##### 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, 2008
 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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ
  þ o




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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
    
    6-24Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    24-30Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    30Item 4. Controls and Procedures
    
    30-31PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    32Item 6. Exhibits
    
    32SIGNATURES
    
    33EX-31.1EX-31,2EX-32.1EX-32.2
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PART I. FINANCIAL INFORMATION
 
 Item 1.
 THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (In thousands, except share data)
 June 30,
    
    
    December 31,2008
    
    
    2007(unaudited)Current Assets:Cash and cash equivalents
    
    $
    10,467
    
    
    $
    16,159Accounts receivable, less allowance for doubtful accounts of
$1,000 and $1,000, respectively
    
    
    95,997
    
    
    
    83,852Inventories
    
    
    99,576
    
    
    
    90,961Prepaid expenses and other
    
    
    7,581
    
    
    
    6,147Assets held for sale
    
    
    1,423
    
    
    
    2,023Deferred tax assets
    
    
    2,721
    
    
    
    2,721Total current assets
    
    
    217,765
    
    
    
    201,863Property, plant and equipment, net of accumulated depreciation
of $49,968 and $44,631, respectively
    
    
    46,332
    
    
    
    44,356Goodwill
    
    
    190,093
    
    
    
    182,163Intangibles, net
    
    
    61,964
    
    
    
    63,204Other assets
    
    
    4,254
    
    
    
    5,841Total assets
    
    $
    520,408
    
    
    $
    497,427Current Liabilities:Working capital facility
    
    $
    17,187
    
    
    $
    12,658Current maturities of long-term obligations
    
    
    1,915
    
    
    
    8,778Accounts payable
    
    
    47,235
    
    
    
    31,577Accrued and other liabilities
    
    
    30,579
    
    
    
    28,826Accrued interest
    
    
    7,270
    
    
    
    8,032Income taxes payable
    
    
    5,600
    
    
    
    4,664Deferred tax liability
    
    
    2,667
    
    
    
    2,667Liabilities related to assets held for sale
    
    
    5,235
    
    
    
    7,417Total current liabilities
    
    
    117,688
    
    
    
    104,619Long-term obligations, less current maturities
    
    
    197,028
    
    
    
    213,142Deferred tax liabilities
    
    
    56,899
    
    
    
    44,306Other long-term liabilities
    
    
    12,687
    
    
    
    12,989Minority interest
    
    
    550
    
    
    
    287Stockholders equity:Common stock, $0.01 par value:Authorized  25,000,000 sharesIssued and outstanding  13,440,940 shares at June 30, 2008 and
13,368,190 shares at December 31, 2007
    
    
    134
    
    
    
    134Additional paid-in capital
    
    
    188,582
    
    
    
    186,830Accumulated deficit
    
    
    (69,466
    )
    
    
    (79,953
    )Accumulated other comprehensive income
    
    
    16,306
    
    
    
    15,073Total stockholders equity
    
    
    135,556
    
    
    
    122,084Total liabilities and stockholders equity
    
    $
    520,408
    
    
    $
    497,427
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    142,135
    
    
    $
    127,181
    
    
    $
    272,902
    
    
    $
    243,288Cost of goods sold
    
    
    94,968
    
    
    
    89,445
    
    
    
    183,456
    
    
    
    167,752Gross margin
    
    
    47,167
    
    
    
    37,736
    
    
    
    89,446
    
    
    
    75,536Selling, general and administrative expenses
    
    
    29,674
    
    
    
    26,414
    
    
    
    57,125
    
    
    
    52,367Amortization of intangibles
    
    
    669
    
    
    
    726
    
    
    
    1,336
    
    
    
    1,452Net periodic postretirement benefits
    
    
    52
    
    
    
    138
    
    
    
    104
    
    
    
    276Operating income
    
    
    16,772
    
    
    
    10,458
    
    
    
    30,881
    
    
    
    21,441Other expenses:Interest
    
    
    (5,323
    )
    
    
    (7,269
    )
    
    
    (10,657
    )
    
    
    (14,331
    )Amortization of deferred financing costs
    
    
    (234
    )
    
    
    (353
    )
    
    
    (468
    )
    
    
    (706
    )Minority interest
    
    
    (69
    )
    
    
    (31
    )
    
    
    (121
    )
    
    
    (53
    )Income from continuing operations before
income tax provision and discontinued
operations
    
    
    11,146
    
    
    
    2,805
    
    
    
    19,635
    
    
    
    6,351Income tax provision
    
    
    4,901
    
    
    
    1,333
    
    
    
    8,673
    
    
    
    3,616Income from continuing operations
    
    
    6,245
    
    
    
    1,472
    
    
    
    10,962
    
    
    
    2,735Income (loss) from discontinued operations, net of tax
    
    
    (283
    )
    
    
    176
    
    
    
    (475
    )
    
    
    317Net income
    
    $
    5,962
    
    
    $
    1,648
    
    
    $
    10,487
    
    
    $
    3,052Basic and diluted income (loss) per share:Continuing operations
    
    $
    0.47
    
    
    $
    0.11
    
    
    $
    0.82
    
    
    $
    0.21Discontinued operations
    
    
    (0.03
    )
    
    
    0.01
    
    
    
    (0.04
    )
    
    
    0.02Net income
    
    $
    0.44
    
    
    $
    0.12
    
    
    $
    0.78
    
    
    $
    0.23
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 Six Months Ended June 30,2008
    
    
    2007Cash flows from continuing operations:Cash flows from operating activities:Net income
    
    $
    10,487
    
    
    $
    3,052Adjustments to reconcile net income to net cash provided by (used in) operating activities:(Income) loss from discontinued operations
    
    
    475
    
    
    
    (317
    )Minority interest
    
    
    121
    
    
    
    53Depreciation and amortization
    
    
    6,280
    
    
    
    6,573Deferred income taxes
    
    
    4,484
    
    
    
    627Net periodic post-retirement benefits
    
    
    104
    
    
    
    276Changes in operating assets and liabilities:Accounts receivable
    
    
    (8,035
    )
    
    
    (10,627
    )Inventories
    
    
    (5,151
    )
    
    
    115Prepaids
    
    
    (805
    )
    
    
    33Accounts payable
    
    
    11,780
    
    
    
    1,867Accrued and other liabilities
    
    
    1,226
    
    
    
    (6,520
    )Accrued interest
    
    
    (762
    )
    
    
    241Other long-term liabilities
    
    
    (384
    )
    
    
    Other, net
    
    
    257
    
    
    
    1,358Net cash provided by (used in) operating activities
    
    
    20,077
    
    
    
    (3,269
    )Cash flows from investing activities:Capital expenditures
    
    
    (4,632
    )
    
    
    (4,519
    )Proceeds from sales of discontinued operations
    
    
    500
    
    
    
    13,783Purchase of outside interest in joint venture
    
    
    (3,013
    )
    
    
    Other
    
    
    (348
    )
    
    
    (427
    )Net cash provided by (used in) investing activities
    
    
    (7,493
    )
    
    
    8,837Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    16,145
    
    
    
    20,041Repayments of Working Capital Facility
    
    
    (11,616
    )
    
    
    (12,244
    )Repayments of other debt
    
    
    (22,689
    )
    
    
    (14,533
    )Stock compensation expense
    
    
    1,093
    
    
    
    720Exercise of employee stock purchases
    
    
    904
    
    
    
    214Advances from (to) discontinued operations
    
    
    (3,062
    )
    
    
    (1,460
    )Other, net
    
    
    (245
    )
    
    
    Net cash used in financing activities
    
    
    (19,470
    )
    
    
    (7,262
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    1,194
    
    
    
    445Net cash used in continuing operations
    
    
    (5,692
    )
    
    
    (1,249
    )Cash flows from discontinued operationsNet cash used in operating activities
    
    
    (2,382
    )
    
    
    (621
    )Net cash provided by (used in) investing activities
    
    
    500
    
    
    
    (871
    )Net cash provided by financing activities
    
    
    1,581
    
    
    
    1,670Effect of exchange rates on cash and cash equivalents
    
    
    26
    
    
    
    (9
    )Net cash provided by (used in) discontinued operations
    
    
    (275
    )
    
    
    169Total decrease in cash and cash equivalents
    
    
    (5,967
    )
    
    
    (1,080
    )Total cash and cash equivalents beginning of period
    
    
    16,435
    
    
    
    11,310Total cash and cash equivalents end of period
    
    $
    10,468
    
    
    $
    10,230Continuing operationsCash and cash equivalents beginning of period
    
    $
    16,159
    
    
    $
    11,310Net cash used in continuing operations
    
    
    (5,692
    )
    
    
    (1,249
    )Cash and cash equivalents end of period
    
    $
    10,467
    
    
    $
    10,061Discontinued operationsCash and cash equivalents beginning of period
    
    $
    276
    
    
    $
    Net cash provided by (used in) discontinued operations
    
    
    (275
    )
    
    
    169Cash and cash equivalents end of period
    
    $
    1
    
    
    $
    169Income taxes paid
    
    $
    4,317
    
    
    $
    1,966Interest paid
    
    $
    11,440
    
    
    $
    13,177
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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 six months
ended June 30, 2008 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2008. 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, 2007.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 2007, primarily accounts related to discontinued operations, has
been reclassified to conform to the 2008 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, 2008 and
2007:
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    3,292
    
    
    $
    3,162
    
    
    $
    3,072
    
    
    $
    2,978Charged to costs and expenses
    
    
    1,636
    
    
    
    1,298
    
    
    
    3,365
    
    
    
    2,459Deductions
    
    
    (1,476
    )
    
    
    (1,154
    )
    
    
    (2,985
    )
    
    
    (2,131
    )Balance at end of period
    
    $
    3,452
    
    
    $
    3,306
    
    
    $
    3,452
    
    
    $
    3,306
 Foreign CurrencyDuring the second quarter of 2008 the Company recorded an adjustment related to foreign
currency translation. The effect of this adjustment would have increased goodwill by $4,558
and increased accumulated other comprehensive income by $2,072 net of $6,630 of deferred
income taxes at December 31, 2007 a portion of which related to prior periods. The current
year impact of foreign currency in these items included an increase to goodwill of $1,174
and an increase to accumulated other comprehensive income of $920 net of $2,094 of deferred
taxes at June 30, 2008. This adjustment did not impact the Companys net income or cash
flows from operating, financing or investing activities for the periods.
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Fair ValueIn February 2007, the FASB issued SFAS 159, The Fair Value Option for Financial Assets and
Financial Liabilities  Including an Amendment of SFAS 115, which permits entities to
choose to measure many financial instruments and certain other items at fair value that are
not currently required to be measured at fair value. Unrealized gains and losses arising
subsequent to adoption are reported in earnings. SFAS 159 is effective for fiscal years
beginning after November 15, 2007. The Company adopted this statement as of January 1, 2008
and elected not to apply the fair value option to any of its financial instruments.In September 2006, the FASB issued SFAS 157 Fair Value Measurements. SFAS 157 defines fair
value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. SFAS 157 does not require
any new fair value measurements. In February 2008, the FASB amended SFAS 157 to exclude
SFAS 13, Accounting for Leases. In addition, the FASB delayed the effective date of SFAS
157 for non-financial assets and liabilities to fiscal years beginning after November 15,
2008. The Company adopted the provisions of SFAS 157 related to its financial assets and
liabilities on January 1, 2008. See footnote 8.The 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 $170,188 and $162,750 at June 30, 2008 and December 31, 2007,
respectively, is based on available market information.Recent Accounting PronouncementsBusiness Combinations. In December 2007, the FASB issued SFAS No. 141 (revised 2007),
Business Combinations (SFAS No. 141R). SFAS No. 141R establishes principles and
requirements for how an acquirer recognizes and measures in its financial statements the
identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the
acquiree and the goodwill acquired. SFAS No. 141R also establishes disclosure requirements to
enable the evaluation of the nature and financial effects of the business combination. SFAS
No. 141R is effective for financial statements issued for fiscal years beginning after
December 15, 2008. The Company is currently evaluating the potential impact of adoption of
SFAS No. 141R on its consolidated financial statements. However, the Company does not expect
the adoption of SFAS No. 141R to have a material effect on its consolidated financial
statements.Noncontrolling Interests. In December 2007, the FASB issued SFAS No. 160, Noncontrolling
Interests in Consolidated Financial Statements-an Amendment of ARB No. 51 (SFAS No. 160).
SFAS No. 160 establishes accounting and reporting standards pertaining to ownership interests
in subsidiaries held by parties other than the parent, the amount of net income attributable
to the parent and to the noncontrolling interest, changes in a parents ownership interest,
and the valuation of any retained noncontrolling equity investment when a subsidiary is
deconsolidated. This statement also establishes disclosure requirements that clearly identify
and distinguish between the interests of the parent and the interests of the noncontrolling
owners. SFAS No. 160 is effective for fiscal years beginning on or after December 15, 2008.
The Company is currently evaluating the potential impact of adoption of SFAS No. 160 on its
consolidated financial statements. However, the Company does not expect the adoption of SFAS
No. 160 to have a material effect on its consolidated financial statements.Disclosures about Derivative Instruments and Hedging Activities.In March 2008, the FASB
issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities. SFAS
No. 161 requires enhanced disclosures about an entitys derivative and hedging activities and
thereby improves the transparency of financial reporting. SFAS No. 161 is effective for
fiscal years beginning on or after November 15, 2008. The Company is currently evaluating the
potential impact of adoption of SFAS No. 161 on its consolidated financial statement
disclosures. However, the Company does not expect the adoption of SFAS No. 161 to have a
material effect on its consolidated financial statements.
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3.
    
    Discontinued OperationsOn December 21, 2007, the Company committed to a plan to dispose of its cutting
table business, C&G Systems. A definitive sales agreement was signed with closing
occurring on January 18, 2008. Based on the sales price of $500, a loss of $570 (net of
$350 of tax) was recorded in 2007 as a component of discontinued operations. The assets
and liabilities were classified as held for sale at December 31, 2007.On December 30, 2006, the Company committed to a plan to sell its Brazilian
manufacturing operations. A loss of approximately $15,200 (net of $1,200 of tax) was
recorded as a component of discontinued operations in the fourth quarter of 2006 based
on the estimated net realizable value of the assets related to the operation. The
Company closed the Brazilian manufacturing operations in the fourth quarter of 2007
disposing of its cutting table business and auctioning various remaining inventory and
equipment. Final negotiations and collections associated with the sale of the building
are continuing with the expectation that a sale will be completed during the third
quarter of 2008. Remaining liabilities include potential tax liabilities asserted by
Brazilian authorities.On 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. A loss of $9,200 (net of $6,300 of tax) was recorded in
2006 as a component of discontinued operations. The sale closed on May 25, 2007 with
receipt of $13,800 net cash received at closing and a note payable bearing 14% interest
payable in South African Rand in May 2010 which had a U.S. conversion value of $3.8
million as of June 30, 2008.
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The tables below set forth certain information related to the C&G, Brazil, South Africa, and
Genset operations included in discontinued operations for the three months and six months
ended June 30, 2008 and 2007:
 Three Months Ended June 30, 2008SouthC&G
    
    Brazil
    
    Africa
    
    Soltec
    
    Genset
    
    TotalNet sales
    
    $
    
    
    
    $
    174
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    174Operating expenses
    
    
    
    
    
    
    (94
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (94
    )Other expenses
    
    
    
    
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )Adjustment in carrying value of related
assets and reserves, net of tax
    
    
    8
    
    
    
    (275
    )
    
    
    
    
    
    
    (7
    )
    
    
    1
    
    
    
    (273
    )Net income (loss) from discontinued operations
    
    $
    8
    
    
    $
    (285
    )
    
    $
    
    
    
    $
    (7
    )
    
    $
    1
    
    
    $
    (283
    )
 Six Months Ended June 30, 2008SouthC&G
    
    Brazil
    
    Africa
    
    Soltec
    
    Genset
    
    TotalNet sales
    
    $
    68
    
    
    $
    452
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    520Operating expenses
    
    
    (218
    )
    
    
    (537
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (755
    )Other expenses
    
    
    
    
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )Adjustment in carrying value of related assets and reserves, net of tax
    
    
    (44
    )
    
    
    (81
    )
    
    
    
    
    
    
    (7
    )
    
    
    (1
    )
    
    
    (133
    )Net income (loss) from discontinued operations
    
    $
    (194
    )
    
    $
    (273
    )
    
    $
    
    
    
    $
    (7
    )
    
    $
    (1
    )
    
    $
    (475
    )
 Three Months Ended June 30, 2007SouthC&G
    
    Brazil
    
    Africa
    
    Soltec
    
    Genset
    
    TotalNet sales
    
    $
    1,253
    
    
    $
    3,946
    
    
    $
    7,213
    
    
    $
    
    
    
    $
    
    
    
    $
    12,412Operating expenses
    
    
    (1,018
    )
    
    
    (4,049
    )
    
    
    (6,614
    )
    
    
    
    
    
    
    
    
    
    
    (11,681
    )Other expenses
    
    
    
    
    
    
    (15
    )
    
    
    (7
    )
    
    
    
    
    
    
    
    
    
    
    (22
    )Income tax provision
    
    
    
    
    
    
    
    
    
    
    (228
    )
    
    
    
    
    
    
    
    
    
    
    (228
    )Adjustment in carrying value of related assets and reserves, net of tax
    
    
    
    
    
    
    (400
    )
    
    
    394
    
    
    
    (299
    )
    
    
    
    
    
    
    (305
    )Net income (loss) from discontinued operations
    
    $
    235
    
    
    $
    (518
    )
    
    $
    758
    
    
    $
    (299
    )
    
    $
    
    
    
    $
    176
 Six Months Ended June 30, 2007SouthC&G
    
    Brazil
    
    Africa
    
    Soltec
    
    Genset
    
    TotalNet sales
    
    $
    2,361
    
    
    $
    6,759
    
    
    $
    19,399
    
    
    $
    
    
    
    $
    
    
    
    $
    28,519Operating expenses
    
    
    (2,172
    )
    
    
    (7,325
    )
    
    
    (17,547
    )
    
    
    
    
    
    
    
    
    
    
    (27,044
    )Other expenses
    
    
    
    
    
    
    (109
    )
    
    
    (229
    )
    
    
    
    
    
    
    
    
    
    
    (338
    )Income tax (provision) benefit
    
    
    
    
    
    
    
    
    
    
    (515
    )
    
    
    
    
    
    
    
    
    
    
    (515
    )Adjustment in carrying value of related assets and reserves, net of tax
    
    
    
    
    
    
    (400
    )
    
    
    394
    
    
    
    (299
    )
    
    
    
    
    
    
    (305
    )Net income (loss) from discontinued operations
    
    $
    189
    
    
    $
    (1,075
    )
    
    $
    1,502
    
    
    $
    (299
    )
    
    $
    
    
    
    $
    317
 9




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##### Table of Contents



At June 30, 2008C&G
    
    Brazil
    
    TotalCash
    
    $
    
    
    
    $
    1
    
    
    $
    1Accounts receivable
    
    
    
    
    
    
    492
    
    
    
    492Other assets
    
    
    
    
    
    
    930
    
    
    
    930$
    
    
    
    $
    1,423
    
    
    $
    1,423Accounts payable and other liabilities
    
    $
    
    
    
    $
    5,235
    
    
    $
    5,235
 At December 31, 2007C&G
    
    Brazil
    
    TotalCash
    
    $
    
    
    
    $
    276
    
    
    $
    276Accounts receivable
    
    
    264
    
    
    
    750
    
    
    
    1,014Inventories
    
    
    437
    
    
    
    93
    
    
    
    530Other assets
    
    
    17
    
    
    
    186
    
    
    
    203$
    718
    
    
    $
    1,305
    
    
    $
    2,023Accounts payable and other liabilities
    
    $
    534
    
    
    $
    6,883
    
    
    $
    7,417
 4.
    
    InventoriesThe composition of inventories was as follows:
 June 30,
    
    
    December 31,2008
    
    
    2007Raw materials and component parts
    
    $
    39,738
    
    
    $
    32,675Work-in-process
    
    
    13,674
    
    
    
    11,374Finished goods
    
    
    58,120
    
    
    
    57,337111,532
    
    
    
    101,386LIFO reserve
    
    
    (11,956
    )
    
    
    (10,425
    )$
    99,576
    
    
    $
    90,961
 5.
    
    Intangible AssetsThe composition of intangibles was as follows:
 June 30,
    
    
    December 31,2008
    
    
    2007Goodwill (See Note 2)
    
    $
    190,093
    
    
    $
    182,163Patents and customer relationships
    
    
    42,222
    
    
    
    42,126Trademarks
    
    
    33,403
    
    
    
    33,403265,718
    
    
    
    257,692Accumulated amortization of patents and
customer relationships
    
    
    (13,661
    )
    
    
    (12,325
    )$
    252,057
    
    
    $
    245,367
 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.
Impairment is tested annually as of October 1 and as of October 1, 2007 an impairment
adjustment was not necessary.
 10




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##### Table of Contents



The change in the carrying amount of goodwill was as follows (See Note 2):
 Carrying Amountof GoodwillBalance as of December 31, 2007
    
    $
    182,163Increase in balance due to acquisition
    
    
    1,794Foreign currency translation
    
    
    6,136Balance as of June 30, 2008
    
    $
    190,093
 Amortization of patents and customer relationships amounted to $669 and $1,336 for the three
month and six month periods ended June 30, 2008, respectively, and to $726 and $1,452 of
expense for the three month and six month periods ended June 30, 2007.6.
    
    Debt and Capital Lease ObligationsThe composition of debt and capital lease obligations was as follows:
 June 30,
    
    
    December 31,2008
    
    
    2007Working Capital Facility
    
    $
    17,187
    
    
    $
    12,658Second-Lien Facility
    
    
    14,000
    
    
    
    36,000Senior Subordinated Notes, due February 1, 2014, 9 1/4% interest
payable semiannually on February 1 and August 1
    
    
    175,000
    
    
    
    175,000Capital leases
    
    
    9,941
    
    
    
    10,625Other
    
    
    2
    
    
    
    295216,130
    
    
    
    234,578Current maturities and working capital facility
    
    
    (19,102
    )
    
    
    (21,436
    )$
    197,028
    
    
    $
    213,142
 At June 30, 2008, $8,048 of letters of credit were outstanding and unused availability was
$50,156 under the Companys borrowing agreements.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 Corporation. At June 30, 2008 and December 31, 2007, 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 the parent company level, separate financial
statements have not been presented for Thermadyne Holdings Corporation.7.
    
    Derivative InstrumentsInterest 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. The interest rate swap converts fixed rate exposure to
variable for a notional value of $50,000. As of June 30, 2008, the Company recorded a fair
value adjustment to the portion of its fixed rate long-term debt that is hedged decreasing
this amount by $294. At June 30, 2008, the fair value of the interest rate swap was $1 and
has been recorded as a component of other long-term assets. For the three months and six
months ended June 30, 2008, the Company realized a decrease in its interest expense as a
result of the interest rate swap of $115 and $629, respectively. 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.
 11




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##### Table of Contents



8.
    
    Fair Value MeasurementsIn September 2006, the FASB issued SFAS No. 157 Fair Value Measurements. 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
does not require any new fair value measurements. In February 2008, the FASB amended SFAS
No. 157 to exclude SFAS No. 13, Accounting for Leases. In addition, the FASB delayed the
effective date of SFAS No. 157 for non-financial assets and liabilities to fiscal years
beginning after November 15, 2008. The Company adopted the provisions of SFAS 157 related to
its financial assets and liabilities on January 1, 2008.SFAS 157 classifies the inputs used to measure fair value into the following hierarchy:
    The Company has one asset that is within the provisions of SFAS 157, the interest
rate swap derivative asset discussed Note 7. At June 30, 2008, the fair value of this
asset is $1 measured at Level 2 fair value on a recurring basis.
 9.
    
    Comprehensive IncomeComprehensive income for the three months and six months ended June 30, 2008 and 2007 was as
follows (See Note 2):
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income
    
    $
    5,962
    
    
    $
    1,648
    
    
    $
    10,487
    
    
    $
    3,052Foreign currency translation
    
    
    7,366
    
    
    
    3,395
    
    
    
    10,070
    
    
    
    3,617Minimum pension liability
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Minimum post-retirement liability
    
    
    (56
    )
    
    
    
    
    
    
    (113
    )
    
    
    Deferred income tax effects
    
    
    (8,724
    )
    
    
    
    
    
    
    (8,724
    )
    
    
    Comprehensive income
    
    $
    4,548
    
    
    $
    5,043
    
    
    $
    11,720
    
    
    $
    6,669
 10.
    
    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 allowances related to
pre-emergence bankruptcy net operating loss carryovers must be recognized as an adjustment
to entries recorded in connection with fresh start accounting. Therefore, any reduction in
those valuation allowances will not reduce the Companys current year provision for taxes,
but must instead adjust the balance sheet. The Companys 2008 income tax provision reflects
the inclusion of the foreign source income of the foreign subsidiaries without a
corresponding benefit for the related foreign tax credits. These matters combined to create
a higher than expected effective tax rate which the Company anticipates will continue for
the foreseeable future. The income taxes currently payable are estimated as 20-22% of
income from continuing operations before income tax provision and discontinued operations.For 2008, the Companys management estimates that actual cash income tax payments will
primarily relate to state and foreign taxes as in prior years due to the use of net
operating loss carryovers to offset U.S. taxable income. At
 12




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##### Table of Contents



the beginning of 2008, the Company had approximately $122,200 in U.S. net operating loss carryovers, including $61,400
of pre-emergence NOL carryovers for which the related income tax benefit, if realized, will
adjust the balance sheet.The Company adopted, FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (FIN 48) as of January 1, 2007. 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 has $2,462 of accrued liabilities for uncertain tax positions as of June 30,
2008, including interest of $363. The Company does not expect any significant increases or
decreases to its unrecognized tax benefits within 12 months of this reporting date.In normal course the Companys tax return filings are subject to examination. The Companys
U.S. federal income tax returns for tax years 2004 and beyond remain subject to examination
by the Internal Revenue Service. The Companys state income tax returns for 2003 through
2007 remain subject to examination by various state taxing authorities. The Companys
significant foreign subsidiaries local country tax returns remain open to examination as
follows: Australia (2003-2007), Canada (2002-2007), United Kingdom (2001-2007) and Italy
(2000-2007).11.
    
    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, 2008, the Company was a co-defendant in approximately 391 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, 2008, 150 of the
391 cases naming the Company are pending in the multidistrict proceeding. Between June 1,
2003 and June 30, 2008, the Company was dismissed from approximately 1,072 other cases with
similar 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.12.
    
    Stock Options and Stock-Based CompensationThe Company utilizes the modified prospective method of SFAS No. 123(R), Share-Based
Payment, and accordingly recognized compensation cost for all share-based payments, which
consist of stock options and restricted stock, granted after January 1, 2006. Stock
compensation cost included in selling, general and administrative expense was $623 and
$1,093 for the three months and six months ended June 30, 2008, respectively, and $420 and
$720 for the three months and six months ended June 30, 2007, respectively.The estimated fair value of the restricted stock awards is determined as the closing price
of the stock as of the date of the awards. 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.
 13




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##### Table of Contents



The following table presents the assumptions used in valuing options granted during the three
months ended June 30, 2008 and 2007:
 June 30,
    
    June 30,2008
    
    2007Weighted average fair value
    
    $
    6.98
    
    
    $
    5.98Assumptions used:Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    41.21
    %
    
    
    37.90
    %Risk-free interest rate
    
    
    3.51
    %
    
    
    4.53
    %Expected life
    
    6.5 years
    
    6 years
 As of June 30, 2008, options to purchase 1,422,267 shares were outstanding under the 2004
Stock Incentive Plan and other specific agreements. Changes in stock options during the six
months ended June 30, 2008, are as follows:
 Weighted-Weighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicEmployee and Director Stock Options
    
    Shares
    
    Price
    
    Term
    
    ValueOptions outstanding at December 31, 2007
    
    
    1,527,830
    
    
    $
    13.56Granted
    
    
    28,755
    
    
    $
    14.40Exercised
    
    
    (66,517
    )
    
    $
    12.90Forfeited or expired
    
    
    (67,801
    )
    
    $
    (13.10
    )Options outstanding at June 30, 2008
    
    
    1,422,267
    
    
    $
    13.63
    
    
    
    7.2
    
    
    $
    1,954Options exercisable at June 30, 2008
    
    
    732,353
    
    
    $
    13.44
    
    
    
    6.5
    
    
    $
    1,142
 The 66,517 options were exercised in the three-month period ended June 30, 2008. In the
prior year, 11,582 options were exercised in the six months ended June 30, 2007, with all
exercised in the three months ended June 30, 2007. The value of the options exercised in the
six-month period ended June 30, 2008 and 2007 was $858 and $146,
respectively. The fair value of options vested during the three-month and six month periods
ended June 30, 2008 was $43 and $669, respectively.The Company also granted 189,010 restricted shares in May 2008 to various employees which
vest if established performance targets related to return on invested operating capital are
achieved for the 3 year period ending December 31, 2010.At June 30, 2008, the total stock-based compensation cost related to non-vested awards not
yet recognized was approximately $5,319 and the weighted average period over which this
amount is expected to be recognized was approximately 2.38 years.
 14




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##### Table of Contents



13.
    
    Earnings (Loss) Per ShareThe calculation of net income (loss) per share follows:
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator:Income (loss) applicable to common sharesContinuing operations
    
    $
    6,245
    
    
    $
    1,472
    
    
    $
    10,962
    
    
    $
    2,735Discontinued operations
    
    
    (283
    )
    
    
    176
    
    
    
    (475
    )
    
    
    317Net income
    
    $
    5,962
    
    
    $
    1,648
    
    
    $
    10,487
    
    
    $
    3,052Denominator:Weighted average shares for basic earnings per share
    
    
    13,386,944
    
    
    
    13,343,865
    
    
    
    13,378,993
    
    
    
    13,341,090Dilutive effect of stock options
    
    
    108,192
    
    
    
    170,227
    
    
    
    23,803
    
    
    
    52,389Weighted average shares for diluted earnings per share
    
    
    13,495,136
    
    
    
    13,514,092
    
    
    
    13,402,796
    
    
    
    13,393,479Basic and diluted income (loss) per share amounts:Continuing operations
    
    $
    0.47
    
    
    $
    0.11
    
    
    $
    0.82
    
    
    $
    0.21Discontinued operations
    
    $
    (0.03
    )
    
    $
    0.01
    
    
    $
    (0.04
    )
    
    $
    0.02Net income
    
    $
    0.44
    
    
    $
    0.12
    
    
    $
    0.78
    
    
    $
    0.23Diluted income (loss) per share amounts:Continuing operations
    
    $
    0.47
    
    
    $
    0.11
    
    
    $
    0.82
    
    
    $
    0.21Discontinued operations
    
    $
    (0.03
    )
    
    $
    0.01
    
    
    $
    (0.04
    )
    
    $
    0.02Net income
    
    $
    0.44
    
    
    $
    0.12
    
    
    $
    0.78
    
    
    $
    0.23
 14.
    
    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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Components of the net periodic benefit cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest Cost
    
    
    311
    
    
    
    312
    
    
    
    52
    
    
    
    138Expected return on plan assets
    
    
    (311
    )
    
    
    (312
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    
    
    
    $
    
    
    
    $
    52
    
    
    $
    138
 Pension Benefits
    
    
    Other Postretirement BenefitsSix Months Ended June 30,
    
    
    Six Months Ended June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Components of the net periodic benefit
cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest Cost
    
    
    622
    
    
    
    624
    
    
    
    104
    
    
    
    276Expected return on plan assets
    
    
    (622
    )
    
    
    (624
    )
    
    
    
    
    
    
    Recognized
(gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic
benefit cost
    
    $
    
    
    
    $
    
    
    
    $
    104
    
    
    $
    276
 15.
    
    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/Middle East and Asia-Pacific.
 15




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##### Table of Contents



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 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Net Sales:Americas
    
    $
    97,577
    
    
    $
    94,037
    
    
    $
    193,078
    
    
    $
    181,725Europe/Middle East
    
    
    10,545
    
    
    
    8,833
    
    
    
    20,707
    
    
    
    17,574Asia-Pacific
    
    
    34,013
    
    
    
    24,311
    
    
    
    59,117
    
    
    
    43,989$
    142,135
    
    
    $
    127,181
    
    
    $
    272,902
    
    
    $
    243,288
 June 30,
    
    
    December 31,2008
    
    
    2007Identifiable Assets (excluding
working capital and intangibles):Americas
    
    $
    38,542
    
    
    $
    39,955Europe/Middle East
    
    
    2,037
    
    
    
    1,860Asia-Pacific
    
    
    9,857
    
    
    
    8,831$
    50,436
    
    
    $
    50,646
 16.
    
    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, 2008, the
maximum payment to satisfy the put option is approximately $1,000 based on the formula in
the agreement.17.
    
    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-guarantors as of June
30, 2008 and December 31, 2007, 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:
 16




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
JUNE 30, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    6,886
    
    
    $
    3,581
    
    
    $
    
    
    
    $
    10,467Accounts receivable, net
    
    
    
    
    
    
    83,635
    
    
    
    12,362
    
    
    
    
    
    
    
    95,997Inventories
    
    
    
    
    
    
    86,524
    
    
    
    13,052
    
    
    
    
    
    
    
    99,576Prepaid expenses and other
    
    
    
    
    
    
    7,579
    
    
    
    2
    
    
    
    
    
    
    
    7,581Assets held for sale
    
    
    
    
    
    
    
    
    
    
    1,423
    
    
    
    
    
    
    
    1,423Current deferred tax assets
    
    
    
    
    
    
    2,721
    
    
    
    
    
    
    
    
    
    
    
    2,721Total current assets
    
    
    
    
    
    
    187,345
    
    
    
    30,420
    
    
    
    
    
    
    
    217,765Property, plant and equipment, net
    
    
    
    
    
    
    37,398
    
    
    
    8,934
    
    
    
    
    
    
    
    46,332Goodwill
    
    
    
    
    
    
    190,093
    
    
    
    
    
    
    
    
    
    
    
    190,093Intangibles, net
    
    
    
    
    
    
    54,759
    
    
    
    7,205
    
    
    
    
    
    
    
    61,964Other assets
    
    
    2,802
    
    
    
    1,452
    
    
    
    
    
    
    
    
    
    
    
    4,254Investment in and advances to subsidiaries
    
    
    210,835
    
    
    
    
    
    
    
    
    
    
    
    (210,835
    )
    
    
    Total assets
    
    $
    213,637
    
    
    $
    471,047
    
    
    $
    46,559
    
    
    $
    (210,835
    )
    
    $
    520,408LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital and second-lien facility
    
    $
    
    
    
    $
    17,187
    
    
    $
    
    
    
    $
    
    
    
    $
    17,187Current maturities of long-term obligations
    
    
    
    
    
    
    1,646
    
    
    
    269
    
    
    
    
    
    
    
    1,915Accounts payable
    
    
    
    
    
    
    40,662
    
    
    
    6,573
    
    
    
    
    
    
    
    47,235Accrued and other liabilities
    
    
    
    
    
    
    27,972
    
    
    
    2,607
    
    
    
    
    
    
    
    30,579Accrued interest
    
    
    7,097
    
    
    
    173
    
    
    
    
    
    
    
    
    
    
    
    7,270Income taxes payable
    
    
    
    
    
    
    4,996
    
    
    
    604
    
    
    
    
    
    
    
    5,600Deferred tax liability
    
    
    
    
    
    
    2,667
    
    
    
    
    
    
    
    
    
    
    
    2,667Liabilities applicable to assets held for sale
    
    
    
    
    
    
    
    
    
    
    5,235
    
    
    
    
    
    
    
    5,235Total current liabilities
    
    
    7,097
    
    
    
    95,303
    
    
    
    15,288
    
    
    
    
    
    
    
    117,688Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    21,514
    
    
    
    514
    
    
    
    
    
    
    
    197,028Deferred tax liabilities
    
    
    
    
    
    
    56,899
    
    
    
    
    
    
    
    
    
    
    
    56,899Other long-term liabilities
    
    
    1
    
    
    
    12,054
    
    
    
    632
    
    
    
    
    
    
    
    12,687Minority interest
    
    
    
    
    
    
    
    
    
    
    550
    
    
    
    
    
    
    
    550Shareholders equity (deficit):Common stock
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Additional paid-in-capital
    
    
    188,582
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,582Retained earnings (accumulated deficit)
    
    
    (69,466
    )
    
    
    40,751
    
    
    
    (83,845
    )
    
    
    43,094
    
    
    
    (69,466
    )Accumulated other comprehensive income (loss)
    
    
    25,030
    
    
    
    (33,901
    )
    
    
    39,193
    
    
    
    (14,016
    )
    
    
    16,306Total shareholders equity (deficit)
    
    
    144,280
    
    
    
    6,850
    
    
    
    (44,652
    )
    
    
    29,078
    
    
    
    135,556Net equity (deficit) and advances to / from subsidiaries
    
    
    (112,741
    )
    
    
    278,427
    
    
    
    74,227
    
    
    
    (239,913
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    213,637
    
    
    $
    471,047
    
    
    $
    46,559
    
    
    $
    (210,835
    )
    
    $
    520,408
 17




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2007
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    14,636
    
    
    $
    1,523
    
    
    $
    
    
    
    $
    16,159Accounts receivable, net
    
    
    
    
    
    
    75,163
    
    
    
    8,689
    
    
    
    
    
    
    
    83,852Inventories
    
    
    (115
    )
    
    
    80,449
    
    
    
    10,627
    
    
    
    
    
    
    
    90,961Prepaid expenses and other
    
    
    
    
    
    
    5,271
    
    
    
    876
    
    
    
    
    
    
    
    6,147Assets held for sale
    
    
    
    
    
    
    
    
    
    
    2,023
    
    
    
    
    
    
    
    2,023Current deferred tax assets
    
    
    
    
    
    
    2,721
    
    
    
    
    
    
    
    
    
    
    
    2,721Total current assets
    
    
    (115
    )
    
    
    178,240
    
    
    
    23,738
    
    
    
    
    
    
    
    201,863Property, plant and equipment, net
    
    
    
    
    
    
    36,464
    
    
    
    7,892
    
    
    
    
    
    
    
    44,356Goodwill
    
    
    
    
    
    
    182,163
    
    
    
    
    
    
    
    
    
    
    
    182,163Intangibles, net
    
    
    
    
    
    
    58,195
    
    
    
    5,009
    
    
    
    
    
    
    
    63,204Other assets
    
    
    4,170
    
    
    
    1,671
    
    
    
    
    
    
    
    
    
    
    
    5,841Investment in and advances to subsidiaries
    
    
    181,271
    
    
    
    
    
    
    
    
    
    
    
    (181,271
    )
    
    
    Total assets
    
    $
    185,326
    
    
    $
    456,733
    
    
    $
    36,639
    
    
    $
    (181,271
    )
    
    $
    497,427LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital and second-lien facility
    
    $
    
    
    
    $
    12,658
    
    
    $
    
    
    
    $
    
    
    
    $
    12,658Current maturities of long-term obligations
    
    
    
    
    
    
    8,578
    
    
    
    200
    
    
    
    
    
    
    
    8,778Accounts payable
    
    
    
    
    
    
    27,636
    
    
    
    3,941
    
    
    
    
    
    
    
    31,577Accrued and other liabilities
    
    
    
    
    
    
    26,736
    
    
    
    2,090
    
    
    
    
    
    
    
    28,826Accrued interest
    
    
    7,741
    
    
    
    291
    
    
    
    
    
    
    
    
    
    
    
    8,032Income taxes payable
    
    
    
    
    
    
    4,178
    
    
    
    486
    
    
    
    
    
    
    
    4,664Deferred tax liability
    
    
    
    
    
    
    2,667
    
    
    
    
    
    
    
    
    
    
    
    2,667Liabilities applicable to assets held for sale
    
    
    
    
    
    
    
    
    
    
    7,417
    
    
    
    
    
    
    
    7,417Total current liabilities
    
    
    7,741
    
    
    
    82,744
    
    
    
    14,134
    
    
    
    
    
    
    
    104,619Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    37,650
    
    
    
    492
    
    
    
    
    
    
    
    213,142Deferred tax liabilities
    
    
    
    
    
    
    44,306
    
    
    
    
    
    
    
    
    
    
    
    44,306Other long-term liabilities
    
    
    296
    
    
    
    12,136
    
    
    
    557
    
    
    
    
    
    
    
    12,989Minority interest
    
    
    
    
    
    
    
    
    
    
    287
    
    
    
    
    
    
    
    287Shareholders equity (deficit):Common stock
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Additional paid-in-capital
    
    
    186,830
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,830Retained earnings (accumulated deficit)
    
    
    (79,953
    )
    
    
    11,306
    
    
    
    (71,860
    )
    
    
    60,554
    
    
    
    (79,953
    )Accumulated other comprehensive income (loss)
    
    
    15,073
    
    
    
    (12,296
    )
    
    
    20,937
    
    
    
    (8,641
    )
    
    
    15,073Total shareholders equity (deficit)
    
    
    122,084
    
    
    
    (990
    )
    
    
    (50,923
    )
    
    
    51,913
    
    
    
    122,084Net equity (deficit) and advances to / from subsidiaries
    
    
    (119,795
    )
    
    
    280,887
    
    
    
    72,092
    
    
    
    (233,184
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    185,326
    
    
    $
    456,733
    
    
    $
    36,639
    
    
    $
    (181,271
    )
    
    $
    497,427
 18




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    306,104
    
    
    $
    23,181
    
    
    $
    (56,383
    )
    
    $
    272,902Cost of goods sold
    
    
    
    
    
    
    223,514
    
    
    
    16,758
    
    
    
    (56,816
    )
    
    
    183,456Gross margin
    
    
    
    
    
    
    82,590
    
    
    
    6,423
    
    
    
    433
    
    
    
    89,446Selling, general and administrative expenses
    
    
    550
    
    
    
    53,882
    
    
    
    2,693
    
    
    
    
    
    
    
    57,125Amortization of intangibles
    
    
    
    
    
    
    1,335
    
    
    
    1
    
    
    
    
    
    
    
    1,336Net periodic postretirement benefits
    
    
    
    
    
    
    104
    
    
    
    
    
    
    
    
    
    
    
    104Operating income (loss)
    
    
    (550
    )
    
    
    27,269
    
    
    
    3,729
    
    
    
    433
    
    
    
    30,881Other income (expense):Interest, net
    
    
    (8,320
    )
    
    
    (2,301
    )
    
    
    (36
    )
    
    
    
    
    
    
    (10,657
    )Amortization of deferred financing costs
    
    
    (250
    )
    
    
    (218
    )
    
    
    
    
    
    
    
    
    
    
    (468
    )Equity in net income (loss) of subsidiaries
    
    
    19,607
    
    
    
    
    
    
    
    
    
    
    
    (19,607
    )
    
    
    Minority interest
    
    
    
    
    
    
    (121
    )
    
    
    
    
    
    
    
    
    
    
    (121
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    10,487
    
    
    
    24,629
    
    
    
    3,693
    
    
    
    (19,174
    )
    
    
    19,635Income tax provision
    
    
    
    
    
    
    7,944
    
    
    
    729
    
    
    
    
    
    
    
    8,673Income (loss) from continuing operations
    
    
    10,487
    
    
    
    16,685
    
    
    
    2,964
    
    
    
    (19,174
    )
    
    
    10,962Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (475
    )
    
    
    
    
    
    
    (475
    )Net income (loss)
    
    $
    10,487
    
    
    $
    16,685
    
    
    $
    2,489
    
    
    $
    (19,174
    )
    
    $
    10,487
 19




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    160,103
    
    
    $
    14,859
    
    
    $
    (32,827
    )
    
    $
    142,135Cost of goods sold
    
    
    
    
    
    
    116,606
    
    
    
    11,184
    
    
    
    (32,822
    )
    
    
    94,968Gross margin
    
    
    
    
    
    
    43,497
    
    
    
    3,675
    
    
    
    (5
    )
    
    
    47,167Selling, general and administrative expenses
    
    
    640
    
    
    
    27,609
    
    
    
    1,425
    
    
    
    
    
    
    
    29,674Amortization of intangibles
    
    
    
    
    
    
    668
    
    
    
    1
    
    
    
    
    
    
    
    669Net periodic postretirement benefits
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Operating income (loss)
    
    
    (640
    )
    
    
    15,168
    
    
    
    2,249
    
    
    
    (5
    )
    
    
    16,772Other income (expense):Interest, net
    
    
    (4,260
    )
    
    
    (1,044
    )
    
    
    (19
    )
    
    
    
    
    
    
    (5,323
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    (234
    )Equity in net income (loss) of subsidiaries
    
    
    10,987
    
    
    
    
    
    
    
    
    
    
    
    (10,987
    )
    
    
    Minority interest
    
    
    
    
    
    
    (69
    )
    
    
    
    
    
    
    
    
    
    
    (69
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    5,962
    
    
    
    13,946
    
    
    
    2,230
    
    
    
    (10,992
    )
    
    
    11,146Income tax provision
    
    
    
    
    
    
    4,643
    
    
    
    258
    
    
    
    
    
    
    
    4,901Income (loss) from continuing operations
    
    
    5,962
    
    
    
    9,303
    
    
    
    1,972
    
    
    
    (10,992
    )
    
    
    6,245Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (283
    )
    
    
    
    
    
    
    (283
    )Net income (loss)
    
    $
    5,962
    
    
    $
    9,303
    
    
    $
    1,689
    
    
    $
    (10,992
    )
    
    $
    5,962
 20




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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
    
    $
    
    
    
    $
    275,851
    
    
    $
    15,554
    
    
    $
    (48,117
    )
    
    $
    243,288Cost of goods sold
    
    
    
    
    
    
    204,580
    
    
    
    11,253
    
    
    
    (48,081
    )
    
    
    167,752Gross margin
    
    
    
    
    
    
    71,271
    
    
    
    4,301
    
    
    
    (36
    )
    
    
    75,536Selling, general and administrative expenses
    
    
    713
    
    
    
    50,709
    
    
    
    945
    
    
    
    
    
    
    
    52,367Amortization of intangibles
    
    
    
    
    
    
    1,452
    
    
    
    
    
    
    
    
    
    
    
    1,452Net periodic postretirement benefits
    
    
    
    
    
    
    276
    
    
    
    
    
    
    
    
    
    
    
    276Operating income (loss)
    
    
    (713
    )
    
    
    18,834
    
    
    
    3,356
    
    
    
    (36
    )
    
    
    21,441Other 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
    
    
    
    13,423
    
    
    
    3,279
    
    
    
    (16,891
    )
    
    
    6,351Income tax provision (benefit)
    
    
    
    
    
    
    2,422
    
    
    
    1,194
    
    
    
    
    
    
    
    3,616Income (loss) from continuing operations
    
    
    6,540
    
    
    
    11,001
    
    
    
    2,085
    
    
    
    (16,891
    )
    
    
    2,735Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    317
    
    
    
    
    
    
    
    317Net income (loss)
    
    $
    6,540
    
    
    $
    11,001
    
    
    $
    2,402
    
    
    $
    (16,891
    )
    
    $
    3,052
 21




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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
    
    $
    
    
    
    $
    137,216
    
    
    $
    7,979
    
    
    $
    (18,014
    )
    
    $
    127,181Cost of goods sold
    
    
    
    
    
    
    101,938
    
    
    
    5,767
    
    
    
    (18,260
    )
    
    
    89,445Gross margin
    
    
    
    
    
    
    35,278
    
    
    
    2,212
    
    
    
    246
    
    
    
    37,736Selling, general and administrative expenses
    
    
    335
    
    
    
    25,605
    
    
    
    474
    
    
    
    
    
    
    
    26,414Amortization of intangibles
    
    
    
    
    
    
    726
    
    
    
    
    
    
    
    
    
    
    
    726Net periodic postretirement benefits
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Operating income (loss)
    
    
    (335
    )
    
    
    8,809
    
    
    
    1,738
    
    
    
    246
    
    
    
    10,458Other 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
    
    
    
    6,036
    
    
    
    1,690
    
    
    
    (10,057
    )
    
    
    2,805Income tax provision
    
    
    
    
    
    
    357
    
    
    
    976
    
    
    
    
    
    
    
    1,333Income (loss) from continuing operations
    
    
    5,136
    
    
    
    5,679
    
    
    
    714
    
    
    
    (10,057
    )
    
    
    1,472Income from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    176
    
    
    
    
    
    
    
    176Net income (loss)
    
    $
    5,136
    
    
    $
    5,679
    
    
    $
    890
    
    
    $
    (10,057
    )
    
    $
    1,648
 22




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    9,977
    
    
    $
    38,053
    
    
    $
    (10,968
    )
    
    $
    (16,985
    )
    
    $
    20,077Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,205
    )
    
    
    (427
    )
    
    
    
    
    
    
    (4,632
    )Proceeds from sales of assets
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500Purchase of outside interest in joint venture
    
    
    824
    
    
    
    
    
    
    
    (3,837
    )
    
    
    
    
    
    
    (3,013
    )Other
    
    
    
    
    
    
    (95
    )
    
    
    (253
    )
    
    
    
    
    
    
    (348
    )Net cash provided by (used in) investing activities
    
    
    824
    
    
    
    (3,800
    )
    
    
    (4,517
    )
    
    
    
    
    
    
    (7,493
    )Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    
    
    
    
    16,145
    
    
    
    
    
    
    
    
    
    
    
    16,145Repayments under revolving credit facility
    
    
    
    
    
    
    (11,616
    )
    
    
    
    
    
    
    
    
    
    
    (11,616
    )Borrowings of other credit facilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of other credit facilities
    
    
    
    
    
    
    (22,731
    )
    
    
    42
    
    
    
    
    
    
    
    (22,689
    )Changes in net equity and advances to / from discontinued operations
    
    
    (12,553
    )
    
    
    (24,868
    )
    
    
    17,374
    
    
    
    16,985
    
    
    
    (3,062
    )Other
    
    
    1,752
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,752Net cash provided by (used in) financing activities
    
    
    (10,801
    )
    
    
    (43,070
    )
    
    
    17,416
    
    
    
    16,985
    
    
    
    (19,470
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    1,068
    
    
    
    126
    
    
    
    
    
    
    
    1,194Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (7,749
    )
    
    
    2,057
    
    
    
    
    
    
    
    (5,692
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    (2,382
    )
    
    
    
    
    
    
    (2,382
    )Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    500Net cash provided by financing activities
    
    
    
    
    
    
    
    
    
    
    1,581
    
    
    
    
    
    
    
    1,581Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    26
    
    
    
    
    
    
    
    26Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (275
    )
    
    
    
    
    
    
    (275
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (7,749
    )
    
    
    1,782
    
    
    
    
    
    
    
    (5,967
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    14,637
    
    
    
    1,798
    
    
    
    
    
    
    
    16,435Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    6,888
    
    
    $
    3,580
    
    
    $
    
    
    
    $
    10,468
 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
    
    
    $
    (4,934
    )
    
    $
    (1,045
    )
    
    $
    (596
    )
    
    $
    (3,269
    )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 (used in) investing
activities
    
    
    (46
    )
    
    
    9,346
    
    
    
    (463
    )
    
    
    
    
    
    
    8,837Cash flows from financing activities:Borrowings under revolving credit
facility
    
    
    
    
    
    
    19,884
    
    
    
    157
    
    
    
    
    
    
    
    20,041Repayments under revolving credit
facility
    
    
    
    
    
    
    (12,244
    )
    
    
    
    
    
    
    
    
    
    
    (12,244
    )Borrowings of other credit facilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of other credit facilities
    
    
    
    
    
    
    (14,502
    )
    
    
    (31
    )
    
    
    
    
    
    
    (14,533
    )Changes in net equity and advances to /
from subsidiaries
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Changes in net equity and advances to /
from discontinued operations
    
    
    (4,194
    )
    
    
    677
    
    
    
    1,461
    
    
    
    596
    
    
    
    (1,460
    )Other
    
    
    934
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    934Net cash provided by (used in) financing
activities
    
    
    (3,260
    )
    
    
    (6,185
    )
    
    
    1,587
    
    
    
    596
    
    
    
    (7,262
    )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
    
    
    
    
    
    
    
    
    
    
    (621
    )
    
    
    
    
    
    
    (621
    )Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    (871
    )
    
    
    
    
    
    
    (871
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    1,670
    
    
    
    
    
    
    
    1,670Effect of exchange rate changes on cash
and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    (9
    )Net cash provided by 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



Item 2.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Overview
      Cautionary Statement Concerning Forward-looking Statements
  25




---



##### Table of Contents



Key Indicators
    RESULTS OF OPERATIONS
 Discontinued Operations
 Net sales
 Three Months Ended June 30,
    
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    % Change
    
    
    2008
    
    
    2007
    
    
    % ChangeNet sales summary:U.S. net sales
    
    $
    74,404
    
    
    $
    74,739
    
    
    
    (0.4
    %)
    
    $
    150,898
    
    
    $
    146,933
    
    
    
    2.7
    %International net sales
    
    
    67,731
    
    
    
    52,442
    
    
    
    29.2
    %
    
    
    122,004
    
    
    
    96,355
    
    
    
    26.6
    %Consolidated net sales
    
    $
    142,135
    
    
    $
    127,181
    
    
    
    11.8
    %
    
    $
    272,902
    
    
    $
    243,288
    
    
    
    12.2
    %
   26




---



##### Table of Contents



Gross margin
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeGross margin
    
    $
    47,167
    
    
    $
    37,736
    
    
    
    25.0
    %
    
    $
    89,446
    
    
    $
    75,536
    
    
    
    18.4
    %
   Selling, general and administrative expenses
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeSelling, general and administrative expenses
    
    $
    29,674
    
    
    $
    26,414
    
    
    
    12.3
    %
    
    $
    57,125
    
    
    $
    52,367
    
    
    
    9.1
    %
   Interest expense
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeInterest expense
    
    $
    5,323
    
    
    $
    7,269
    
    
    
    (26.8
    %)
    
    $
    10,657
    
    
    $
    14,331
    
    
    
    (25.6
    %)
   27




---



##### Table of Contents



Income tax provision
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeIncome tax provision
    
    $
    4,901
    
    
    $
    1,333
    
    
    
    267.7
    %
    
    $
    8,673
    
    
    $
    3,616
    
    
    
    139.9
    %
   Income (loss) from discontinued operations
 Three Months Ended June 30,
    
    
    
    
    
    Six Months Ended June 30,(Dollars in thousands)
    
    2008
    
    2007
    
    % Change
    
    2008
    
    2007
    
    % ChangeIncome (loss) from discontinued operations
    
    $
    (283
    )
    
    $
    176
    
    
    
    (260.8
    %)
    
    $
    (475
    )
    
    $
    317
    
    
    
    (249.8
    %)
   RECENT ACCOUNTING PRONOUNCEMENTS
 Business Combinations
 Noncontrolling Interests
 28




---



##### Table of Contents



Disclosures about Derivative Instruments and Hedging Activities.
 LIQUIDITY AND CAPITAL RESOURCES
   (Dollars in thousands)
    
    Six months endedJune 30,2008
    
    
    2007Net cash provided by (used in) continuing operations :Operating activities
    
    $
    20,077
    
    
    $
    (3,269
    )Investing activities
    
    
    (7,493
    )
    
    
    8,837Financing activities
    
    
    (19,470
    )
    
    
    (7,262
    )Effect of exchange rates
    
    
    1,194
    
    
    
    445Cash used in continuing operations
    
    $
    (5,692
    )
    
    $
    (1,249
    )
 Operating Activities
  Investing Activities
   29




---



##### Table of Contents



Financing Activities
    
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    Derivative Instruments
  
 Item 4. Controls and Procedures
  30




---



##### Table of Contents



31




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##### Table of Contents



Item 1. Legal Proceedings
 Contingencies
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Board of Director
    
    For
    
    WithheldPaul D. Melnuk
    
    
    12,650,351
    
    
    
    1,000J. Joe Adorjan
    
    
    12,651,351
    
    
    
    0Andrew L. Berger
    
    
    12,351,351
    
    
    
    0James B. Gamache
    
    
    12,650,351
    
    
    
    1,000Marnie S. Gordon
    
    
    12,651,001
    
    
    
    350Bradley G. Pattelli
    
    
    12,651,351
    
    
    
    0
   
 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))
 32




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:
    
    /s/ Steven A. SchummSteven A. SchummChief Financial and Administrative Officer(Principal Financial and Accounting Officer)
  33