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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 31, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                 to
 Commission file number 001-13023
 Thermadyne Holdings Corporation
  Delaware
    
    74-2482571(State or Other Jurisdiction of
Incorporation or Organization)
    
    (I.R.S. Employer Identification No.)16052 Swingley Ridge Road, Suite 300,
Chesterfield, MO
    
    63017(Address of Principal Executive Offices)
    
    (Zip Code)
 (636) 728-3000
  þ o
  o þ
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
(Do not check if a smaller reporting company)
    
    Smaller reporting company þ
  o þ




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##### 



THERMADYNE HOLDINGS CORPORATION
  
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    20Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    26Item 6. Exhibits
    
    
    26SIGNATURES
    
    
    27EX-10.4EX-10.5EX-10.6EX-10.7EX-10.8EX-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)
 March 31,
    
    
    December 31,2010
    
    
    2009(unaudited)Current Assets:Cash and cash equivalents
    
    $
    22,352
    
    
    $
    14,886Accounts receivable, less allowance for doubtful accounts of
$500 and $400, respectively
    
    
    62,248
    
    
    
    56,589Inventories
    
    
    75,540
    
    
    
    74,381Prepaid expenses and other
    
    
    7,753
    
    
    
    9,255Deferred tax assets
    
    
    3,008
    
    
    
    3,008Total current assets
    
    
    170,901
    
    
    
    158,119Property, plant and equipment, net of accumulated depreciation
of $57,075 and $55,082, respectively
    
    
    46,493
    
    
    
    46,687Goodwill
    
    
    187,880
    
    
    
    187,818Intangibles, net
    
    
    57,855
    
    
    
    58,451Other assets
    
    
    3,606
    
    
    
    3,870Total assets
    
    $
    466,735
    
    
    $
    454,945Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    9,643Current maturities of long-term obligations
    
    
    17,089
    
    
    
    8,915Accounts payable
    
    
    29,727
    
    
    
    9,598Accrued and other liabilities
    
    
    25,391
    
    
    
    23,119Accrued interest
    
    
    3,375
    
    
    
    7,608Income taxes payable
    
    
    1,938
    
    
    
    705Deferred tax liabilities
    
    
    2,793
    
    
    
    2,793Total current liabilities
    
    
    80,313
    
    
    
    62,381Long-term obligations, less current maturities
    
    
    190,235
    
    
    
    198,466Deferred tax liabilities
    
    
    52,384
    
    
    
    52,835Other long-term liabilities
    
    
    13,106
    
    
    
    13,471Stockholders equity:Common stock, $0.01 par value:Authorized  25,000,000 sharesIssued and outstanding  13,543,068 shares at March 31, 2010 and
13,539,998 shares at December 31, 2009
    
    
    135
    
    
    
    135Additional paid-in capital
    
    
    188,828
    
    
    
    188,791Accumulated deficit
    
    
    (62,767
    )
    
    
    (65,063
    )Accumulated other comprehensive income
    
    
    4,501
    
    
    
    3,929Total shareholders equity
    
    
    130,697
    
    
    
    127,792Total liabilities and shareholders equity
    
    $
    466,735
    
    
    $
    454,945
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Net sales
    
    $
    96,617
    
    
    $
    83,311Cost of goods sold
    
    
    64,232
    
    
    
    61,951Gross margin
    
    
    32,385
    
    
    
    21,360Selling, general and administrative expenses
    
    
    21,767
    
    
    
    19,442Amortization of intangibles
    
    
    677
    
    
    
    671Operating income
    
    
    9,941
    
    
    
    1,247Other income (expenses):Interest, net
    
    
    (6,336
    )
    
    
    (4,633
    )Amortization of deferred financing costs
    
    
    (264
    )
    
    
    (236
    )Income (loss) before income tax provision
    
    
    3,341
    
    
    
    (3,622
    )Income tax provision
    
    
    1,045
    
    
    
    (1,126
    )Net income (loss)
    
    $
    2,296
    
    
    $
    (2,496
    )Basic and Diluted income (loss) per share
    
    $
    0.17
    
    
    $
    (0.18
    )
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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months Ended March 31,2010
    
    
    2009Cash flows from continuing operations:Cash flows from operating activities:Net income/(loss)
    
    $
    2,296
    
    
    $
    (2,496
    )Adjustments to reconcile net income to net cash provided by (used in) operating activities:Depreciation and amortization
    
    
    3,467
    
    
    
    3,002Deferred income taxes
    
    
    (513
    )
    
    
    (1,270
    )Net periodic post-retirement benefits
    
    
    (35
    )
    
    
    4Changes in operating assets and liabilities:Accounts receivable
    
    
    (5,571
    )
    
    
    10,850Inventories
    
    
    (885
    )
    
    
    12,155Prepaids
    
    
    1,687
    
    
    
    528Accounts payable
    
    
    19,575
    
    
    
    (8,341
    )Accrued and other liabilities
    
    
    2,088
    
    
    
    (7,505
    )Accrued interest
    
    
    (4,233
    )
    
    
    (3,688
    )Accrued taxes
    
    
    1,230
    
    
    
    (132
    )Other long-term liabilities
    
    
    (475
    )
    
    
    (108
    )Net cash provided by operating activities
    
    
    18,631
    
    
    
    2,999Cash flows from investing activities:Capital expenditures
    
    
    (1,636
    )
    
    
    (2,238
    )Other
    
    
    (81
    )
    
    
    (55
    )Net cash used in investing activities
    
    
    (1,717
    )
    
    
    (2,293
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    8,923Repayments of Working Capital Facility
    
    
    (9,643
    )
    
    
    (7,193
    )Borrowings under Second-Lien Facility and other
    
    
    
    
    
    
    75Repayments of Second-Lien Facility and other
    
    
    (72
    )
    
    
    (518
    )Stock compensation expense
    
    
    17
    
    
    
    (602
    )Exercise of employee stock purchases
    
    
    20
    
    
    
    35Termination payment from derivative counterparty
    
    
    
    
    
    
    2,157Other, net
    
    
    35
    
    
    
    36Net cash provided by (used in) financing activities
    
    
    (9,643
    )
    
    
    2,913Effect of exchange rate changes on cash and cash equivalents
    
    
    195
    
    
    
    (288
    )Net cash provided by continuing operations
    
    
    7,466
    
    
    
    3,331Net cash provided by discontinued operations
    
    
    
    
    
    
    314Total increase in cash and cash equivalents
    
    
    7,466
    
    
    
    3,645Total cash and cash equivalents beginning of period
    
    
    14,886
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    22,352
    
    
    $
    16,146Income taxes paid
    
    $
    544
    
    
    $
    530Interest paid
    
    $
    10,210
    
    
    $
    9,027
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THERMADYNE HOLDINGS CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 (Dollars in thousands, except share data)
 1.
    
    Organization and Basis of Presentation
 Thermadyne 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
ended March 31, 2010 are not necessarily indicative of the results that may be expected for
the year ending December 31, 2010. 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, 2009.
 The preparation of financial statements requires the 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.
 2.
    
    Significant Accounting Policies
 Product 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 such provisions are
adjusted periodically based on current estimates of anticipated warranty costs. The
following table provides the activity in the warranty accrual for the three months ended
March 31, 2010 and 2009:
 Three Months EndedMarch 31,2010
    
    
    2009Balance at beginning of period
    
    $
    2,300
    
    
    $
    2,961Charged to expenses
    
    
    705
    
    
    
    (32
    )Warranty payments
    
    
    (605
    )
    
    
    (220
    )Balance at end of period
    
    $
    2,400
    
    
    $
    2,709
 Fair ValueThe carrying values of the obligations outstanding under the Working Capital Facility and
the Second Lien Facility, approximate fair values because these obligations have varying
interest charges based on current market rates and were recently renegotiated. The Companys
Senior Subordinated Notes traded at 100.5% and 95% at March 31, 2010, and December 31, 2009,
respectively, based on available market information.Recent Accounting PronouncementsThe Company has determined that all recently issued accounting pronouncements will not have
a material impact on its consolidated financial position, results of operations and cash
flows, or do not apply to its operations.
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3.
    
    Inventories
 The composition of inventories was as follows:
 March 31,
    
    
    December 31,2010
    
    
    2009Raw materials and component parts
    
    $
    26,911
    
    
    $
    25,410Work-in-process
    
    
    4,318
    
    
    
    4,216Finished goods
    
    
    52,943
    
    
    
    53,27284,172
    
    
    
    82,898LIFO reserve
    
    
    (8,632
    )
    
    
    (8,517
    )$
    75,540
    
    
    $
    74,381
 4.
    
    Intangible Assets
 The composition of intangibles was as follows:
 March 31,
    
    
    December 31,2010
    
    
    2009Goodwill
    
    $
    187,880
    
    
    $
    187,818Patents and customer relationships
    
    
    42,822
    
    
    
    42,741Trademarks
    
    
    33,403
    
    
    
    33,403264,105
    
    
    
    263,962Accumulated amortization of
patents and customer
relationships
    
    
    (18,370
    )
    
    
    (17,693
    )$
    245,735
    
    
    $
    246,269
 Amortization of patents and customer relationships amounted to $677 and $671 for the three
month periods ended March 31, 2010 and 2009, respectively.
 Goodwill and trademarks are tested for impairment annually, as of October 1st, 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
performed on a consolidated enterprise level based on one reporting unit. The annual
impairment analysis was completed in the fourth quarter, and no adjustment to the carrying
value of goodwill was deemed necessary as of October 1, 2009. As
of March 31, 2010, the Company considered possible impairment
triggering events since the impairment test date, including its
market capitalization relative to the carrying value of its net
assets, as well as other relevant factors, and concluded that no
triggering events or goodwill impairment were indicated at that date.
 The change in the carrying amount of goodwill during the three-month period was as follows:
 Carrying Amountof GoodwillBalance as of January 1, 2010
    
    $
    187,818Foreign currency translation
    
    
    62Balance as of March 31, 2010
    
    $
    187,880
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5.
    
    Debt and Capital Lease Obligations
 The composition of debt and capital lease obligations was as follows:
 March 31,
    
    
    December 31,2010
    
    
    2009Working Capital Facility
    
    $
    
    
    
    $
    9,643Second Lien Facility
    
    
    25,000
    
    
    
    25,000Issuance discount on Second Lien Facility
    
    
    (1,562
    )
    
    
    (1,703
    )Senior Subordinated Notes, due February 1, 2014, 9 1/4% interest
payable semiannually on February 1 and August 1
    
    
    172,327
    
    
    
    172,327Capital leases
    
    
    9,786
    
    
    
    9,869Other
    
    
    1,773
    
    
    
    1,888207,324
    
    
    
    217,024Current maturities and working capital facility
    
    
    (17,089
    )
    
    
    (18,558
    )$
    190,235
    
    
    $
    198,466
 Working Capital FacilityCertain subsidiaries of the Company are borrowers under the Third Amended and Restated
Credit Agreement dated June 29, 2007 as amended (the Credit Agreement), with General
Electric Capital Corporation as agent and lender. The Credit Agreement: (i) matures on
June 29, 2012; (ii) provides a revolving credit commitment of up to $70,000 (the Working
Capital Facility), which includes (a) an asset based facility and (b) an amortizing $10,000
property, plant and equipment facility; (iii) provides for interest rate percentages
applicable to the asset base; (iv) limits the senior leverage ratio to 2.75; (v) provides
for an interest rate of 90-day LIBOR plus 4.00%; (vi) includes a prepayment fee of 2% if the
Facility is terminated prior to June 27, 2010 or 1% prior to June 27, 2011; and (vii)
includes a minimum fixed charge coverage ratio for the twelve-months ended June 30, 2009 and
September 30, 2009 of 0.95 and 0.825, respectively, 1.00 for the quarter ended December 31,
2009 and 1.10 thereafter. With respect to the quarters ending March 31, 2010 and June 30,
2010, the calculation is based on the results for the six months and nine months periods
ending on such dates, respectively. The calculation for quarters ending September 30, 2010
and thereafter is based on the twelve month periods then ending. 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 eligible inventories less customary reserves, plus machinery at appraised value not
to exceed $10,000.At March 31, 2010, $3,878 of letters of credit were outstanding under the Credit Agreement.
Unused availability, net of these letters of credit, was $49,167 under the Working Capital
Facility.Second Lien AgreementUnder the 2009 Amended and Restated Second Lien Credit Agreement, as amended (the Second
Lien Agreement), the Company has borrowed $25,000 which has a maturity date of November 30,
2012. The Agreement permits a single prepayment of as much as $14,000 beginning April 1, 2010 through
August 30, 2010 and prepayment of the balance beginning August 31, 2010. The Company repaid
$14,000 of the Second Lien indebtedness in April 2010 and the amount is shown in current
maturities as of March 31, 2010. The applicable interest rate is, at the Companys option,
(a) the greater of LIBOR or 6%, plus 6% or (b) the greater of the prime rate, the federal
funds rate plus one half of 1.00% or 6%, plus 6%. The interest rate payable is 12%, and the
effective interest rate, including amortization of the issuance discount, is 15%.Covenant ComplianceAt March 31, 2010, the Company was in compliance with its financial covenants. Failure to
comply with our financial covenants in future periods would result in defaults under our
credit agreements unless covenants are further amended or waived. The most restrictive
financial covenant is the fixed charge coverage covenant under our Working Capital
Facility which requires EBITDA, as defined, to be at least 1.10 of Fixed Charges, as
defined, except in 2009, as described above. Under the Second Lien Agreement, the most
restrictive financial covenant is the senior leverage ratio covenant which requires that
senior debt, consisting of total debt less the Senior Subordinated
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Notes and cash, not exceed 2.75 of EBITDA, as defined. Compliance is measured quarterly based on the trailing
four quarters. A default of the financial covenants under the Working Capital Facility or
Second Lien Agreement would constitute a default under the Senior Subordinated Notes.Senior Subordinated Notes
 The Company is the issuer of 9.25% Senior Subordinated Notes due in 2014 (the Senior
Subordinated Notes) with an aggregate principal outstanding of $172,327. 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 9.25% per annum and is payable semi-annually in
arrears on February 1 and August 1 of each year. An additional Special Interest is payable
semi-annually and accrues at a rate subject to adjustment based on the consolidated leverage
ratio which is calculated each calendar quarter. The Special Interest accrual rate through
June 30, 2010 is 2.25% with 1.25% effective for the calendar quarter beginning July 1, 2010.
 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. Subject to certain conditions we must annually use our Excess Cash Flow (as
defined in the Indenture) either to make permanent repayments of our senior debt or to
extend a repurchase offer to the holders of the Senior Subordinated Notes pursuant to which
we will offer to repurchase outstanding Senior Subordinated Notes at a purchase price of
101% of their principal amount. The debt repayment obligation from the Excess Cash Flow
amount for 2009 was $6,000 and was paid on April 1, 2010 through a repayment of Second Lien
borrowings.Parent Company Financial Information
 Borrowings 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 of the subsidiaries to dividend cash and other assets to the parent company,
Thermadyne Holdings Corporation. At March 31, 2010 and December 31, 2009, the primary asset
carried on the parent company books of Thermadyne Holdings Corporation was its investment in
its operating subsidiaries and the primary liability was the $172,327 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
except as shown in Note 15, Condensed Consolidating Financial Statements.
 6.
    
    Derivative Instruments
 In February 2004, the Company entered into an interest rate swap arrangement to convert a
portion of the fixed rate exposure on its Senior Subordinated Notes to variable rates. On
February 1, 2009, the swap arrangement was terminated by the counterparty pursuant to terms
of the arrangement and a $3,000 payment was received by the Company in conjunction with this
termination and is amortized as a reduction of interest expense over the remaining term of
the Notes.
 7.
    
    Comprehensive Income
 Comprehensive income for the three months ended March 31, 2010 and 2009 was as follows:
 Three Months Ended March 31,2010
    
    
    2009Net income
    
    $
    2,296
    
    
    $
    (2,496
    )Cumulative foreign currency translation gains (losses),
net of tax
    
    
    501
    
    
    
    (1,285
    )Minimum pension and post-retirement liabilties, net of tax
    
    
    71
    
    
    
    72Comprehensive income (loss)
    
    $
    2,868
    
    
    $
    (3,709
    )
 8.
    
    Income Taxes
 The Company accounts for income taxes by recognizing deferred tax assets and liabilities
using enacted tax rates for the effect of temporary differences between the financial
reporting and tax bases of recorded assets and liabilities.
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Deferred tax assets are 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 Company adopted ASC Topic 805, Business Combinations effective January 1, 2009. Among
other matters, this establishes that the benefit of net operating loss carryovers reduce
current year income tax expense as the carryovers are utilized. In 2008 and prior, the tax
benefit from net operating loss carryovers from periods prior to emergence from bankruptcy
did not reduce the Companys current year provision for taxes, but instead adjusted the
goodwill amount.
 At the beginning of 2010 the Company had approximately $152,000 in U.S. net operating
losses. For 2010, the Companys management estimates that actual cash income tax payments
will, as in prior years, primarily relate to state and foreign taxes due to the use of net
operating loss carryovers to offset U.S. taxable income.
 9.
    
    Contingencies
 The Company and certain of its wholly owned subsidiaries are defendants in various legal
actions, primarily related to welding fumes and other product liability claims. While there
is uncertainty relating to any litigation, management is of the opinion that the outcome of
this litigation will not have a material adverse effect on the Companys financial condition
or results of operations.
 The Company is party to certain environmental matters. Any related obligations are not
expected to have a material adverse effect on the Companys financial condition or results
of operations.
 The Company has initiated a comprehensive review of its compliance with foreign and U.S.
duties requirements in light of the assessments by a foreign jurisdiction in the third
quarter of 2009. It is premature to assess the ultimate resolution of the compliance review
but management believes it will not have a material adverse effect on the Companys business
or financial condition.
 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 financial condition or on the results of operations.
 10.
    
    Stock Options and Stock-Based Compensation
 The Company utilizes the modified prospective method of accounting for stock compensation,
and accordingly recognizes 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 $17 of expense for the three
months ended March 31, 2010. For the three months ended March 31, 2009, stock compensation
cost was a credit of $602 resulting from the reversal of prior performance-based accruals
offset partially by $161 of charges.
 The fair value of the restricted stock awards is estimated as the closing price of the stock
on 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. The 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.
 As of March 31, 2010, 1,134,443 options to purchase shares were issued and outstanding under
the 2004 Non-Employee Directors Stock Option Plan, the Amended and Restated 2004 Stock
Incentive Plan and other specific agreements. In addition, restricted stock grants to
employees totaling 426,729 shares were outstanding at March 31, 2010 of which 332,088 shares
have vesting determined in 2010, 2011, 2012 and 2013 based on performance targets related to
return on invested operating capital and the remaining 94,641 shares vest ratably over the
three years ending March 2013.
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Changes in stock options during the three months ended March 31, 2010 were as follows:
 Weighted-Weighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicNon-Vested Stock Options
    
    Shares
    
    
    Price
    
    
    Term
    
    
    ValueNon-vested options outstanding at January
1, 2010
    
    
    538,604Granted
    
    
    196,313Vested
    
    
    (21,812
    )Forfeited or expired
    
    
    (237,948
    )Non-vested options outstanding at March 31,
2010
    
    
    475,157
    
    
    $
    9.44
    
    
    
    6.9
    
    
    $
    155Total Employee and Director Stock OptionsOptions outstanding at January 1, 2010
    
    
    1,190,578
    
    
    $
    12.72Granted
    
    
    196,313
    
    
    $
    7.71Exercised
    
    
    Forfeited or expired
    
    
    (252,448
    )
    
    $
    14.87Options outstanding at March 31, 2010
    
    
    1,134,443
    
    
    $
    11.43
    
    
    
    5.5
    
    
    $
    235Vested options exercisable at March 31, 2010
    
    
    659,286
    
    
    $
    12.86
    
    
    
    4.7
    
    
    $
    80
 No options were exercised in the three month period ended March 31, 2010 or March 31, 2009.
The fair value of options vested during the three month period ended March 31, 2010 was $31.
 The Company granted 196,313 stock options and 113,957 restricted shares in March 2010 to
various salaried employees all of which option shares and 94,641 restricted shares are
time-based and will vest ratably over three years beginning on the first anniversary of the
grant date. The remaining 19,316 restricted shares will fully vest if the targeted return on
invested operating capital (ROIOC) of 39.4% is achieved in the period ending December 31,
2012. Proportionate vesting occurs for ROIOC performance between 39.4% and 31.5% at the end
of 2012.
 At March 31, 2010, the total stock-based compensation cost related to non-vested awards not
yet recognized is approximately $1,374 and the weighted average period over which this amount
is expected to be recognized is approximately 3.2 years.
 11.
    
    Earnings (Loss) Per Share
 The calculation of net income (loss) per share follows:
 Three Months Ended March 31,2010
    
    
    2009Numerator:Income (loss) applicable to common sharesContinuing operations
    
    $
    2,296
    
    
    $
    (2,496
    )Net income
    
    $
    2,296
    
    
    $
    (2,496
    )Denominator:Weighted average shares for basic earnings per share
    
    
    13,542,829
    
    
    
    13,513,154Dilutive effect of stock options
    
    
    58,905
    
    
    
    22,039Weighted average shares for diluted earnings per
share
    
    
    13,601,734
    
    
    
    13,535,193Basic and diluted income (loss) per share amounts:Continuing operations
    
    $
    0.17
    
    
    $
    (0.18
    )Net income per share
    
    $
    0.17
    
    
    $
    (0.18
    )
 11




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The calculation of weighted average shares for the three months ended March 31, 2010
and 2009 excludes common shares of 1.5 million  and 1.7 million
stock options and restricted stock, respectively, because their effect was considered
to be antidilutive or performance conditions had not been satisfied.
 12.
    
    Employee Benefit Plans
 Net periodic pension and other postretirement benefit costs include the following
components:
 Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended March 31,
    
    
    Three Months Ended March 31,2010
    
    
    2009
    
    
    2010
    
    
    2009Components of the net periodic benefit cost:Interest Cost
    
    $
    318
    
    
    $
    321
    
    
    $
    
    
    
    $
    4Expected return on plan assets
    
    
    (279
    )
    
    
    (235
    )
    
    
    
    
    
    
    Recognized (gain) loss
    
    
    146
    
    
    
    161
    
    
    
    (35
    )
    
    
    Net periodic benefit cost
    
    $
    185
    
    
    $
    247
    
    
    $
    (35
    )
    
    $
    4
 13.
    
    Segment Information
 The Companys continuing operations are comprised of several product lines manufactured and
sold in various geographic locations. The market channels and end users for products are
similar. The production processes are shared across the majority of the products.
Management evaluates performance and allocates resources on a combined basis and not as
separate business units or profit centers. Accordingly, management has concluded the Company
operates in one reportable segment.
 Geographic Information
 The reportable geographic regions are the Americas (United States, Canada, Mexico, Latin
America and South America), Europe/Middle East and Asia-Pacific. The following tables
provide summarized financial information concerning the Companys geographic segments:
 Three Months Ended March 31,2010
    
    
    2009Americas (U.S. 79% and 83%, respectively)
    
    $
    67,320
    
    
    $
    60,709Asia-Pacific (Australia 82% and 81%,
respectively)
    
    
    23,335
    
    
    
    16,303Europe/ Middle East
    
    
    5,962
    
    
    
    6,299Total
    
    $
    96,617
    
    
    $
    83,311
 March 31,2010
    
    
    December 31,2009Identifiable Assets (excluding working capital and intangibles):Americas
    
    $
    39,973
    
    
    $
    40,365Asia-Pacific
    
    
    8,192
    
    
    
    8,043Europe/Middle East
    
    
    1,629
    
    
    
    1,844$
    49,794
    
    
    $
    50,252
 12




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##### Table of Contents



Product Line Information
 The Company sells a variety of products, substantially all of which are used by
manufacturing, construction and foundry operations to cut, join and reinforce steel, aluminum
and other metals in various applications including construction, oil, gas rig and pipeline
construction, repair and maintenance of manufacturing equipment, and shipbuilding. The
following table shows sales for each of the product lines:
 Three Months Ended March 31,2010
    
    
    2009Gas equipment
    
    $
    34,842
    
    
    $
    29,475Filler metals including hardfacing
    
    
    21,288
    
    
    
    18,894Arc accessories including torches, related consumable
parts and accessories
    
    
    15,758
    
    
    
    15,310Plasma power supplies, torches and related consumable parts
    
    
    15,228
    
    
    
    13,032Welding equipment
    
    
    9,501
    
    
    
    6,600$
    96,617
    
    
    $
    83,311
 14.
    
    Restructuring and Other Charges
 In the first quarter of 2009, the Company offered a voluntary retirement program in which
approximately 50 employees elected to participate. As a result, the Company accrued
restructuring charges for $1,300 in separation pay and COBRA benefits payable under the
program. As a result, the Company
reduced annual compensation and benefit costs by approximately $3,100. The amounts were
substantially paid through August 2009.
 15.
    
    Condensed Consolidating Financial Statements
 Certain 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 as of March 31, 2010 and December 31, 2009 presents
guarantors and non-guarantors, 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.
 13




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    18,492
    
    
    $
    3,860
    
    
    $
    
    
    
    $
    22,352Accounts receivable, net
    
    
    
    
    
    
    56,568
    
    
    
    5,680
    
    
    
    
    
    
    
    62,248Inventories
    
    
    
    
    
    
    67,162
    
    
    
    8,378
    
    
    
    
    
    
    
    75,540Prepaid expenses and other
    
    
    
    
    
    
    6,041
    
    
    
    1,712
    
    
    
    
    
    
    
    7,753Deferred tax assets
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    3,008Total current assets
    
    
    
    
    
    
    151,271
    
    
    
    19,630
    
    
    
    
    
    
    
    170,901Property, plant and equipment, net
    
    
    
    
    
    
    43,215
    
    
    
    3,278
    
    
    
    
    
    
    
    46,493Goodwill
    
    
    
    
    
    
    187,880
    
    
    
    
    
    
    
    
    
    
    
    187,880Intangibles, net
    
    
    
    
    
    
    50,498
    
    
    
    7,357
    
    
    
    
    
    
    
    57,855Other assets
    
    
    1,895
    
    
    
    5,644
    
    
    
    
    
    
    
    (3,933
    )
    
    
    3,606Investment in and advances to subsidiaries
    
    
    227,820
    
    
    
    
    
    
    
    
    
    
    
    (227,820
    )
    
    
    Total assets
    
    $
    229,715
    
    
    $
    438,508
    
    
    $
    30,265
    
    
    $
    (231,753
    )
    
    $
    466,735LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Current maturities of long-term obligations
    
    
    463
    
    
    
    16,393
    
    
    
    233
    
    
    
    
    
    
    
    17,089Accounts payable
    
    
    
    
    
    
    25,746
    
    
    
    3,981
    
    
    
    
    
    
    
    29,727Accrued and other liabilities
    
    
    
    
    
    
    21,644
    
    
    
    3,747
    
    
    
    
    
    
    
    25,391Accrued interest
    
    
    3,303
    
    
    
    72
    
    
    
    
    
    
    
    
    
    
    
    3,375Income taxes payable
    
    
    
    
    
    
    1,977
    
    
    
    (39
    )
    
    
    
    
    
    
    1,938Deferred tax liabilities
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    
    
    
    
    2,793Total current liabilities
    
    
    3,766
    
    
    
    68,625
    
    
    
    7,922
    
    
    
    
    
    
    
    80,313Long-term obligations, less current maturities
    
    
    172,327
    
    
    
    17,424
    
    
    
    484
    
    
    
    
    
    
    
    190,235Deferred tax liabilities
    
    
    
    
    
    
    52,384
    
    
    
    
    
    
    
    
    
    
    
    52,384Other long-term liabilities
    
    
    1,310
    
    
    
    11,190
    
    
    
    606
    
    
    
    
    
    
    
    13,106Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    188,828
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,828Accumulated deficit
    
    
    (62,766
    )
    
    
    62,208
    
    
    
    (67,556
    )
    
    
    5,347
    
    
    
    (62,767
    )Accumulated other comprehensive income
(loss)
    
    
    4,501
    
    
    
    (29,592
    )
    
    
    (7,660
    )
    
    
    37,252
    
    
    
    4,501Total shareholders equity (deficit)
    
    
    130,698
    
    
    
    32,616
    
    
    
    (75,216
    )
    
    
    42,599
    
    
    
    130,697Net equity (deficit) and advances to / from subsidiaries
    
    
    (78,386
    )
    
    
    256,269
    
    
    
    96,469
    
    
    
    (274,352
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    229,715
    
    
    $
    438,508
    
    
    $
    30,265
    
    
    $
    (231,753
    )
    
    $
    466,735
 14




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2009
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    11,740
    
    
    $
    3,146
    
    
    $
    
    
    
    $
    14,886Accounts receivable, net
    
    
    
    
    
    
    50,422
    
    
    
    6,167
    
    
    
    
    
    
    
    56,589Inventories
    
    
    
    
    
    
    66,205
    
    
    
    8,176
    
    
    
    
    
    
    
    74,381Prepaid expenses and other
    
    
    
    
    
    
    7,714
    
    
    
    1,541
    
    
    
    
    
    
    
    9,255Deferred tax assets
    
    
    
    
    
    
    3,008
    
    
    
    
    
    
    
    
    
    
    
    3,008Total current assets
    
    
    
    
    
    
    139,089
    
    
    
    19,030
    
    
    
    
    
    
    
    158,119Property, plant and equipment, net
    
    
    
    
    
    
    43,233
    
    
    
    3,454
    
    
    
    
    
    
    
    46,687Goodwill
    
    
    
    
    
    
    187,818
    
    
    
    
    
    
    
    
    
    
    
    187,818Intangibles, net
    
    
    
    
    
    
    50,737
    
    
    
    7,714
    
    
    
    
    
    
    
    58,451Other assets
    
    
    2,019
    
    
    
    1,851
    
    
    
    
    
    
    
    
    
    
    
    3,870Investment in and advances to subsidiaries
    
    
    225,881
    
    
    
    
    
    
    
    
    
    
    
    (225,881
    )
    
    
    Total assets
    
    $
    227,900
    
    
    $
    422,728
    
    
    $
    30,198
    
    
    $
    (225,881
    )
    
    $
    454,945LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    9,643
    
    
    $
    
    
    
    $
    
    
    
    $
    9,643Current maturities of long-term obligations
    
    
    463
    
    
    
    8,239
    
    
    
    213
    
    
    
    
    
    
    
    8,915Accounts payable
    
    
    
    
    
    
    6,953
    
    
    
    2,645
    
    
    
    
    
    
    
    9,598Accrued and other liabilities
    
    
    
    
    
    
    19,275
    
    
    
    3,844
    
    
    
    
    
    
    
    23,119Accrued interest
    
    
    7,527
    
    
    
    81
    
    
    
    
    
    
    
    
    
    
    
    7,608Income taxes payable
    
    
    
    
    
    
    896
    
    
    
    (191
    )
    
    
    
    
    
    
    705Deferred tax liabilities
    
    
    
    
    
    
    2,793
    
    
    
    
    
    
    
    
    
    
    
    2,793Total current liabilities
    
    
    7,990
    
    
    
    47,880
    
    
    
    6,511
    
    
    
    
    
    
    
    62,381Long-term obligations, less current maturities
    
    
    172,327
    
    
    
    25,569
    
    
    
    570
    
    
    
    
    
    
    
    198,466Deferred tax liabilities
    
    
    
    
    
    
    52,835
    
    
    
    
    
    
    
    
    
    
    
    52,835Other long-term liabilities
    
    
    1,426
    
    
    
    11,430
    
    
    
    615
    
    
    
    
    
    
    
    13,471Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    188,791
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,791Accumulated deficit
    
    
    (65,062
    )
    
    
    54,870
    
    
    
    (67,783
    )
    
    
    12,912
    
    
    
    (65,063
    )Accumulated other comprehensive income
(loss)
    
    
    3,929
    
    
    
    (22,636
    )
    
    
    (6,312
    )
    
    
    28,948
    
    
    
    3,929Total shareholders equity (deficit)
    
    
    127,793
    
    
    
    32,234
    
    
    
    (74,095
    )
    
    
    41,860
    
    
    
    127,792Net equity (deficit) and advances to / from subsidiaries
    
    
    (81,636
    )
    
    
    252,780
    
    
    
    96,597
    
    
    
    (267,741
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    227,900
    
    
    $
    422,728
    
    
    $
    30,198
    
    
    $
    (225,881
    )
    
    $
    454,945
 15




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    106,219
    
    
    $
    8,961
    
    
    $
    (18,563
    )
    
    $
    96,617Cost of goods sold
    
    
    
    
    
    
    76,209
    
    
    
    6,360
    
    
    
    (18,337
    )
    
    
    64,232Gross margin
    
    
    
    
    
    
    30,010
    
    
    
    2,601
    
    
    
    (226
    )
    
    
    32,385Selling, general and administrative expenses
    
    
    17
    
    
    
    19,625
    
    
    
    2,125
    
    
    
    
    
    
    
    21,767Amortization of intangibles
    
    
    
    
    
    
    677
    
    
    
    
    
    
    
    
    
    
    
    677Operating income (loss)
    
    
    (17
    )
    
    
    9,708
    
    
    
    476
    
    
    
    (226
    )
    
    
    9,941Other income (expense):Interest, net
    
    
    (4,902
    )
    
    
    (1,399
    )
    
    
    (35
    )
    
    
    
    
    
    
    (6,336
    )Amortization of deferred financing costs
    
    
    (124
    )
    
    
    (140
    )
    
    
    
    
    
    
    
    
    
    
    (264
    )Equity in net income (loss) of subsidiaries
    
    
    7,339
    
    
    
    
    
    
    
    
    
    
    
    (7,339
    )
    
    
    Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    2,296
    
    
    
    8,169
    
    
    
    441
    
    
    
    (7,565
    )
    
    
    3,341Income tax provision
    
    
    
    
    
    
    831
    
    
    
    214
    
    
    
    
    
    
    
    1,045Net income (loss)
    
    $
    2,296
    
    
    $
    7,338
    
    
    $
    227
    
    
    $
    (7,565
    )
    
    $
    2,296
 16




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    90,025
    
    
    $
    5,597
    
    
    $
    (12,311
    )
    
    $
    83,311Cost of goods sold
    
    
    
    
    
    
    69,646
    
    
    
    4,583
    
    
    
    (12,278
    )
    
    
    61,951Gross margin
    
    
    
    
    
    
    20,379
    
    
    
    1,014
    
    
    
    (33
    )
    
    
    21,360Selling, general and administrative expenses
    
    
    (602
    )
    
    
    18,759
    
    
    
    1,285
    
    
    
    
    
    
    
    19,442Amortization of intangibles
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    
    
    
    
    671Operating income (loss)
    
    
    602
    
    
    
    949
    
    
    
    (271
    )
    
    
    (33
    )
    
    
    1,247Other income (expense):Interest, net
    
    
    (3,983
    )
    
    
    (638
    )
    
    
    (12
    )
    
    
    
    
    
    
    (4,633
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (111
    )
    
    
    
    
    
    
    
    
    
    
    (236
    )Equity in net income (loss) of subsidiaries
    
    
    1,010
    
    
    
    
    
    
    
    
    
    
    
    (1,010
    )
    
    
    Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    (2,496
    )
    
    
    200
    
    
    
    (283
    )
    
    
    (1,043
    )
    
    
    (3,622
    )Income tax provision
    
    
    
    
    
    
    (1,242
    )
    
    
    116
    
    
    
    
    
    
    
    (1,126
    )Net income (loss)
    
    $
    (2,496
    )
    
    $
    1,442
    
    
    $
    (399
    )
    
    $
    (1,043
    )
    
    $
    (2,496
    )
 17




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2010
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (1,920
    )
    
    $
    25,587
    
    
    $
    2,529
    
    
    $
    (7,565
    )
    
    $
    18,631Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (1,662
    )
    
    
    26
    
    
    
    
    
    
    
    (1,636
    )Other
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    
    
    
    
    (81
    )Net cash used in investing activities
    
    
    
    
    
    
    (1,662
    )
    
    
    (55
    )
    
    
    
    
    
    
    (1,717
    )Cash flows from financing activities:Repayments under Working Capital Facility
    
    
    
    
    
    
    (9,643
    )
    
    
    
    
    
    
    
    
    
    
    (9,643
    )Repayments of Second-Lien Facility and other
    
    
    
    
    
    
    (54
    )
    
    
    (18
    )
    
    
    
    
    
    
    (72
    )Stock compensation expense
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17Exercise of employee stock purchases
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Other
    
    
    1,883
    
    
    
    (7,713
    )
    
    
    (1,700
    )
    
    
    7,565
    
    
    
    35Net cash provided by (used in) financing activities
    
    
    1,920
    
    
    
    (17,410
    )
    
    
    (1,718
    )
    
    
    7,565
    
    
    
    (9,643
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    237
    
    
    
    (42
    )
    
    
    
    
    
    
    195Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    6,752
    
    
    
    714
    
    
    
    
    
    
    
    7,466Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    6,752
    
    
    
    714
    
    
    
    
    
    
    
    7,466Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    11,740
    
    
    
    3,146
    
    
    
    
    
    
    
    14,886Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    18,492
    
    
    $
    3,860
    
    
    $
    
    
    
    $
    22,352
 18




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (6,012
    )
    
    $
    8,494
    
    
    $
    1,560
    
    
    $
    (1,043
    )
    
    $
    2,999Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (2,059
    )
    
    
    (179
    )
    
    
    
    
    
    
    (2,238
    )Other
    
    
    
    
    
    
    (55
    )
    
    
    
    
    
    
    
    
    
    
    (55
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (2,114
    )
    
    
    (179
    )
    
    
    
    
    
    
    (2,293
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    8,923
    
    
    
    
    
    
    
    
    
    
    
    8,923Repayments under Working Capital Facility
    
    
    
    
    
    
    (7,193
    )
    
    
    
    
    
    
    
    
    
    
    (7,193
    )Borrowings of other debt
    
    
    
    
    
    
    75
    
    
    
    
    
    
    
    
    
    
    
    75Repayments of other debt
    
    
    463
    
    
    
    (908
    )
    
    
    (73
    )
    
    
    
    
    
    
    (518
    )Changes in net equity and advances to / from
discontinued operations
    
    
    4,343
    
    
    
    (4,941
    )
    
    
    (445
    )
    
    
    1,043
    
    
    
    Other
    
    
    1,206
    
    
    
    420
    
    
    
    
    
    
    
    
    
    
    
    1,626Net cash provided by (used in) financing activities
    
    
    6,012
    
    
    
    (3,624
    )
    
    
    (518
    )
    
    
    1,043
    
    
    
    2,913Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    (158
    )
    
    
    (130
    )
    
    
    
    
    
    
    (288
    )Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    2,598
    
    
    
    733
    
    
    
    
    
    
    
    3,331Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    
    
    
    
    314Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    2,598
    
    
    
    1,047
    
    
    
    
    
    
    
    3,645Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    6,302
    
    
    
    6,199
    
    
    
    
    
    
    
    12,501Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    8,900
    
    
    $
    7,246
    
    
    $
    
    
    
    $
    16,146
 19




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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
  20




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##### Table of Contents



Key Indicators
    RESULTS OF OPERATIONS
  Net sales
 Three Months Ended March 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeNet sales summary:U.S.
    
    $
    52,920
    
    
    $
    50,451
    
    
    
    4.9
    %International
    
    
    43,697
    
    
    
    32,860
    
    
    
    33.0
    %Consolidated
    
    $
    96,617
    
    
    $
    83,311
    
    
    
    16.0
    %
  Gross margin
 Three Months Ended March 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeGross margin
    
    $
    32,385
    
    
    $
    21,360
    
    
    
    51.6
    %Gross margin as a percent of net sales
    
    
    33.5
    %
    
    
    25.6
    %
  21




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##### Table of Contents



Selling, general and administrative expenses
 Three Months Ended March 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeSelling, general and
administrative expenses
    
    $
    21,767
    
    
    $
    19,442
    
    
    
    12.0
    %SG&A as a percent of net sales
    
    
    22.5
    %
    
    
    23.3
    %
  Interest, net
 Three Months Ended March 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeInterest, net
    
    $
    6,336
    
    
    $
    4,633
    
    
    
    36.8
    %
  Income tax provision (benefit)
 Three Months Ended March 31,(Dollars in thousands)
    
    2010
    
    
    2009
    
    
    % ChangeIncome tax provision (benefit)
    
    $
    1,045
    
    
    $
    (1,126
    )
    
    
    (192.8
    %)
  RECENT ACCOUNTING PRONOUNCEMENTS
  LIQUIDITY AND CAPITAL RESOURCES
  22




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##### Table of Contents



Three Months EndedMarch 31,(Dollars in thousands)
    
    2010
    
    
    2009Net cash provided by (used in):Operating activities
    
    $
    18,631
    
    
    $
    2,999Investing activities
    
    
    (1,717
    )
    
    
    (2,293
    )Financing activities
    
    
    (9,643
    )
    
    
    2,913Effect of exchange rates
    
    
    195
    
    
    
    (288
    )Cash provided
    
    $
    7,466
    
    
    $
    3,331
 Operating Activities
  
    
    Accounts receivable increased $5.6 million during the three months ended March 31, 2010
due to increased sales, compared to the $10.9 million decrease during the same period in
2009 during which sales declined substantially.
    
    Inventory increases used $0.9 million of cash through the first three months of 2010 due
to increased customer demand. Inventory declined in 2009 due to substantial declines in
demand and provided $12.2 million of cash.
    
    Accounts payable increased in the first three months of 2010 providing $19.8 million of
cash which includes the beneficial impact of approximately $14 million of early payment of
supplier invoices during the fourth quarter of 2009. These early payments reduced the cash
usage requirements in the first quarter of 2010. In the first three months of 2009
accounts payable were reduced, utilizing $8.3 million of cash. During 2009, the Company
was paying vendors for previous materials purchases while reducing new purchases in
connection with reducing inventory levels.
    
    Accrued liabilities decreased in the first three months of 2010, using $0.9 million of
cash, which reflected the net effect of the $9.2 million for payment of the semi-annual
interest due on the Senior Subordinated Notes and accruals during the quarter for interest
and incentive compensation. The reduction of accrued liabilities during the first three
months of 2009 used $11.3 million in cash, consisting of severance payments, customer
rebates, incentive compensation and the $8.5 million of semi-annual interest due on the
Senior Subordinated Notes.
 Investing Activities
  Financing Activities
   23




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
     
 Item 4. Controls and Procedures
  24




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##### Table of Contents



25




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##### Table of Contents



Item 1. Legal Proceedings
 Contingencies
 
 Item 6. Exhibits
 3.1
    
    
    
    Amended and Restated Bylaws of Thermadyne Holdings Corporation, effective
March 9, 2010 (incorporated by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K (File No. 001-13023), filed on March 15,
2010).10.1
    
    
    
    Third Amendment to Third Amended and Restated Credit Agreement dated as
of February 23, 2010 by and among Thermadyne Industries, Inc., Thermal
Dynamics Corporation, Victor Equipment Company, C & G Merger Co., Stoody
Company, Thermadyne International Corp., as borrowers, the credit parties
signatory thereto, and General Electric Capital Corporation, as agent and
lender (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 001-13023), filed on February 26,
2010).10.2
    
    
    
    Amendment Number One to 2009 Amended and Restated Second Lien Credit
Agreement dated as of February 23, 2010 by and among Thermadyne
Industries, Inc., Thermal Dynamics Corporation, Victor Equipment Company,
C & G Merger Co., Stoody Company, and Thermadyne International Corp., as
borrowers, the guarantors signatory thereto, the lenders signatory
thereto, and Regions Bank as agent (incorporated by reference to Exhibit
10.2 to the Companys Current Report on Form 8-K (File No. 001-13023),
filed on February 26, 2010).10.3
    
    
    
    Severance Agreement and Release by and between John Boisvert and
Thermadyne Holdings Corporation dated effective March 12, 2010
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K (File No. 001-13023), filed on March 15, 2010).*10.4
    
    
    
    Form of Non-Qualified Stock Option Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.5
    
    
    
    Form of Restricted Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.6
    
    
    
    Form of Restricted Cash Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.7
    
    
    
    Form of Restricted Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn and
Terry Downes.*10.8
    
    
    
    Form of Restricted Cash Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn and
Terry Downes.*31.1
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **31.2
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**32.1
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002. **32.2
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002.*
 
 
    
    Indicates a management contract or compensatory plan or arrangement.*
    
    Filed herewith. 26




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:
    /s/ Steven A. SchummSteven A. SchummExecutive Vice President, Chief Financial and
Administrative Officer(Principal Financial and Accounting Officer)  27




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
 EXHIBIT INDEX
 Exhibit No.
    
    
    
    Exhibit3.1
    
    
    
    Amended and Restated Bylaws of Thermadyne Holdings Corporation, effective
March 9, 2010 (incorporated by reference to Exhibit 3.1 to the Companys
Current Report on Form 8-K (File No. 001-13023), filed on March 15,
2010).10.1
    
    
    
    Third Amendment to Third Amended and Restated Credit Agreement dated as
of February 23, 2010 by and among Thermadyne Industries, Inc., Thermal
Dynamics Corporation, Victor Equipment Company, C & G Merger Co., Stoody
Company, Thermadyne International Corp., as borrowers, the credit parties
signatory thereto, and General Electric Capital Corporation, as agent and
lender (incorporated by reference to Exhibit 10.1 to the Companys
Current Report on Form 8-K (File No. 001-13023), filed on February 26,
2010).10.2
    
    
    
    Amendment Number One to 2009 Amended and Restated Second Lien Credit
Agreement dated as of February 23, 2010 by and among Thermadyne
Industries, Inc., Thermal Dynamics Corporation, Victor Equipment Company,
C & G Merger Co., Stoody Company, and Thermadyne International Corp., as
borrowers, the guarantors signatory thereto, the lenders signatory
thereto, and Regions Bank as agent (incorporated by reference to Exhibit
10.2 to the Companys Current Report on Form 8-K (File No. 001-13023),
filed on February 26, 2010).10.3
    
    
    
    Severance Agreement and Release by and between John Boisvert and
Thermadyne Holdings Corporation dated effective March 12, 2010
(incorporated by reference to Exhibit 10.1 to the Companys Current
Report on Form 8-K (File No. 001-13023), filed on March 15, 2010).*10.4
    
    
    
    Form of Non-Qualified Stock Option Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.5
    
    
    
    Form of Restricted Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.6
    
    
    
    Form of Restricted Cash Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn, Terry
Downes, Terry A. Moody and Steven A. Schumm.*10.7
    
    
    
    Form of Restricted Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn and
Terry Downes.*10.8
    
    
    
    Form of Restricted Cash Award Agreement dated March 9, 2010, between
Thermadyne Holdings Corporation and each of Messrs. Martin Quinn and
Terry Downes.*31.1
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. **31.2
    
    
    
    Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.**32.1
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002. **32.2
    
    
    
    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted by Section
906 of the Sarbanes-Oxley Act of 2002.*
 
 
    
    Indicates a management contract or compensatory plan or arrangement.*
    
    Filed herewith. 28