##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended September 30, 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
    
    (I.R.S. Employer Identification No.)Organization)16052 Swingley Ridge Road, Suite 300,Chesterfield, MO
    
    63017(Address of Principal Executive Offices)
    
    (Zip Code)
 (636) 728-3000
 þ o
  o 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
    
    
    6-26Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    27-33Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    33-34Item 4. Controls and Procedures
    
    
    34PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    35Item 6. Exhibits
    
    
    35SIGNATURES
    
    
    36Executive Employment Agreement between Thermadyne Holdings Corporation and Terry A. Moody, dated July 12, 2007First Amendment to Lease Agreement between 2800 Airport Road Limited Partnership and Victor Equipment Company, dated August 1, 2007Second Amendment to Lease Agreement between Benning Street, LLC and Thermal Dynamics Corporation, dated August 1, 2007CEO Certification Pursuant to Section 302CFO Certification Pursuant to Section 302CEO Certification Pursuant to Section 906CFO Certification Pursuant to Section 906
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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)
 September 30,
    
    
    December 31,2007
    
    
    2006(Unaudited)Current Assets:Cash and cash equivalents
    
    $
    10,998
    
    
    $
    11,310Accounts receivable, less allowance for doubtful accounts of
$1,448 and $2,483, respectively
    
    
    90,965
    
    
    
    79,249Inventories
    
    
    100,834
    
    
    
    98,364Prepaid expenses and other
    
    
    6,748
    
    
    
    6,425Assets held for sale
    
    
    4,125
    
    
    
    16,493Deferred tax assets
    
    
    1,104
    
    
    
    1,104Total current assets
    
    
    214,774
    
    
    
    212,945Property, plant and equipment, net of accumulated depreciation
of $44,426 and $37,206, respectively
    
    
    44,745
    
    
    
    43,334Goodwill
    
    
    185,072
    
    
    
    189,282Intangibles, net
    
    
    64,176
    
    
    
    65,931Other assets
    
    
    6,160
    
    
    
    6,633Total assets
    
    $
    514,927
    
    
    $
    518,125Current Liabilities:Working Capital Facility
    
    $
    27,601
    
    
    $
    17,606Current maturities of long-term obligations
    
    
    3,436
    
    
    
    1,378Accounts payable
    
    
    34,819
    
    
    
    32,298Accrued and other liabilities
    
    
    30,799
    
    
    
    34,519Accrued interest
    
    
    3,856
    
    
    
    8,252Income taxes payable
    
    
    3,902
    
    
    
    1,248Liabilities related to assets held for sale
    
    
    7,526
    
    
    
    11,279Total current liabilities
    
    
    111,939
    
    
    
    106,580Long-term obligations, less current maturities
    
    
    219,980
    
    
    
    238,012Deferred tax liabilities
    
    
    45,812
    
    
    
    46,456Other long-term liabilities
    
    
    22,647
    
    
    
    23,266Minority interest
    
    
    322
    
    
    
    307Stockholders equity:Common stock, $0.01 par value:Authorized
 25,000,000 sharesIssued and outstanding  13,365,848 shares at September 30, 2007 and
13,335,517 shares at December 31, 2006
    
    
    134
    
    
    
    133Additional paid-in capital
    
    
    186,391
    
    
    
    184,804Accumulated deficit
    
    
    (84,520
    )
    
    
    (88,618
    )Accumulated other comprehensive income
    
    
    12,222
    
    
    
    7,185Total stockholders equity
    
    
    114,227
    
    
    
    103,504Total liabilities and stockholders equity
    
    $
    514,927
    
    
    $
    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 September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    126,609
    
    
    $
    113,681
    
    
    $
    372,258
    
    
    $
    339,900Cost of goods sold
    
    
    88,497
    
    
    
    80,158
    
    
    
    257,766
    
    
    
    242,178Gross margin
    
    
    38,112
    
    
    
    33,523
    
    
    
    114,492
    
    
    
    97,722Selling, general and administrative expenses
    
    
    27,234
    
    
    
    28,843
    
    
    
    80,256
    
    
    
    82,442Amortization of intangibles
    
    
    735
    
    
    
    724
    
    
    
    2,187
    
    
    
    2,168Net periodic postretirement benefits
    
    
    138
    
    
    
    528
    
    
    
    414
    
    
    
    1,584Operating income
    
    
    10,005
    
    
    
    3,428
    
    
    
    31,635
    
    
    
    11,528Other expenses:Interest
    
    
    (6,656
    )
    
    
    (6,923
    )
    
    
    (20,987
    )
    
    
    (19,384
    )Amortization of deferred financing costs
    
    
    (369
    )
    
    
    (329
    )
    
    
    (1,075
    )
    
    
    (993
    )Minority interest
    
    
    59
    
    
    
    (21
    )
    
    
    6
    
    
    
    (96
    )Income (loss) from continuing operations before
income tax provision and discontinued operations
    
    
    3,039
    
    
    
    (3,845
    )
    
    
    9,579
    
    
    
    (8,945
    )Income tax provision
    
    
    1,728
    
    
    
    1,728
    
    
    
    5,344
    
    
    
    3,829Income (loss) from continuing operations
    
    
    1,311
    
    
    
    (5,573
    )
    
    
    4,235
    
    
    
    (12,774
    )Income (loss) from discontinued operations, net of tax
    
    
    (265
    )
    
    
    (167
    )
    
    
    (137
    )
    
    
    365Net income (loss)
    
    $
    1,046
    
    
    $
    (5,740
    )
    
    $
    4,098
    
    
    $
    (12,409
    )Basic and diluted income (loss) per share:Continuing operations
    
    $
    0.09
    
    
    $
    (0.42
    )
    
    $
    0.31
    
    
    $
    (0.96
    )Discontinued operations
    
    
    (0.02
    )
    
    
    (0.01
    )
    
    
    (0.01
    )
    
    
    0.03Net income (loss)
    
    $
    0.07
    
    
    $
    (0.43
    )
    
    $
    0.30
    
    
    $
    (0.93
    )
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Nine Months Ended September 30,2007
    
    
    2006Cash flows from continuing operationsCash flows from operating activities:Net income (loss)
    
    $
    4,098
    
    
    $
    (12,409
    )Adjustments to reconcile net income (loss) to net cash used in operating
activities:(Income) loss from discontinued operations
    
    
    137
    
    
    
    (365
    )Minority interest
    
    
    (6
    )
    
    
    96Depreciation and amortization
    
    
    9,830
    
    
    
    12,299Deferred taxes
    
    
    553
    
    
    
    (2,115
    )Changes in operating assets and liabilities
    
    
    (13,565
    )
    
    
    (20,240
    )Other, net
    
    
    (1,480
    )
    
    
    2,486Net cash used in operating activities
    
    
    (433
    )
    
    
    (20,248
    )Cash flows from investing activities:Capital expenditures
    
    
    (8,668
    )
    
    
    (4,372
    )Net proceeds from sales of assets
    
    
    13,783
    
    
    
    16,455Purchase of minority interest
    
    
    
    
    
    
    (3,954
    )Other
    
    
    (983
    )
    
    
    Net cash provided by investing activities
    
    
    4,132
    
    
    
    8,129Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    20,041
    
    
    
    9,357Repayments under Working Capital Facility
    
    
    (10,046
    )
    
    
    (15,998
    )Borrowings under other credit facilities
    
    
    
    
    
    
    21,256Repayments under other credit facilities
    
    
    (14,940
    )
    
    
    (7,716
    )Advances from (to) from discontinued operations
    
    
    (1,523
    )
    
    
    557Other, net
    
    
    1,588
    
    
    
    1,548Net cash provided by (used in) financing activities
    
    
    (4,880
    )
    
    
    9,004Effect of exchange rate changes on cash and cash equivalents
    
    
    869
    
    
    
    572Net cash used in continuing operations
    
    
    (312
    )
    
    
    (2,543
    )Cash flows from discontinued operationsNet cash provided by operating activities
    
    
    473
    
    
    
    1,191Net cash used in investing activities
    
    
    (929
    )
    
    
    (1,208
    )Net cash used in financing activities
    
    
    569
    
    
    
    (1,405
    )Effect of exchange rates on cash and cash equivalents
    
    
    10
    
    
    
    (339
    )Net cash provided by (used in) discontinued operations
    
    
    123
    
    
    
    (1,761
    )Total decrease in cash and cash equivalents
    
    
    (189
    )
    
    
    (4,304
    )Total cash and cash equivalents beginning of period
    
    
    11,310
    
    
    
    15,562Total cash and cash equivalents end of period
    
    $
    11,121
    
    
    $
    11,258Continuing operationsCash and cash equivalents beginning of period
    
    $
    11,310
    
    
    $
    13,187Net cash used in continuing operations
    
    
    (312
    )
    
    
    (2,543
    )Cash and cash equivalents end of period
    
    $
    10,998
    
    
    $
    10,644Discontinued operationsCash and cash equivalents beginning of period
    
    $
    
    
    
    $
    2,375Net cash provided by (used in) discontinued operations
    
    
    123
    
    
    
    (1,761
    )Cash and cash equivalents end of period
    
    $
    123
    
    
    $
    614Income taxes paid
    
    $
    2,337
    
    
    $
    4,481Interest paid
    
    $
    23,698
    
    
    $
    22,880
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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 three months
and nine months ended September 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 nine months ended September 30,
2007 and 2006:
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Balance at beginning of period
    
    $
    3,306
    
    
    $
    2,938
    
    
    $
    2,978
    
    
    $
    3,007Charged to costs and expenses
    
    
    596
    
    
    
    856
    
    
    
    3,055
    
    
    
    2,203Deductions
    
    
    (781
    )
    
    
    (796
    )
    
    
    (2,912
    )
    
    
    (2,212
    )Balance at end of period
    
    $
    3,121
    
    
    $
    2,998
    
    
    $
    3,121
    
    
    $
    2,998
 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 $169,750 and $162,750 at September 30,
2007 and December 31, 2006, respectively, is based on available market information.
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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 No. 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 No. 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 nine months ended September 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 (net of $1,200 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
September 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 nine months ended September 30, 2007.During the second quarter of 2007, the Company recorded a $300 charge, net of tax, related to
its 2005 Soltec disposition as a result of reducing the net realizable value of
remaining tax recoveries 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 set forth certain information related to the South Africa, Brazil, Soltec,
and TecMo operations included in discontinued operations for the three month and nine month
periods ended September 30, 2007 and 2006:
 Three Months Ended September 30, 2007SouthAfrica
    
    Brazil
    
    Soltec
    
    TotalNet sales
    
    $
    
    
    
    $
    3,779
    
    
    
    
    
    
    $
    3,779Operating expenses
    
    
    
    
    
    
    (3,813
    )
    
    
    
    
    
    
    (3,813
    )Other expenses
    
    
    
    
    
    
    (163
    )
    
    
    
    
    
    
    (163
    )Adjustment in carrying value of related assets
and reserves, net of tax
    
    
    (37
    )
    
    
    
    
    
    
    (31
    )
    
    
    (68
    )Net loss from discontinued operations
    
    $
    (37
    )
    
    $
    (197
    )
    
    $
    (31
    )
    
    $
    (265
    )
 Nine Months Ended September 30, 2007SouthAfrica
    
    Brazil
    
    Soltec
    
    TotalNet sales
    
    $
    16,230
    
    
    $
    10,386
    
    
    
    
    
    
    $
    26,616Operating expenses
    
    
    (14,378
    )
    
    
    (10,986
    )
    
    
    
    
    
    
    (25,364
    )Other expenses
    
    
    (229
    )
    
    
    (272
    )
    
    
    
    
    
    
    (501
    )Income tax provision
    
    
    (515
    )
    
    
    
    
    
    
    
    
    
    
    (515
    )Adjustment in carrying value of related assets
and reserves, net of tax
    
    
    357
    
    
    
    (400
    )
    
    
    (330
    )
    
    
    (373
    )Net income (loss) from discontinued operations
    
    $
    1,465
    
    
    $
    (1,272
    )
    
    $
    (330
    )
    
    $
    (137
    )
 Three Months Ended September 30, 2006SouthAfrica
    
    Brazil
    
    TecMo
    
    TotalNet sales
    
    $
    9,674
    
    
    $
    3,932
    
    
    $
    
    
    
    $
    13,606Operating expenses
    
    
    (8,661
    )
    
    
    (4,654
    )
    
    
    
    
    
    
    (13,315
    )Other expenses
    
    
    (5
    )
    
    
    (157
    )
    
    
    
    
    
    
    (162
    )Income tax (provision) benefit
    
    
    (298
    )
    
    
    2
    
    
    
    
    
    
    
    (296
    )Net income (loss) from discontinued operations
    
    $
    710
    
    
    $
    (877
    )
    
    $
    
    
    
    $
    (167
    )
 Nine Months Ended September 30, 2006SouthAfrica
    
    Brazil
    
    TecMo
    
    TotalNet sales
    
    $
    26,127
    
    
    $
    11,634
    
    
    $
    2,774
    
    
    $
    40,535Operating expenses
    
    
    (22,871
    )
    
    
    (12,995
    )
    
    
    (2,789
    )
    
    
    (38,655
    )Other expenses
    
    
    (19
    )
    
    
    (726
    )
    
    
    (7
    )
    
    
    (752
    )Income tax (provision) benefit
    
    
    (506
    )
    
    
    11
    
    
    
    (268
    )
    
    
    (763
    )Net income (loss) from discontinued operations
    
    $
    2,731
    
    
    $
    (2,076
    )
    
    $
    (290
    )
    
    $
    365
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Selected balance sheet items for the discontinued operations classified as held for sale as
of September 30, 2007 and December 31, 2006 are as follows:
 At September 30,2007BrazilCash
    
    $
    123Accounts receivable
    
    
    630Inventories
    
    
    1,689Property and equipment, net
    
    
    1,338Goodwill and other intangible assets
    
    
    Other assets
    
    
    345$
    4,125Accounts payable and other liabilities
    
    $
    7,526
 At December 31, 2006SouthAfrica
    
    Brazil
    
    TotalAccounts receivable
    
    $
    4,984
    
    
    $
    569
    
    
    $
    5,553Inventories
    
    
    7,273
    
    
    
    2,252
    
    
    
    9,525Property and equipment, net
    
    
    
    
    
    
    1,109
    
    
    
    1,109Other 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:
 September 30,
    
    
    December 31,2007
    
    
    2006Raw materials and component parts
    
    $
    40,260
    
    
    $
    38,285Work-in-process
    
    
    13,312
    
    
    
    11,687Finished goods
    
    
    59,466
    
    
    
    58,072113,038
    
    
    
    108,044LIFO reserve
    
    
    (12,204
    )
    
    
    (9,680
    )$
    100,834
    
    
    $
    98,364
 Amounts reported for December 31, 2006 have been reclassified to be consistent with the
presentation at September 30, 2007. At December 31, 2006, $18,479 has been reclassified
from Work-in-process and $459 from Finished goods to Raw Materials. This reclassification
had no impact on the Companys consolidated financial statements for the periods presented
herein.
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##### Table of Contents



5.
    
    Intangible AssetsThe composition of intangibles was as follows:
 September 30,
    
    
    December 31,2007
    
    
    2006Goodwill
    
    $
    185,072
    
    
    $
    189,282Patents and customer relationships
    
    
    42,450
    
    
    
    42,019Trademarks
    
    
    33,403
    
    
    
    33,403260,925
    
    
    
    264,704Accumulated amortization of patents and
customer relationships
    
    
    (11,677
    )
    
    
    (9,491
    )$
    249,248
    
    
    $
    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.
Impairment is tested annually as of October 1 and as of September 30, 2007, the most
recent test found no impairment. 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 2007, there was no utilization of loss carryforwards.The change in the carrying amount of goodwill was as follows:
 CarryingAmountof 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
    
    
    (2,334
    )Foreign currency translation
    
    
    341Balance as of September 30, 2007
    
    $
    185,072
 Amortization of patents and customer relationships amounted to $735 and $2,187 for the three
month and nine month periods ended September 30, 2007, respectively, and to $724 and $2,168
of expense for the three month and nine month periods ended September 30, 2006.
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6.
    
    Debt and Capital Lease ObligationsThe composition of debt and capital lease obligations was as follows:
 September 30,
    
    
    December 31,2007
    
    
    2006Working Capital Facility
    
    $
    27,601
    
    
    $
    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
    
    
    11,920
    
    
    
    14,761Other
    
    
    496
    
    
    
    (371
    )251,017
    
    
    
    256,996Current maturities and working capital facility
    
    
    (31,037
    )
    
    
    (18,984
    )$
    219,980
    
    
    $
    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 and 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 September
30, 2007, $11,809 of letters of credit were outstanding. Unused availability was $42,057 as
of September 30, 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%. The 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.Changes in Capital Lease ObligationsDuring the third quarter of 2007, the Company amended its Denton, Texas (Denton) and West
Lebanon, New Hampshire (West Lebanon) office, manufacturing and warehouse facility leases
that were held by the same lessor.The amendment included revising certain monthly lease payments under the Denton lease,
extending the Denton existing lease commitment from June 30, 2013 to June 30, 2015 and
reducing the existing West Lebanon lease commitment from June 30, 2013 to June 30, 2011. In
addition, future renewal options were also revised to provide lease extensions options to
June 30, 2025 (from June 30, 2018) for the Denton lease and to June 30, 2021 (from June 30,
2018) for the West Lebanon lease.
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As a result of the above amendments, the Companys net investment in capital leases
(included in Property, Plant and Equipment in the consolidated financial statements) and
related obligations under these capital leases were reduced by $1,782. This non-cash
transaction had no impact on the Companys consolidated statement of cash flows.Senior Subordinated NotesThe Company is the issuer of $175,000 in aggregate principal of 91/4% Senior Subordinated
Notes due in 2014 (the Senior Subordinated Notes). The Senior Subordinated Notes are
unsecured senior subordinated obligations and are subordinated in right of payment to all
existing and future Senior Indebtedness (as defined in the indenture). Interest accrues at
the rate of 91/4% per annum and is payable semi-annually in arrears on February 1 and August 1
of each year. The Senior Subordinated Notes contain customary covenants and events of
default, including covenants that limit the Companys ability to incur debt, pay dividends
and make certain investments. In an amendment dated May 9, 2006, the Company is now
required, subject to certain conditions in the Amended GE Credit Agreement and Second Lien
Facility, to use the amount of Excess Cash Flow, as defined in the indenture, to either
permanently repay senior debt within 105 days after year end or purchase the Senior
Subordinated Notes through an offer of 101% of the principal amount thereof.In August 2006, the Company obtained consent to amend the indenture governing Senior
Subordinated Notes and to waive existing defaults under that indenture related to the late
filing of the Companys 2005 Form 10-K and first quarter 2006 Form 10-Q with the SEC. The
indenture was amended to provide for the payment of additional Special Interest on the
Senior Subordinated Notes, initially at a rate of 1.25% per annum. The Special Interest is
subject to adjustment increasing to 1.75% if the consolidated leverage ratio exceeds 6.00
with incremental interest increases to a maximum of 2.75% if the consolidated leverage ratio
increases to 7.0. The Special Interest declines to .75% if the consolidated leverage ratio
declines below 4.0 and declines incrementally to 0% if leverage is less than 3.0. The
Special Interest Adjustment calculated as of September 30, 2007 was 1.25%.The Notes are redeemable at the Companys option during the 12 month periods beginning on
February 1, 2009 at 104.625%, February 1, 2010 at 103.083%, February 1, 2011 at 101.542%,
and after February 1, 2012 at 100% of the principal amount thereof.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 September 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 the parent company level,
separate financial statements have not been presented for Thermadyne Holdings Corporation.7.
    
    Derivative InstrumentsAs of September 30, 2007, the Company recorded a fair value adjustment to the portion of its
fixed rate long-term debt that is hedged. At September 30, 2007, the fair value of the
interest rate swap of $1,119 has been recorded as a component of other long-term
liabilities. A fair value adjustment reducing this amount by $1,543 was recorded for the
three month period ended September 30, 2007. 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 nine months ended September 30, 2007, the Company realized an increase in its
interest expense as a result of the interest rate swap of $16 and $189, respectively. For
the three months and nine months ended September 30, 2006, the Company realized an increase in its
interest expense as a result of the interest rate swap of $77 and $269, respectively.
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8.
    
    Comprehensive Income (Loss)Comprehensive income (loss) for the three month and nine month periods ended September 30,
2007 and 2006 was as follows:
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)
    
    $
    1,046
    
    
    $
    (5,740
    )
    
    $
    4,098
    
    
    $
    (12,409
    )Foreign currency translation
    
    
    1,420
    
    
    
    529
    
    
    
    5,037
    
    
    
    (691
    )Comprehensive income (loss)
    
    $
    2,466
    
    
    $
    (5,211
    )
    
    $
    9,135
    
    
    $
    (13,100
    )
 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 to
goodwill recorded in connection 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 nine month periods ended September 30, 2007, the Company reduced its valuation
allowance on the related deferred tax asset and made a corresponding reduction in goodwill
of $612 and $2,334, respectively. The Company has included the utilization of a portion of
its pre-emergence bankruptcy net operating loss (NOL) carry forwards 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 and foreign taxes. At the beginning of
2007, the Company had $70,300 of pre-emergence NOL carry forwards for which the related
income tax benefit, if realized, will reduce goodwill, and $60,680 post-emergence NOL carry
forwards for which the related income tax benefit, if realized, will reduce future income
tax expense.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 an unusually high effective tax rate which
the Company anticipates will continue for the foreseeable future. The income taxes
currently payable are estimated as 75% of the 2007 income tax provision.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 FIN 48 as of January 1, 2007.The Company has $9,100 of accrued liabilities for uncertain tax positions as of September
30, 2007, including interest of $1,500. The adoption of FIN 48 did not have a significant
impact on this amount. 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 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).
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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
September 30, 2007, the Company was a co-defendant in approximately 607 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 September
30, 2007, 354 of the 607 cases naming the Company are pending in the multidistrict
proceeding. Between June 1, 2003 and September 30, 2007, the Company was dismissed from
approximately 840 other cases with similar allegations. Through September 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.11.
    
    Stock Options and Stock-Based CompensationThe 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
$483 and $1,203 as selling, general and administrative expense for the three month and nine
month periods ended September 30, 2007, respectively, and $303 and $703 for the three month
and nine month periods ended September 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 September 30, 2007 and 2006:
 September 30,
    
    September 30,2007
    
    2006Weighted average fair value
    
    $
    6.59
    
    
    $
    4.96Assumptions used:Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    41.52
    %
    
    
    41.50
    %Risk-free interest rate
    
    
    4.33
    %
    
    
    4.53
    %Expected life
    
    6 years
    
    6 years
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##### Table of Contents



As of September 30, 2007, options to purchase 1,577,530 shares were outstanding under the
2004 Stock Incentive Plan and other specific agreements. Changes in stock options during
the nine months ended September 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
    
    
    277,600
    
    
    $
    14.86Exercised
    
    
    (21,856
    )
    
    $
    12.77Forfeited or expired
    
    
    (39,477
    )
    
    $
    13.69Options outstanding at September
30, 2007
    
    
    1,529,330
    
    
    $
    13.56
    
    
    
    7.9
    
    
    $
    1,761Options exercisable at September
30, 2007
    
    
    738,680
    
    
    $
    13.10
    
    
    
    7.2
    
    
    $
    1,050
 There were 10,274 and 4,412 options exercised in the three-month periods ended September 30,
2007 and 2006. There were 21,856 and 4,412 options exercised in the nine-month periods ended
September 30, 2007 and 2006, respectively. The value of the options exercised in the
three-month periods ended September 30, 2007 and 2006 was $133 and $71, respectively. The
value of the options exercised in the nine-month periods ended September 30, 2007 and 2006
was $279 and $71, respectively. The fair value of options vested during the three-month and
nine-month periods ended September 30, 2007 was $122 and $791, respectively.The Company also granted 45,200 and 3,200 restricted shares in May 2007 and September 2007,
respectively, to various employees which vest over 3 years if established performance
targets related to return on invested operating capital are achieved.At September 30, 2007, the total stock-based compensation cost related to non-vested awards
not yet recognized was approximately $3,708 and the weighted average period over which this
amount is expected to be recognized was approximately 2.1 years.
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12.
    
    Earnings (Loss) Per ShareThe calculation of net income (loss) per share follows:
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator:Income (loss) :Continuing operations
    
    $
    1,311
    
    
    $
    (5,573
    )
    
    $
    4,235
    
    
    $
    (12,774
    )Discontinued operations
    
    
    (265
    )
    
    
    (167
    )
    
    
    (137
    )
    
    
    365Net income (loss)
    
    $
    1,046
    
    
    $
    (5,740
    )
    
    $
    4,098
    
    
    $
    (12,409
    )Denominator:Denominator for basic earnings per share  Weighted
average shares for basic earnings per share
    
    
    13,364
    
    
    
    13,330
    
    
    
    13,349
    
    
    
    13,328Dilutive effect of stock options
    
    
    194
    
    
    
    
    
    
    
    94
    
    
    
    Denominator for diluted earnings per share  Weighted
average shares
for diluted
earnings per
share
    
    
    13,558
    
    
    
    13,330
    
    
    
    13,443
    
    
    
    13,328Basic income (loss) per share amounts:Continuing operations
    
    $
    0.09
    
    
    $
    (0.42
    )
    
    $
    0.31
    
    
    $
    (0.96
    )Discontinued operations
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.03Net income (loss)
    
    $
    0.07
    
    
    $
    (0.43
    )
    
    $
    0.30
    
    
    $
    (0.93
    )Diluted income (loss) per share amounts:Continuing operations
    
    $
    0.09
    
    
    $
    (0.42
    )
    
    $
    0.31
    
    
    $
    (0.96
    )Discontinued operations
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    0.03Net income (loss)
    
    $
    0.07
    
    
    $
    (0.43
    )
    
    $
    0.30
    
    
    $
    (0.93
    )
 The effects of options and warrants have not been considered in the determination of net
income (loss) per share for the three months and nine months ended September 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 nine months ended September 30,
2006 were 1,310,313.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 nine months ended
September 30, 2006.
 16




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##### Table of Contents



13.
    
    Employee Benefit PlansNet periodic pension and other postretirement benefit costs include the following
components:
 Pension Benefits
    
    

Other Postretirement BenefitsThree Months Ended September 30,
    
    
    Three Months Ended September 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 BenefitsNine Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Components of the net periodic benefit cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    867Interest Cost
    
    
    936
    
    
    
    858
    
    
    
    414
    
    
    
    780Expected return on plan assets
    
    
    (936
    )
    
    
    (858
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (63
    )Net periodic benefit cost
    
    $
    
    
    
    $
    
    
    
    $
    414
    
    
    $
    1,584
 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/Middle East and Asia-Pacific.Summarized financial information concerning the Companys geographic regions for its
continuing operations is shown in the following table:
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net Sales:Americas
    
    $
    79,831
    
    
    $
    75,779
    
    
    $
    242,259
    
    
    $
    233,461Europe/Middle East
    
    
    21,116
    
    
    
    16,442
    
    
    
    60,349
    
    
    
    46,672Asia-Pacific
    
    
    25,662
    
    
    
    21,460
    
    
    
    69,650
    
    
    
    59,767$
    126,609
    
    
    $
    113,681
    
    
    $
    372,258
    
    
    $
    339,900
 September 30,
    
    
    December 31,2007
    
    
    2006Identifiable Assets (excluding working capital):Americas
    
    $
    39,863
    
    
    $
    38,942Europe/Middle East
    
    
    1,938
    
    
    
    2,089Asia-Pacific
    
    
    9,103
    
    
    
    8,936$
    50,904
    
    
    $
    49,967
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##### Table of Contents



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 September 30, 2007,
the maximum payment to satisfy the put option is $775 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-guarantors as of
September 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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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
SEPTEMBER 30, 2007
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    8,441
    
    
    $
    2,557
    
    
    $
    
    
    
    $
    10,998Accounts receivable, net
    
    
    
    
    
    
    82,657
    
    
    
    8,308
    
    
    
    
    
    
    
    90,965Inventories
    
    
    (93
    )
    
    
    90,288
    
    
    
    10,639
    
    
    
    
    
    
    
    100,834Prepaid expenses and other
    
    
    
    
    
    
    6,042
    
    
    
    706
    
    
    
    
    
    
    
    6,748Assets held for sale
    
    
    
    
    
    
    
    
    
    
    4,125
    
    
    
    
    
    
    
    4,125Current deferred tax assets
    
    
    
    
    
    
    1,104
    
    
    
    
    
    
    
    
    
    
    
    1,104Total current assets
    
    
    (93
    )
    
    
    188,532
    
    
    
    26,335
    
    
    
    
    
    
    
    214,774Property, plant and equipment, net
    
    
    
    
    
    
    37,146
    
    
    
    7,599
    
    
    
    
    
    
    
    44,745Goodwill
    
    
    
    
    
    
    185,072
    
    
    
    
    
    
    
    
    
    
    
    185,072Intangibles, net
    
    
    
    
    
    
    64,176
    
    
    
    
    
    
    
    
    
    
    
    64,176Other assets
    
    
    4,158
    
    
    
    1,692
    
    
    
    310
    
    
    
    
    
    
    
    6,160Investment in and advances to subsidiaries
    
    
    183,399
    
    
    
    
    
    
    
    
    
    
    
    (183,399
    )
    
    
    Total assets
    
    $
    187,464
    
    
    $
    476,618
    
    
    $
    34,244
    
    
    $
    (183,399
    )
    
    $
    514,927LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital and second-lien facility
    
    $
    
    
    
    $
    27,601
    
    
    $
    
    
    
    $
    
    
    
    $
    27,601Current maturities of long-term obligations
    
    
    
    
    
    
    1,655
    
    
    
    1,781
    
    
    
    
    
    
    
    3,436Accounts payable
    
    
    
    
    
    
    30,717
    
    
    
    4,102
    
    
    
    
    
    
    
    34,819Accrued and other liabilities
    
    
    
    
    
    
    28,709
    
    
    
    2,090
    
    
    
    
    
    
    
    30,799Accrued interest
    
    
    3,209
    
    
    
    587
    
    
    
    60
    
    
    
    
    
    
    
    3,856Income taxes payable
    
    
    
    
    
    
    2,560
    
    
    
    1,342
    
    
    
    
    
    
    
    3,902Liabilities applicable to assets held for sale
    
    
    
    
    
    
    
    
    
    
    7,526
    
    
    
    
    
    
    
    7,526Total current liabilities
    
    
    3,209
    
    
    
    91,829
    
    
    
    16,901
    
    
    
    
    
    
    
    111,939Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    44,747
    
    
    
    233
    
    
    
    
    
    
    
    219,980Deferred tax liabilities
    
    
    
    
    
    
    45,812
    
    
    
    
    
    
    
    
    
    
    
    45,812Other long-term liabilities
    
    
    
    
    
    
    21,830
    
    
    
    817
    
    
    
    
    
    
    
    22,647Minority Interest
    
    
    
    
    
    
    
    
    
    
    322
    
    
    
    
    
    
    
    322Shareholders equity (deficit):Common stock
    
    
    134
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    134Additional paid-in-capital
    
    
    186,391
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    186,391Retained earnings (accumulated deficit)
    
    
    (84,520
    )
    
    
    (2,687
    )
    
    
    (67,520
    )
    
    
    70,207
    
    
    
    (84,520
    )Accumulated other comprehensive income (loss)
    
    
    12,222
    
    
    
    65,998
    
    
    
    18,622
    
    
    
    (84,620
    )
    
    
    12,222Total shareholders equity (deficit)
    
    
    114,227
    
    
    
    63,311
    
    
    
    (48,898
    )
    
    
    (14,413
    )
    
    
    114,227Net equity (deficit) and advances to / from subsidiaries
    
    
    (104,972
    )
    
    
    209,089
    
    
    
    64,869
    
    
    
    (168,986
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    187,464
    
    
    $
    476,618
    
    
    $
    34,244
    
    
    $
    (183,399
    )
    
    $
    514,927
 19




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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 (deficit) 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
 20




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2007
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    421,296
    
    
    $
    22,821
    
    
    $
    (71,859
    )
    
    $
    372,258Cost of goods sold
    
    
    
    
    
    
    313,009
    
    
    
    16,410
    
    
    
    (71,653
    )
    
    
    257,766Gross margin
    
    
    
    
    
    
    108,287
    
    
    
    6,411
    
    
    
    (206
    )
    
    
    114,492Selling, general and administrative expenses
    
    
    1,046
    
    
    
    77,000
    
    
    
    2,210
    
    
    
    
    
    
    
    80,256Amortization of intangibles
    
    
    
    
    
    
    2,187
    
    
    
    
    
    
    
    
    
    
    
    2,187Net periodic postretirement benefits
    
    
    
    
    
    
    414
    
    
    
    
    
    
    
    
    
    
    
    414Operating income (loss)
    
    
    (1,046
    )
    
    
    28,686
    
    
    
    4,201
    
    
    
    (206
    )
    
    
    31,635Other income (expense):Interest, net
    
    
    (14,199
    )
    
    
    (6,690
    )
    
    
    (98
    )
    
    
    
    
    
    
    (20,987
    )Amortization of deferred financing costs
    
    
    (375
    )
    
    
    (700
    )
    
    
    
    
    
    
    
    
    
    
    (1,075
    )Equity in net income (loss) of subsidiaries
    
    
    23,206
    
    
    
    
    
    
    
    
    
    
    
    (23,206
    )
    
    
    Minority interest
    
    
    
    
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    6Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    7,586
    
    
    
    21,302
    
    
    
    4,103
    
    
    
    (23,412
    )
    
    
    9,579Income tax provision
    
    
    
    
    
    
    3,686
    
    
    
    1,658
    
    
    
    
    
    
    
    5,344Income (loss) from continuing operations
    
    
    7,586
    
    
    
    17,616
    
    
    
    2,445
    
    
    
    (23,412
    )
    
    
    4,235Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    
    
    
    
    (137
    )Net income (loss)
    
    $
    7,586
    
    
    $
    17,616
    
    
    $
    2,308
    
    
    $
    (23,412
    )
    
    $
    4,098
 21




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2007
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    143,084
    
    
    $
    7,267
    
    
    $
    (23,742
    )
    
    $
    126,609Cost of goods sold
    
    
    
    
    
    
    106,912
    
    
    
    5,157
    
    
    
    (23,572
    )
    
    
    88,497Gross margin
    
    
    
    
    
    
    36,172
    
    
    
    2,110
    
    
    
    (170
    )
    
    
    38,112Selling, general and administrative expenses
    
    
    333
    
    
    
    25,638
    
    
    
    1,263
    
    
    
    
    
    
    
    27,234Amortization of intangibles
    
    
    
    
    
    
    735
    
    
    
    
    
    
    
    
    
    
    
    735Net periodic postretirement benefits
    
    
    
    
    
    
    138
    
    
    
    
    
    
    
    
    
    
    
    138Operating income (loss)
    
    
    (333
    )
    
    
    9,661
    
    
    
    847
    
    
    
    (170
    )
    
    
    10,005Other income (expense):Interest, net
    
    
    (4,847
    )
    
    
    (1,788
    )
    
    
    (21
    )
    
    
    
    
    
    
    (6,656
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (244
    )
    
    
    
    
    
    
    
    
    
    
    (369
    )Equity in net income (loss) of subsidiaries
    
    
    6,351
    
    
    
    
    
    
    
    
    
    
    
    (6,351
    )
    
    
    Minority interest
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    59Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    1,046
    
    
    
    7,688
    
    
    
    826
    
    
    
    (6,521
    )
    
    
    3,039Income tax provision
    
    
    
    
    
    
    1,264
    
    
    
    464
    
    
    
    
    
    
    
    1,728Income (loss) from continuing operations
    
    
    1,046
    
    
    
    6,424
    
    
    
    362
    
    
    
    (6,521
    )
    
    
    1,311Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (265
    )
    
    
    
    
    
    
    (265
    )Net income (loss)
    
    $
    1,046
    
    
    $
    6,424
    
    
    $
    97
    
    
    $
    (6,521
    )
    
    $
    1,046
 22




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    382,370
    
    
    $
    25,443
    
    
    $
    (67,913
    )
    
    $
    339,900Cost of goods sold
    
    
    
    
    
    
    285,496
    
    
    
    23,209
    
    
    
    (66,527
    )
    
    
    242,178Gross margin
    
    
    
    
    
    
    96,874
    
    
    
    2,234
    
    
    
    (1,386
    )
    
    
    97,722Selling, general and administrative expenses
    
    
    1,716
    
    
    
    77,780
    
    
    
    2,946
    
    
    
    
    
    
    
    82,442Amortization of intangibles
    
    
    
    
    
    
    2,166
    
    
    
    2
    
    
    
    
    
    
    
    2,168Net periodic postretirement benefits
    
    
    
    
    
    
    1,584
    
    
    
    
    
    
    
    
    
    
    
    1,584Operating income (loss)
    
    
    (1,716
    )
    
    
    15,344
    
    
    
    (714
    )
    
    
    (1,386
    )
    
    
    11,528Other income (expense):Interest, net
    
    
    (12,769
    )
    
    
    (6,597
    )
    
    
    (18
    )
    
    
    
    
    
    
    (19,384
    )Amortization of deferred financing costs
    
    
    (376
    )
    
    
    (617
    )
    
    
    
    
    
    
    
    
    
    
    (993
    )Equity in net income (loss) of subsidiaries
    
    
    2,452
    
    
    
    
    
    
    
    
    
    
    
    (2,452
    )
    
    
    Minority interest
    
    
    
    
    
    
    (96
    )
    
    
    
    
    
    
    
    
    
    
    (96
    )Income
(loss) from continuing operations before income  tax provision and discontinued operations
   
    
    (12,409
    )
    
    
    8,034
    
    
    
    (732
    )
    
    
    (3,838
    )
    
    
    (8,945
    )Income tax provision
    
    
    
    
    
    
    3,475
    
    
    
    354
    
    
    
    
    
    
    
    3,829Income (loss) from continuing operations
    
    
    (12,409
    )
    
    
    4,559
    
    
    
    (1,086
    )
    
    
    (3,838
    )
    
    
    (12,774
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    365
    
    
    
    
    
    
    
    365Net income (loss)
    
    $
    (12,409
    )
    
    $
    4,559
    
    
    $
    (721
    )
    
    $
    (3,838
    )
    
    $
    (12,409
    )
 23




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    128,566
    
    
    $
    8,318
    
    
    $
    (23,203
    )
    
    $
    113,681Cost of goods sold
    
    
    
    
    
    
    94,734
    
    
    
    8,383
    
    
    
    (22,959
    )
    
    
    80,158Gross margin
    
    
    
    
    
    
    33,832
    
    
    
    (65
    )
    
    
    (244
    )
    
    
    33,523Selling, general and administrative expenses
    
    
    963
    
    
    
    27,509
    
    
    
    371
    
    
    
    
    
    
    
    28,843Amortization of intangibles
    
    
    
    
    
    
    724
    
    
    
    
    
    
    
    
    
    
    
    724Net periodic postretirement benefits
    
    
    
    
    
    
    528
    
    
    
    
    
    
    
    
    
    
    
    528Operating income (loss)
    
    
    (963
    )
    
    
    5,071
    
    
    
    (436
    )
    
    
    (244
    )
    
    
    3,428Other income (expense):Interest, net
    
    
    (4,484
    )
    
    
    (2,422
    )
    
    
    (17
    )
    
    
    
    
    
    
    (6,923
    )Amortization of deferred financing costs
    
    
    (124
    )
    
    
    (205
    )
    
    
    
    
    
    
    
    
    
    
    (329
    )Equity in net income (loss) of subsidiaries
    
    
    (169
    )
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    Minority interest
    
    
    
    
    
    
    (21
    )
    
    
    
    
    
    
    
    
    
    
    (21
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    (5,740
    )
    
    
    2,423
    
    
    
    (453
    )
    
    
    (75
    )
    
    
    (3,845
    )Income tax provision
    
    
    
    
    
    
    1,489
    
    
    
    239
    
    
    
    
    
    
    
    1,728Income (loss) from continuing operations
    
    
    (5,740
    )
    
    
    934
    
    
    
    (692
    )
    
    
    (75
    )
    
    
    (5,573
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (167
    )
    
    
    
    
    
    
    (167
    )Net income (loss)
    
    $
    (5,740
    )
    
    $
    934
    
    
    $
    (859
    )
    
    $
    (75
    )
    
    $
    (5,740
    )
 24




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2007
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (60
    )
    
    $
    8,545
    
    
    $
    (1,975
    )
    
    $
    (6,943
    )
    
    $
    (433
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (7,945
    )
    
    
    (723
    )
    
    
    
    
    
    
    (8,668
    )Proceeds from sales of assets
    
    
    
    
    
    
    13,783
    
    
    
    
    
    
    
    
    
    
    
    13,783Acquisition of minority interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other
    
    
    (205
    )
    
    
    (763
    )
    
    
    (15
    )
    
    
    
    
    
    
    (983
    )Net cash provided by (used in) investing activities
    
    
    (205
    )
    
    
    5,075
    
    
    
    (738
    )
    
    
    
    
    
    
    4,132Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    
    
    
    
    19,884
    
    
    
    157
    
    
    
    
    
    
    
    20,041Repayments under revolving credit facility
    
    
    
    
    
    
    (10,046
    )
    
    
    
    
    
    
    
    
    
    
    (10,046
    )Borrowing of other credit facilities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Repayments of other credit facilities
    
    
    
    
    
    
    (14,875
    )
    
    
    (65
    )
    
    
    
    
    
    
    (14,940
    )Changes in
net equity and advances to / from discontinued operations
    
    
    (1,323
    )
    
    
    (9,931
    )
    
    
    2,788
    
    
    
    6,943
    
    
    
    (1,523
    )Other
    
    
    1,588
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,588Net cash provided by (used in) financing activities
    
    
    265
    
    
    
    (14,968
    )
    
    
    2,880
    
    
    
    6,943
    
    
    
    (4,880
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    582
    
    
    
    287
    
    
    
    
    
    
    
    869Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    (766
    )
    
    
    454
    
    
    
    
    
    
    
    (312
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    473
    
    
    
    
    
    
    
    473Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    (929
    )
    
    
    
    
    
    
    (929
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    569
    
    
    
    
    
    
    
    569Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Net cash provided by discontinued operations
    
    
    
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    123Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    (766
    )
    
    
    577
    
    
    
    
    
    
    
    (189
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    9,207
    
    
    
    2,103
    
    
    
    
    
    
    
    11,310Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    8,441
    
    
    $
    2,680
    
    
    $
    
    
    
    $
    11,121
 25




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 2006
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (15,501
    )
    
    $
    (11,680
    )
    
    $
    (3,239
    )
    
    $
    10,172
    
    
    $
    (20,248
    )Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (4,731
    )
    
    
    359
    
    
    
    
    
    
    
    (4,372
    )Proceeds from sales of assets
    
    
    
    
    
    
    16,455
    
    
    
    
    
    
    
    
    
    
    
    16,455Acquisition of minority interest
    
    
    
    
    
    
    (3,954
    )
    
    
    
    
    
    
    
    
    
    
    (3,954
    )Net cash provided by investing activities
    
    
    
    
    
    
    7,770
    
    
    
    359
    
    
    
    
    
    
    
    8,129Cash flows from financing activities:Borrowings under revolving credit facility
    
    
    
    
    
    
    8,215
    
    
    
    1,142
    
    
    
    
    
    
    
    9,357Repayments under revolving credit facility
    
    
    
    
    
    
    (15,998
    )
    
    
    
    
    
    
    
    
    
    
    (15,998
    )Borrowings of other credit facilities
    
    
    
    
    
    
    21,256
    
    
    
    
    
    
    
    
    
    
    
    21,256Repayments of other credit facilities
    
    
    
    
    
    
    (6,984
    )
    
    
    (732
    )
    
    
    
    
    
    
    (7,716
    )Changes in net equity and advances to / from subsidiaries
    
    
    14,125
    
    
    
    (2,636
    )
    
    
    (760
    )
    
    
    (10,172
    )
    
    
    557Other
    
    
    1,376
    
    
    
    (264
    )
    
    
    436
    
    
    
    
    
    
    
    1,548Net cash provided by (used in) financing activities
    
    
    15,501
    
    
    
    3,589
    
    
    
    86
    
    
    
    (10,172
    )
    
    
    9,004Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    1,242
    
    
    
    (670
    )
    
    
    
    
    
    
    572Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    921
    
    
    
    (3,464
    )
    
    
    
    
    
    
    (2,543
    )Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    1,191
    
    
    
    
    
    
    
    1,191Net cash used in investing activities
    
    
    
    
    
    
    
    
    
    
    (1,208
    )
    
    
    
    
    
    
    (1,208
    )Net cash used in financing activities
    
    
    
    
    
    
    
    
    
    
    (1,405
    )
    
    
    
    
    
    
    (1,405
    )Effect of
exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    (339
    )
    
    
    
    
    
    
    (339
    )Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (1,761
    )
    
    
    
    
    
    
    (1,761
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    921
    
    
    
    (5,225
    )
    
    
    
    
    
    
    (4,304
    )Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    6,591
    
    
    
    8,971
    
    
    
    
    
    
    
    15,562Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    7,512
    
    
    $
    3,746
    
    
    $
    
    
    
    $
    11,258
 26




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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
  27




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##### Table of Contents



Key Indicators
    Discontinued Operations
 Discontinued Operations
 28




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##### Table of Contents



RESULTS OF OPERATIONS
 Discontinued Operations
 Net Sales
 Three Months Ended September 30,
    
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    
    2006
    
    
    % Change
    
    
    2007
    
    
    2006
    
    
    % ChangeNet sales summary:U.S. net sales
    
    $
    73,159
    
    
    $
    70,319
    
    
    
    4.0
    %
    
    $
    222,453
    
    
    $
    215,204
    
    
    
    3.4
    %International net sales
    
    
    53,450
    
    
    
    43,362
    
    
    
    23.3
    %
    
    
    149,805
    
    
    
    124,696
    
    
    
    20.1
    %Consolidated net sales
    
    $
    126,609
    
    
    $
    113,681
    
    
    
    11.4
    %
    
    $
    372,258
    
    
    $
    339,900
    
    
    
    9.5
    %
   Gross Margin
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeGross margin
    
    $
    38,112
    
    
    $
    33,523
    
    
    
    13.7
    %
    
    $
    114,492
    
    
    $
    97,722
    
    
    
    17.2
    %
   29




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##### Table of Contents



Selling, general and administrative expenses
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeSelling, general and administrative expenses
    
    $
    27,234
    
    
    $
    28,843
    
    
    
    (5.6
    %)
    
    $
    80,256
    
    
    $
    82,442
    
    
    
    (2.7
    %)
   Interest expense
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeInterest expense
    
    $
    6,656
    
    
    $
    6,923
    
    
    
    (3.9
    %)
    
    $
    20,987
    
    
    $
    19,384
    
    
    
    8.3
    %
    Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeIncome tax provision
    
    $
    1,728
    
    
    $
    1,728
    
    
    
    0.0
    %
    
    $
    5,344
    
    
    $
    3,829
    
    
    
    39.6
    %
  30




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##### Table of Contents



Income (loss) from discontinued operations
 Three Months Ended September 30,
    
    
    
    
    
    Nine Months Ended September 30,(Dollars in thousands)
    
    2007
    
    2006
    
    % Change
    
    2007
    
    2006
    
    % ChangeIncome (loss) from discontinued operations
    
    $
    (265
    )
    
    $
    (167
    )
    
    
    58.7
    %
    
    $
    (137
    )
    
    $
    365
    
    
    
    (137.5
    %)
   RECENT ACCOUNTING PRONOUNCEMENTS
 Fair Value Measurements . Fair Value Measurements
 Fair Value Option
 LIQUIDITY AND CAPITAL RESOURCES
  31




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##### Table of Contents



Nine months endedSeptember 30,(Dollars in thousands)
    
    2007
    
    
    2006Net cash provided by (used in) continuing operations :Operating activities
    
    $
    (433
    )
    
    $
    (20,248
    )Investing activities
    
    
    4,132
    
    
    
    8,129Financing activities
    
    
    (4,880
    )
    
    
    9,004Effect of exchange rates
    
    
    869
    
    
    
    572Cash used in continuing operations
    
    $
    (312
    )
    
    $
    (2,543
    )
 Operating Activities
  Investing Activities
  Financing Activities
  32




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##### Table of Contents



Debt and Capital
Lease Obligations
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    Derivative Instruments
 33




---



##### Table of Contents



Item 4. Controls and Procedures
  34




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
 Contingencies
 
 Item 6. Exhibits
 10.1
    
    Executive Employment Agreement
between Thermadyne Holdings Corporation and Terry A. Moody, dated
July 12, 200710.2
    
    First Amendment to Lease Agreement
between 2800 Airport Road Limited Partnership and Victor Equipment
Company, dated August 1, 200710.3
    
    Second Amendment to Lease Agreement
between Benning Street, LLC and Thermal Dynamics Corporation, dated
August 1, 200731.1
    
    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))
 35




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:
    /s/ Mark F. JollyDate: November 6, 2007
    
    Mark F. Jolly
Vice President  Global Controller
Principal Accounting Officer 36