THERMADYNE HOLDINGS CORPORATION NEW (THMD, Financial) filed Quarterly Report for the period ended 2011-09-30.
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Net sales for the nine months ended September 30, 2011 increased $58.9 million as compared to the same period in 2010, with approximately $38.4 million related to increased volumes, $7.4 million associated with price increases and $13.1 million attributable to foreign currency translation.
For the three months ended September 30, 2011, gross margin as a percent of net sales decreased as compared to the same period in 2010. In the third quarter of 2011, the Company charged cost of sales with $1.1 million of incremental depreciation related to fair value purchase accounting adjustments for fixed assets. Under its use of the last-in first-out (“LIFO”) inventory method, the Company also recorded a $0.6 million charge to cost of sales in the third quarter of 2011, and recorded no LIFO related charges in the third quarter of 2010. Excluding these items, adjusted gross margin as a percent of net sales was 35.2% in 2011 as compared to 34.4% in 2010. This increase in adjusted gross margin is due to the beneficial impact of manufacturing efficiencies arising from increased volumes of activity in 2011 and price increases enacted in the first half of 2011.
For the nine months ended September 30, 2011, gross margin as a percent of net sales decreased as compared to the same period in 2010. In the first nine months of 2011, the Company expensed $6.8 million to cost of sales related to fair value purchase accounting adjustments for inventory and incremental depreciation of fixed assets. The Company also recorded a $2.1 million LIFO related charge to cost of sales in the first nine months of 2011 resulting from expected inflation in 2011. In 2010, the Company recorded a $0.1 million LIFO related charge to cost of sales. Excluding these items, adjusted gross margin as a percent of net sales was 35.7% in 2011 as compared to 33.9% in 2010. The increase in adjusted gross margin is primarily due to the beneficial impact of manufacturing efficiencies arising from increased volumes of activity in 2011 and price increases enacted in the first half of 2011.
The effective tax rate for 2011 is estimated to approximate 37.3% for the year. The effective tax rate exceeds the federal statutory rate primarily because foreign earnings are currently taxable as “deemed dividends” in the U.S. These deemed dividends are not offset by foreign tax credits due to the uncertainty of their utilization. In the third quarter of 2011, these deemed dividends were largely offset by the release of valuation allowances. For the first nine months of 2010, the effective income tax rate was 30.5%. The lower effective rate in 2010 of the Predecessor resulted from the use of net operating loss carryovers to offset U.S. pre-tax income. The income taxes currently payable for 2011 are estimated to be 31% and are primarily related to foreign jurisdictions.
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Highlight of Business Operations:
Net sales for the three months ended September 30, 2011 increased $18.4 million as compared to the same period in 2010, with approximately $10.5 million related to increased volumes, $3.2 million associated with price increases and $4.7 million attributable to foreign currency translation.Net sales for the nine months ended September 30, 2011 increased $58.9 million as compared to the same period in 2010, with approximately $38.4 million related to increased volumes, $7.4 million associated with price increases and $13.1 million attributable to foreign currency translation.
For the three months ended September 30, 2011, gross margin as a percent of net sales decreased as compared to the same period in 2010. In the third quarter of 2011, the Company charged cost of sales with $1.1 million of incremental depreciation related to fair value purchase accounting adjustments for fixed assets. Under its use of the last-in first-out (“LIFO”) inventory method, the Company also recorded a $0.6 million charge to cost of sales in the third quarter of 2011, and recorded no LIFO related charges in the third quarter of 2010. Excluding these items, adjusted gross margin as a percent of net sales was 35.2% in 2011 as compared to 34.4% in 2010. This increase in adjusted gross margin is due to the beneficial impact of manufacturing efficiencies arising from increased volumes of activity in 2011 and price increases enacted in the first half of 2011.
For the nine months ended September 30, 2011, gross margin as a percent of net sales decreased as compared to the same period in 2010. In the first nine months of 2011, the Company expensed $6.8 million to cost of sales related to fair value purchase accounting adjustments for inventory and incremental depreciation of fixed assets. The Company also recorded a $2.1 million LIFO related charge to cost of sales in the first nine months of 2011 resulting from expected inflation in 2011. In 2010, the Company recorded a $0.1 million LIFO related charge to cost of sales. Excluding these items, adjusted gross margin as a percent of net sales was 35.7% in 2011 as compared to 33.9% in 2010. The increase in adjusted gross margin is primarily due to the beneficial impact of manufacturing efficiencies arising from increased volumes of activity in 2011 and price increases enacted in the first half of 2011.
The effective tax rate for 2011 is estimated to approximate 37.3% for the year. The effective tax rate exceeds the federal statutory rate primarily because foreign earnings are currently taxable as “deemed dividends” in the U.S. These deemed dividends are not offset by foreign tax credits due to the uncertainty of their utilization. In the third quarter of 2011, these deemed dividends were largely offset by the release of valuation allowances. For the first nine months of 2010, the effective income tax rate was 30.5%. The lower effective rate in 2010 of the Predecessor resulted from the use of net operating loss carryovers to offset U.S. pre-tax income. The income taxes currently payable for 2011 are estimated to be 31% and are primarily related to foreign jurisdictions.
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