<PAGE>
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549


                                    FORM 10-Q


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
         OF THE SECURITIES EXCHANGE ACT of 1934
         For the quarterly period ended September 30, 2003

                                       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: 0-452


                            TECUMSEH PRODUCTS COMPANY
             (Exact name of registrant as specified in its charter)



                MICHIGAN                                  38-1093240
         (State of Incorporation)           (IRS Employer Identification Number)


         100 EAST PATTERSON STREET
            TECUMSEH, MICHIGAN                              49286
 (Address of Principal Executive Offices)                 (Zip Code)

               Registrant's telephone number, including area code:
                                 (517) 423-8411

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 is an accelerated filer (as
defined in Rule 12b-2 of the Act).

      Yes [X]     No [  ]

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
          Class of Stock                       Outstanding at September 30, 2003
--------------------------------------------------------------------------------
<S>                                            <C>
Class B Common Stock, $1.00 par value                      5,077,746
Class A Common Stock, $1.00 par value                     13,401,938
</TABLE>


                                                                          Page 1

<PAGE>


<TABLE>
<CAPTION>
                            TABLE OF CONTENTS                                  Page

<S>                                                                          <C>
Part I.  Financial Information
    Item 1. Financial Statements
          Consolidated Condensed Balance Sheets                                  3
          Consolidated Condensed Statements of Income                            4
          Consolidated Condensed Statements of Cash Flows                        5
          Notes to Consolidated Condensed Financial Statements                   6
    Item 2.  Management's Discussion and Analysis of Financial Condition        13
             and Results of Operations
    Item 3.  Quantitative and Qualitative Disclosures About Market Risk         22
    Item 4.  Controls and Procedures                                            23
Part II.  Other Information                                                     24
    Item 6.  Exhibits and Reports on Form 8-K.                                  24
Signatures                                                                      25
Certification of CEO Pursuant to Section 302                                 Exh 31.1
Certification of CFO Pursuant to Section 302                                 Exh 31.2
Certification of CEO Pursuant to Section 906                                 Exh 32.1
Certification of CFO Pursuant to Section 906                                 Exh 32.2
</TABLE>


                                                                          Page 2

<PAGE>




                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                   (Unaudited)



<TABLE>
<CAPTION>
  (Dollars in millions, except par value)                                      SEPTEMBER 30,          December 31,
ASSETS                                                                             2003                  2002
                                                                                ----------            ----------
<S>                                                                             <C>                   <C>
Current Assets:
   Cash and cash equivalents                                                    $    280.5            $    333.1
   Accounts receivable, less allowance for doubtful accounts of
     $6.7 in 2003 and $9.2 in 2002                                                   252.3                 242.4
   Inventories                                                                       301.3                 304.0
   Deferred and recoverable income taxes                                              57.9                  51.4
   Other current assets                                                               33.2                  24.2
                                                                                ----------            ----------
         Total current assets                                                        925.2                 955.1

Property, plant, and equipment, at cost, net of accumulated
 depreciation of $776.2 in 2003 and $690.6 in 2002                                   553.5                 570.5
Goodwill and other intangibles                                                       349.1                 329.1
Deferred income taxes                                                                 20.9                  32.2
Prepaid pension expense                                                              173.0                 162.8
Other assets                                                                          53.6                  13.3
                                                                                ----------            ----------
         Total assets                                                           $  2,075.3            $  2,063.0
                                                                                ==========            ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
   Accounts payable, trade                                                      $    164.1            $    172.6
   Income taxes payable                                                                4.3                   8.6
   Short-term borrowings                                                              72.3                 112.6
   Accrued liabilities                                                               157.0                 157.6
                                                                                ----------            ----------
         Total current liabilities                                                   397.7                 451.4

Long-term debt                                                                       314.2                 298.2
Deferred income taxes                                                                 31.3                  33.6
Other postretirement benefit liabilities                                             215.8                 217.3
Product warranty and self-insured risks                                               22.7                  21.3
Accrual for environmental matters                                                     39.7                  29.5
Pension liabilities                                                                   37.9                  32.8
                                                                                ----------            ----------
         Total liabilities                                                         1,059.3               1,084.1
                                                                                ----------            ----------

Stockholders' Equity:
   Class A common stock, $1 par value; authorized 75,000,000 shares;
     issued and outstanding 13,401,938 shares in 2003 and 2002                        13.4                  13.4
   Class B common stock, $1 par value; authorized 25,000,000 shares;
     issued and outstanding 5,077,746 shares in 2003 and 2002                          5.1                   5.1
   Retained earnings                                                               1,076.2               1,078.9
   Accumulated other comprehensive loss                                              (78.7)               (118.5)
                                                                                ----------            ----------
         Total stockholders' equity                                                1,016.0                 978.9
                                                                                ----------            ----------
         Total liabilities and stockholders' equity                             $  2,075.3            $  2,063.0
                                                                                ==========            ==========
</TABLE>

The accompanying notes are an integral part of these Consolidated Condensed
Financial Statements.

                                                                          Page 3

<PAGE>




                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
                   CONSOLIDATED CONDENSED STATEMENTS OF INCOME
                                   (Unaudited)



<TABLE>
<CAPTION>
         (Dollars in millions except per share data)                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                               SEPTEMBER 30,               SEPTEMBER 30,
                                                                         ----------------------     --------------------------
                                                                           2003          2002          2003            2002
                                                                         --------     ---------     ----------      ----------
<S>                                                                      <C>          <C>           <C>             <C>
Net Sales                                                                $  438.5     $   310.9     $  1,394.7      $  1,039.6
   Cost of sales and operating expenses                                     379.7         261.1        1,212.7           882.1
   Selling and administrative expenses                                       37.2          29.4          123.3            88.9
   Restructuring charges and other items                                     (3.3)       --               38.8             4.5
                                                                         --------     ---------     ----------      ----------
Operating Income                                                             24.9          20.4           19.9            64.1
   Interest expense                                                          (6.8)         (1.4)         (18.3)           (3.5)
   Interest income and other, net                                             6.6           3.0           16.7             8.8
                                                                         --------     ---------     ----------      ----------
Income before taxes and cumulative effect of accounting change               24.7          22.0           18.3            69.4
   Income tax expense                                                         5.7           7.8            3.4            24.6
                                                                         --------     ---------     ----------      ----------
Income before cumulative effect of accounting change                         19.0          14.2           14.9            44.8
                                                                         ========     =========     ==========      ==========
Cumulative effect of accounting change for goodwill, net of tax              --            --             --              (3.1)
                                                                         --------     ---------     ----------      ----------
Net Income                                                               $   19.0     $    14.2     $     14.9      $     41.7


Basic and Diluted Earnings Per Share:
   Income before cumulative effect of accounting change                  $   1.03     $    0.77     $     0.81      $     2.42
   Cumulative effect of accounting change for goodwill                        --            --             --            (0.17)
                                                                         --------     ---------     ----------      ----------
   Net Income                                                            $   1.03     $    0.77     $     0.81      $     2.25
                                                                         ========     =========     ==========      ==========

Weighted Average Shares (in thousands)                                     18,480        18,480         18,480          18,480
                                                                         ========     =========     ==========      ==========

Cash Dividends Declared Per Share                                        $   0.32     $    0.32     $     0.96      $     0.96
                                                                         ========     =========     ==========      ==========
</TABLE>




The accompanying notes are an integral part of these Consolidated Condensed
Financial Statements.


                                                                          Page 4
<PAGE>




                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
                 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
                                   (Unaudited)


<TABLE>
<CAPTION>
  (Dollars in millions)                                                               NINE MONTHS ENDED
                                                                                         SEPTEMBER 30,
                                                                                   -----------------------
                                                                                     2003           2002
                                                                                   --------       --------
<S>                                                                                <C>            <C>
Cash Flows from Operating Activities:
   Income before cumulative effect of accounting change                            $   14.9       $   44.8
   Adjustments to reconcile income before cumulative effect of
    accounting change to net cash provided by operating activities:
      Depreciation and amortization                                                    68.7           48.7
      Non-cash restructuring charges and other items                                   22.4            4.5
      Accounts receivable                                                               2.8           (3.7)
      Inventories                                                                      19.5          (15.3)
      Payables and accrued expenses                                                   (48.8)          32.9
      Prepaid pension expense                                                         (12.0)         (21.6)
      Deferred and recoverable taxes                                                    3.1          (11.5)
      Net effect of environmental payment                                             (25.6)          --
      Other                                                                            (6.6)           1.2
                                                                                   --------       --------
                  Cash Provided By Operating Activities                                38.4           80.0
                                                                                   --------       --------

Cash Flows from Investing Activities:
   Business acquisition, net of cash acquired                                          10.6           (4.0)
   Capital expenditures                                                               (61.3)         (41.3)
                                                                                   --------       --------
                  Cash Used In Investing Activities                                   (50.7)         (45.3)
                                                                                   --------       --------

Cash Flows from Financing Activities:
   Dividends paid                                                                     (17.7)         (17.7)
   Decrease in borrowings, net                                                        (36.2)          40.8
                                                                                   --------       --------
                  Cash Provided By (Used In) Financing Activities                     (53.9)          23.1
                                                                                   --------       --------

Effect Of Exchange Rate Changes On Cash                                                13.6           (6.2)
                                                                                   --------       --------

Increase (Decrease) In Cash and Cash Equivalents                                      (52.6)          51.6

Cash and Cash Equivalents:
                  Beginning of Period                                                 333.1          317.6
                                                                                   --------       --------
                  End of Period                                                    $  280.5       $  369.2
                                                                                   ========       ========
</TABLE>


The accompanying notes are an integral part of these Consolidated Condensed
Financial Statements.

                                                                          Page 5

<PAGE>



                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS



1.       The consolidated condensed financial statements of Tecumseh Products
         Company and Subsidiaries (the "Company") are unaudited and reflect all
         adjustments (including normal recurring adjustments) which are, in the
         opinion of management, necessary for a fair presentation of the
         financial position and operating results for the interim periods. The
         December 31, 2002 condensed balance sheet data was derived from audited
         financial statements, but does not include all disclosures required by
         generally accepted accounting principles in the United States ("U.S.
         GAAP"). The consolidated condensed financial statements should be read
         in conjunction with the consolidated financial statements and notes
         thereto contained in the Company's Annual Report for the fiscal year
         ended December 31, 2002. Due to the seasonal nature of the Company's
         business, the results of operations for the interim period are not
         necessarily indicative of the results for the entire fiscal year.

2.       Inventories consisted of:


<TABLE>
<CAPTION>
                                               SEPTEMBER 30,        DECEMBER 31,
             (Dollars in millions)                 2003                2002
         -----------------------------------------------------------------------
<S>                                             <C>                 <C>
          Raw material and work in process      $  157.4            $  164.3
          Finished goods                           129.3               123.5
          Supplies                                  14.6                16.2
         -----------------------------------------------------------------------
          Total Inventories                     $  301.3            $  304.0
         =======================================================================
</TABLE>


3.       In an effort to more effectively compete in a business environment
         plagued by worldwide production over-capacity and low cost
         foreign-sourced product, the Company has undertaken a number of
         strategic initiatives designed to reduce production costs and improve
         overall productivity and product quality by consolidating and
         relocating production capabilities, both domestically and
         internationally.

         As part of these initiatives, the Company began a restructuring action
         during the second quarter of 2003 related to the Engine & Power Train
         business. The restructuring includes the closure of the Company's
         Douglas, Georgia and Sheboygan Falls, Wisconsin production facilities,
         and the relocation of certain production capacities to the new
         Curitiba, Brazil facility and other existing U.S. locations. The
         closings affected approximately 550 and 250 people at the Douglas and
         Sheboygan Falls facilities, respectively. As a result of these actions,
         the Company has incurred both charges and gains which have been
         recognized over the second and third quarters of 2003 in accordance
         with Statement of Financial Accounting Standards (SFAS) No. 144
         "Accounting for the Impairment or Disposal of Long-Lived Assets," SFAS
         No. 146 "Accounting for Costs Associated with Exit or Disposal
         Activities," and SFAS No. 88 "Employer's Accounting for Settlements &
         Curtailments of Defined Benefit Pension Plans and Termination
         Benefits."

         Through September 30, 2003, the Company has recognized a total of $31.0
         million in charges and $5.8 million in gains with respect to these
         restructuring actions. Included in the charges are approximately $7.5
         million in earned severance pay and future benefit costs relating to
         manpower reductions, $3.2 million in plant closing and exit costs
         incurred through September 30, 2003, and $20.3 million in asset
         impairment charges for idled equipment and facilities. The amount of
         severance pay and future benefit costs mentioned above includes $0.8
         million in curtailment losses related to the pension plan at the
         Sheboygan Falls, Wisconsin facility.


                                                                          Page 6

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)



         The gains represent curtailment gains associated with other
         post-employment benefits. Under U.S. GAAP, such gains are not
         recognizable until the affected employees have been severed and,
         accordingly, were recorded in the third quarter of 2003.

         Under SFAS No. 146, severance payments that require future service to
         be received is accrued as earned and other costs are only recognized to
         the extent a liability has been incurred. Accordingly, $28.5 million
         and $2.5 million of the charges were recognized in the second and third
         quarters, respectively. Additionally, the Company expects to incur
         further charges of approximately $3.2 million in the fourth quarter of
         2003.

         As of September 30, 2003, manufacturing operations at both the Douglas,
         Georgia and Sheboygan Falls, Wisconsin operations had ceased. With
         respect to the Douglas Facility, substantially all the employees had
         been dismissed and all related severance costs paid. With respect to
         the Sheboygan Falls facility, substantially all the employees had been
         dismissed and approximately 13% of the estimated $1.0 million severance
         costs had been paid.

         Nine month 2003 results were also adversely affected by a $13.6 million
         ($8.7 million net of tax or $0.47 per share) charge, recognized in the
         first quarter, related to environmental costs at the Company's
         Sheboygan Falls, Wisconsin facility. On March 25, 2003, with the
         cooperation of the Environmental Protection Agency, the Company entered
         into a Liability Transfer and Assumption Agreement (the "Liability
         Transfer Agreement") with Pollution Risk Services, LLC ("PRS"), whereby
         PRS assumed substantially all of the Company's responsibilities,
         obligations and liabilities for remediation of the Sheboygan River and
         Harbor Superfund Site (the "Site"). While the Company believes the
         Liability Transfer Agreement with PRS is sufficient to satisfy
         substantially all of the Company's environmental responsibilities with
         respect to the Site, Liability Transfer Agreement does not constitute a
         legal discharge or release of the Company's liabilities with respect to
         the Site. The cost of the Liability Transfer Agreement was $39.2
         million. The charge consists of the difference between the cost of the
         Liability Transfer Agreement and amounts previously accrued for the
         cleanup. The Company also maintains a reserve of $0.5 million to
         reflect its potential residual environmental liability arising from
         operations at the Site, including potential liabilities not assumed by
         PRS pursuant to the Liability Transfer Agreement. Additional
         information is available in the Company's Form 8-K filed on April 9,
         2003.

         Nine month 2002 results were adversely affected by a $4.5 million ($2.9
         million net of tax or $0.16 per share) restructuring charge in the
         Compressor segment recognized in the first quarter. The charge relates
         to the decision to relocate the production of additional rotary
         compressor product lines to Brazil from the United States and consists
         of the write-down of certain equipment, which will not be used in other
         operations.


                                                                          Page 7

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)



4.       The following table reports the Company's comprehensive income:



<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED            NINE MONTHS ENDED
         COMPREHENSIVE INCOME                                     SEPTEMBER 30,                SEPTEMBER 30,
            (Dollars in millions)                              2003          2002           2003          2002
         -------------------------------------------------------------------------------------------------------
<S>                                                          <C>           <C>            <C>           <C>
          Net Income                                         $  19.0       $  14.2        $  14.9       $  41.7
          Other comprehensive income (loss):
             Foreign currency translation adjustments            2.2         (33.4)          39.8         (41.1)
             Minimum pension liability                           --           --             --            --
         -------------------------------------------------------------------------------------------------------
          Total Comprehensive Income (Loss)                  $  21.2       ($ 19.2)       $  54.7       $   0.6
         =======================================================================================================
</TABLE>


5.       The Company has been named by the U.S. Environmental Protection Agency
         ("EPA") as a potentially responsible party ("PRP") in connection with
         the Sheboygan River and Harbor Superfund Site in Wisconsin. In May
         2000, the EPA issued a Record of Decision ("ROD") selecting the remedy
         for the Site. The Company is one of several named PRP's in the proposed
         cleanup action. The EPA has estimated the cost of cleanup at $40.9
         million. Additionally, the Wisconsin Department of Natural Resources
         ("WDNR"), as a Natural Resource Trustee, is investigating what
         additional requirements, if any, the state may have beyond those
         specified under the ROD.

         The EPA has indicated its intent to address the Site in two phases,
         with the plant site and upper river constituting the first phase
         ("Phase I") and the middle and lower river and harbor being the second
         phase ("Phase II"). In March 2003, the Company entered into a Consent
         Decree concerning the performance of remedial design and remedial
         action for Phase I. This Consent Decree is awaiting final approval by
         the U.S. Department of Justice. Negotiation of a Consent Decree
         regarding Phase II has yet to commence.

         On March 25, 2003, with the cooperation of the EPA, the Company and
         Pollution Risk Services, LLC ("PRS") entered into a Liability Transfer
         and Assumption Agreement (the "Liability Transfer Agreement"). Under
         the terms of the Liability Transfer Agreement, PRS assumed all of the
         Company's responsibilities, obligations and liabilities for remediation
         of the entire Site and the associated costs, except for certain
         specifically enumerated liabilities. Also, as required by the Liability
         Transfer Agreement, the Company has purchased Remediation Cost Cap
         insurance, with a thirty (30) year term, in the amount of $100,000,000
         and Environmental Site Liability insurance in the amount of
         $20,000,000. The Company believes such insurance coverage will provide
         sufficient assurance for completion of the responsibilities,
         obligations and liabilities assumed by PRS under the Liability Transfer
         Agreement. On October 10, 2003, in conjunction with the Liability
         Transfer Agreement, the Company completed the transfer of title to the
         Sheboygan Falls, Wisconsin property to PRS.

         In connection with the Liability Transfer Agreement, the Company has
         received an opinion from its outside tax counsel that substantially
         all of the payment made to PRS should be currently deductible for
         federal purposes.

         The total cost of the Liability Transfer Agreement to the Company,
         including the cost of the insurance policies, was $39.2 million. The
         Company recognized a nonrecurring charge of $13.6 million ($8.7 million
         net of tax ) in the first quarter of 2003. The charge consists of the
         difference between the cost of the Liability Transfer Agreement and
         amounts previously accrued for the cleanup. The Company continues to
         maintain an additional reserve of $0.5 million to reflect its potential
         residual environmental liability arising from operations at the Site,
         including potential liabilities not assumed by PRS pursuant to the
         Liability Transfer Agreement.


                                                                          Page 8

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)

         It is the intent of the Company, PRS and the EPA to negotiate
         provisions that would add PRS as a PRP by amendment to the Consent
         Decree, which requires the approval of the U.S. Department of Justice.
         Until such approval is received, U.S. GAAP requires that the Company
         continue to record the full amount of the estimated remediation
         liability of $39.7 million and a corresponding asset of $39.2 million
         included in Other Assets in the balance sheet. While the Company
         believes the arrangements with PRS are sufficient to satisfy
         substantially all of the Company's environmental responsibilities with
         respect to the Site, these arrangements do not constitute a discharge
         or release of the Company's liabilities with respect to the Site. The
         actual cost of this obligation will be governed by numerous factors,
         including the requirements of the WDNR, and may be greater or lower
         than the amount accrued.

         With respect to other environmental matters, the Company, in
         cooperation with the WDNR, conducted an investigation of soil and
         groundwater contamination at the Company's Grafton, Wisconsin plant. It
         was determined that contamination from petroleum and degreasing
         products used at the plant are contributing to an off-site groundwater
         plume. The Company began remediation of soils in 2001 on the east side
         of the facility. Additional remediation of soils began in the fall of
         2002 in two other areas on the plant site. At September 30, 2003, the
         Company had accrued $2.7 million for the total estimated cost
         associated with the investigation and remediation of the on-site
         contamination. Investigative efforts related to the potential off-site
         groundwater contamination have to date been limited in their nature and
         scope. The extent, timing, and cost of off-site remediation
         requirements, if any, are not presently determinable.

         The WDNR requested that the Company join it in a cooperative effort to
         investigate and clean up PCB contamination in the watershed of the
         south branch of the Manitowoc River, downstream of the Company's New
         Holstein, Wisconsin facility. Despite the fact that the WDNR's
         investigation does not establish the parties responsible for the PCB
         contamination, the WDNR has indicated that it believes the Company is a
         source and that it expects the Company to participate in the cleanup.
         The Company has participated in the first phase of a cooperative
         cleanup, consisting of joint funding of the removal of soils and
         sediments in the source area near its facility. The next phase of the
         cooperative effort is scheduled to occur mid-2004 involving a segment
         downstream of the source area. The Company has provided for these
         estimated costs. Although participation in a cooperative remedial
         effort after this phase for the balance of the watershed is under
         consideration, it is not possible to reasonably estimate the cost of
         any such participation at this time.

         In addition to the above mentioned sites, the Company is also currently
         participating with the EPA and various state agencies at certain other
         sites to determine the nature and extent of any remedial action which
         may be necessary with regard to such other sites. At September 30, 2003
         and December 31, 2002, the Company had accrued $46.5 million and $36.3
         million, respectively, for environmental remediation, including the
         amounts noted above relating to the Sheboygan River and Harbor
         Superfund Site. As these matters continue toward final resolution,
         amounts in excess of those already provided may be necessary to
         discharge the Company from its obligations for these sites. Such
         amounts, depending on their amount and timing, could be material to
         reported net income in the particular quarter or period which they are
         recorded. In addition, the ultimate resolution of these matters, either
         individually or in the aggregate, could be material to the consolidated
         financial statements.


                                                                          Page 9


<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)




6.       The Company is also the subject of, or a party to, a number of other
         pending or threatened legal actions involving a variety of matters
         incidental to its business. Although the ultimate outcome of these
         matters cannot be predicted with certainty, and some may be disposed of
         unfavorably to the Company, management has no reason to believe that
         their disposition will have a material adverse effect on the
         consolidated financial position or results of operations of the
         Company.

7.       The Company has four reportable segments based on the criteria set
         forth in SFAS No. 131 "Disclosures about Segments of an Enterprise and
         Related Information": Compressor Products, Electrical Component
         Products, Engine & Power Train Products, and Pump Products. With the
         acquisition of the FASCO Motors Group ("FASCO") on December 30, 2002,
         the Company created the Electrical Component Products operating
         segment. In addition to FASCO, the segment includes certain North
         American electrical component manufacturing that was previously
         reported in the Compressor Business. Prior year business segment data
         has been reclassified to conform to the Company's current presentation.
         Revenues and operating income by segment for the periods indicated are
         as follows:

<TABLE>
<CAPTION>
                                                                     THREE MONTHS ENDED              NINE MONTHS ENDED
          BUSINESS SEGMENT DATA                                         SEPTEMBER 30,                   SEPTEMBER 30,
               (Dollars in millions)                                 2003           2002             2003             2002
         --------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>            <C>            <C>              <C>
          NET SALES:
             Compressor Products                                  $  193.8       $  181.9       $    620.6       $    615.0
             Electrical Component Products (a)                       101.5            2.3            315.8              5.8
             Engine & Power Train Products                           113.2           97.9            357.1            320.7
             Pump Products                                            29.7           28.4            100.6             97.4
             Other (b)                                                 0.3            0.4              0.6              0.7
         --------------------------------------------------------------------------------------------------------------------
                    Total Net Sales                               $  438.5       $  310.9       $  1,394.7       $  1,039.6
         ====================================================================================================================
          OPERATING INCOME:
             Compressor Products                                  $   15.5       $   22.6       $     55.9       $     65.7
             Electrical Component Products                             3.9           (2.1)            11.5             (1.5)
             Engine & Power Train Products                             3.3            0.2             (7.1)             0.0
             Pump Products                                             3.3            3.3             11.7             12.4
             Other (b)                                                (0.8)          (0.9)            (2.9)            (1.3)
             Corporate expenses                                       (3.6)          (2.7)           (10.4)            (6.7)
             Restructuring charges and other items                     3.3            --             (38.8)            (4.5)
         --------------------------------------------------------------------------------------------------------------------
                    Total Operating Income                            24.9           20.4             19.9             64.1
             Interest expense                                         (6.8)          (1.4)           (18.3)            (3.5)
             Interest income and other, net                            6.6            3.0             16.7              8.8
         --------------------------------------------------------------------------------------------------------------------
          INCOME  BEFORE TAXES AND CUMULATIVE
            EFFECT OF ACCOUNTING CHANGE                           $   24.7       $   22.0       $     18.3       $     69.4
         ====================================================================================================================
</TABLE>


         (a)      Electrical Component Products also has inter-segment sales.
                  Such sales were $54.5 million and $17.2 million for the nine
                  and three month periods ended September 30, 2003,
                  respectively, and $46.1 million and $12.2 million for the nine
                  and three month periods ended September 30, 2002,
                  respectively.

         (b)      "Other" consists of non-reportable business segments,
                  primarily MDSI.

8.       The cumulative effect from an accounting change of $4.8 million ($3.1
         million net of tax) recorded in the first quarter of 2002, resulted
         from the Company adopting SFAS No. 142


                                                                         Page 10

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)



         "Goodwill and Other Intangible Assets" effective January 1, 2002. Under
         SFAS No. 142, goodwill is no longer amortized, but is subject to
         impairment testing on at least an annual basis. As required by SFAS No.
         142, the Company tested for impairment at the date of adoption and
         found that the goodwill associated with the Engine & Power Train
         European operations had been impaired.

9.       On March 5, 2003, the Company completed a private placement of $300
         million Senior Guaranteed Notes due March 5, 2011. These notes bear
         interest at a fixed rate of 4.66%. Proceeds from the private placement
         were used to repay a $250 million bridge loan and pay down borrowings
         under the Company's revolving credit facility. On March 31, 2003, the
         remaining $25 million outstanding under the revolver was repaid from
         available cash resources.

         In addition, during the third quarter 2003, the Company entered into
         two pay variable, receive fixed interest rate swap agreements to lower
         the Company's overall borrowing costs. The agreements have a total
         notional principle amount of $125 million with maturity terms that
         match the Company's Senior Guaranteed Notes. The variable interest
         payments are based upon 60 day LIBOR.

10.      On December 30, 2002, the Company acquired FASCO from Invensys Plc for
         cash of $396.6 million and the assumption of approximately $14.5
         million in debt. During the second quarter of 2003, the Company
         received $14.1 million in cash for purchase price adjustments relating
         to working capital and employee benefit related items. These proceeds
         are reflected in the Statement of Cash Flows under "Business
         acquisition, net of cash acquired."


                                                                         Page 11


<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 1
       NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS - (CONTINUED)


         Also during the second quarter, the Company completed formal tangible
         and intangible asset valuations for FASCO. Adjustments to preliminary
         amounts recorded in purchase accounting are reflected in the September
         30, 2003 balance sheet. The effect of these adjustments decreased net
         property, plant and equipment by $35.2 million, increased
         definite-lived intangibles subject to amortization by $31.6 million,
         and increased goodwill and indefinite-lived intangibles by $3.6
         million. The changes in intangible assets were as follows:


<TABLE>
<CAPTION>
                                                                             Preliminary
                                                                                Values
                                                                              Estimated at
                                                                                Time of           Revised      Estimated Life
                                                                              Acquisition         Values
                                                                             ---------------------------------------------------
<S>                                                                           <C>               <C>            <C>
          Definite-lived Intangibles:
            Non-Compete Agreement                                               $  15.0         $  15.0           2 years
            Customer Relationships and Contracts                                   20.0            39.3         6-15 years
            Technology                                                             --              12.3         3-10 years

          Indefinite-lived Intangibles:
            Trade Name                                                             20.0            16.9
                                                                             ------------------------------
                                                                                $  55.0         $  83.5
                                                                             ==============================
</TABLE>


11.      A portion of export accounts receivable at the Company's Brazilian
         subsidiary are sold with recourse. Brazilian export receivables sold at
         September 30, 2003 and December 31, 2002 were $55.0 million and $41.2
         million, respectively. The Company estimates the fair value of the
         contingent liability related to these receivables to be $0.1 million,
         which is included in operating income and allowance for doubtful
         accounts.

         A provision for estimated future warranty costs and estimated returns
         for credit relating to warranty are recorded when products are sold and
         revenue recognized. A reconciliation of the changes in the Company's
         product warranty liability follows:


<TABLE>
<CAPTION>

                                                               Nine Months Ended
           (Dollars in millions)                              September 30, 2003
                                                            ----------------------
<S>                                                         <C>
           Balance at January 1, 2003                              $  30.5
                 Accruals for warranties                              12.6
                 Settlements made (in cash or in kind)               (12.0)
                 Effect of foreign currency translation                0.5
                                                            ----------------------
           Balance at September 30, 2003                           $  31.6
                                                            ======================
</TABLE>




                                                                         Page 12

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS

Consolidated net sales for the third quarter of 2003 amounted to $438.5 million
compared to sales of $310.9 million in the third quarter of 2002. Consolidated
sales for the nine months ended September 30, 2003 were $1,394.7 million
compared to sales of $1,039.6 million in the first nine months of 2002. The net
increase in sales of $127.6 million for the third quarter includes FASCO sales
of $99.1 million as well as moderate increases in all other business segments.
The net increase of $355.1 million for the first nine months also includes FASCO
sales of $308.4 million, as well as moderate increases in all other business
segments.

Consolidated net income for the third quarter of 2003 amounted to $19.0 million
or $1.03 per share compared to $14.2 million or $0.77 per share in the third
quarter of 2002. Included in reported results for the third quarter of 2003 is a
net gain of $3.3 million ($2.1 million net of tax or $0.11 per share) resulting
from the restructuring actions in the Engine & Power Train business announced in
the second quarter of 2003. Third quarter results were also favorably impacted
by several income tax related items. The resolution of prior years' federal
income tax audits reduced the Company's currently payable provision for income
taxes by $1.9 million. The Company's effective federal income tax rate was
further reduced by adjustments to the provision for deferred taxes pertaining to
unremitted earnings of foreign subsidiaries. Third quarter 2003 results include
the income of the FASCO Motors Group ("FASCO"), which was acquired on December
30, 2002. FASCO's operating income for the quarter was $4.9 million.

Consolidated net income for the first nine months of 2003 amounted to $14.9
million or $0.81 per share compared to $41.7 million or $2.25 per share in the
same period of 2002. In addition to the third quarter net gain from
restructuring actions and the federal income tax-related items mentioned above,
results for the first nine months of 2003 include a charge of $13.6 million
($8.7 million net of tax or $0.47 per share) recorded in the first quarter
related to environmental costs at the Company's Sheboygan Falls, Wisconsin
facility and a restructuring charge of $28.5 million ($18.2 million net of tax
or $0.99 per share) recorded in the second quarter related to the consolidation
of operations in the Engine & Power Train business and related plant closings.
Year-to-date 2003 operating results were also reduced by $4.2 million ($2.7
million net of tax or $0.15 per share) due to the expensing of inventory
write-ups recorded as part of purchase accounting for the FASCO acquisition as
required by U.S. Generally Accepted Accounting Principles. Year-to-date results
have also been negatively impacted by a $5.6 million charge related to the
amortization of a non-compete agreement arising from the FASCO acquisition.
Included in the 2002 first half results is a restructuring charge of $4.5
million ($2.9 million net of tax or $0.16 per share) related to the relocation
of certain compressor manufacturing operations from the United States to Brazil
and the cumulative effect of an accounting change for goodwill ($3.1 million net
of tax or $0.17 per share) related to the adoption of Statement of Financial
Accounting Standards ("SFAS") No. 142 "Goodwill and Other Intangible Assets."

Exclusive of restructuring and other one-time items, third quarter operating
income was slightly lower than the prior year due to weaker results in the
Compressor business segment and interest



                                                                         Page 13
<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



charges on the Company's acquisition related debt, partially offset by
improvement in the Engine & Power Train business and the addition of FASCO.

Compressor Products

Third quarter 2003 sales in the Company's Compressor business increased to
$193.8 million from $181.9 million in the third quarter of 2002. This increase
was primarily attributable to effects of foreign currency translation which
increased sales by approximately $11.3 million. Otherwise, gains in sales of
compressors used in refrigeration applications and, to a lesser extent, gains in
U.S. export sales of compressors used in air conditioning that rebounded after
the second quarter slowdown caused by the war in Iraq were offset by declines in
sales of compressors used in unitary air conditioning and commercial
applications. In addition, aftermarket sales into the distribution and
replacement markets were negatively affected by cool, wet weather declining
nearly 14% from third quarter 2002 levels. Compressor business sales in the
first nine months of 2003 increased $5.6 million, or approximately 0.9%, from
the first nine months of 2002. The relatively flat sales reflect an increase due
to currency translation and a 36% increase in sales of compressors utilized in
refrigeration applications, more than offset by declines in sales of compressors
used in air conditioning.

Compressor business operating income for the third quarter of 2003 amounted to
$15.5 million compared to $22.6 million in the third quarter of 2002. Operating
income for the nine months ended September 30, 2003 amounted to $55.9 million
compared to $65.7 million for the first nine months of 2002. The decrease in
operating income for the third quarter of 2003 versus the comparable 2002
quarter reflects several factors, including an unfavorable sales mix,
unfavorable foreign currency movements, and lower product margins. The continued
decline in overall U.S. manufactured volumes reduced the profitability of the
segment's U.S. operations. Results in Brazil were also lower in the third
quarter of 2003 versus 2002, partially due to $3.7 million of net re-measurement
gains from foreign currency-denominated transactions in the third quarter of
2002 that did not recur in 2003. The weak U.S. dollar narrowed margins on U.S.
dollar denominated sales sourced from Brazil and other foreign operations.
Lastly, margins were adversely affected by unfavorable product sales mix,
material cost increases in some locations, and lower average sales prices in
certain product categories. The decline in profitability experienced in the
second and third quarters of 2003 compared to the same periods in 2002 is in
contrast to the improvement experienced in the first quarter of 2003 where
volumes were up over the prior year first quarter and the effects of cost
reduction efforts produced positive results. As a result of these two
contrasting periods, the Compressor business' operating results for the first
nine months of 2003 were down 14.9% in comparison to the same period in 2002.

Results from the Company's Brazilian compressor operations for the third quarter
of 2003 declined from the comparable prior year period, reflecting a shift in
sales mix to lower priced compressors, increased material and operating costs,
and the foreign currency effects noted above. Despite these declines, Brazilian
operations remain a key to future competitiveness, and for the three and nine
month periods ended September 30, 2003, represented 64% and 59% of operating
income




                                                                         Page 14


<PAGE>




                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)


for the Compressor business compared to 64% and 50%, respectively for the
comparable periods in 2002.

The stagnant European economy combined with the strengthening European currency
resulted in reduced operating profits at the Company's European Compressor
operations versus a year ago. Compressor operations in India were also below
last year's third quarter results, primarily due to reduced sales in the
refrigerator and freezer markets.

Electrical Component Products

With the acquisition of FASCO, the Company has created a new operating segment.
In addition to FASCO, the segment includes certain North American electrical
component manufacturing that was previously reported in the Compressor business.
Prior year business segment data, as presented in the table titled "Results by
Business Segments (Unaudited)," has been reclassified to conform to the
Company's current presentations.

Electrical Components sales were $101.5 million in the third quarter of 2003,
including $99.1 million of sales from FASCO, compared to $2.3 million in the
third quarter of 2002. Year-to-date sales amounted to $315.8 million, including
$308.4 million of sales from FASCO, compared to $5.8 million in the first nine
months of 2002.

Segment operating profit for the quarter was $3.9 million compared to a loss of
$2.1 million in 2002. FASCO contributed $4.9 million in operating profit to the
third quarter of 2003. Segment operating profit for the first nine months of the
year was $11.5 million compared to a loss of $1.5 million for the same period in
2002. FASCO contributed $14.6 million in operating profit to the first nine
months of 2003. FASCO's results for the three and nine month periods have been
reduced by $1.9 million ($1.2 million net of tax or $0.07 per share) and $5.6
million ($3.6 million net of tax or $0.19 per share), respectively,
respectively, for amortization of a non-compete agreement arising from the
acquisition. The non-compete agreement is being amortized over a two year
period. In addition, during the first quarter of 2003, FASCO's results were
reduced by $4.2 million ($2.7 million net of tax or $0.15 per share) for
inventory adjustments required by purchase accounting rules.

Engine & Power Train Products

Engine & Power Train business sales amounted to $113.2 million in the third
quarter of 2003 compared to $97.9 million in the third quarter of 2002. Sales in
the first nine months of 2003 were $357.1 million compared to $320.7 million in
the first nine months of 2002. The improvement in sales for the third quarter
reflects a 29% improvement in unit volume of engines used for snow throwers.
Sales for the first nine months of the year reflect overall higher U.S. shipment
volumes and the effects of translation from a weaker U.S. dollar, partially
offset by lower volumes in Europe where the dry, hot summer has dramatically
slowed sales.

                                                                         Page 15

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



Exclusive of restructuring charges and gains, the Engine & Power Train business
operating income in the third quarter of 2003 amounted to $3.3 million compared
to $0.2 million in the third quarter of 2002. For the first nine months of 2003,
the business incurred an operating loss of $7.1 million compared to breakeven in
2002. The improvement in third quarter results is attributable to the increased
volume of engines for snow throwers and lower fixed costs resulting from the
closure of the Douglas, Georgia facility. Offsets include higher engineering
costs associated with new product development and startup costs associated with
the new facility in Curitiba, Brazil. The substantial decline in profitability
of the segment for the first nine months is attributable to numerous factors,
including less favorable sales mix, lower average selling prices, higher costs
of purchased parts, excess capacity and production inefficiency costs, rising
health care expenses and startup expenses associated with the new facility in
Curitiba, Brazil, as well as weak sales volumes in Europe.

Pump Products

Pump business sales in the third quarter of 2003 amounted to $29.7 million
compared to $28.4 million in 2003. Year-to-date sales amounted to $100.6 million
in 2003 compared to $97.4 million the previous year. The increase in third
quarter sales was primarily attributed to higher volumes in the retail and
plumbing sectors, which were spurred by the inclement weather in the eastern
United States. The slight improvement in the first nine months of 2003 sales was
due to the same third quarter factors, plus increased volumes in condensate
products sold to the HVAC and plumbing markets and in industrial products sold
through the aftermarket distribution channel, offset by lower volumes in the
heavy industrial market.

Operating income amounted to $3.3 million in the quarter ended September 30,
2003 compared to $3.3 million in the same period of 2002. Operating income in
the first nine months of 2003 decreased to $11.7 million from $12.4 million in
2002. The slight decrease in operating income for the first nine months of 2003
compared to 2002 is primarily attributable to increased administrative costs and
unfavorable sales mix.

Restructuring Charges and Other Items

Third quarter 2003 results were favorably affected by $3.3 million ($2.1 million
net of tax or $0.11 per share) for net gains recognized pursuant to the
restructuring actions announced in the second quarter involving the Engine &
Power Train business. These actions included the closure of the Company's
Douglas, Georgia and Sheboygan Falls, Wisconsin production facilities and the
relocation of certain production capacities to the new Curitiba, Brazil facility
and other existing U.S. locations. As a result of these actions, the Company has
incurred both charges and gains, which have been recognized over the second and
third quarters of 2003 in accordance with SFAS No. 144 "Accounting for the
Impairment or Disposal of Long-Lived Assets," SFAS No. 146 "Accounting for Costs
Associated with Exit or Disposal Activities," and SFAS No. 88 "Employer's
Accounting for Settlements & Curtailments of Defined Benefit Pension Plans and
Termination Benefits."


                                                                         Page 16

<PAGE>



                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



As of September 30, 2003, the Company has recognized $31.0 million in charges
and $5.8 million in gains with respect to these restructuring actions. Included
in the charges are approximately $7.5 million in earned severance pay and future
benefit costs relating to manpower reductions, $3.2 million in plant closing and
exit costs incurred through September 30, 2003, and $20.3 million in asset
impairment charges for idled equipment and facilities. The amount of severance
pay and future benefit costs mentioned above includes $0.8 million in
curtailment losses related to the pension plan at the Sheboygan Falls, Wisconsin
facility. The gains represent curtailment gains associated with other
post-employment benefits. Under U.S. GAAP, such gains are not recognizable until
the affected employees have been severed and, accordingly, were recorded in the
third quarter of 2003.

Under SFAS No. 146, severance payments that require future service to be
received is accrued as earned and other costs are only recognized to the extent
a liability has been incurred. Accordingly, $28.5 million and $2.5 million of
the charges were recognized in the second and third quarters, respectively.
Additionally, the Company expects to incur further charges of approximately $3.2
million in the fourth quarter of 2003.

Nine month 2003 results were also adversely affected by a $13.6 million ($8.7
million net of tax or $0.47 per share) charge, recognized in the first quarter,
related to environmental costs at the Company's Sheboygan Falls, Wisconsin
facility. On March 25, 2003, with the cooperation of the Environmental
Protection Agency, the Company entered into a Liability Transfer and Assumption
Agreement (the "Liability Transfer Agreement") with Pollution Risk Services, LLC
("PRS"), whereby PRS assumed substantially all of the Company's
responsibilities, obligations and liabilities for remediation of the Sheboygan
River and Harbor Superfund Site (the "Site"). While the Company believes the
Liability Transfer Agreement with PRS is sufficient to satisfy substantially all
of the Company's environmental responsibilities with respect to the Site,
Liability Transfer Agreement does not constitute a legal discharge or release of
the Company's liabilities with respect to the Site. The cost of the Liability
Transfer Agreement was $39.2 million. The charge consists of the difference
between the cost of the Liability Transfer Agreement and amounts previously
accrued for the cleanup. The Company also maintains a reserve of $0.5 million to
reflect its potential residual environmental liability arising from operations
at the Site, including potential liabilities not assumed by PRS pursuant to the
Liability Transfer Agreement. Additional information is available in the
Company's Form 8-K filed on April 9, 2003.

Nine month 2002 results were adversely affected by a $4.5 million ($2.9 million
net of tax or $0.16 per share) restructuring charge in the Compressor segment
recognized in the first quarter. The charge relates to the decision to relocate
the production of additional rotary compressor product lines to Brazil from the
United States and consists of the write-down of certain equipment, which will
not be used in other operations.


Accounting Changes

The cumulative effect from an accounting change of $4.8 million ($3.1 million
net of tax) recorded in the first quarter of 2002, resulted from the Company
adopting SFAS No. 142 "Goodwill and


                                                                         Page 17


<PAGE>



                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



Other Intangible Assets" on January 1, 2002. Under SFAS No. 142, goodwill is no
longer amortized, but is subject to impairment testing on at least an annual
basis. As required by SFAS No. 142, the Company tested for impairment at the
date of adoption and found that the goodwill associated with the Engine & Power
Train European operations had been impaired.

Interest Expense

Interest expense amounted to $6.8 million in the third quarter of 2003 compared
to $1.4 million in the third quarter of 2002. Interest expense amounted to $18.3
million in the first nine months of 2003 compared to $3.5 million in the same
period of 2002. The increase is primarily related to the temporary and permanent
financing added in connection with the acquisition of FASCO. See "LIQUIDITY,
CAPITAL RESOURCES AND RISKS" for further information regarding this debt.

Interest Income and Other, Net

Interest income and other, net amounted to $6.6 million in the third quarter of
2003 compared to $3.0 million in the third quarter of 2002. Interest income and
other, net amounted to $16.7 million in the first nine months of 2003 compared
to $8.8 million in the same period of 2002. This increase resulted primarily
from higher cash balances in Brazil and $1.2 million in interest received in the
third quarter 2003 in connection with the federal income tax refund.

Taxes on Income

The effective income tax rate for the first nine months of 2003 was 18.6%
compared to 35.5% for the same period in 2002. The lower rate in 2003 is the
result of the resolution of prior years' federal income tax audits and a
prospective revision to the full year forecasted effective tax rate to reflect
lower levels of deferred taxes on the unremitted earnings of foreign
subsidiaries. The resolution of the income tax audits pertained to tax years
1998 and 1999 and resulted in a total refund of $6.9 million, including $1.2
million in interest. The effect of the refund on the provision for income taxes
was $1.9 million.

Outlook

The outlook for the fourth quarter of 2003 is unfavorable in comparison to 2002.
The accretive impact of FASCO's results are expected to be positive, but results
from the Company's traditional Compressor, Engine & Power Train and Pump
segments are expected to be soft in relation to the prior year, reflecting
little economic growth, higher costs and the unfavorable effects of a weak U.S.
dollar. The weakness in the U.S. dollar will be most evident on the results of
the Brazilian Compressor operations where the Real was particularly weak in the
fourth quarter of 2002 due to the national election and European Engine
operations where the strength of the Euro has resulted in a loss of share to
non-European suppliers.



                                                                         Page 18

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



Each of the Company's business segments operates in highly competitive
environments characterized by excess worldwide production capacity, new
competitors located in countries with lower labor costs, resulting in overall
price deflation. The Company's fundamental strategy to remain competitive is to
manufacture high volume commodity-like components in low cost manufacturing
locations, while providing final customization of engineered products to niche
markets near the point of consumption. As a result, it is still possible that
further restructuring actions will be necessary to realign the Company's
productive capabilities. Plans continue to be developed to determine how best to
further reorganize the Company's operations and product offerings in light of
current and rapidly changing market conditions.

LIQUIDITY, CAPITAL RESOURCES AND RISKS

Historically, the Company's primary source of cash has been net cash provided by
operations. Operating activities in the first nine months of 2003 provided cash
of $38.4 million compared to $80.0 million in 2002. The lower generation of cash
in 2003 resulted primarily from lower profitability, higher net working capital
needs, and the $39.2 cash payment for the Liability Transfer and Assumption
Agreement. Working capital of $527.5 million at September 30, 2003 was up
slightly from $503.7 million at the end of 2002.

Capital spending during the first nine months of 2003 was $61.3 million compared
to $41.3 million for the same period of 2002. The increase relates to the new
engine facility in Curitiba, Brazil, as well as spending at FASCO. Total capital
spending for 2003 is projected to be in the range of $75 to $80 million,
depending on the timing of approved asset purchases.

On December 30, 2002, the Company acquired FASCO from Invensys Plc for cash of
$396.6 million and the assumption of approximately $14.5 million in debt. The
acquisition was financed, in part, with proceeds from new bank borrowings,
including $250 million from a six-month bridge loan and $75 million from a new
three-year $125 million revolving credit facility. On March 5, 2003, the Company
completed a private placement of $300 million Senior Guaranteed Notes due March
5, 2011. These notes bear interest at a fixed rate of 4.66%. Proceeds from the
private placement were used to repay the bridge loan and pay down borrowings
under the revolving credit facility. On March 31, 2003, the remaining $25
million outstanding on the revolver was repaid from available cash resources.

Working capital requirements, planned capital investment and stock repurchase
expenditures, if any, for 2003 are expected to be financed primarily through
internally generated funds; however, short-term borrowings and various financial
instruments are utilized from time to time to hedge currency risk and finance
foreign working capital requirements. As noted above, the Company maintains a
$125 million revolving credit facility that is available for general corporate
purposes. The Company may also utilize long-term financing arrangements in
connection with state investment incentive programs.

The Company will continue to focus its efforts on improving the profitability
and competitiveness of its worldwide operations. It is likely that additional
production relocation and consolidation


                                                                         Page 19

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)





initiatives will take place during 2003 that could have a material effect on the
consolidated financial position and future results of operations of the Company.
These initiatives could include joint ventures or business combinations.

Environmental Matters

The Company is subject to various federal, state and local laws relating to the
protection of the environment, and is actively involved in various stages of
investigation or remediation for sites where contamination has been alleged.
(See Note 5 to the financial statements.) Liabilities, relating to probable
remediation activities, are recorded when the costs of such activities can be
reasonably estimated based on the facts and circumstances currently known.
Difficulties exist estimating the future timing and ultimate costs to be
incurred due to uncertainties regarding the status of laws, regulations, levels
of required remediation, changes in remediation technology and information
available.

At September 30, 2003 and December 31, 2002, the Company had accrued $46.5 and
$36.3 million, respectively, for environmental remediation, including $40.1 and
$29.2 million, respectively, relating to the Sheboygan River and Harbor
Superfund Site. As these matters continue toward final resolution, amounts in
excess of those already provided may be necessary to discharge the Company from
its obligations for these sites. Such amounts, depending on their amount and
timing, could be material to reported net income in the particular quarter or
period in which they are recorded. In addition, the ultimate resolution of these
matters, either individually or in the aggregate, could be material to the
consolidated financial statements.

CAUTIONARY STATEMENTS RELATING TO FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 that are subject to the safe
harbor provisions created by that Act. In addition, forward-looking statements
may be made orally in the future by or on behalf of the Company. Forward-looking
statements can be identified by the use of terms such as "expects", "should",
"may", "believes", "anticipates", "will", and other future tense and
forward-looking terminology, or by the fact that they appear under the caption
"Outlook."

Readers are cautioned that actual results may differ materially from those
projected as a result of certain risks and uncertainties, including, but not
limited to, i) changes in business conditions and the economy in general in both
foreign and domestic markets; ii) the effect of terrorist activity and armed
conflict; iii) weather conditions affecting demand for air conditioners, lawn
and garden products, portable power generators and snow throwers; iv) the
success of the Company's ongoing effort to bring costs in line with projected
production levels and product mix; v) financial market changes, including
fluctuations in interest rates and foreign currency exchange rates; vi) economic
trend factors such as housing starts; vii) emerging governmental regulations;
viii) availability and cost of materials; ix) actions of competitors; x) the
ultimate cost of resolving environmental matters; xi) the Company's ability to
profitably develop, manufacture and sell both


                                                                         Page 20

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 2
                  MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
           FINANCIAL CONDITION AND RESULTS OF OPERATIONS - (CONTINUED)



new and existing products; xii) the extent of any business disruption that may
result from the restructuring and realignment of the Company's manufacturing
operations, the ultimate cost of those initiatives and the amount of savings
actually realized; xiii) the integration of the FASCO Motors business into the
Company and the ultimate cost associated therewith; xiv) potential political and
economic adversities that could adversely affect anticipated sales and
production in Brazil; and xv) potential political and economic adversities that
could adversely affect anticipated sales and production in India. These
forward-looking statements are made only as of the date hereof, and the Company
undertakes no obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise.



                                                                         Page 21

<PAGE>


                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 3
           QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK



The Company is exposed to risk during the normal course of business from credit
risk associated with accounts receivable and from changes in interest rates,
commodity prices and foreign currency exchange rates. The exposure to these
risks is managed through a combination of normal operating and financing
activities which include the use of derivative financial instruments in the form
of foreign currency forward exchange contracts and commodity forward purchasing
contracts. A discussion of the Company's policies and procedures regarding the
management of market risk and the use of derivative financial instruments was
provided in its Annual Report on Form 10-K in Item 7A and in Notes 1 and 10 of
the Notes to Consolidated Financial Statements. The Company does not utilize
financial instruments for trading or other speculative purposes. There have been
no changes in these policies or procedures during the first nine months of 2003.

The Company utilizes foreign currency forward exchange contracts to hedge
foreign currency receivables, payables and other known transactional exposures
for periods consistent with the expected cash flows of the underlying
transactions. The contracts generally mature within one year and are designed to
limit exposure to exchange rate fluctuations because gains and losses on the
hedged transactions offset gains and losses on the contracts. At September 30,
2003 and December 31, 2002, the Company held foreign currency forward exchange
contracts and foreign currency call options with total notional values in the
amount of $12.4 and $4.9 million, respectively.

The Company uses commodity forward purchasing contracts to help control the cost
of traded commodities, primarily copper and aluminum, used as raw material in
the production of compressor motors, electrical components and engines. Local
management is allowed to contract commodity forwards for a limited percentage of
projected raw material requirements up to one year in advance. The total values
of commodity forwards outstanding at September 30, 2003 and December 31, 2002
were $10.8 and $14.6 million, respectively.


                                                                         Page 22

<PAGE>



                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                     PART I. FINANCIAL INFORMATION - ITEM 4
                            CONTROLS AND PROCEDURES





As of the end of the fiscal quarter covered by this report, the Company carried
out an evaluation under the supervision and with the participation of the
Company's management, including the Company's President and Chief Executive
Officer and the Company's Vice President, Treasurer and Chief Financial Officer,
of the effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Exchange Act Rule 13a-15. Based upon that
evaluation, the Company's President and Chief Executive Officer along with the
Company's Vice President, Treasurer and Chief Financial Officer concluded that
the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company (including its
consolidated subsidiaries) required to be included in the Company's periodic SEC
filings.

There have been no significant changes in the Company's internal controls or in
other factors which could significantly affect internal controls subsequent to
the date the Company carried out its evaluation.



                                                                         Page 23

<PAGE>



                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                           PART II. OTHER INFORMATION





ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

 (a)    Exhibit
         Number   Description
         ------   -----------

         31.1     Certification of the President and Chief Executive Officer
                  pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

         31.2     Certification of the Chief Financial Officer pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

         32.1     Certification of the President and Chief Executive Officer
                  pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

         32.2     Certification of the Chief Financial Officer pursuant to
                  Section 906 of the Sarbanes-Oxley Act of 2002.

 (b)    On September 24, 2003, the Company filed a report on Form 8-K announcing
        the appointment of David M. Risley to the Board of Directors.

        On October 30, 2003, the Company filed a report on Form 8-K announcing
        the appointment of Virginia A. Kamsky to the Board of Directors.

        On October 31, 2003, the Company filed a report on Form 8-K reporting
        its third quarter 2003 financial data and investor presentation.


                                                                         Page 24

<PAGE>




                   TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
                    CERTIFICATION OF CHIEF FINANCIAL OFFICER


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.

                                      TECUMSEH PRODUCTS COMPANY
                                      -------------------------
                                              (Registrant)



Dated:  November 13, 2003             BY:   /s/   DAVID W. KAY
        ---------------------------         ------------------------------------
                                            David W. Kay
                                              Vice President, Treasurer and
                                              Chief Financial Officer (on behalf
                                              of the Registrant and as principal
                                              financial officer)


                                                                         Page 25

<PAGE>



                               10-Q EXHIBIT INDEX


EXHIBIT NO.          DESCRIPTION
-----------          -----------

31.1          Certification of the President and Chief Executive Officer
              pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2          Certification of the Chief Financial Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002.

32.1          Certification of the President and Chief Executive Officer
              pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2          Certification of the Chief Financial Officer pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002.