
    
    4,124
    
    
    
    1,820
    
    
    
    293
    
    
    
    
    
    
    
    6,237Investment in and advances to subsidiaries
    
    
    183,399
    
    
    
    
    
    
    
    
    
    
    
    (183,399
    )
    
    
    Total assets
    
    $
    187,440
    
    
    $
    474,788
    
    
    $
    35,725
    
    
    $
    (183,399
    )
    
    $
    514,554LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital and second-lien facility
    
    $
    
    
    
    $
    25,403
    
    
    $
    
    
    
    $
    
    
    
    $
    25,403Current maturities of long-term obligations
    
    
    
    
    
    
    1,316
    
    
    
    1,694
    
    
    
    
    
    
    
    3,010Accounts payable
    
    
    
    
    
    
    30,133
    
    
    
    4,495
    
    
    
    
    
    
    
    34,628Accrued and other liabilities
    
    
    
    
    
    
    25,978
    
    
    
    1,919
    
    
    
    
    
    
    
    27,897Accrued interest
    
    
    7,756
    
    
    
    673
    
    
    
    63
    
    
    
    
    
    
    
    8,492Income taxes payable
    
    
    
    
    
    
    2,102
    
    
    
    1,839
    
    
    
    
    
    
    
    3,941Liabilities applicable to assets held for sale
    
    
    
    
    
    
    
    
    
    
    7,708
    
    
    
    
    
    
    
    7,708Total current liabilities
    
    
    7,756
    
    
    
    85,605
    
    
    
    17,718
    
    
    
    
    
    
    
    111,079Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    45,708
    
    
    
    256
    
    
    
    
    
    
    
    220,964Deferred tax liabilities
    
    
    
    
    
    
    46,602
    
    
    
    
    
    
    
    
    
    
    
    46,602Other long-term liabilities
    
    
    
    
    
    
    23,688
    
    
    
    756
    
    
    
    
    
    
    
    24,444Minority Interest
    
    
    
    
    
    
    
    
    
    
    358
    
    
    
    
    
    
    
    358Shareholders equity (deficit):Common stock
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Additional paid-in-capital
    
    
    185,737
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    185,737Retained earnings (accumulated deficit)
    
    
    (85,566
    )
    
    
    (12,823
    )
    
    
    (46,630
    )
    
    
    59,453
    
    
    
    (85,566
    )Accumulated other comprehensive income (loss)
    
    
    10,802
    
    
    
    77,389
    
    
    
    8,944
    
    
    
    (86,333
    )
    
    
    10,802Total shareholders equity (deficit)
    
    
    111,107
    
    
    
    64,566
    
    
    
    (37,686
    )
    
    
    (26,880
    )
    
    
    111,107Net equity and advances to / from subsidiaries
    
    
    (106,423
    )
    
    
    208,619
    
    
    
    54,323
    
    
    
    (156,519
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    187,440
    
    
    $
    474,788
    
    
    $
    35,725
    
    
    $
    (183,399
    )
    
    $
    514,554
 18




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING BALANCE SHEET
 DECEMBER 31, 2006
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    9,206
    
    
    $
    2,104
    
    
    $
    
    
    
    $
    11,310Accounts receivable, net
    
    
    
    
    
    
    73,300
    
    
    
    5,949
    
    
    
    
    
    
    
    79,249Inventories
    
    
    
    
    
    
    87,060
    
    
    
    11,304
    
    
    
    
    
    
    
    98,364Prepaid expenses and other
    
    
    
    
    
    
    5,894
    
    
    
    531
    
    
    
    
    
    
    
    6,425Assets held for sale
    
    
    
    
    
    
    
    
    
    
    16,493
    
    
    
    
    
    
    
    16,493Current deferred tax assets
    
    
    
    
    
    
    1,104
    
    
    
    
    
    
    
    
    
    
    
    1,104Total current assets
    
    
    
    
    
    
    176,564
    
    
    
    36,381
    
    
    
    
    
    
    
    212,945Property, plant and equipment, net
    
    
    
    
    
    
    35,560
    
    
    
    7,774
    
    
    
    
    
    
    
    43,334Goodwill
    
    
    
    
    
    
    189,282
    
    
    
    
    
    
    
    
    
    
    
    189,282Intangibles, net
    
    
    
    
    
    
    65,931
    
    
    
    
    
    
    
    
    
    
    
    65,931Other assets
    
    
    4,284
    
    
    
    2,075
    
    
    
    274
    
    
    
    
    
    
    
    6,633Investment in and advances to subsidiaries
    
    
    183,400
    
    
    
    
    
    
    
    
    
    
    
    (183,400
    )
    
    
    Total assets
    
    $
    187,684
    
    
    $
    469,412
    
    
    $
    44,429
    
    
    $
    (183,400
    )
    
    $
    518,125LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital and second-lien facility
    
    $
    
    
    
    $
    17,606
    
    
    $
    
    
    
    $
    
    
    
    $
    17,606Current maturities of long-term obligations
    
    
    
    
    
    
    1,009
    
    
    
    369
    
    
    
    
    
    
    
    1,378Accounts payable
    
    
    
    
    
    
    27,775
    
    
    
    4,523
    
    
    
    
    
    
    
    32,298Accrued and other liabilities
    
    
    
    
    
    
    32,396
    
    
    
    2,123
    
    
    
    
    
    
    
    34,519Accrued interest
    
    
    7,791
    
    
    
    338
    
    
    
    123
    
    
    
    
    
    
    
    8,252Income taxes payable
    
    
    
    
    
    
    369
    
    
    
    879
    
    
    
    
    
    
    
    1,248Liabilities applicable to assets held for sale
    
    
    
    
    
    
    
    
    
    
    11,279
    
    
    
    
    
    
    
    11,279Total current liabilities
    
    
    7,791
    
    
    
    79,493
    
    
    
    19,296
    
    
    
    
    
    
    
    106,580Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    61,611
    
    
    
    1,401
    
    
    
    
    
    
    
    238,012Deferred tax liabilities
    
    
    
    
    
    
    46,456
    
    
    
    
    
    
    
    
    
    
    
    46,456Other long-term liabilities
    
    
    
    
    
    
    22,526
    
    
    
    740
    
    
    
    
    
    
    
    23,266Minority Interest
    
    
    
    
    
    
    
    
    
    
    307
    
    
    
    
    
    
    
    307Shareholders equity (deficit):Common stock
    
    
    133
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    133Additional paid-in-capital
    
    
    184,804
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184,804Retained earnings (accumulated deficit)
    
    
    (88,618
    )
    
    
    (28,278
    )
    
    
    (44,481
    )
    
    
    72,759
    
    
    
    (88,618
    )Accumulated other comprehensive income (loss)
    
    
    7,185
    
    
    
    93,188
    
    
    
    21,254
    
    
    
    (114,442
    )
    
    
    7,185Total shareholders equity (deficit)
    
    
    103,504
    
    
    
    64,910
    
    
    
    (23,227
    )
    
    
    (41,683
    )
    
    
    103,504Net equity and advances to / from subsidiaries
    
    
    (98,611
    )
    
    
    194,416
    
    
    
    45,912
    
    
    
    (141,717
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    187,684
    
    
    $
    469,412
    
    
    $
    44,429
    
    
    $
    (183,400
    )
    
    $
    518,125
 19




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 SIX MONTHS ENDED JUNE 30, 2007
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    278,212
    
    
    $
    15,554
    
    
    $
    (48,117
    )
    
    $
    245,649Cost of goods sold
    
    
    
    
    
    
    206,097
    
    
    
    11,253
    
    
    
    (48,081
    )
    
    
    169,269Gross margin
    
    
    
    
    
    
    72,115
    
    
    
    4,301
    
    
    
    (36
    )
    
    
    76,380Selling, general and administrative expenses
    
    
    713
    
    
    
    51,362
    
    
    
    947
    
    
    
    
    
    
    
    53,022Amortization of intangibles
    
    
    
    
    
    
    1,452
    
    
    
    
    
    
    
    
    
    
    
    1,452Net periodic postretirement benefits
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    276Operating income (loss)
    
    
    (713
    )
    
    
    19,025
    
    
    
    3,354
    
    
    
    (36
    )
    
    
    21,630Other income (expense):Interest, net
    
    
    (9,352
    )
    
    
    (4,902
    )
    
    
    (77
    )
    
    
    
    
    
    
    (14,331
    )Amortization of deferred financing costs
    
    
    (250
    )
    
    
    (456
    )
    
    
    
    
    
    
    
    
    
    
    (706
    )Equity in net income (loss) of subsidiaries
    
    
    16,855
    
    
    
    
    
    
    
    
    
    
    
    (16,855
    )
    
    
    Minority interest
    
    
    
    
    
    
    (53
    )
    
    
    
    
    
    
    
    
    
    
    (53
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    6,540
    
    
    
    13,614
    
    
    
    3,277
    
    
    
    (16,891
    )
    
    
    6,540Income tax provision
    
    
    
    
    
    
    2,422
    
    
    
    1,194
    
    
    
    
    
    
    
    3,616Income (loss) from continuing operations
    
    
    6,540
    
    
    
    11,192
    
    
    
    2,083
    
    
    
    (16,891
    )
    
    
    2,924Discontinued Operations:Loss on disposition of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    128Net income (loss)
    
    $
    6,540
    
    
    $
    11,192
    
    
    $
    2,211
    
    
    $
    (16,891
    )
    
    $
    3,052
 20




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2007
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    138,469
    
    
    $
    7,979
    
    
    $
    (18,014
    )
    
    $
    128,434Cost of goods sold
    
    
    
    
    
    
    102,631
    
    
    
    5,767
    
    
    
    (18,260
    )
    
    
    90,138Gross margin
    
    
    
    
    
    
    35,838
    
    
    
    2,212
    
    
    
    246
    
    
    
    38,296Selling, general and administrative expenses
    
    
    335
    
    
    
    25,930
    
    
    
    474
    
    
    
    
    
    
    
    26,739Amortization of intangibles
    
    
    
    
    
    
    726
    
    
    
    
    
    
    
    
    
    
    
    726Net periodic postretirement benefits
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Operating income (loss)
    
    
    (335
    )
    
    
    9,044
    
    
    
    1,738
    
    
    
    246
    
    
    
    10,693Other income (expense):Interest, net
    
    
    (4,707
    )
    
    
    (2,514
    )
    
    
    (48
    )
    
    
    
    
    
    
    (7,269
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (228
    )
    
    
    
    
    
    
    
    
    
    
    (353
    )Equity in net income (loss) of subsidiaries
    
    
    10,303
    
    
    
    
    
    
    
    
    
    
    
    (10,303
    )
    
    
    Minority interest
    
    
    
    
    
    
    (31
    )
    
    
    
    
    
    
    
    
    
    
    (31
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    5,136
    
    
    
    6,271
    
    
    
    1,690
    
    
    
    (10,057
    )
    
    
    3,040Income tax provision
    
    
    
    
    
    
    357
    
    
    
    976
    
    
    
    
    
    
    
    1,333Income (loss) from continuing operations
    
    
    5,136
    
    
    
    5,914
    
    
    
    714
    
    
    
    (10,057
    )
    
    
    1,707Discontinued Operations:Loss on disposition of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (59
    )
    
    
    
    
    
    
    (59
    )Net income (loss)
    
    $
    5,136
    
    
    $
    5,914
    
    
    $
    655
    
    
    $
    (10,057
    )
    
    $
    1,648
 21




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 SIX MONTHS ENDED JUNE 30, 2006
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    253,804
    
    
    $
    17,125
    
    
    $
    (44,710
    )
    
    $
    226,219Cost of goods sold
    
    
    
    
    
    
    190,762
    
    
    
    14,826
    
    
    
    (43,568
    )
    
    
    162,020Gross margin
    
    
    
    
    
    
    63,042
    
    
    
    2,299
    
    
    
    (1,142
    )
    
    
    64,199Selling, general and administrative expenses
    
    
    753
    
    
    
    50,271
    
    
    
    2,575
    
    
    
    
    
    
    
    53,599Amortization of intangibles
    
    
    
    
    
    
    1,442
    
    
    
    2
    
    
    
    
    
    
    
    1,444Net periodic postretirement benefits
    
    
    
    
    
    
    1,056
    
    
    
    
    
    
    
    
    
    
    
    1,056Operating income (loss)
    
    
    (753
    )
    
    
    10,273
    
    
    
    (278
    )
    
    
    (1,142
    )
    
    
    8,100Other income (expense):Interest, net
    
    
    (8,285
    )
    
    
    (4,175
    )
    
    
    (1
    )
    
    
    
    
    
    
    (12,461
    )Amortization of deferred financing costs
    
    
    (252
    )
    
    
    (412
    )
    
    
    
    
    
    
    
    
    
    
    (664
    )Equity in net income (loss) of subsidiaries
    
    
    2,621
    
    
    
    
    
    
    
    
    
    
    
    (2,621
    )
    
    
    Minority interest
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    (6,669
    )
    
    
    5,611
    
    
    
    (279
    )
    
    
    (3,763
    )
    
    
    (5,100
    )Income tax provision
    
    
    
    
    
    
    1,986
    
    
    
    115
    
    
    
    
    
    
    
    2,101Income (loss) from continuing operations
    
    
    (6,669
    )
    
    
    3,625
    
    
    
    (394
    )
    
    
    (3,763
    )
    
    
    (7,201
    )Discontinued Operations:Loss on disposition of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    532
    
    
    
    
    
    
    
    532Net income (loss)
    
    $
    (6,669
    )
    
    $
    3,625
    
    
    $
    138
    
    
    $
    (3,763
    )
    
    $
    (6,669
    )
 22




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
 THREE MONTHS ENDED JUNE 30, 2006
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    127,882
    
    
    $
    7,743
    
    
    $
    (21,306
    )
    
    $
    114,319Cost of goods sold
    
    
    
    
    
    
    96,227
    
    
    
    7,175
    
    
    
    (21,185
    )
    
    
    82,217Gross margin
    
    
    
    
    
    
    31,655
    
    
    
    568
    
    
    
    (121
    )
    
    
    32,102Selling, general and administrative expenses
    
    
    667
    
    
    
    26,211
    
    
    
    2,518
    
    
    
    
    
    
    
    29,396Amortization of intangibles
    
    
    
    
    
    
    724
    
    
    
    (1
    )
    
    
    
    
    
    
    723Net periodic postretirement benefits
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    
    
    
    
    528Operating income (loss)
    
    
    (667
    )
    
    
    4,192
    
    
    
    (1,949
    )
    
    
    (121
    )
    
    
    1,455Other income (expense):Interest, net
    
    
    (4,195
    )
    
    
    (2,104
    )
    
    
    (17
    )
    
    
    
    
    
    
    (6,316
    )Amortization of deferred financing costs
    
    
    (127
    )
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    (332
    )Equity in net income (loss) of subsidiaries
    
    
    (302
    )
    
    
    
    
    
    
    
    
    
    
    302
    
    
    
    Minority interest
    
    
    
    
    
    
    (14
    )
    
    
    
    
    
    
    
    
    
    
    (14
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    (5,291
    )
    
    
    1,869
    
    
    
    (1,966
    )
    
    
    181
    
    
    
    (5,207
    )Income tax provision
    
    
    
    
    
    
    1,271
    
    
    
    13
    
    
    
    
    
    
    
    1,284Income (loss) from continuing operations
    
    
    (5,291
    )
    
    
    598
    
    
    
    (1,979
    )
    
    
    181
    
    
    
    (6,491
    )Discontinued Operations:Loss on disposition of discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    1,200
    
    
    
    
    
    
    
    1,200Net income (loss)
    
    $
    (5,291
    )
    
    $
    598
    
    
    $
    (779
    )
    
    $
    181
    
    
    $
    (5,291
    )
 23




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 SIX MONTHS ENDED JUNE 30, 2007
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    3,306
    
    
    $
    (5,456
    )
    
    $
    (1,045
    )
    
    $
    (596
    )
    
    $
    (3,791
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,068
    )
    
    
    (451
    )
    
    
    
    
    
    
    (4,519
    )Proceeds from sales of assets
    
    
    
    
    
    
    13,783
    
    
    
    
    
    
    
    
    
    
    
    13,783Acquisition of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (46
    )
    
    
    (369
    )
    
    
    (12
    )
    
    
    
    
    
    
    (427
    )Net cash provided by investing activities
    
    
    (46
    )
    
    
    9,346
    
    
    
    (463
    )
    
    
    
    
    
    
    8,837Cash flows from financing activities:Net borrowings (repayments) under revolving credit facility
    
    
    
    
    
    
    7,640
    
    
    
    157
    
    
    
    
    
    
    
    7,797Net repayments of other credit facilities
    
    
    
    
    
    
    (14,502
    )
    
    
    (31
    )
    
    
    
    
    
    
    (14,533
    )Changes in net equity and advances to / from discontinued operations
    
    
    (4,194
    )
    
    
    1,199
    
    
    
    1,461
    
    
    
    596
    
    
    
    (938
    )Other
    
    
    934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    934Net cash provided by (used in) financing activities
    
    
    (3,260
    )
    
    
    (5,663
    )
    
    
    1,587
    
    
    
    596
    
    
    
    (6,740
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    236
    
    
    
    209
    
    
    
    
    
    
    
    445Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (1,537
    )
    
    
    288
    
    
    
    
    
    
    
    (1,249
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    (99
    )
    
    
    
    
    
    
    (99
    )Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (871
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    1,148
    
    
    
    
    
    
    
    1,148Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
    
    
    
    169Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (1,537
    )
    
    
    457
    
    
    
    
    
    
    
    (1,080
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    9,207
    
    
    
    2,103
    
    
    
    
    
    
    
    11,310Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    7,670
    
    
    $
    2,560
    
    
    $
    
    
    
    $
    10,230
 24




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
 SIX MONTHS ENDED JUNE 30, 2006
 (unaudited)
 (In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (6,218
    )
    
    $
    2,342
    
    
    $
    (8,134
    )
    
    $
    (999
    )
    
    $
    (13,009
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (2,515
    )
    
    
    275
    
    
    
    
    
    
    
    (2,240
    )Proceeds from sales of assets
    
    
    
    
    
    
    16,455
    
    
    
    
    
    
    
    
    
    
    
    16,455Acquisition of minority interest
    
    
    
    
    
    
    (3,954
    )
    
    
    
    
    
    
    
    
    
    
    (3,954
    )Net cash provided by investing activities
    
    
    
    
    
    
    9,986
    
    
    
    275
    
    
    
    
    
    
    
    10,261Cash flows from financing activities:Net borrowings (repayments) under revolving credit facility
    
    
    
    
    
    
    (5,281
    )
    
    
    1,142
    
    
    
    
    
    
    
    (4,139
    )Net repayments of other credit facilities
    
    
    
    
    
    
    (330
    )
    
    
    (425
    )
    
    
    
    
    
    
    (755
    )Changes in net equity and advances to / from subsidiaries
    
    
    5,893
    
    
    
    (12,773
    )
    
    
    8,500
    
    
    
    999
    
    
    
    2,619Other
    
    
    325
    
    
    
    (264
    )
    
    
    257
    
    
    
    
    
    
    
    318Net cash provided by (used in) financing activities
    
    
    6,218
    
    
    
    (18,648
    )
    
    
    9,474
    
    
    
    999
    
    
    
    (1,957
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    1,242
    
    
    
    (865
    )
    
    
    
    
    
    
    377Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (5,078
    )
    
    
    750
    
    
    
    
    
    
    
    (4,328
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    2,404
    
    
    
    
    
    
    
    2,404Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    (1,124
    )
    
    
    
    
    
    
    (1,124
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    (2,571
    )
    
    
    
    
    
    
    (2,571
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (302
    )
    
    
    
    
    
    
    (302
    )Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,593
    )
    
    
    
    
    
    
    (1,593
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (5,078
    )
    
    
    (843
    )
    
    
    
    
    
    
    (5,921
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    6,591
    
    
    
    8,971
    
    
    
    
    
    
    
    15,562Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    1,513
    
    
    $
    8,128
    
    
    $
    
    
    
    $
    9,641
 25




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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
  26




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##### Table of Contents



Key Indicators
    Discontinued Operations
 Discontinued Operations
 27




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##### Table of Contents



RESULTS OF OPERATIONS
 Discontinued Operations
 Net Sales
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,2007
    
    
    2006
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    % ChangeNet sales
    
    $
    128,434
    
    
    $
    114,319
    
    
    
    12.3
    %
    
    $
    245,649
    
    
    $
    226,219
    
    
    
    8.6
    %Net sales summary:Americas net sales
    
    $
    95,290
    
    
    $
    86,244
    
    
    
    10.5
    %
    
    $
    184,086
    
    
    $
    173,375
    
    
    
    6.2
    %International net sales
    
    
    33,144
    
    
    
    28,075
    
    
    
    18.1
    %
    
    
    61,563
    
    
    
    52,844
    
    
    
    16.5
    %Consolidated net sales
    
    $
    128,434
    
    
    $
    114,319
    
    
    
    12.3
    %
    
    $
    245,649
    
    
    $
    226,219
    
    
    
    8.6
    %
   Gross Margin
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeGross margin
    
    $
    38,296
    
    
    $
    32,102
    
    
    
    19.3
    %
    
    $
    76,380
    
    
    $
    64,199
    
    
    
    19.0
    %
   28




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##### Table of Contents



Selling, general and administrative expenses
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeSelling, general and administrative expenses
    
    $
    26,739
    
    
    $
    29,396
    
    
    
    (9.0
    %)
    
    $
    53,022
    
    
    $
    53,599
    
    
    
    (1.1
    %)
   Interest expense
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeInterest expense
    
    $
    (7,269
    )
    
    $
    (6,316
    )
    
    
    15.1
    %
    
    $
    (14,331
    )
    
    $
    (12,461
    )
    
    
    15.0
    %
   Income tax provision
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeIncome tax provision
    
    $
    1,333
    
    
    $
    1,284
    
    
    
    3.8
    %
    
    $
    3,616
    
    
    $
    2,101
    
    
    
    72.1
    %
   29




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##### Table of Contents



Income (loss) from discontinued operations
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeIncome (loss) from discontinued operations
    
    $
    (59
    )
    
    $
    1,200
    
    
    
    (104.9
    %)
    
    $
    128
    
    
    $
    532
    
    
    
    (75.9
    %)
   RECENT ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements . Fair Value Measurements
 Fair Value Option
 LIQUIDITY AND CAPITAL RESOURCES
  30




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##### Table of Contents



Six months endedNet cash provided by (used in) continuing operations :
    
    June 30,2007
    
    
    2006Operating activities
    
    $
    (3,791
    )
    
    $
    (13,009
    )Investing activities
    
    
    8,837
    
    
    
    10,261Financing activities
    
    
    (6,740
    )
    
    
    (1,957
    )Effect of exchange rates
    
    
    445
    
    
    
    377Cash used in continuing operations
    
    $
    (1,249
    )
    
    $
    (4,328
    )
 Operating Activities
  Investing Activities
  Financing Activities
  31




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##### Table of Contents



Debt and
Capital Lease Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    32




---



##### Table of Contents



Derivative Instruments
  
 Item 4. Controls and Procedures
  33




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Contingencies
 
 Item 4. Submission of Matters to a Vote of Security Holders
   Board of Director
    
    For
    
    WithheldPaul D. Melnuk
    
    
    8,358,348
    
    
    
    500J. Joe Adorjan
    
    
    8,358,348
    
    
    
    500Andrew L. Berger
    
    
    8,358,348
    
    
    
    500James B. Gamache
    
    
    8,358,348
    
    
    
    500Marnie S. Gordon
    
    
    8,358,348
    
    
    
    500Bradley G. Pattelli
    
    
    8,358,348
    
    
    
    500
  
 Item 6. Exhibits
 31.1
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (Exchange Act Rule 13a-14(a))31.2
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002 (Exchange Act Rule 13a-14(a))32.1
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b))32.2
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002 (18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b))
 
 Item 9. Recent Developments
  34




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##### Table of Contents



Appointment
of Executive Vice President.
 35




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:

/s/ Mark F. JollyMark F. JollyVice President  Global Controller
            Principal Accounting Officer  36