##### 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 March 31, 2009
 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
    
    (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
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
  o þ
  þ o




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##### 



THERMADYNE HOLDINGS CORPORATION
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Balance Sheets
    
    
    3Condensed Consolidated Statements of Operations
    
    
    4Condensed Consolidated Statements of Cash Flows
    
    
    5Notes to Condensed Consolidated Financial Statements
    
    
    6-20Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21-25Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    25Item 4. Controls and Procedures
    
    
    26PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    27Item 6. Exhibits
    
    
    27SIGNATURES
    
    
    28EX-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 31,2009
    
    
    2008(unaudited)Current Assets:Cash and cash equivalents
    
    $
    15,247
    
    
    $
    11,916Accounts receivable, less allowance for doubtful accounts of
$750 and $900, respectively
    
    
    60,457
    
    
    
    72,044Inventories
    
    
    89,493
    
    
    
    102,479Prepaid expenses and other
    
    
    4,879
    
    
    
    5,443Assets held for sale
    
    
    1,238
    
    
    
    916Deferred tax assets
    
    
    2,277
    
    
    
    2,277Total current assets
    
    
    173,591
    
    
    
    195,075Property, plant and equipment, net of accumulated depreciation
of $47,729 and $46,653, respectively
    
    
    47,286
    
    
    
    47,501Goodwill
    
    
    183,482
    
    
    
    184,043Intangibles, net
    
    
    60,167
    
    
    
    60,783Other assets
    
    
    3,895
    
    
    
    6,967Total assets
    
    $
    468,421
    
    
    $
    494,369Current Liabilities:Working capital facility
    
    $
    34,261
    
    
    $
    32,531Current maturities of long-term obligations
    
    
    2,490
    
    
    
    2,060Accounts payable
    
    
    22,182
    
    
    
    30,823Accrued and other liabilities
    
    
    20,619
    
    
    
    28,295Accrued interest
    
    
    2,870
    
    
    
    6,558Income taxes payable
    
    
    2,668
    
    
    
    2,849Deferred tax liability
    
    
    3,253
    
    
    
    3,253Liabilities related to assets held for sale
    
    
    5,443
    
    
    
    5,266Total current liabilities
    
    
    93,786
    
    
    
    111,635Long-term obligations, less current maturities
    
    
    197,736
    
    
    
    199,454Deferred tax liabilities
    
    
    45,179
    
    
    
    47,292Other long-term liabilities
    
    
    17,693
    
    
    
    17,685Shareholders equity:Common stock, $0.01 par value:Authorized  25,000,000 sharesIssued and outstanding  13,513,901 shares at March 31, 2009 and
13,509,698 shares at December 31, 2008
    
    
    135
    
    
    
    135Additional paid-in capital
    
    
    188,689
    
    
    
    189,256Accumulated deficit
    
    
    (71,741
    )
    
    
    (69,245
    )Accumulated other comprehensive loss
    
    
    (3,056
    )
    
    
    (1,843
    )Total shareholders equity
    
    
    114,027
    
    
    
    118,303Total liabilities and shareholders equity
    
    $
    468,421
    
    
    $
    494,369
  3




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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (In thousands, except per share data)
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Net sales
    
    $
    83,311
    
    
    $
    130,767Cost of goods sold
    
    
    61,951
    
    
    
    88,488Gross margin
    
    
    21,360
    
    
    
    42,279Selling, general and administrative expenses
    
    
    19,438
    
    
    
    27,451Amortization of intangibles
    
    
    671
    
    
    
    667Net periodic postretirement benefits
    
    
    4
    
    
    
    52Operating income
    
    
    1,247
    
    
    
    14,109Other income (expenses):Interest, net
    
    
    (4,633
    )
    
    
    (5,334
    )Amortization of deferred financing costs
    
    
    (236
    )
    
    
    (234
    )Minority interest
    
    
    
    
    
    
    (52
    )Income (loss) from continuing operations before
income tax provision and discontinued operations
    
    
    (3,622
    )
    
    
    8,489Income tax provision (benefit)
    
    
    (1,126
    )
    
    
    3,772Income (loss) from continuing operations
    
    
    (2,496
    )
    
    
    4,717Income (loss) from discontinued operations, net of tax
    
    
    
    
    
    
    (192
    )Net income (loss)
    
    $
    (2,496
    )
    
    $
    4,525Basic and diluted income (loss) per share:Continuing operations
    
    $
    (0.18
    )
    
    $
    0.35Discontinued operations
    
    
    
    
    
    
    (0.01
    )Net income (loss)
    
    $
    (0.18
    )
    
    $
    0.34
  4




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THERMADYNE HOLDINGS CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands)
 (Unaudited)
 Three Months Ended March 31,2009
    
    
    2008Cash flows from continuing operations:Cash flows from operating activities:Net income (loss)
    
    $
    (2,496
    )
    
    $
    4,525Adjustments to reconcile net income to net cash provided by (used in)
operating activities:Income (loss) from discontinued operations
    
    
    
    
    
    
    192Minority interest
    
    
    
    
    
    
    52Depreciation and amortization
    
    
    3,002
    
    
    
    3,118Deferred income taxes
    
    
    (1,270
    )
    
    
    1,851Net periodic post-retirement benefits
    
    
    4
    
    
    
    52Changes in operating assets and liabilities:
    
    
    
    
    
    
    Accounts receivable
    
    
    10,850
    
    
    
    (6,133
    )Inventories
    
    
    12,155
    
    
    
    1,808Prepaids
    
    
    528
    
    
    
    (64
    )Accounts payable
    
    
    (8,341
    )
    
    
    4,154Accrued and other liabilities
    
    
    (7,505
    )
    
    
    (2,611
    )Accrued interest
    
    
    (3,688
    )
    
    
    (4,760
    )Other long-term liabilities
    
    
    (108
    )
    
    
    (189
    )Other, net
    
    
    (132
    )
    
    
    882Net cash provided by (used in) operating activities
    
    
    2,999
    
    
    
    2,877Cash flows from investing activities:Capital expenditures
    
    
    (2,238
    )
    
    
    (1,497
    )Proceeds from sales of discontinued operations
    
    
    
    
    
    
    500Purchase of outside interest in joint venture
    
    
    
    
    
    
    (844
    )Other
    
    
    (55
    )
    
    
    (48
    )Net cash provided by (used in) investing activities
    
    
    (2,293
    )
    
    
    (1,889
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    8,923
    
    
    
    14,181Repayments of Working Capital Facility
    
    
    (7,193
    )
    
    
    (4,715
    )Borrowings under other debt
    
    
    75
    
    
    
    Repayments of other debt
    
    
    (518
    )
    
    
    (7,233
    )Stock compensation expense
    
    
    (602
    )
    
    
    208Exercise of employee stock purchases
    
    
    35
    
    
    
    36Advances from (to) discontinued operations
    
    
    36
    
    
    
    (1,126
    )Other, net
    
    
    2,157
    
    
    
    Net cash provided by (used in) financing activities
    
    
    2,913
    
    
    
    1,351Effect of exchange rate changes on cash and cash equivalents
    
    
    (288
    )
    
    
    568Net cash provided by (used in) continuing operations
    
    
    3,331
    
    
    
    2,907Cash flows from discontinued operationsNet cash provided by (used in) operating activities
    
    
    100
    
    
    
    (894
    )Net cash provided by (used in) investing activities
    
    
    
    
    
    
    500Net cash provided by (used in) financing activities
    
    
    206
    
    
    
    130Effect of exchange rates on cash and cash equivalents
    
    
    8
    
    
    
    15Net cash provided by (used in) discontinued operations
    
    
    314
    
    
    
    (249
    )Total increase (decrease) in cash and cash equivalents
    
    
    3,645
    
    
    
    2,658Total cash and cash equivalents beginning of period
    
    
    12,501
    
    
    
    16,435Total cash and cash equivalents end of period
    
    $
    16,146
    
    
    $
    19,093Continuing operationsCash and cash equivalents beginning of period
    
    $
    11,916
    
    
    $
    16,159Net cash provided by (used in) continuing operations
    
    
    3,331
    
    
    
    2,907Cash and cash equivalents end of period
    
    $
    15,247
    
    
    $
    19,066Discontinued operationsCash and cash equivalents beginning of period
    
    $
    585
    
    
    $
    276Net cash provided by (used in) discontinued operations
    
    
    314
    
    
    
    (249
    )Cash and cash equivalents end of period
    
    $
    899
    
    
    $
    27Income taxes paid
    
    $
    530
    
    
    $
    1,092Interest paid
    
    $
    9,027
    
    
    $
    10,286
  5




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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 Presentation
    2. Significant Accounting Policies
 Product Warranty Programs
  Three Months EndedMarch 31,2009
    
    
    2008Balance at beginning of period
    
    $
    2,961
    
    
    $
    3,072Charged to costs and expenses
    
    
    (32
    )
    
    
    1,729Deductions
    
    
    (220
    )
    
    
    (1,509
    )Balance at end of period
    
    $
    2,709
    
    
    $
    3,292
 Fair Value
  Recent Accounting Pronouncements
 Business Combinations
 6




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3. Discontinued Operations
   7




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Three Months Ended March 31, 2009C&G
    
    Brazil
    
    Genset
    
    TotalNet sales
    
    $
    
    
    
    $
    
    
    
    
    
    
    
    $
    Operating expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income tax benefit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjustment in carrying value of related assets
and reserves, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss) from discontinued operations
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Three Months Ended March 31, 2008C&G
    
    Brazil
    
    Genset
    
    TotalNet sales
    
    $
    68
    
    
    $
    278
    
    
    $
    
    
    
    $
    346Operating expenses
    
    
    (218
    )
    
    
    (443
    )
    
    
    
    
    
    
    (661
    )Other expenses
    
    
    
    
    
    
    (17
    )
    
    
    
    
    
    
    (17
    )Income tax provision
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Adjustment in carrying value
of related assets
and reserves, net of tax
    
    
    (52
    )
    
    
    194
    
    
    
    (2
    )
    
    
    140Net income (loss) from discontinued operations
    
    $
    (202
    )
    
    $
    12
    
    
    $
    (2
    )
    
    $
    (192
    )
  March 31,
    
    December 31,2009
    
    2008Cash
    
    $
    899
    
    
    $
    585Other assets
    
    
    339
    
    
    
    331$
    1,238
    
    
    $
    916Accounts payable and other liabilities
    
    $
    5,443
    
    
    $
    5,266
 4.
    
    Inventories
  March 31,
    
    
    December 31,2009
    
    
    2008Raw materials and component parts
    
    $
    32,934
    
    
    $
    41,185Work-in-process
    
    
    10,522
    
    
    
    12,216Finished goods
    
    
    59,494
    
    
    
    63,597102,950
    
    
    
    116,998LIFO reserve
    
    
    (13,457
    )
    
    
    (14,519
    )$
    89,493
    
    
    $
    102,479
 8




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5.
    
    Intangible AssetsThe composition of intangibles was as follows:
 March 31,
    
    
    December 31,2009
    
    
    2008Goodwill
    
    $
    183,482
    
    
    $
    184,043Patents and customer relationships
    
    
    42,435
    
    
    
    42,380Trademarks
    
    
    33,403
    
    
    
    33,403259,320
    
    
    
    259,826Accumulated amortization of patents and
customer relationships
    
    
    (15,671
    )
    
    
    (15,000
    )$
    243,649
    
    
    $
    244,826
 Amortization of patents and customer relationships amounted to $671 and $667 for the three
month periods ended March 31, 2009 and 2008, respectively.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 below
its carrying value. The impairment analysis is completed on a consolidated enterprise
level. Management considers comparable market value, market capitalization and the present
value of expected future cash flows (the three factors) 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. Management performed an impairment analysis as of December 31, 2008.During the fourth quarter 2008, the stock price of Thermadyne reported on NASDAQ declined
from $16.48 per share as of October 1, 2008 to $6.87 per share at December 31, 2008 and the
stock price averaged $7.60 per share during December 2008. Stock price is an important
consideration in managements impairment assessment. During
March 2009, the traded stock price has averaged $2.11 per share. If
management were to consider only the calculated market capitalization at this average price,
an impairment would be deemed to exist. However, management believes that this trading
period for the Companys stock is characterized by both extraordinary general market
conditions and unique events in changes of the stockholdings of the Company. In the fourth
quarter, significant disruption occurred in the trading patterns of the Companys stock. A
number of large holders of Thermadyne stock were severely impacted by the declines in the
general markets, causing them to liquidate positions. This put an unprecedented selling
pressure on our shares, which are thinly traded. In order to appropriately reflect these
considerations in the March 31, 2009 impairment analysis, Management has shifted its
relative weighting of the three factors discussed above. In doing so,
Management used primarily the present value of expected future cash flows to estimate fair
value. Management concluded that the carrying value of goodwill was not impaired as of March
31, 2009. If current global economic recessionary conditions or reduced prices for the
Companys publicly traded stock prove to be sustained beyond the time frames assumed in
managements analysis, the Company may be required to record an impairment.The change in the carrying amount of goodwill was as follows:
 Carrying Amountof GoodwillBalance as of December 31, 2008
    
    $
    184,043Foreign currency translation
    
    
    (561
    )Balance as of March 31, 2009
    
    $
    183,482
 9




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6. Debt and Capital Lease Obligations
  March 31,
    
    
    December 31,2009
    
    
    2008Working Capital Facility
    
    $
    34,261
    
    
    $
    32,531Second-Lien Facility
    
    
    14,000
    
    
    
    14,000Senior Subordinated Notes, due
February 1, 2014, 9 1/4% interest
payable semiannually on February 1 and August 1
    
    
    175,000
    
    
    
    175,000Capital leases
    
    
    8,991
    
    
    
    9,524Other
    
    
    2,235
    
    
    
    2,990234,487
    
    
    
    234,045Current maturities and working capital facility
    
    
    (36,751
    )
    
    
    (34,591
    )$
    197,736
    
    
    $
    199,454
   Parent Company Financial Information
  7. Derivative Instruments
    10




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##### Table of Contents



8. Comprehensive Income
  Three Months Ended March 31,2009
    
    
    2008Net income (loss)
    
    $
    (2,496
    )
    
    $
    4,525Cumulative foreign currency translation
gains (losses), net of tax
    
    
    (1,285
    )
    
    
    2,703Minimum pension liability, net of tax
    
    
    164
    
    
    
    Minimum post-retirement liability, net of tax
    
    
    (92
    )
    
    
    (56
    )Comprehensive income (loss)
    
    $
    (3,709
    )
    
    $
    7,172
 9. Income Taxes
    10. Contingencies
    11. Stock Options and Stock-Based Compensation
  11




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March 31,
    
    March 31,2009
    
    2008Weighted average fair value
    
    $
    1.01
    
    
    $
    3.85Assumptions used:Expected dividend yield
    
    
    0.00
    %
    
    
    0.00
    %Expected volatility
    
    
    54.79
    %
    
    
    40.25
    %Risk-free interest rate
    
    
    2.63
    %
    
    
    2.88
    %Expected life
    
    6.5 years
    
    
    6.5 years
  Weighted-Weighted
    
    AverageAverage
    
    Remaining
    
    AggregateExercise
    
    Contractual
    
    IntrinsicEmployee and Director Stock Options
    
    Shares
    
    Price
    
    Term
    
    ValueOptions outstanding at December 31,
2008
    
    
    1,249,497
    
    
    $
    13.61Granted
    
    
    65,779
    
    
    $
    4.99Exercised
    
    
    Forfeited or expired
    
    
    (20,997
    )
    
    $
    14.62Options outstanding at March 31, 2009
    
    
    1,294,279
    
    
    $
    12.90
    
    
    
    6.3
    
    
    $
    Options exercisable at March 31, 2009
    
    
    699,438
    
    
    $
    13.55
    
    
    
    5.7
    
    
    $
    
    12




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12. Earnings (Loss) Per Share
  Three Months Ended March 31,2009
    
    
    2008Numerator:Income (loss) applicable to common sharesContinuing operations
    
    $
    (2,496
    )
    
    $
    4,717Discontinued operations
    
    
    
    
    
    
    (192
    )Net income (loss)
    
    $
    (2,496
    )
    
    $
    4,525Denominator:Weighted average shares for basic earnings per share
    
    
    13,513,154
    
    
    
    13,434,226Dilutive effect of stock options
    
    
    22,039
    
    
    
    90Weighted average shares for diluted earnings per
share
    
    
    13,535,193
    
    
    
    13,434,316Basic and Diluted income (loss) per share amounts:Continuing operations
    
    $
    (0.18
    )
    
    $
    0.35Discontinued operations
    
    $
    
    
    
    $
    (0.01
    )Net income (loss)
    
    $
    (0.18
    )
    
    $
    0.34
 13. Employee Benefit Plans
  Pension Benefits
    
    
    Other Postretirement BenefitsThree Months Ended March 31,
    
    
    Three Months Ended March 31,2009
    
    
    2008
    
    
    2009
    
    
    2008Components of the net periodic benefit cost:Service Cost
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Interest Cost
    
    
    321
    
    
    
    311
    
    
    
    4
    
    
    
    52Expected
return on plan assets
    
    
    (235
    )
    
    
    (311
    )
    
    
    
    
    
    
    Recognized
(gain) loss
    
    
    161
    
    
    
    
    
    
    
    
    
    
    
    Net periodic
benefit cost
    
    $
    247
    
    
    $
    
    
    
    $
    4
    
    
    $
    52
 14. Segment Information
   Three Months Ended March 31,2009
    
    
    2008Net Sales:Americas
    
    $
    60,709
    
    
    $
    95,501Europe/Middle East
    
    
    6,299
    
    
    
    10,162Asia-Pacific
    
    
    16,303
    
    
    
    25,104$
    83,311
    
    
    $
    130,767
 March 31,
    
    
    December 31,2009
    
    
    2008Identifiable Assets (excluding
working capital and intangibles):Americas
    
    $
    41,874
    
    
    $
    44,992Europe/Middle East
    
    
    1,985
    
    
    
    2,182Asia-Pacific
    
    
    7,036
    
    
    
    6,958$
    50,895
    
    
    $
    54,132
 13




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15. Restructuring and Other Charges
  16. Condensed Consolidating Financial Statements
   14




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THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2009
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    8,900
    
    
    $
    6,347
    
    
    $
    
    
    
    $
    15,247Accounts receivable, net
    
    
    
    
    
    
    54,109
    
    
    
    6,348
    
    
    
    
    
    
    
    60,457Inventories
    
    
    
    
    
    
    79,666
    
    
    
    9,827
    
    
    
    
    
    
    
    89,493Prepaid expenses and other
    
    
    
    
    
    
    4,178
    
    
    
    701
    
    
    
    
    
    
    
    4,879Assets held for sale
    
    
    
    
    
    
    
    
    
    
    1,238
    
    
    
    
    
    
    
    1,238Deferred tax assets
    
    
    
    
    
    
    2,277
    
    
    
    
    
    
    
    
    
    
    
    2,277Total current assets
    
    
    
    
    
    
    149,130
    
    
    
    24,461
    
    
    
    
    
    
    
    173,591Property, plant and equipment, net
    
    
    
    
    
    
    43,459
    
    
    
    3,827
    
    
    
    
    
    
    
    47,286Goodwill
    
    
    
    
    
    
    183,482
    
    
    
    
    
    
    
    
    
    
    
    183,482Intangibles, net
    
    
    
    
    
    
    52,914
    
    
    
    7,253
    
    
    
    
    
    
    
    60,167Other assets
    
    
    2,425
    
    
    
    1,470
    
    
    
    
    
    
    
    
    
    
    
    3,895Investment in and advances to subsidiaries
    
    
    191,667
    
    
    
    
    
    
    
    
    
    
    
    (191,667
    )
    
    
    Total assets
    
    $
    194,092
    
    
    $
    430,455
    
    
    $
    35,541
    
    
    $
    (191,667
    )
    
    $
    468,421LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    34,261
    
    
    $
    
    
    
    $
    
    
    
    $
    34,261Current maturities of long-term obligations
    
    
    463
    
    
    
    1,722
    
    
    
    305
    
    
    
    
    
    
    
    2,490Accounts payable
    
    
    
    
    
    
    19,822
    
    
    
    2,360
    
    
    
    
    
    
    
    22,182Accrued and other liabilities
    
    
    
    
    
    
    18,944
    
    
    
    1,675
    
    
    
    
    
    
    
    20,619Accrued interest
    
    
    2,771
    
    
    
    99
    
    
    
    
    
    
    
    
    
    
    
    2,870Income taxes payable
    
    
    
    
    
    
    2,296
    
    
    
    372
    
    
    
    
    
    
    
    2,668Deferred tax liability
    
    
    
    
    
    
    3,253
    
    
    
    
    
    
    
    
    
    
    
    3,253Liabilities related to assets held for sale
    
    
    
    
    
    
    
    
    
    
    5,443
    
    
    
    
    
    
    
    5,443Total current liabilities
    
    
    3,234
    
    
    
    80,397
    
    
    
    10,155
    
    
    
    
    
    
    
    93,786Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    22,130
    
    
    
    606
    
    
    
    
    
    
    
    197,736Deferred tax liabilities
    
    
    
    
    
    
    45,179
    
    
    
    
    
    
    
    
    
    
    
    45,179Other long-term liabilities
    
    
    1,773
    
    
    
    15,393
    
    
    
    527
    
    
    
    
    
    
    
    17,693Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    188,689
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    188,689Accumulated deficit
    
    
    (71,740
    )
    
    
    35,982
    
    
    
    (68,291
    )
    
    
    32,308
    
    
    
    (71,741
    )Accumulated other comprehensive income (loss)
    
    
    (3,057
    )
    
    
    (21,394
    )
    
    
    (2,622
    )
    
    
    24,017
    
    
    
    (3,056
    )Total shareholders equity (deficit)
    
    
    114,027
    
    
    
    14,588
    
    
    
    (70,913
    )
    
    
    56,325
    
    
    
    114,027Net equity (deficit) and advances to / from subsidiaries
    
    
    (99,942
    )
    
    
    252,768
    
    
    
    95,166
    
    
    
    (247,992
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    194,092
    
    
    $
    430,455
    
    
    $
    35,541
    
    
    $
    (191,667
    )
    
    $
    468,421
 15




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 2008
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedASSETSCurrent Assets:Cash and cash equivalents
    
    $
    
    
    
    $
    6,301
    
    
    $
    5,615
    
    
    $
    
    
    
    $
    11,916Accounts receivable, net
    
    
    
    
    
    
    63,760
    
    
    
    8,284
    
    
    
    
    
    
    
    72,044Inventories
    
    
    
    
    
    
    90,220
    
    
    
    12,259
    
    
    
    
    
    
    
    102,479Prepaid expenses and other
    
    
    
    
    
    
    4,653
    
    
    
    790
    
    
    
    
    
    
    
    5,443Assets held for sale
    
    
    
    
    
    
    
    
    
    
    916
    
    
    
    
    
    
    
    916Deferred tax assets
    
    
    
    
    
    
    2,277
    
    
    
    
    
    
    
    
    
    
    
    2,277Total current assets
    
    
    
    
    
    
    167,211
    
    
    
    27,864
    
    
    
    
    
    
    
    195,075Property, plant and equipment, net
    
    
    
    
    
    
    43,295
    
    
    
    4,206
    
    
    
    
    
    
    
    47,501Goodwill
    
    
    
    
    
    
    184,043
    
    
    
    
    
    
    
    
    
    
    
    184,043Intangibles, net
    
    
    
    
    
    
    53,166
    
    
    
    7,617
    
    
    
    
    
    
    
    60,783Other assets
    
    
    5,541
    
    
    
    1,426
    
    
    
    
    
    
    
    
    
    
    
    6,967Investment in and advances to subsidiaries
    
    
    191,869
    
    
    
    
    
    
    
    
    
    
    
    (191,869
    )
    
    
    Total assets
    
    $
    197,410
    
    
    $
    449,141
    
    
    $
    39,687
    
    
    $
    (191,869
    )
    
    $
    494,369LIABILITIES AND SHAREHOLDERS EQUITY (DEFICIT)Current Liabilities:Working capital facility
    
    $
    
    
    
    $
    32,531
    
    
    $
    
    
    
    $
    
    
    
    $
    32,531Current maturities of long-term obligations
    
    
    
    
    
    
    1,702
    
    
    
    358
    
    
    
    
    
    
    
    2,060Accounts payable
    
    
    
    
    
    
    26,132
    
    
    
    4,691
    
    
    
    
    
    
    
    30,823Accrued and other liabilities
    
    
    
    
    
    
    26,673
    
    
    
    1,622
    
    
    
    
    
    
    
    28,295Accrued interest
    
    
    6,412
    
    
    
    146
    
    
    
    
    
    
    
    
    
    
    
    6,558Income taxes payable
    
    
    
    
    
    
    2,798
    
    
    
    51
    
    
    
    
    
    
    
    2,849Deferred tax liability
    
    
    
    
    
    
    3,253
    
    
    
    
    
    
    
    
    
    
    
    3,253Liabilities related to assets held for sale
    
    
    
    
    
    
    
    
    
    
    5,266
    
    
    
    
    
    
    
    5,266Total current liabilities
    
    
    6,412
    
    
    
    93,235
    
    
    
    11,988
    
    
    
    
    
    
    
    111,635Long-term obligations, less current maturities
    
    
    175,000
    
    
    
    23,761
    
    
    
    693
    
    
    
    
    
    
    
    199,454Deferred tax liabilities
    
    
    
    
    
    
    47,292
    
    
    
    
    
    
    
    
    
    
    
    47,292Other long-term liabilities
    
    
    2,991
    
    
    
    14,155
    
    
    
    539
    
    
    
    
    
    
    
    17,685Shareholders equity (deficit):Common stock
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Additional paid-in-capital
    
    
    189,256
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    189,256Accumulated deficit
    
    
    (69,244
    )
    
    
    34,540
    
    
    
    (67,892
    )
    
    
    33,351
    
    
    
    (69,245
    )Accumulated other comprehensive income (loss)
    
    
    (1,843
    )
    
    
    (16,066
    )
    
    
    (4,060
    )
    
    
    20,126
    
    
    
    (1,843
    )Total shareholders equity (deficit)
    
    
    118,304
    
    
    
    18,474
    
    
    
    (71,952
    )
    
    
    53,477
    
    
    
    118,303Net equity (deficit) and advances to / from subsidiaries
    
    
    (105,297
    )
    
    
    252,224
    
    
    
    98,419
    
    
    
    (245,346
    )
    
    
    Total liabilities and shareholders equity (deficit)
    
    $
    197,410
    
    
    $
    449,141
    
    
    $
    39,687
    
    
    $
    (191,869
    )
    
    $
    494,369
 16




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##### Table of Contents



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
    )
    
    
    18,755
    
    
    
    1,285
    
    
    
    
    
    
    
    19,438Amortization of intangibles
    
    
    
    
    
    
    671
    
    
    
    
    
    
    
    
    
    
    
    671Net periodic postretirement benefits
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    
    
    
    
    4Operating income (loss)
    
    
    602
    
    
    
    949
    
    
    
    (271
    )
    
    
    (33
    )
    
    
    1,247Other income
(expenses):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 (benefit)
    
    
    
    
    
    
    (1,242
    )
    
    
    116
    
    
    
    
    
    
    
    (1,126
    )Income (loss) from continuing operations
    
    
    (2,496
    )
    
    
    1,442
    
    
    
    (399
    )
    
    
    (1,043
    )
    
    
    (2,496
    )Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income (loss)
    
    $
    (2,496
    )
    
    $
    1,442
    
    
    $
    (399
    )
    
    $
    (1,043
    )
    
    $
    (2,496
    )
 17




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##### Table of Contents



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedNet sales
    
    $
    
    
    
    $
    146,001
    
    
    $
    8,322
    
    
    $
    (23,556
    )
    
    $
    130,767Cost of goods sold
    
    
    
    
    
    
    106,908
    
    
    
    5,574
    
    
    
    (23,994
    )
    
    
    88,488Gross margin
    
    
    
    
    
    
    39,093
    
    
    
    2,748
    
    
    
    438
    
    
    
    42,279Selling, general and administrative expenses
    
    
    (90
    )
    
    
    26,273
    
    
    
    1,268
    
    
    
    
    
    
    
    27,451Amortization of intangibles
    
    
    
    
    
    
    667
    
    
    
    
    
    
    
    
    
    
    
    667Net periodic postretirement benefits
    
    
    
    
    
    
    52
    
    
    
    
    
    
    
    
    
    
    
    52Operating income (loss)
    
    
    90
    
    
    
    12,101
    
    
    
    1,480
    
    
    
    438
    
    
    
    14,109Other income
(expenses):Interest, net
    
    
    (4,060
    )
    
    
    (1,257
    )
    
    
    (17
    )
    
    
    
    
    
    
    (5,334
    )Amortization of deferred financing costs
    
    
    (125
    )
    
    
    (109
    )
    
    
    
    
    
    
    
    
    
    
    (234
    )Equity in net income (loss) of subsidiaries
    
    
    8,620
    
    
    
    
    
    
    
    
    
    
    
    (8,620
    )
    
    
    Minority interest
    
    
    
    
    
    
    (52
    )
    
    
    
    
    
    
    
    
    
    
    (52
    )Income (loss) from continuing operations before income
tax provision and discontinued operations
    
    
    4,525
    
    
    
    10,683
    
    
    
    1,463
    
    
    
    (8,182
    )
    
    
    8,489Income tax provision
    
    
    
    
    
    
    3,301
    
    
    
    471
    
    
    
    
    
    
    
    3,772Income (loss) from continuing operations
    
    
    4,525
    
    
    
    7,382
    
    
    
    992
    
    
    
    (8,182
    )
    
    
    4,717Loss from discontinued operations, net of tax
    
    
    
    
    
    
    
    
    
    
    (192
    )
    
    
    
    
    
    
    (192
    )Net income (loss)
    
    $
    4,525
    
    
    $
    7,382
    
    
    $
    800
    
    
    $
    (8,182
    )
    
    $
    4,525
 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
    )Advances to / from discontinued operations
    
    
    4,343
    
    
    
    (4,905
    )
    
    
    (445
    )
    
    
    1,043
    
    
    
    36Other
    
    
    1,206
    
    
    
    384
    
    
    
    
    
    
    
    
    
    
    
    1,590Net 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
    
    
    
    
    
    
    
    3,331Cash flows from discontinued operations:Net cash provided by operating activities
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    
    
    
    
    100Net cash provided by financing activities
    
    
    
    
    
    
    
    
    
    
    206
    
    
    
    
    
    
    
    206Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    8Net cash provided by 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



THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2008
(unaudited)
(In thousands)
 ParentThermadyneHoldings
    
    
    
    
    
    
    Non-Corporation
    
    
    Guarantors
    
    
    Guarantors
    
    
    Eliminations
    
    
    ConsolidatedCash flows from continuing operations:Net cash provided by (used in) operating activities
    
    $
    (303
    )
    
    $
    10,110
    
    
    $
    155
    
    
    $
    (7,085
    )
    
    $
    2,877Cash flows from investing activities:Capital expenditures
    
    
    
    
    
    
    (1,242
    )
    
    
    (255
    )
    
    
    
    
    
    
    (1,497
    )Proceeds from sales of assets
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    
    
    
    
    500Purchase of outside interest in joint venture
    
    
    (844
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (844
    )Other
    
    
    
    
    
    
    (48
    )
    
    
    
    
    
    
    
    
    
    
    (48
    )Net cash provided by (used in) investing activities
    
    
    (844
    )
    
    
    (790
    )
    
    
    (255
    )
    
    
    
    
    
    
    (1,889
    )Cash flows from financing activities:Borrowings under Working Capital Facility
    
    
    
    
    
    
    14,181
    
    
    
    
    
    
    
    
    
    
    
    14,181Repayments under Working Capital Facility
    
    
    
    
    
    
    (4,715
    )
    
    
    
    
    
    
    
    
    
    
    (4,715
    )Repayments of other debt
    
    
    
    
    
    
    (7,366
    )
    
    
    133
    
    
    
    
    
    
    
    (7,233
    )Changes in net equity and advances to / from discontinued operations
    
    
    903
    
    
    
    (10,292
    )
    
    
    1,178
    
    
    
    7,085
    
    
    
    (1,126
    )Other
    
    
    244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    244Net cash provided by (used in) financing activities
    
    
    1,147
    
    
    
    (8,192
    )
    
    
    1,311
    
    
    
    7,085
    
    
    
    1,351Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    454
    
    
    
    114
    
    
    
    
    
    
    
    568Net cash provided by (used in) continuing operations
    
    
    
    
    
    
    1,582
    
    
    
    1,325
    
    
    
    
    
    
    
    2,907Cash flows from discontinued operations:Net cash used in operating activities
    
    
    
    
    
    
    
    
    
    
    (894
    )
    
    
    
    
    
    
    (894
    )Net cash provided by investing activities
    
    
    
    
    
    
    
    
    
    
    500
    
    
    
    
    
    
    
    500Net cash provided by financing activities
    
    
    
    
    
    
    
    
    
    
    130
    
    
    
    
    
    
    
    130Effect of exchange rate changes on cash and cash equivalents
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Net cash used in discontinued operations
    
    
    
    
    
    
    
    
    
    
    (249
    )
    
    
    
    
    
    
    (249
    )Total increase (decrease) in cash and cash equivalents
    
    
    
    
    
    
    1,582
    
    
    
    1,076
    
    
    
    
    
    
    
    2,658Total cash and cash equivalents beginning of period
    
    
    
    
    
    
    14,637
    
    
    
    1,798
    
    
    
    
    
    
    
    16,435Total cash and cash equivalents end of period
    
    $
    
    
    
    $
    16,219
    
    
    $
    2,874
    
    
    $
    
    
    
    $
    19,093
 20




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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
  21




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##### Table of Contents



Key Indicators
    RESULTS OF OPERATIONS
  Net sales
 Three Months Ended March 31,(Dollars in thousands)
    
    2009
    
    
    2008
    
    
    % ChangeNet sales summary:U.S. net sales
    
    $
    52,486
    
    
    $
    76,494
    
    
    
    (31.4
    %)International net sales
    
    
    30,825
    
    
    
    54,273
    
    
    
    (43.2
    %)Consolidated net sales
    
    $
    83,311
    
    
    $
    130,767
    
    
    
    (36.3
    %)
  Gross margin
 Three Months Ended March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    % ChangeGross margin
    
    $
    21,360
    
    
    $
    42,279
    
    
    
    (49.5
    %)
  22




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##### Table of Contents



Selling, general and administrative expenses
 Three Months Ended March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    % ChangeSelling, general and administrative expenses
    
    $
    19,438
    
    
    $
    27,451
    
    
    
    (29.2
    %)
  Interest, net
 Three Months Ended March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    % ChangeInterest, net
    
    $
    4,633
    
    
    $
    5,334
    
    
    
    (13.1
    %)
  Income tax provision
 Three Months Ended March 31,(Dollars in thousands)
    
    2009
    
    2008
    
    % ChangeIncome tax provision
    
    $
    (1,126
    )
    
    $
    3,772
    
    
    
    (129.9
    %)
  23




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##### Table of Contents



RECENT ACCOUNTING PRONOUNCEMENTS
 Business Combinations
   LIQUIDITY AND CAPITAL RESOURCES
   Three Months EndedMarch 31,(Dollars in thousands)
    
    2009
    
    
    2008Net cash provided by (used in) continuing operations :Operating activities
    
    $
    2,999
    
    
    $
    2,877Investing activities
    
    
    (2,293
    )
    
    
    (1,889
    )Financing activities
    
    
    2,913
    
    
    
    1,351Effect of exchange rates
    
    
    (288
    )
    
    
    568Cash used in continuing operations
    
    $
    3,331
    
    
    $
    2,907
 Operating Activities
  24




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##### Table of Contents



Investing Activities
  Financing Activities
      
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
   25




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##### Table of Contents



Item 4. Controls and Procedures
  26




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##### Table of Contents



Item 1. Legal Proceedings
 Contingencies
 
 Item 6. Exhibits
 31.1
    
    CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 (Exchange Act Rule 13a-14(a))31.2
    
    CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002 (Exchange Act Rule 13a-14(a))32.1
    
    CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b))32.2
    
    CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002 (18 U.S.C. Section 1350 and Exchange Act Rule 13a-14(b))
 27




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##### Table of Contents



SIGNATURES
  THERMADYNE HOLDINGS CORPORATIONBy:
    /s/ Steven A. SchummSteven A. SchummChief Financial and Administrative Officer
(Principal Financial and Accounting Officer)  28