<PAGE> 1
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934.
For the quarterly period ended March 31, 2000
------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
-------------------------- ---------------------
Commission file number 0-23378
-------------
Thermadyne Holdings Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 74-2482571
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Commission file number 333-57457
-------------
Thermadyne Mfg. LLC
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Delaware 74-2878452
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
Commission file number 333-57457
-------------
Thermadyne Capital Corp.
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Its Charter)
Delaware 74-2878453
- --------------------------------------------------------------------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
101 S. Hanley, St. Louis, MO 63105
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (314)721-5573
----------------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No
--- ---
The number of shares outstanding of the issuer's common stock, par value $0.01
per share, as of April 28, 2000 was 3,590,326.
Thermadyne Mfg. LLC and Thermadyne Capital Corp. meet the conditions set forth
in General Instruction H(1) of Form 10-Q and are therefore filing this form with
the reduced disclosure format.
<PAGE> 2
THERMADYNE HOLDINGS CORPORATION
INDEX
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION
<S> <C>
Item 1. Condensed Consolidated Financial Statements of
Thermadyne Holdings Corporation
Condensed Consolidated Balance Sheets........................................................... 3
Condensed Consolidated Statements of Operations................................................. 4
Condensed Consolidated Statements of Cash Flows................................................. 5
Notes to Condensed Consolidated Financial Statements............................................ 6-9
Condensed Consolidated Financial Statements of Thermadyne Mfg. LLC
Condensed Consolidated Balance Sheets........................................................... 10
Condensed Consolidated Statements of Operations................................................. 11
Condensed Consolidated Statements of Cash Flows................................................. 12
Notes to Condensed Consolidated Financial Statements............................................ 13-20
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations................................................ 21-23
Item 3. Quantitative and Qualitative Disclosures of Market Risk......................................... 24
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K................................................................ 25
SIGNATURES................................................................................................... 26-28
</TABLE>
<PAGE> 3
THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 40,186 $ 13,321
Accounts receivable, less allowanced for doubtful
accounts of $3,181 and $3,275, respectively 71,959 94,731
Inventories 102,526 100,831
Prepaid expenses and other 5,399 5,954
------------- -------------
Total current assets 220,070 214,837
Property, plant and equipment, at cost, net 90,835 93,811
Deferred financing costs, net 20,715 20,459
Intangibles, at cost, net 38,365 40,170
Deferred income taxes 29,141 29,105
Other assets 2,517 2,014
------------- -------------
Total assets $ 401,643 $ 400,396
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 44,653 $ 41,773
Accrued and other liabilities 27,158 27,052
Accrued interest 8,748 3,080
Income taxes payable 12,454 9,575
Current maturities of long-term obligations 13,343 12,080
------------- -------------
Total current liabilities 106,356 93,560
Long-term obligations, less current maturities 717,382 717,322
Other long-term liabilities 61,858 62,172
Redeemable preferred stock (paid in kind), $0.01 par value,
15,000,000 shares authorized and
2,000,000 shares issued and outstanding 63,427 61,430
Shareholders' deficit:
Common stock, $0.01 par value, 30,000,000 shares authorized,
and 3,590,326 shares issued and outstanding at
March 31, 2000 and December 31, 1999 36 36
Additional paid-in capital (113,441) (111,444)
Accumulated deficit (402,384) (394,819)
Management loans (4,020) (3,966)
Accumulated other comprehensive loss (27,571) (23,895)
------------- -------------
Total shareholders' deficit (547,380) (534,088)
------------- -------------
Total liabilities and shareholders' deficit $ 401,643 $ 400,396
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
<PAGE> 4
THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------- -------------
<S> <C> <C>
Net sales $ 133,157 $ 130,234
Operating expenses:
Cost of goods sold 85,188 83,635
Selling, general and administrative expenses 25,540 24,546
Amortization of intangibles 924 1,037
Net periodic postretirement benefits 500 1,050
Special charges 6,007 2,874
------------- -------------
Operating income 14,998 17,092
Other income (expense):
Interest expense (19,529) (17,742)
Amortization of deferred financing costs (862) (888)
Other, net 613 844
------------- -------------
Loss before income tax provision (4,780) (694)
Income tax provision (benefit) 2,785 (358)
------------- -------------
Net loss (7,565) (336)
Preferred stock dividends (paid in kind) 1,997 1,757
------------- -------------
Net loss applicable to common shares $ (9,562) $ (2,093)
============= =============
Per share data:
Basic loss per common share $ (2.66) $ (0.60)
Diluted loss per common share $ (2.66) $ (0.60)
</TABLE>
See accompanying notes to condensed consolidated financial statements.
4
<PAGE> 5
THERMADYNE HOLDINGS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 2000 March 31, 1999
-------------- --------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss $ (7,565) $ (336)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Net periodic postretirement benefits 500 1,050
Depreciation 4,193 4,109
Amortization of intangibles 924 1,037
Amortization of deferred financing costs 862 888
Deferred income taxes (39) (333)
Non-cash interest expense 4,606 3,153
Changes in operating assets and liabilities:
Accounts receivable (6,176) 3,589
Inventories (3,381) 422
Prepaid expenses and other 451 952
Accounts payable 3,159 (1,179)
Accrued and other liabilities 342 (11,060)
Accrued interest 5,670 6,095
Income taxes payable 2,879 (764)
Other long-term liabilities (859) (1,164)
------------- -------------
Total adjustments 13,131 6,795
------------- -------------
Net cash provided by operating activities 5,566 6,459
------------- -------------
Cash flows used in investing activities:
Capital expenditures, net (2,716) (2,183)
Change in other assets (883) (478)
Acquisitions, net of cash -- (2,250)
------------- -------------
Net cash used in investing activities (3,599) (4,911)
------------- -------------
Cash flows provided by (used in) financing activities:
Change in long-term receivables 59 21
Repayment of long-term obligations (3,578) (1,144)
Borrowing of long-term obligations 1,538 5,562
Issuance of common stock -- 4
Change in accounts receivable securitization 28,586 2,288
Financing fees (1,134) (282)
Other (573) (3,644)
------------- -------------
Net cash provided by financing activities 24,898 2,805
------------- -------------
Net increase in cash and cash equivalents 26,865 4,353
Cash and cash equivalents at beginning of period 13,321 1,319
------------- -------------
Cash and cash equivalents at end of period $ 40,186 $ 5,672
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements
5
<PAGE> 6
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
As used in this report, the term "Mercury" means Mercury Acquisition
Corporation, the term "Issuer" means Mercury before the merger of the Company
in May of 1998 (the "Merger") and Thermadyne Holdings Corporation after the
Merger, the term "Holdings" means Thermadyne Holdings Corporation, the terms
"Thermadyne" and the "Company" mean Thermadyne Holdings Corporation, its
predecessors and subsidiaries, the term "Thermadyne LLC" means Thermadyne
Mfg. LLC, a wholly owned and the principal operating subsidiary of Thermadyne
Holdings Corporation, and the term "Thermadyne Capital" means Thermadyne
Capital Corp., a wholly owned subsidiary of Thermadyne LLC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements of
Holdings have been prepared in accordance with generally accepted accounting
principles for interim financial information and with 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 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. Operating
results for the three month period ended March 31, 2000 are not necessarily
indicative of the results that may be expected for the year ended December
31, 2000. 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, 1999.
STATEMENTS OF CASH FLOWS
For purposes of the Statements of Cash Flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less
to be cash equivalents. Interest and taxes paid were as follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
----------------- ------------------
<S> <C> <C>
Interest paid $ 10,303 $ 8,507
Taxes paid (received) (15) 105
</TABLE>
6
<PAGE> 7
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
LOSS PER SHARE
The following table sets forth the information used in the computation of
basic and diluted loss per share for the periods indicated.
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
-------------- --------------
<S> <C> <C>
Numerator:
Net loss applicable to common
shares - basic and diluted $ (9,562) $ (2,093)
============== ==============
Denominator:
Weighted average shares-basic and diluted 3,590,326 3,496,079
============== ==============
Basic loss per common share $ (2.66) $ (0.60)
============== ==============
Diluted loss per common share $ (2.66) $ (0.60)
============== ==============
</TABLE>
2. ACCOUNTS RECEIVABLE
On January 31, 2000, the Company entered into a trade accounts receivable
securitization agreement whereby it sells on an ongoing basis participation
interests in up to $45,000 of designated accounts receivable. The amount of
participation interests sold under this financing arrangement is subject to
change based on the level of eligible receivables and restrictions on
concentrations of receivables, and was approximately $28,586 at March 31, 2000.
The sold accounts receivable are reflected as a reduction of accounts receivable
on the March 31, 2000, Consolidated Balance Sheet. Interest expense is incurred
on participation interests at the rate of one-month LIBOR plus 65 basis points,
per annum.
3. INVENTORIES
The composition of inventories was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
---------- ------------
<S> <C> <C>
Raw materials $ 26,945 $ 26,707
Work-in-process 24,383 23,718
Finished goods 51,945 51,278
LIFO reserve (747) (872)
---------- ------------
Total $ 102,526 $ 100,831
========== ============
</TABLE>
7
<PAGE> 8
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
4. SEGMENT INFORMATION
The Company has adopted the Financial Accounting Standards Board's Statement
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which changes the way the Company reports information about its
operating segments.
The Company reports its segment information by geographic region. Although
the Company's domestic operation is comprised of several individual business
units, similarity of products, paths to market, end users, and production
processes results in performance evaluation and decisions regarding
allocation of resources being made on a combined basis. The Company's
reportable geographic regions are the United States, Europe and
Australia/Asia.
The Company evaluates performance and allocates resources based principally
on operating income net of any special charges or significant one-time
charges. The accounting policies of the reportable segments are the same as
those described in the summary of significant accounting policies.
Intersegment sales are based on market prices.
Summarized financial information concerning the Company's reportable segments
is shown in the following table. Export sales from the United States are
included in the United States segment. The "Other" column includes the
elimination of intersegment sales and profits, corporate related items and
other costs not allocated to the reportable segments.
<TABLE>
<CAPTION>
Other
United Australia/ Geographic
States Europe Asia Regions Other Consolidated
---------- ---------- ---------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 2000
- ------------------------------------
Revenue from external customers $ 92,305 $ 14,971 $ 14,022 $ 11,859 $ -- $ 133,157
Intersegment revenues 9,880 4,158 515 -- (14,553) --
Operating income (loss) 18,623 550 (1,150) (306) (2,719) 14,998
Three Months Ended March 31, 1999
- ------------------------------------
Revenue from external customers $ 87,776 $ 13,303 $ 20,233 $ 8,922 $ -- $ 130,234
Intersegment revenues 8,973 3,493 1,094 -- (13,560) --
Operating income (loss) 21,527 746 (631) (599) (3,951) 17,092
</TABLE>
8
<PAGE> 9
THERMADYNE HOLDINGS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
5. RELOCATION AND REORGANIZATION
Special charges of $6.0 million were recorded during the three months ended
March 31, 2000. These charges relate primarily to the decision to relocate
certain product assembly operations from the U.S. to Mexico. The special
charges are comprised of $4.2 million of severance costs, $1.0 of inventory
obsoleted by the move and approximately $0.8 million of other miscellaneous
costs related to relocation of this production and the continuing
reorganization of the Company's Australian business. The severance costs
accrued in the first quarter relate to headcount reductions which are
expected to occur over the next 21 months. As of March 31, 2000 none of
these termination benefits had been paid.
In the first quarter of 1999, special charges of $2.9 million were recorded
in connection with a reorganization and realignment of the Company with the
objective of making the Company's cost structure more competitive. These
charges resulted primarily from headcount reductions and the related
severance costs.
6. COMPREHENSIVE LOSS
During the first three months of 2000 and 1999, total comprehensive loss
amounted to $(11,241) and $(7,033), respectively.
9
<PAGE> 10
THERMADYNE MFG. LLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 40,186 $ 13,321
Accounts receivable, less allowance for doubtful
accounts of $3,181 and $3,275, respectively 71,959 94,731
Inventories 102,526 100,831
Prepaid expenses and other 5,399 5,954
------------- -------------
Total current assets 220,070 214,837
Property, plant and equipment, at cost, net 90,835 93,811
Deferred financing costs, net 17,639 17,289
Intangibles, at cost, net 38,365 40,170
Deferred income taxes 25,874 25,838
Other assets 2,517 2,014
------------- -------------
Total assets $ 395,300 $ 393,959
============= =============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ 44,653 $ 41,773
Accrued and other liabilities 27,158 27,052
Accrued interest 7,088 2,416
Income taxes payable 12,454 9,575
Current maturities of long-term obligations 13,343 12,080
------------- -------------
Total current liabilities 104,696 92,896
Long-term obligations, less current maturities 561,749 565,247
Other long-term liabilities 61,858 62,172
Shareholders' deficit:
Accumulated deficit (388,395) (385,425)
Accumulated other comprehensive loss (27,571) (23,895)
------------- -------------
Total shareholders' deficit (415,966) (409,320)
Net equity and advances to/from parent 82,963 82,964
------------- -------------
Total liabilities and shareholders' deficit $ 395,300 $ 393,959
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements
10
<PAGE> 11
THERMADYNE MFG. LLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------- -------------
<S> <C> <C>
Net sales $ 133,157 $ 130,234
Operating expenses:
Cost of goods sold 85,188 83,635
Selling, general and administrative expenses 25,540 24,546
Amortization of intangibles 924 1,037
Net periodic postretirement benefits 500 1,050
Special charges 6,007 2,874
------------- -------------
Operating income 14,998 17,092
Other income (expense):
Interest expense (14,974) (13,593)
Amortization of deferred financing costs (768) (792)
Other, net 559 792
------------- -------------
Income (loss) before income tax provision (185) 3,499
Income tax provision (benefit) 2,785 (358)
------------- -------------
Net income (loss) $ (2,970) $ 3,857
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements
11
<PAGE> 12
THERMADYNE MFG. LLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------- -------------
<S> <C> <C>
Cash flows provided by (used in) operating activities:
Net loss $ (2,970) $ 3,857
Adjustment to reconcile net loss to
net cash provided by operating activities:
Net periodic postretirement benefits 500 1,050
Depreciation 4,193 4,109
Amortization of intangibles 924 1,037
Amortization of deferred financing costs 768 792
Deferred income taxes (39) (333)
Non-cash interest expense 1,050 --
Changes in operating assets and liabilities:
Accounts receivable (6,176) 3,589
Inventories (3,381) 422
Prepaid expenses and other 451 952
Accounts payable 3,159 (1,179)
Accrued and other liabilities 342 (11,060)
Accrued interest 4,672 7,091
Income taxes payable 2,879 (764)
Other long-term liabilities (859) (1,164)
------------- -------------
Total adjustments 8,483 4,542
------------- -------------
Net cash provided by operating activities 5,513 8,399
------------- -------------
Cash flows used in investing activities:
Capital expenditures, net (2,716) (2,183)
Change in other assets (883) (478)
Acquisitions, net of cash -- (2,250)
------------- -------------
Net cash used in investing activities (3,599) (4,911)
------------- -------------
Cash flows provided by (used in) financing activities:
Change in long-term receivables 59 21
Repayment of long-term obligations (3,578) (1,144)
Borrowing of long-term obligations 1,538 5,562
Change in accounts receivable securitization 28,586 2,288
Financing fees (1,134) (282)
Change in net equity of parent -- (3,353)
Other (520) (2,227)
------------- -------------
Net cash provided by financing activities 24,951 865
------------- -------------
Net increase in cash and cash equivalents 26,865 4,353
Cash and cash equivalents at beginning of period 13,321 1,319
------------- -------------
Cash and cash equivalents at end of period $ 40,186 $ 5,672
============= =============
</TABLE>
See accompanying notes to condensed consolidated financial statements
12
<PAGE> 13
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
1. BASIS OF PRESENTATION
As used in this report, the term "Mercury" means Mercury Acquisition
Corporation, the term "Issuer" means Mercury before the merger of the Company
in May of 1998 (the "Merger") and Thermadyne Holdings Corporation after the
Merger, the term "Holdings" means Thermadyne Holdings Corporation, the term
"Thermadyne" means Thermadyne Holdings Corporation, its predecessors and
subsidiaries, the terms "Thermadyne LLC" and the "Company" mean Thermadyne
Mfg. LLC, a wholly owned and the principal operating subsidiary of Thermadyne
Holdings Corporation, and the term "Thermadyne Capital" means Thermadyne
Capital Corp., a wholly owned subsidiary of Thermadyne LLC.
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited condensed consolidated financial statements of
Thermadyne LLC have been prepared in accordance with generally accepted
accounting principles for interim financial information and with 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 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.
Operating results for the three month period ended March 31, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. 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, 1999.
CO-ISSUER
Thermadyne Capital, a wholly-owned subsidiary of Thermadyne LLC, was formed
solely for the purpose of serving as co-issuer of the 9-7/8% Senior
Subordinated Notes due 2008 (the "Senior Subordinated Notes"). Thermadyne
Capital has no substantial assets or liabilities and no operations of any
kind, and the Indenture pursuant to which the Senior Subordinated Notes were
issued limits Thermadyne Capital's ability to acquire or hold any significant
assets, incur any liabilities or engage in any business activities, other
than in connection with the issuance of the Senior Subordinated Notes.
13
<PAGE> 14
STATEMENTS OF CASH FLOWS
For purposes of the Statements of Cash Flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less
to be cash equivalents. Interest and taxes paid were as follows:
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, March 31,
2000 1999
------------- -------------
<S> <C> <C>
Interest paid $ 10,303 $ 8,507
Taxes paid (received) (15) 105
</TABLE>
2. ACCOUNTS RECEIVABLE
On January 31, 2000, the Company entered into a trade accounts receivable
securitization agreement whereby it sells on an ongoing basis participation
interests in up to $45,000 of designated accounts receivable. The amount of
participation interests sold under this financing arrangement is subject to
change based on the level of eligible receivables and restrictions on
concentrations of receivables, and was approximately $28,586 at March 31,
2000. The sold accounts receivable are reflected as a reduction of accounts
receivable on the March 31, 2000, Consolidated Balance Sheet. Interest
expense is incurred on participation interests at the rate of one-month LIBOR
plus 65 basis points, per annum.
3. INVENTORIES
The composition of inventories was as follows:
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- -----------
<S> <C>
Raw materials $ 26,945 $ 26,707
Work-in-process 24,383 23,718
Finished goods 51,945 51,278
LIFO reserve (747) (872)
--------- -----------
Total $ 102,526 $ 100,831
========= ===========
</TABLE>
4. SEGMENT INFORMATION
The Company has adopted the Financial Accounting Standards Board Statement
No. 131, "Disclosures about Segments of an Enterprise and Related
Information," which changes the way the Company reports information about its
operating segments.
The Company reports its segment information by geographic region. Although
the Company's domestic operation is comprised of several individual business
units, similarity of products, paths to market, end users, and production
processes results in performance evaluation and decisions regarding
allocation of resources being made on a combined basis. The Company's
reportable geographic regions are the United States, Europe and
Australia/Asia.
The Company evaluates performance and allocates resources based principally
on operating income net of any special charges or significant one-time
charges. The accounting policies of the
14
<PAGE> 15
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
reportable segments are the same as those described in the summary of
significant accounting policies. Intersegment sales are based on market
prices.
Summarized financial information concerning the Company's reportable
segments is shown in the following table. Export sales from the United
States are included in the United States segment. The "Other" column
includes the elimination of intersegment sales and profits, corporate
related items and other costs not allocated to the reportable segments.
<TABLE>
<CAPTION>
Other
United Australia/ Geographic
States Europe Asia Regions Other Consolidated
---------- --------- ---------- ----------- --------- ------------
<S> <C> <C> <C> <C> <C> <C>
Three Months Ended March 31, 2000
Revenue from external customers $ 92,305 $ 14,971 $14,022 $ 11,859 $ - $133,157
Intersegment revenues 9,880 4,158 515 - (14,553) -
Operating income (loss) 18,623 550 (1,150) (306) (2,719) 14,998
Three Months Ended March 31, 1999
Revenue from external customers $ 87,776 $ 13,303 $ 20,233 $ 8,922 $ - $130,234
Intersegment revenues 8,973 3,493 1,094 - (13,560) -
Operating income (loss) 21,527 746 (631) (599) (3,951) 17,092
</TABLE>
5. RELOCATION AND REORGANIZATION
Special charges of $6.0 million were recorded during the three months
ended March 31, 2000. These charges relate primarily to the decision to
relocate certain product assembly operations from the U.S. to Mexico.
The special charges are comprised of $4.2 million of severance costs,
$1.0 of inventory obsoleted by the move and approximately $0.8 million
of other miscellaneous costs related to relocation of this production
and the continuing reorganization of the Company's Australian business.
The severance costs accrued in the first quarter relate to headcount
reductions which are expected to occur over the next 21 months. As of
March 31, 2000 none of these termination benefits had been paid.
In the first quarter of 1999, special charges of $2.9 million were
recorded in connection with a reorganization and realignment of the
Company with the objective of making the Company's cost structure more
competitive. These charges resulted primarily from headcount reductions
and the related severance costs.
15
<PAGE> 16
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
6. COMPREHENSIVE INCOME (LOSS)
During the first three months of 2000 and 1999, total comprehensive
income (loss) amounted to $(6,646) and $(2,840), respectively.
7. GUARANTOR SUBSIDIARIES
In connection with the merger of Holdings and Mercury, Thermadyne LLC
and Thermadyne Capital, both wholly-owned subsidiaries of Holdings,
issued $207 million of Senior Subordinated Notes. Holdings received all
of the net proceeds from the issuance of the Senior Subordinated Notes
and Thermadyne LLC and Thermadyne Capital are jointly and severally
liable for all payments under the Senior Subordinated Notes.
Additionally, the Senior Subordinated Notes are fully and
unconditionally (as well as jointly and severally) guaranteed on an
unsecured senior subordinated basis by certain subsidiaries of the
Company (the "Guarantor Subsidiaries"). Each of the Guarantor
Subsidiaries is wholly-owned by Thermadyne LLC.
The following condensed consolidating financial information of
Thermadyne LLC includes the accounts of Thermadyne LLC, 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 that such information is
not material in assessing the Guarantor Subsidiaries.
16
<PAGE> 17
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEET
MARCH 31, 2000
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ -- $ 33,218 $ 6,968 $ -- $ 40,186
Restricted cash -- -- 16,217 (16,217) --
Accounts receivable -- 299 97,402 (25,742) 71,959
Inventories -- 59,897 42,629 -- 102,526
Prepaid expenses and other -- 2,534 3,119 (254) 5,399
--------- --------- --------- --------- ---------
Total current assets -- 95,948 166,335 (42,213) 220,070
Property, plant and equipment, at cost, net -- 41,602 49,233 -- 90,835
Deferred financing costs, net 17,433 -- 206 -- 17,639
Intangibiles, at cost, net -- 12,329 26,036 -- 38,365
Deferred income taxes -- 25,046 828 -- 25,874
Investment in and advances to/from subsidiaries 210,621 (678) -- (209,943) --
Other assets -- 846 1,671 -- 2,517
--------- --------- --------- --------- ---------
Total assets $ 228,054 $ 175,093 $ 244,309 $(252,156) $ 395,300
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ -- $ 22,083 $ 22,570 $ -- $ 44,653
Accrued and other liabilities -- 19,745 7,413 -- 27,158
Accrued interest 7,081 1 6 -- 7,088
Income taxes payable -- 14,057 (1,603) -- 12,454
Current maturities of long-term obligations 11,057 276 2,010 -- 13,343
--------- --------- --------- --------- ---------
Total current liabilities 18,138 56,162 30,396 -- 104,696
Long-term obligations, less current maturities 515,348 15,949 75,452 (45,000) 561,749
Other long-term liabilities -- 51,774 10,084 -- 61,858
Shareholders' equity (deficit):
Retained earnings (accumulated deficit) (388,395) (279,026) (49,505) 328,531 (388,395)
Accumulated other comprehensive loss -- (7,958) (19,613) -- (27,571)
--------- --------- --------- --------- ---------
Total shareholders' equity (deficit) (388,395) (286,984) (69,118) 328,531 (415,966)
Net equity and advances to/from subsidiaries 82,963 338,192 197,495 (535,687) 82,963
--------- --------- --------- --------- ---------
Total liabilities and shareholders' equity (deficit) $ 228,054 $ 175,093 $ 244,309 $(252,156) $ 395,300
========= ========= ========= ========= =========
</TABLE>
17
<PAGE> 18
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1999
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ -- $ 2,566 $ 10,755 $ -- $ 13,321
Accounts receivable -- 51,895 42,836 -- 94,731
Inventories -- 59,042 41,789 -- 100,831
Prepaid expenses and other -- 2,853 3,101 -- 5,954
--------- --------- --------- --------- ---------
Total current assets -- 116,356 98,481 -- 214,837
Property, plant and equipment, at cost, net -- 43,985 49,826 -- 93,811
Deferred financing costs, net 17,020 -- 269 -- 17,289
Intangibiles, at cost, net -- 11,937 28,233 -- 40,170
Deferred income taxes -- 25,046 792 -- 25,838
Investment in and advances to/from subsidiaries 209,719 -- -- (209,719) --
Other assets -- 692 1,322 -- 2,014
--------- --------- --------- --------- ---------
Total assets $ 226,739 $ 198,016 $ 178,923 $(209,719) $ 393,959
========= ========= ========= ========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
Accounts payable $ -- $ 18,141 $ 23,632 $ -- $ 41,773
Accrued and other liabilities -- 18,060 8,992 -- 27,052
Accrued interest 2,400 -- 16 -- 2,416
Income taxes payable -- 11,725 (2,150) -- 9,575
Current maturities of long-term obligations 9,800 253 2,027 -- 12,080
--------- --------- --------- --------- ---------
Total current liabilities 12,200 48,179 32,517 -- 92,896
Long-term obligations, less current maturities 517,000 16,906 31,341 -- 565,247
Other long-term liabilities -- 51,797 10,375 -- 62,172
Shareholders' equity (deficit):
Retained earnings (accumulated deficit) (385,425) (279,825) (46,716) 326,541 (385,425)
Accumulated other comprehensive income (loss) -- (7,742) (16,153) -- (23,895)
--------- --------- --------- --------- ---------
Total shareholders' equity (deficit) (385,425) (287,567) (62,869) 326,541 (409,320)
Net equity and advances to/from subsidiaries 82,964 368,701 167,559 (536,260) 82,964
--------- --------- --------- --------- ---------
Total liabilities and shareholders' equity (deficit) $ 226,739 $ 198,016 $ 178,923 $(209,719) $ 393,959
========= ========= ========= ========= =========
</TABLE>
18
<PAGE> 19
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net sales $ -- $ 110,639 $ 46,847 $ (24,329) $ 133,157
Operating expenses:
Cost of goods sold -- 69,786 39,455 (24,053) 85,188
Selling, general and administrative expenses -- 17,702 7,838 -- 25,540
Amortization of intangibles -- 464 460 -- 924
Net periodic postretirement benefits -- 500 -- -- 500
Special charges -- 5,553 454 -- 6,007
--------- --------- --------- --------- ---------
Operating income (loss) -- 16,634 (1,360) (276) 14,998
Other income (expense):
Interest expense -- (13,892) (1,912) 830 (14,974)
Amortization of deferred financing costs -- (733) (35) -- (768)
Equity in net loss of subsidiaries (2,970) -- -- 2,970 --
Other -- 1,106 987 (1,534) 559
--------- --------- --------- --------- ---------
Income (loss) before income tax provision (2,970) 3,115 (2,320) 1,990 (185)
Income tax provision -- 2,316 469 -- 2,785
--------- --------- --------- --------- ---------
Net income (loss) $ (2,970) $ 799 $ (2,789) $ 1,990 $ (2,970)
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net sales $ -- $ 105,183 $ 47,327 $ (22,276) $ 130,234
Operating expenses:
Cost of goods sold -- 66,368 39,669 (22,402) 83,635
Selling, general and administrative expenses -- 16,944 7,602 -- 24,546
Amortization of intangibles -- 498 539 -- 1,037
Net periodic postretirement benefits -- 1,050 -- -- 1,050
Special charges -- 936 1,938 -- 2,874
--------- --------- --------- --------- ---------
Operating income (loss) -- 19,387 (2,421) 126 17,092
Other income (expense):
Interest expense -- (11,947) (2,418) 772 (13,593)
Amortization of deferred financing costs -- (741) (51) -- (792)
Equity in net loss of subsidiaries 3,857 -- -- (3,857) --
Other -- 2,378 281 (1,867) 792
--------- --------- --------- --------- ---------
Income (loss) before income tax provision 3,857 9,077 (4,609) (4,826) 3,499
Income tax provision -- (270) (88) -- (358)
--------- --------- --------- --------- ---------
Net income (loss) $ 3,857 $ 9,347 $ (4,521) $ (4,826) $ 3,857
========= ========= ========= ========= =========
</TABLE>
(a) Reflects the elimination of intercompany sales among all the Company's
subsidiaries
19
<PAGE> 20
THERMADYNE MFG. LLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 1,711 $ 5,560 $ (3,748) $ 1,990 $ 5,513
Cash flows provided by (used in) investing activities:
Capital expenditures, net -- (1,632) (1,084) -- (2,716)
Change in other assets -- (207) (676) -- (883)
Acquisitions, net of cash -- -- -- -- --
-------- -------- -------- -------- --------
Net cash used in investing activities -- (1,839) (1,760) -- (3,599)
Cash flows provided by (used in) financing activities:
Changes in long-term receivables -- 59 -- -- 59
Repayment of long-term obligations (1,449) (62) (2,067) -- (3,578)
Borrowing of long-term obligations -- -- 1,538 -- 1,538
Change in accounts receivable securitization -- 28,586 -- -- 28,586
Financing fees -- (1,146) 12 -- (1,134)
Change in net equity and advances to/from
subsidiaries (267) (581) 2,838 (1,990) --
Other 5 75 (600) -- (520)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing activities (1,711) 26,931 1,721 (1,990) 24,951
-------- -------- -------- -------- --------
Net increase (decrease) in cash and cash equivalents -- 30,652 (3,787) -- 26,865
Cash and cash equivalents at beginning of period -- 2,566 10,755 -- 13,321
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $ -- $ 33,218 $ 6,968 $ -- $ 40,186
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATING STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
Thermadyne Total Total
LLC Guarantors Non-Guarantors Eliminations Total
---------- ----------- -------------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $ 10,951 $ 5,486 $ (3,212) $ (4,826) $ 8,399
Cash flows provided by (used in) investing activities: --
Capital expenditures, net -- (1,401) (782) -- (2,183)
Change in other assets -- (1,271) 793 -- (478)
Acquisitions, net of cash -- -- (2,250) -- (2,250)
-------- -------- -------- -------- --------
Net cash used in investing activities -- (2,672) (2,239) -- (4,911)
Cash flows provided by (used in) financing activities:
Changes in long-term receivables -- 21 -- -- 21
Repayment of long-term obligations (575) (51) (518) -- (1,144)
Borrowing of long-term obligations 5,100 -- 462 -- 5,562
Change in accounts receivable securitization -- 2,288 -- -- 2,288
Financing fees -- -- (282) -- (282)
Change in net equity and advances to/from subsidiaries (15,476) (2) 7,299 4,826 (3,353)
Other -- (2,310) 83 -- (2,227)
-------- -------- -------- -------- --------
Net cash provided by (used in) financing activities (10,951) (54) 7,044 4,826 865
-------- -------- -------- -------- --------
Net increase in cash and cash equivalents -- 2,760 1,593 -- 4,353
Cash and cash equivalents at beginning of period -- (1,051) 2,370 -- 1,319
-------- -------- -------- -------- --------
Cash and cash equivalents at end of period $ -- $ 1,709 $ 3,963 $ -- $ 5,672
======== ======== ======== ======== ========
</TABLE>
20
<PAGE> 21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is a discussion and analysis of the condensed consolidated
financial statements of Holdings. Holdings conducts its operations through its
wholly-owned subsidiary Thermadyne LLC. The accompanying condensed consolidated
financial statements for Holdings and Thermadyne LLC are substantially the same
except for certain debt and equity securities issued by Holdings, and therefore,
a separate discussion of Thermadyne LLC is not presented.
Included in the following discussions are comparisons of Adjusted EBITDA which
is defined as operating income plus depreciation, amortization of goodwill,
amortization of intangibles, net periodic postretirement benefits expense and
special charges and is a key financial measure but should not be construed as an
alternative to operating income or cash flows from operating activities (as
determined in accordance with generally accepted accounting principles).
Adjusted EBITDA is also one of the financial measures by which the Company's
compliance with its covenants is calculated under its debt agreements. The
Company believes that Adjusted EBITDA is a useful supplement to net income
(loss) and other consolidated income statement data in understanding cash flows
generated from operations that are available for taxes, debt service and capital
expenditures. However, the Company's method of computation may or may not be
comparable to other similarly titled measures of other companies. In addition,
Adjusted EBITDA is not necessarily indicative of amounts that may be available
for discretionary uses and does not reflect any legal or contractual
restrictions on the Company's use of funds.
The statements in this Quarterly Report on Form 10-Q that relate to future
plans, events or performance are forward-looking statements. Actual results
could differ materially due to a variety of factors and the other risks
described in this Quarterly Report and the other documents the Company files
from time to time with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date hereof. The Company undertakes no obligation to
publicly release the result of any revisions to these forward-looking statements
that may be made to reflect events or circumstances after the date hereof or
that reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999
Net sales for the three months ended March 31, 2000 were $133.2 million compared
to $130.2 million for the same period in 1999, an increase of 2.2%. Domestic
sales for the quarter were $85.7 million which is a 4.6% increase over the three
month period ended March 31, 1999. The Company has experienced a general
increase in demand across most of its product lines. International sales were
down a modest 1.8% during the quarter compared to the same three month period in
1999, with strong sales gains in Latin America, Europe and Canada substantially
offsetting a sales decline in Australia. Latin America had a quarterly sales
increase of 38.9% which resulted from stronger economic conditions and to a
lesser extent incremental revenues from a 1999 acquisition. The European growth
was primarily the result of a second quarter 1999 acquisition while increased
sales in Canada were attributable to continued economic
21
<PAGE> 22
expansion in that country. Australian sales continued to be hampered by a weak
industrial economy together with increased competition from imports.
Cost of goods sold as a percentage of sales was 64.0% for the three months ended
March 31, 2000, compared to 64.2% for the same period last year. This
improvement is the result of cost reduction efforts together with improved
efficiencies as the Company's production facilities are generally running at
more optimal levels. During most of 1999 the Company was focused on reducing its
working capital with particular emphasis on inventory which had the effect of
less efficient production.
Selling, general and administrative costs were $25.5 million for the three
months ended March 31, 2000, which is 4.0% higher than the same period in 1999.
Substantially all of this increase results from two mid-1999 acquisitions. As a
percentage of sales selling, general, and administrative costs were 19.2% for
the first quarter compared to 18.8% for the three months ended March 31, 1999.
This increase results mainly from expenditures made with respect to new sales
and marketing initiatives including the addition of new sales personnel.
Special charges of $6.0 million were recorded during the three months ended
March 31, 2000. These charges relate primarily to the decision to relocate
certain product assembly operations from the U.S. to Mexico. The special charges
are comprised of $4.2 million of severance costs, $1.0 of inventory obsoleted by
the move and approximately $0.8 million of other miscellaneous costs related to
relocation of this production and the continuing reorganization of the Company's
Australian business. The severance costs accrued in the first quarter relate to
headcount reductions which are expected to occur over the next 21 months.
In the first quarter of 1999, special charges of $2.9 million were recorded in
connection with a reorganization and realignment of the Company with the
objective of making the Company's cost structure more competitive. These charges
resulted primarily from headcount reductions and the related severance costs.
For the three months ended March 31, 2000, an income tax provision of $2.8
million was recorded on a pre-tax loss of $4.8 million which compares to a tax
benefit of $0.4 million reported for the first quarter of 1999 on a pre-tax loss
of $0.7 million. The income tax provision for the three months ended March 31,
2000, includes the impact of nonrecognition of foreign tax loss benefits and
other nondeductible expenses.
Adjusted EBITDA was $26.6 million, or 20.0% of sales, for the quarter ended
March 31, 2000, and is 1.8% higher than the $26.2 million reported for the first
quarter of 1999 which was 20.1% of sales.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital and Cash Flows
Operating activities provided cash of $5.6 million during the three month period
ended March 31, 2000, which compares to cash provided of $6.5 million during the
same time period in 1999. Operating assets and liabilities provided cash of $2.1
million during the first quarter 2000 compared to a use of cash of $3.1 million
during the same period last year. This improvement was more than offset by a net
loss reported during the three month period ended March 31, 2000 of $7.6 million
compared to a net loss of
22
<PAGE> 23
$0.3 million during the same three month period in 1999. These net loss amounts
included $11.0 million and $9.9 million of non-cash charges for the three months
ended March 31, 2000 and 1999, respectively. Investing activities used $3.6
million of cash during the first quarter of 2000, a decrease of $1.3 million
from the comparable period in 1999. This change resulted primarily from a
decline in cash used for acquisitions of $2.3 million partially offset by an
increase in capital expenditures of $0.5 million. Financing activities provided
$24.9 million during the three months ended March 31, 2000, compared to $2.8
million for the quarter ended March 31, 1999. This increase in cash provided
resulted mainly from the Company's accounts receivable securitization program
which provided $26.3 million more of cash during the three months ended March
31, 2000 when compared to the same period in 1999. During the fourth quarter of
1999 the Company's old securitization program was repaid and the new program did
not commence until January 2000.
LIQUIDITY
The Company's principal sources of liquidity are cash flow from operations and
borrowings under the Company's existing bank facility. The Company's principal
uses of cash will be debt service requirements, capital expenditures,
acquisitions and working capital. The Company expects that ongoing requirements
for debt service, capital expenditures and working capital will be funded from
operating cash flow and borrowings under its existing bank facility. In
connection with future acquisitions, the Company may require additional funding
which may be provided in the form of additional debt, equity financing or
combination thereof. There can be no assurance that any such additional
financing will be available to the Company on acceptable terms.
The Company anticipates that its operating cash flow, together with borrowings
under its existing bank facility, will be sufficient to meet its anticipated
future operating expenses and capital expenditures and to service its debt
requirements as they become due. However, the Company's ability to make
scheduled payments of principal of, to pay interest on or to refinance its
indebtedness and to satisfy its other debt obligations will depend upon its
future operating performance, which will be affected by general economic,
financial, competitive, legislative, regulatory, business and other factors
beyond its control.
YEAR 2000 ISSUE
To date, the Company has not experienced any material Year 2000 problems in
products that it sells or in its internal systems. While we are not currently
aware of any internal or external Year 2000 failures impacting our operations or
those of our customers due to Year 2000 failures of our products, we continue to
monitor the compliance of our products and internal systems, as well as third
party software purchased from suppliers prior to January 1, 2000.
Although we believe that we have successfully modified our products, services,
and internal systems as necessary to be Year 2000-compliant, we cannot be sure
that our products or our internal systems do not contain undetected errors or
defects associated with Year 2000 functions that may manifest themselves over
time and may result in a material adverse impact on the Company's business,
financial condition, or results of operations.
With regard to the Company's products, the most likely worst-case scenario with
respect to any Year 2000 problems will be insignificant given the mechanical
nature of the vast majority of the products. With regard to the Company's
internal systems, and products and services acquired from third-party suppliers,
the most likely worst-case scenario will be a delayed Year 2000-related failure.
23
<PAGE> 24
Information technology staff have continued testing internal systems after the
rollover date of January 1, 2000, and as of the date hereof, have detected no
errors or malfunctions resulting from Year 2000 issues. Information technology
staff will continue to monitor internal systems and investigate reports of Year
2000-related errors or failures in our products well into the future.
QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK
There have been no material changes in the first quarter of 2000. Refer to the
Company's discussion in its Annual Report on Form 10-K for the year ended
December 31, 1999.
24
<PAGE> 25
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27 - Financial Data Schedule
b) Reports on Form 8-K
None
25
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THERMADYNE HOLDINGS CORPORATION
By: /s/ Randall E. Curran
-------------------------------
Randall E. Curran
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ James H. Tate
-------------------------------
James H. Tate
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: May 12, 2000
26
<PAGE> 27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THERMADYNE MFG. LLC
By: /s/ Randall E. Curran
-------------------------------
Randall E. Curran
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ James H. Tate
-------------------------------
James H. Tate
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: May 12, 2000
27
<PAGE> 28
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THERMADYNE CAPITAL CORP.
By: /s/ Randall E. Curran
-------------------------------
Randall E. Curran
Chairman of the Board, President and
Chief Executive Officer
(Principal Executive Officer)
By: /s/ James H. Tate
-------------------------------
James H. Tate
Senior Vice President and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Date: May 12, 2000
28
<PAGE> 29
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH QUARTERLY REPORT.
</LEGEND>
<CIK> 0000850660
<NAME> Thermadyne Holdings Corp
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 40,186
<SECURITIES> 0
<RECEIVABLES> 71,959
<ALLOWANCES> 3,181
<INVENTORY> 102,526
<CURRENT-ASSETS> 220,070
<PP&E> 90,835
<DEPRECIATION> 0
<TOTAL-ASSETS> 401,643
<CURRENT-LIABILITIES> 106,356
<BONDS> 730,725
63,427
0
<COMMON> 36
<OTHER-SE> 547,416
<TOTAL-LIABILITY-AND-EQUITY> 401,643
<SALES> 133,157
<TOTAL-REVENUES> 133,157
<CGS> 85,188
<TOTAL-COSTS> 85,188
<OTHER-EXPENSES> 32,971
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,529
<INCOME-PRETAX> (4,780)
<INCOME-TAX> 2,785
<INCOME-CONTINUING> (7,565)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (7,565)
<EPS-BASIC> (2.66)
<EPS-DILUTED> (2.66)
</TABLE>
