##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
 For the quarterly period ended June 30, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
 For the transition period from  to
 COMMISSION FILE NUMBER: 0-452
 TECUMSEH PRODUCTS COMPANY
  Michigan(State or other jurisdiction of incorporation or
    
    38-1093240organization)
    
    (IRS Employer Identification Number)1136 OAK VALLEY DRIVEANN ARBOR, MICHIGAN
    
    48108(Address of Principal Executive Offices)
    
    (Zip Code)
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
  o þ




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##### 



TABLE OF CONTENTS
 PagePART I FINANCIAL INFORMATION:Item 1. Financial StatementsConsolidated Balance Sheets (unaudited)
    
    
    3Consolidated Statements of Operations (unaudited)
    
    
    4Consolidated Statements of Cash Flows (unaudited)
    
    
    5Notes to Consolidated Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    27Item 4. Controls and Procedures
    
    
    28PART II OTHER INFORMATION:Item 1. Legal Proceedings
    
    
    29Item 6. Exhibits
    
    
    30Signatures
    
    
    31Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   Page 2




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PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Financial Statements
 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
 June 30,
    
    
    December 31,2010
    
    
    2009ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    74.8
    
    
    $
    90.7Restricted cash and cash equivalents
    
    
    18.3
    
    
    
    10.5Accounts receivable, trade, less allowance for
doubtful accounts of $1.1 in 2010 and
$1.2 in 2009
    
    
    154.9
    
    
    
    79.4Inventories
    
    
    130.0
    
    
    
    109.6Deferred income taxes
    
    
    6.9
    
    
    
    7.4Recoverable non-income taxes
    
    
    51.7
    
    
    
    38.5Fair value of hedge
    
    
    3.9
    
    
    
    11.2Other current assets
    
    
    11.8
    
    
    
    13.4Total current assets
    
    
    452.3
    
    
    
    360.7Property, Plant, and Equipment, net
    
    
    234.9
    
    
    
    259.7Long-term investments
    
    
    
    
    
    
    4.1Prepaid pension expense
    
    
    8.6
    
    
    
    80.3Recoverable non-income taxes
    
    
    38.0
    
    
    
    38.5Other assets
    
    
    18.7
    
    
    
    23.8Total assets
    
    $
    752.5
    
    
    $
    767.1LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable, trade
    
    $
    140.0
    
    
    $
    117.4Short-term borrowings
    
    
    56.2
    
    
    
    23.0Accrued liabilities:Employee compensation
    
    
    30.2
    
    
    
    29.0Product warranty and self-insured risks
    
    
    12.1
    
    
    
    10.6Payroll taxes
    
    
    11.0
    
    
    
    11.1Fair value of hedge
    
    
    3.1
    
    
    
    0.6Other
    
    
    24.6
    
    
    
    19.2Total current liabilities
    
    
    277.2
    
    
    
    210.9Long-term debt
    
    
    3.0
    
    
    
    8.0Deferred income taxes
    
    
    0.8
    
    
    
    7.2Other postretirement benefit liabilities
    
    
    39.0
    
    
    
    41.1Product warranty and self-insured risks
    
    
    4.5
    
    
    
    4.8Pension liabilities
    
    
    23.9
    
    
    
    25.2Other
    
    
    7.5
    
    
    
    6.5Total liabilities
    
    
    355.9
    
    
    
    303.7Stockholders EquityClass A common stock, $1 par value; authorized
75,000,000 shares; issued and outstanding
13,401,938 shares in 2010 and 2009
    
    
    13.4
    
    
    
    13.4Class B common stock, $1 par value; authorized
25,000,000 shares; issued and outstanding
5,077,746 shares in 2010 and 2009
    
    
    5.1
    
    
    
    5.1Paid in capital
    
    
    11.0
    
    
    
    11.0Retained earnings
    
    
    364.0
    
    
    
    411.0Accumulated other comprehensive income
    
    
    3.1
    
    
    
    22.9Total stockholders equity
    
    
    396.6
    
    
    
    463.4Total liabilities and stockholders equity
    
    $
    752.5
    
    
    $
    767.1
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    249.3
    
    
    $
    163.7
    
    
    $
    488.0
    
    
    $
    315.0Cost of sales and operating expenses
    
    
    218.3
    
    
    
    159.7
    
    
    
    428.3
    
    
    
    301.5Gross Profit
    
    
    31.0
    
    
    
    4.0
    
    
    
    59.7
    
    
    
    13.5Selling and administrative expenses
    
    
    29.6
    
    
    
    33.3
    
    
    
    58.1
    
    
    
    65.7Impairments, restructuring charges, and other items
    
    
    8.5
    
    
    
    1.1
    
    
    
    48.5
    
    
    
    7.0Operating loss
    
    
    (7.1
    )
    
    
    (30.4
    )
    
    
    (46.9
    )
    
    
    (59.2
    )Interest expense
    
    
    2.7
    
    
    
    2.1
    
    
    
    5.6
    
    
    
    5.0Interest income and other, net
    
    
    0.3
    
    
    
    0.6
    
    
    
    0.6
    
    
    
    1.4Loss from continuing operations before taxes
    
    
    (9.5
    )
    
    
    (31.9
    )
    
    
    (51.9
    )
    
    
    (62.8
    )Tax benefit
    
    
    0.2
    
    
    
    7.2
    
    
    
    1.9
    
    
    
    13.7Loss from continuing operations
    
    
    (9.3
    )
    
    
    (24.7
    )
    
    
    (50.0
    )
    
    
    (49.1
    )Income (loss) from discontinued operations, net of tax
    
    
    4.2
    
    
    
    (0.2
    )
    
    
    3.0
    
    
    
    0.3Net loss
    
    $
    (5.1
    )
    
    $
    (24.9
    )
    
    $
    (47.0
    )
    
    $
    (48.8
    )Basic and diluted loss per share (a):Loss from continuing operations
    
    $
    (0.50
    )
    
    $
    (1.34
    )
    
    $
    (2.71
    )
    
    $
    (2.66
    )Income (loss) from discontinued operations, net of tax
    
    
    0.23
    
    
    
    (0.01
    )
    
    
    0.16
    
    
    
    0.02Net loss per share
    
    $
    (0.27
    )
    
    $
    (1.35
    )
    
    $
    (2.55
    )
    
    $
    (2.64
    )Weighted average shares, basic and diluted (in thousands)
    
    
    18,480
    
    
    
    18,480
    
    
    
    18,480
    
    
    
    18,480Cash dividends declared per share
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
 (a)
    
    On April 9, 2007, we issued a warrant to a lender to purchase 1,390,944 shares of our Class A
Common Stock, which is equivalent to 7% of our fully diluted common stock (including both
Class A and Class B shares). This warrant is not included in diluted per share information,
as the effect would be antidilutive.   Page 4




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
 Six Months EndedJune 30,2010
    
    
    2009Cash Flows from Operating Activities:Net loss
    
    $
    (47.0
    )
    
    $
    (48.8
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation
    
    
    19.8
    
    
    
    19.6Impairment of long-lived assets and goodwill
    
    
    
    
    
    
    1.2Amortization of debt-issuance costs
    
    
    1.1
    
    
    
    0.2Loss on disposal of property and equipment
    
    
    
    
    
    
    2.4Non-cash settlement of hourly pension plan reversion
    
    
    29.2
    
    
    
    Non-cash curtailment of post-retirement benefits
    
    
    (7.0
    )
    
    
    Deferred income taxes
    
    
    (7.8
    )
    
    
    4.1Share based compensation
    
    
    0.9
    
    
    
    2.5Investment impairment
    
    
    0.4
    
    
    
    Changes in operating assets and liabilities:Accounts receivable
    
    
    (85.1
    )
    
    
    15.7Inventories
    
    
    (26.9
    )
    
    
    19.2Payables and accrued expenses
    
    
    46.6
    
    
    
    (27.4
    )Employee retirement benefits
    
    
    (3.5
    )
    
    
    (4.9
    )Hourly pension plan reversion
    
    
    54.5
    
    
    
    Recoverable non-income taxes
    
    
    (15.7
    )
    
    
    (11.6
    )Other
    
    
    6.5
    
    
    
    3.7Cash used in operating activities
    
    
    (34.0
    )
    
    
    (24.1
    )Cash Flows from Investing Activities:Capital expenditures
    
    
    (3.1
    )
    
    
    (5.2
    )Short and long term investments
    
    
    4.1
    
    
    
    (0.1
    )Change in restricted cash and cash equivalents
    
    
    (7.8
    )
    
    
    0.6Proceeds (payments made) from sale of assets
    
    
    0.1
    
    
    
    (13.1
    )Cash used in investing activities
    
    
    (6.7
    )
    
    
    (17.8
    )Cash Flows from Financing Activities:Other borrowings, net
    
    
    29.8
    
    
    
    2.3Cash provided by financing activities
    
    
    29.8
    
    
    
    2.3Effect of Exchange Rate Changes on Cash
    
    
    (5.0
    )
    
    
    1.3Decrease in cash and cash equivalents
    
    
    (15.9
    )
    
    
    (38.3
    )Cash and Cash Equivalents:Beginning of Period
    
    
    90.7
    
    
    
    113.1End of Period
    
    $
    74.8
    
    
    $
    74.8Cash paid (refunds received) for taxes
    
    $
    (0.2
    )
    
    $
    0.1Cash paid for interest
    
    $
    4.3
    
    
    $
    5.8
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
 NOTE 1. Accounting Policies
  Reclassification
  Use of Estimates
   NOTE 2. Discontinued Operations
    Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net sales
    
    $
    
    
    
    $
    0.5
    
    
    $
    
    
    
    $
    0.8Cost of sales
    
    
    
    
    
    
    0.4
    
    
    
    
    
    
    
    0.6Selling and administrative expenses
    
    
    
    
    
    
    0.1
    
    
    
    
    
    
    
    0.5Impairments, restructuring charges, and other items
    
    
    (6.0
    )
    
    
    0.5
    
    
    
    (5.1
    )
    
    
    (0.4
    )Operating income (loss) from discontinued operations before
income taxes
    
    
    6.0
    
    
    
    (0.5
    )
    
    
    5.1
    
    
    
    0.1Income taxes provision (benefit) on discontinued operations
    
    
    1.8
    
    
    
    (0.3
    )
    
    
    2.1
    
    
    
    (0.2
    )Operating income (loss) from discontinued operations after income
taxes
    
    $
    4.2
    
    
    $
    (0.2
    )
    
    $
    3.0
    
    
    $
    0.3
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NOTE 3. Inventories
  June 30,
    
    
    December 31,(In Millions)
    
    2010
    
    
    2009Raw materials, net of reserves
    
    $
    68.2
    
    
    $
    54.9Work in progress
    
    
    2.5
    
    
    
    4.3Finished goods, net of reserves
    
    
    59.3
    
    
    
    50.4$
    130.0
    
    
    $
    109.6
  NOTE 4. Property, Plant and Equipment, net
  June 30,
    
    
    December 31,(In Millions)
    
    2010
    
    
    2009Land and land improvements
    
    $
    15.6
    
    
    $
    16.5Buildings
    
    
    97.7
    
    
    
    107.5Machinery and Equipment
    
    
    849.1
    
    
    
    892.1962.4
    
    
    
    1,016.1Less accumulated depreciation
    
    
    729.7
    
    
    
    759.4232.7
    
    
    
    256.7Construction in process
    
    
    2.2
    
    
    
    3.0Property, plant and equipment, net
    
    $
    234.9
    
    
    $
    259.7
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NOTE 5. Pension and Other Postemployment Benefit (OPEB) Plans
  Pension Benefits
    
    
    Other BenefitsThree Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,(In Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    0.5
    
    
    $
    0.6
    
    
    $
    0.1
    
    
    $
    0.1Interest cost
    
    
    2.0
    
    
    
    3.0
    
    
    
    0.5
    
    
    
    0.7Expected return on plan assets
    
    
    (2.1
    )
    
    
    (4.0
    )
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    0.4
    
    
    
    
    
    
    
    (1.2
    )
    
    
    (2.5
    )Amortization of actuarial transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.1
    )Additional expense (income) due to
curtailments, settlements and terminations
(see below)
    
    
    
    
    
    
    
    
    
    
    (6.8
    )
    
    
    Net periodic expense (benefit)
    
    $
    0.8
    
    
    $
    (0.4
    )
    
    $
    (7.4
    )
    
    $
    (1.8
    )
 Pension Benefits
    
    
    Other BenefitsSix  Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Service cost
    
    $
    1.0
    
    
    $
    1.2
    
    
    $
    0.2
    
    
    $
    0.3Interest cost
    
    
    4.7
    
    
    
    5.9
    
    
    
    1.1
    
    
    
    1.3Expected return on plan assets
    
    
    (6.1
    )
    
    
    (8.1
    )
    
    
    
    
    
    
    Amortization of net loss (gain)
    
    
    0.7
    
    
    
    (0.1
    )
    
    
    (2.5
    )
    
    
    (5.0
    )Amortization of actuarial transition obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.2
    )Additional expense (income) due to
curtailments, settlements and terminations
(see below)
    
    
    29.4
    
    
    
    0.5
    
    
    
    (6.8
    )
    
    
    Net periodic expense (benefit)
    
    $
    29.7
    
    
    $
    (0.6
    )
    
    $
    (8.0
    )
    
    $
    (3.6
    )
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NOTE 6. Recoverable Non-income Taxes
    June 30,
    
    
    December 31,(In Millions)
    
    2010
    
    
    2009Brazil
    
    $
    74.5
    
    
    $
    67.7India
    
    
    10.7
    
    
    
    7.1Europe
    
    
    4.5
    
    
    
    2.2Total recoverable non-income taxes
    
    $
    89.7
    
    
    $
    77.0
  NOTE 7. Warranties
   Six Months
    
    
    Six MonthsEnded
    
    
    Ended(In Millions)
    
    June 30, 2010
    
    
    June 30, 2009Balance at January 1,
    
    $
    5.1
    
    
    $
    6.6Settlements made (in cash or in kind)
    
    
    (2.3
    )
    
    
    (2.3
    )Current year accrual
    
    
    2.6
    
    
    
    3.3Adjustments to preexisting warranties
    
    
    0.1
    
    
    
    (2.1
    )Effect of foreign currency translation
    
    
    (0.1
    )
    
    
    0.2Balance at June 30,
    
    $
    5.4
    
    
    $
    5.7
  NOTE 8. Debt
    Page 9




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NOTE 9. Comprehensive Income (Loss)
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(In Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Net loss
    
    $
    (5.1
    )
    
    $
    (24.9
    )
    
    $
    (47.0
    )
    
    $
    (48.8
    )Other comprehensive income (loss), net of taxForeign currency translation adjustments
    
    
    (5.9
    )
    
    
    15.0
    
    
    
    (14.0
    )
    
    
    27.2(Loss) Gain on derivatives, net of tax
    
    
    (5.6
    )
    
    
    38.7
    
    
    
    (9.1
    )
    
    
    35.3Total comprehensive (loss) income
    
    $
    (16.6
    )
    
    $
    28.8
    
    
    $
    (70.1
    )
    
    $
    13.7
 NOTE 10. Share-Based Compensation Arrangements
      June 30, 2010
    
    June 30, 2009Risk-free interest rate
    
    1.69-2.29%
    
    3.19%Dividend yield
    
    0.0%
    
    0.0%Expected life (years)
    
    4.7-6.5 years
    
    5.7-7.0 yearsVolatility
    
    91.91%
    
    90.56%
   Page 10




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NOTE 11. Impairments, Restructuring Charges, and Other Items
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    

June 30,(In Millions)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009Legal Settlement
    
    $
    7.3
    
    
    $
    
    
    
    $
    7.3
    
    
    $
    Environmental reserve on held-for-sale building
    
    
    1.2
    
    
    
    
    
    
    
    1.2
    
    
    
    2.3Severance, restructuring costs, and special termination benefits
    
    
    0.4
    
    
    
    1.1
    
    
    
    0.9
    
    
    
    4.4Curtailment Gain
    
    
    (0.4
    )
    
    
    
    
    
    
    (0.4
    )
    
    
    Settlement loss on the hourly pension plan reversion
    
    
    
    
    
    
    
    
    
    
    29.2
    
    
    
    Excise tax expense on proceeds from hourly retirement plan reversion
    
    
    
    
    
    
    
    
    
    
    10.9
    
    
    
    Impairment of Investment
    
    
    
    
    
    
    
    
    
    
    0.4
    
    
    
    Final settlement of previously terminated salary retirement plan,
net of excise tax
    
    
    
    
    
    
    
    
    
    
    (1.0
    )
    
    
    Loss on transfer of surplus land
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.3Total impairments, restructuring charges, and other items
    
    $
    8.5
    
    
    $
    1.1
    
    
    $
    48.5
    
    
    $
    7.0
     (In Millions)
    
    Severance
    
    
    Excise Tax
    
    
    Legal
    
    
    Other
    
    
    TotalBalance at January 1, 2010
    
    $
    9.7
    
    
    $
    
    
    
    $
    
    
    
    $
    1.8
    
    
    $
    11.5Accruals
    
    
    0.6
    
    
    
    10.9
    
    
    
    7.3
    
    
    
    1.2
    
    
    
    20.0Payments
    
    
    (8.8
    )
    
    
    (10.9
    )
    
    
    
    
    
    
    (0.4
    )
    
    
    (20.1
    )Balance at June 30, 2010
    
    $
    1.5
    
    
    $
    
    
    
    $
    7.3
    
    
    $
    2.6
    
    
    $
    11.4
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NOTE 12. Income Taxes
          NOTE 13. Fair Value
  Level 1
    
    Valuation is based upon quoted prices for identical instruments traded in active markets.Level 2
    
    Valuation is based upon quoted prices for similar instruments in active markets, quoted
prices for identical or similar instruments in markets that are not active, and model-based
valuation techniques for which all significant assumptions are observable in the market.Level 3
    
    Valuation is generated from model-based techniques that use at least one significant
assumption not observable in the market. These unobservable assumptions reflect estimates of
assumptions that market participants would use in pricing the asset or liability.
  Page 12




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Total Fair(In Millions)
    
    Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Commodity futures contracts
    
    $
    2.2
    
    
    $
    
    
    
    $
    2.2
    
    
    $
    Foreign currency derivatives
    
    
    1.7
    
    
    
    
    
    
    
    1.7
    
    
    
    Balance as of June 30, 2010
    
    $
    3.9
    
    
    $
    
    
    
    $
    3.9
    
    
    $
    Liabilities:Foreign currency derivatives
    
    
    3.1
    
    
    
    
    
    
    
    3.1
    
    
    
    Balance as of June 30, 2010
    
    $
    3.1
    
    
    $
    
    
    
    $
    3.1
    
    
    $
    
  Auction Rate
    
    
    Auction Rate(In Millions)
    
    Certificates
    
    
    Securities RightsBalance at January 1, 2010
    
    $
    3.9
    
    
    $
    0.2Payments on principal
    
    
    (4.2
    )
    
    
    Gains (losses) included in investment income
    
    
    0.3
    
    
    
    (0.2
    )Balance at June 30, 2010
    
    $
    
    
    
    $
    
  NOTE 14. Derivative Instruments and Hedging Activities
     Page 13




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##### Table of Contents



Asset (Liability) DerivativesJune 30, 2010
    
    
    December 31, 2009Financial
    
    
    
    
    
    Financial(In Millions)
    
    Position Location
    
    Fair Value
    
    
    Position Location
    
    Fair ValueDerivatives designated as hedging instrumentsCommodity futures contracts
    
    Fair value of hedge (asset)
    
    $
    2.2
    
    
    Fair value of hedge (asset)
    
    $
    5.4Commodity futures contracts
    
    Fair value of hedge (liability)
    
    
    
    
    
    Fair value of hedge (liability)
    
    
    (0.4
    )Foreign currency derivatives
    
    Fair value of hedge  (asset)
    
    
    1.7
    
    
    Fair value of hedge (asset)
    
    
    5.8Foreign currency derivatives
    
    Fair value of hedge (liability)
    
    
    (3.1
    )
    
    Fair value of hedge (liability)
    
    
    (0.2
    )Total derivatives designated as hedging
instruments
    
    
    
    $
    0.8
    
    
    
    
    $
    10.6
  Location ofGain (Loss)ReclassifiedAmount of Gain (Loss)
    
    
    from AOCI
    
    
    Amount of Gain (Loss)recognized in OCI (effective
    
    
    into Income
    
    
    Reclassified from AOCI into(In Millions)
    
    Portion)
    
    
    (Effective
    
    
    Income (Effective Portion)Three Months Ended
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    Portion)
    
    
    June 30, 2010
    
    
    June 30, 2009Commodity futures contracts
    
    $
    (0.8
    )
    
    $
    13.7
    
    
    Cost of sales
    
    $
    2.3
    
    
    $
    1.3Foreign currency derivatives
    
    
    (0.7
    )
    
    
    10.0
    
    
    Net sales
    
    
    1.8
    
    
    
    0.7Total
    
    
    (1.5
    )
    
    
    23.7
    
    
    
    
    
    
    $
    4.1
    
    
    $
    2.0Six Months Ended
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    
    
    
    June 30, 2010
    
    
    June 30, 2009Commodity futures contracts
    
    $
    0.2
    
    
    $
    16.0
    
    
    Cost of sales
    
    $
    3.3
    
    
    
    (1.1
    )Foreign currency derivatives
    
    
    (1.3
    )
    
    
    14.8
    
    
    Net sales
    
    
    4.7
    
    
    
    (5.9
    )Total
    
    $
    (1.1
    )
    
    $
    30.8
    
    
    
    
    
    
    $
    8.0
    
    
    $
    (7.0
    )
 Location ofGain (Loss)ReclassifiedAmount of Gain (Loss)
    
    
    from AOCI
    
    
    Amount of Gain (Loss)recognized in OCI (Ineffective
    
    
    into Income
    
    
    Reclassified from AOCI into(In Millions)
    
    Portion)
    
    
    (Ineffective
    
    
    Income (Ineffective Portion)Three Months Ended
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    Portion)
    
    
    June 30, 2010
    
    
    June 30, 2009Commodity futures contracts
    
    $
    
    
    
    $
    1.0
    
    
    Cost of sales
    
    $
    
    
    
    $
    0.3Foreign currency derivatives
    
    
    
    
    
    
    
    
    
    Net sales
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    1.0
    
    
    
    
    
    
    $
    
    
    
    $
    0.3
 Six Months Ended
    
    June 30, 2010
    
    
    June 30, 2009
    
    
    
    
    
    
    June 30, 2010
    
    
    June 30, 2009Commodity futures contracts
    
    $
    
    
    
    $
    1.0
    
    
    Cost of sales
    
    $
    
    
    
    $
    0.3Foreign currency derivatives
    
    
    
    
    
    
    
    
    
    Net sales
    
    
    
    
    
    
    Total
    
    $
    
    
    
    $
    1.0
    
    
    
    
    
    
    $
    
    
    
    $
    0.3
   Page 14




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##### Table of Contents



NOTE 15. Commitments and Contingencies
 Accounts Receivables
  Purchase Commitments
  Letters of Credit
  Litigation
 General
  U.S. Horsepower label litigation
 th
  Page 15




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##### Table of Contents



Canadian Horsepower label litigation
     Compressor industry antitrust investigation
     Page 16




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##### Table of Contents



Platinum
   Page 17




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##### Table of Contents



Environmental Matters
    NOTE 16. Recently Issued Accounting Pronouncements
  NOTE 17. Subsequent Events
   Page 18




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
 CAUTIONARY STATEMENTS RELATING TO FORWARD LOOKING STATEMENTS
     EXECUTIVE SUMMARY
  Economy
   Page 19




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##### Table of Contents



Copper and Steel
      Currency Exchange
  Liquidity
   Page 20




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##### Table of Contents



RESULTS OF OPERATIONS
 Three Months Ended June 30, 2010 vs. Three Months Ended June 30, 2009
  Three Months Ended June 30,(Dollars In Millions)
    
    2010
    
    
    %
    
    
    2009*
    
    
    %Net sales
    
    $
    249.3
    
    
    
    100.0
    %
    
    $
    163.7
    
    
    
    100.0
    %Cost of sales and operating expenses
    
    
    218.3
    
    
    
    87.6
    %
    
    
    159.7
    
    
    
    97.6
    %Gross Profit
    
    
    31.0
    
    
    
    12.4
    %
    
    
    4.0
    
    
    
    2.4
    %Selling and administrative expenses
    
    
    29.6
    
    
    
    11.9
    %
    
    
    33.3
    
    
    
    20.3
    %Impairments, restructuring charges, and other items
    
    
    8.5
    
    
    
    3.4
    %
    
    
    1.1
    
    
    
    0.7
    %Operating loss
    
    
    (7.1
    )
    
    
    (2.9
    )%
    
    
    (30.4
    )
    
    
    (18.6
    )%Interest expense
    
    
    2.7
    
    
    
    1.0
    %
    
    
    2.1
    
    
    
    1.3
    %Interest income and other, net
    
    
    0.3
    
    
    
    0.1
    %
    
    
    0.6
    
    
    
    0.4
    %Loss from continuing operations before taxes
    
    
    (9.5
    )
    
    
    (3.8
    )%
    
    
    (31.9
    )
    
    
    (19.5
    )%Tax benefit
    
    
    0.2
    
    
    
    0.1
    %
    
    
    7.2
    
    
    
    4.4
    %Net loss from continuing operations
    
    $
    (9.3
    )
    
    
    (3.7
    )%
    
    $
    (24.7
    )
    
    
    (15.1
    )%
 *
    
    The Paris Tennessee operation reclassification increases net loss from continuing
operations, net of tax, by $1.4 million for the quarter ended June 30, 2009.    Page 21




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##### Table of Contents



Six Months Ended June 30, 2010 vs. Six Months Ended June 30, 2009
  Six Months Ended June 30,(Dollars In Millions)
    
    2010
    
    
    %
    
    
    2009*
    
    
    %Net sales
    
    $
    488.0
    
    
    
    100.0
    %
    
    $
    315.0
    
    
    
    100.0
    %Cost of sales and operating expenses
    
    
    428.3
    
    
    
    87.8
    %
    
    
    301.5
    
    
    
    95.7
    %Gross Profit
    
    
    59.7
    
    
    
    12.2
    %
    
    
    13.5
    
    
    
    4.3
    %Selling and administrative expenses
    
    
    58.1
    
    
    
    11.9
    %
    
    
    65.7
    
    
    
    20.9
    %Impairments, restructuring charges, and other items
    
    
    48.5
    
    
    
    9.9
    %
    
    
    7.0
    
    
    
    2.2
    %Operating loss
    
    
    (46.9
    )
    
    
    (9.6
    )%
    
    
    (59.2
    )
    
    
    (18.8
    )%Interest expense
    
    
    5.6
    
    
    
    1.1
    %
    
    
    5.0
    
    
    
    1.6
    %Interest income and other, net
    
    
    0.6
    
    
    
    0.1
    %
    
    
    1.4
    
    
    
    0.4
    %Loss from continuing operations before taxes
    
    
    (51.9
    )
    
    
    (10.6
    )%
    
    
    (62.8
    )
    
    
    (20.0
    )%Tax benefit
    
    
    1.9
    
    
    
    0.4
    %
    
    
    13.7
    
    
    
    4.4
    %Net loss from continuing operations
    
    $
    (50.0
    )
    
    
    (10.2
    )%
    
    $
    (49.1
    )
    
    
    (15.6
    )%
 *
    
    The Paris Tennessee operation reclassification increases net loss from continuing
operations, net of tax, by $1.3 million for the six months ended June 30, 2009.  Page 22




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##### Table of Contents



Page 23




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##### Table of Contents



LIQUIDITY AND CAPITAL RESOURCES
   Cash Flow
          Page 24




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##### Table of Contents



Liquidity Sources
 Credit Facilities and Cash on Hand
   Potential Non-Operating Cash Inflows
   Accounts Receivable Sales
  Adequacy of Liquidity Sources
  OFF-BALANCE SHEET ARRANGEMENTS
  CONTRACTUAL OBLIGATIONS
   Page 25




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##### Table of Contents



SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES
   OUTLOOK
          Page 26




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  Credit Risk 
  Interest Rate Risk 
 Commodity Price Risk 
   Foreign Currency Exchange Risk 
   Page 27




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##### Table of Contents



Item 4.
    
    Controls and Procedures.
    Changes In Internal Control Over Financial Reporting
  Limitations On The Effectiveness Of Controls And Procedures
    Page 28




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings
 Kahn shareholder lawsuit
  Canadian Horsepower label litigation
 Canadian
Horsepower label litigation
 U.S. Horsepower label litigation
 U.S. Horsepower label
litigation
 Compressor industry antitrust investigation
 Compressor
industry antitrust investigation
 Platinum
 Platinum
 Other litigation
    Page 29




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##### Table of Contents



Item 6.
    
    Exhibits
 ExhibitNumber
    
    Description4.1
    
    
    Letter Agreement, dated June 24, 2010, between Tecumseh Products
Company and JPMorgan Chase Bank, N.A. terminating Credit
Agreement, incorporated by reference to Exhibit 99.1 to the
companys Current Report on Form 8-K, dated June 24, 2010 and
filed June 28, 2010.31.1
    
    
    Certifications of the President and Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certifications of the Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the President and Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
  Page 30




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY
(Registrant)Date: August 5, 2010
    By:
    /s/ James J. ConnorJames J. ConnorVice President, Treasurer and Chief
Financial Officer

(Duly Authorized and
Principal Financial Officer)  Page 31




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##### Table of Contents



EXHIBIT INDEX
 ExhibitNumber
    
    
    Description4.1
    
    
    Letter Agreement, dated June 24, 2010, between Tecumseh Products
Company and JPMorgan Chase Bank, N.A. terminating Credit
Agreement, incorporated by reference to Exhibit 99.1 to the
companys Current Report on Form 8-K, dated June 24, 2010 and
filed June 28, 2010.31.1
    
    
    Certifications of the President and Principal Executive Officer
pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certifications of the Principal Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the President and Principal Executive Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    
    Certification of the Principal Financial Officer pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.