##### Table of Contents



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, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
 For the transition period from  to
 COMMISSION FILE NUMBER: 0-452
 TECUMSEH PRODUCTS COMPANY
  MICHIGAN
    
    38-1093240(State of Incorporation)
    
    (IRS Employer Identification Number)1136 OAK VALLEY DRIVEANN ARBOR, MICHIGAN
    
    48108(Address of Principal Executive Offices)
    
    (Zip Code)
 Registrants telephone number, including area code:
(734) 585-9500
  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
  Class of Stock
    
    Outstanding at June 30, 2009Class B Common Stock, $1.00 par value
    
    
    5,077,746Class A Common Stock, $1.00 par value
    
    
    13,401,938




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##### 



TABLE OF CONTENTS
 PagePart I. Financial Information (unaudited)Item 1. Financial Statements (unaudited)Consolidated Condensed Balance Sheets (unaudited)
    
    
    3Consolidated Condensed Statements of Operations (unaudited)
    
    
    4Consolidated Condensed Statements of Cash Flows (unaudited)
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations
    
    
    28Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    42Item 4. Controls and Procedures
    
    
    45Part II. Other InformationItem 1. Legal Proceedings
    
    
    47Item 6. Exhibits
    
    
    49Signatures
    
    
    50EX-31.1EX-31.2EX-32.1EX-32.2
  Page 2




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
  CONSOLIDATED CONDENSED BALANCE SHEETS
  June 30,
    
    
    December 31,(Dollars in millions, except share data)
    
    2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    74.8
    
    
    $
    113.1Restricted cash and cash equivalents
    
    
    11.9
    
    
    
    12.5Accounts receivable, trade, less allowance for
doubtful accounts of $1.1 in 2009 and $1.2 in 2008
    
    78.1
    
    
    
    88.1Inventories
    
    
    113.4
    
    
    
    123.0Deferred and recoverable income taxes
    
    
    21.5
    
    
    
    23.2Recoverable non-income taxes
    
    
    13.8
    
    
    
    11.7Assets held for sale
    
    
    16.3
    
    
    
    21.7Fair value of hedge
    
    
    5.3
    
    
    
    Prepaid expenses
    
    
    13.4
    
    
    
    13.8Other current assets
    
    
    5.9
    
    
    
    5.5Total current assets
    
    
    354.4
    
    
    
    412.6Property, plant, and equipment, net
    
    
    254.1
    
    
    
    244.3Long term investments
    
    
    4.9
    
    
    
    4.8Prepaid pension expense
    
    
    82.0
    
    
    
    81.0Recoverable income taxes
    
    
    0.1
    
    
    
    0.1Recoverable non-income taxes
    
    
    46.4
    
    
    
    37.0Other assets
    
    
    22.3
    
    
    
    18.7Total assets
    
    $
    764.2
    
    
    $
    798.5LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable, trade
    
    $
    97.9
    
    
    $
    109.6Short-term borrowings
    
    
    37.3
    
    
    
    30.4Liabilities held for sale
    
    
    1.3
    
    
    
    1.0Accrued liabilities:Employee compensation
    
    
    28.4
    
    
    
    26.1Product warranty and self-insured risks
    
    
    11.2
    
    
    
    12.1Fair value of hedge
    
    
    5.6
    
    
    
    38.6Other
    
    
    18.6
    
    
    
    21.4Total current liabilities
    
    
    200.3
    
    
    
    239.2Long-term debt
    
    
    0.3
    
    
    
    0.4Deferred income taxes
    
    
    4.7
    
    
    
    8.7Other postretirement benefit liabilities
    
    
    39.0
    
    
    
    39.5Product warranty and self-insured risks
    
    
    5.8
    
    
    
    8.0Pension liabilities
    
    
    18.8
    
    
    
    18.7Other non-current liabilities
    
    
    7.0
    
    
    
    6.6Total liabilities
    
    
    275.9
    
    
    
    321.1Stockholders EquityClass A common stock, $1 par value; authorized
75,000,000 shares; issued and outstanding 13,401,938
shares in 2009 and 2008
    
    
    13.4
    
    
    
    13.4Class B common stock, $1 par value; authorized
25,000,000 shares; issued and outstanding 5,077,746
shares in 2009 and 2008
    
    
    5.1
    
    
    
    5.1Paid in capital
    
    
    11.0
    
    
    
    11.0Retained earnings
    
    
    455.6
    
    
    
    504.4Accumulated other comprehensive income
    
    
    3.2
    
    
    
    (56.5
    )Total stockholders equity
    
    
    488.3
    
    
    
    477.4Total liabilities and stockholders equity
    
    $
    764.2
    
    
    $
    798.5
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in millions, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    161.2
    
    
    $
    273.8
    
    
    $
    309.3
    
    
    $
    549.0Cost of sales
    
    
    156.1
    
    
    
    240.3
    
    
    
    294.9
    
    
    
    469.9Selling and administrative expenses
    
    
    33.1
    
    
    
    34.3
    
    
    
    65.3
    
    
    
    65.9Impairments, restructuring charges, and other items
    
    
    1.1
    
    
    
    3.3
    
    
    
    7.0
    
    
    
    3.8Operating (loss) income
    
    
    (29.1
    )
    
    
    (4.1
    )
    
    
    (57.9
    )
    
    
    9.4Interest expense
    
    
    2.1
    
    
    
    6.2
    
    
    
    5.0
    
    
    
    13.5Interest income and other, net
    
    
    0.6
    
    
    
    3.3
    
    
    
    1.4
    
    
    
    5.1(Loss) income from continuing operations before
taxes
    
    
    (30.6
    )
    
    
    (7.0
    )
    
    
    (61.5
    )
    
    
    1.0Tax (benefit) expense
    
    
    (7.3
    )
    
    
    (0.4
    )
    
    
    (13.7
    )
    
    
    0.8(Loss) income from continuing operations
    
    
    (23.3
    )
    
    
    (6.6
    )
    
    
    (47.8
    )
    
    
    0.2(Loss) income from discontinued operations, net of
tax
    
    
    (1.6
    )
    
    
    15.6
    
    
    
    (1.0
    )
    
    
    25.8Net (loss) income
    
    $
    (24.9
    )
    
    $
    9.0
    
    
    $
    (48.8
    )
    
    $
    26.0Basic (loss) earnings per share:*(Loss) income from continuing operations
    
    
    (1.26
    )
    
    
    (0.36
    )
    
    
    (2.59
    )
    
    
    0.01(Loss) income from discontinued operations, net of
tax
    
    
    (0.09
    )
    
    
    0.85
    
    
    
    (0.05
    )
    
    
    1.40Net (loss) income per share, basic
    
    $
    (1.35
    )
    
    $
    0.49
    
    
    $
    (2.64
    )
    
    $
    1.41Diluted (loss) earnings per share:**(Loss) income from continuing operations
    
    
    (1.26
    )
    
    
    (0.36
    )
    
    
    (2.59
    )
    
    
    0.01(Loss) income from discontinued operations, net
of tax
    
    
    (0.09
    )
    
    
    0.85
    
    
    
    (0.05
    )
    
    
    1.30Net (loss) income per share, diluted
    
    $
    (1.35
    )
    
    $
    0.49
    
    
    $
    (2.64
    )
    
    $
    1.31Weighted average shares, basic (in thousands)
    
    
    18,480
    
    
    
    18,480
    
    
    
    18,480
    
    
    
    18,480Weighted average shares, diluted (in thousands)
    
    
    19,871
    
    
    
    19,871
    
    
    
    19,871
    
    
    
    19,871Cash dividends declared per share
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
    
    
    $
    0.00
 
 *
    
    Based on 18,479,684 shares issued and outstanding throughout all periods presented.**
    
    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). Diluted earnings per share for the six months ended June 30, 2008 are
therefore calculated based on a total of 19,870,628 shares. For the three and six months ended
June 30, 2009 and the three months ended June 30, 2008 however, this warrant is not included in
diluted per share information, as the effect would be antidilutive due to the losses recorded in
continuing operations.  Page 4




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
   Six Months EndedJune 30,(Dollars in millions)
    
    2009
    
    
    2008Cash Flows from Operating Activities:Net (loss) income
    
    $
    (48.8
    )
    
    $
    26.0Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    19.8
    
    
    
    22.6Impairment of long-lived assets and goodwill
    
    
    1.2
    
    
    
    Gain on sale of discontinued operations
    
    
    
    
    
    
    (7.9
    )Loss (gain) on disposal of property and equipment
    
    
    2.4
    
    
    
    (4.2
    )Changes in assets and liabilities:Accounts receivable
    
    
    15.7
    
    
    
    (23.7
    )Inventories
    
    
    19.2
    
    
    
    (8.5
    )Payables and accrued expenses
    
    
    (24.9
    )
    
    
    30.3Employee retirement benefits
    
    
    (4.9
    )
    
    
    69.7Deferred and recoverable taxes
    
    
    (7.5
    )
    
    
    (13.5
    )Other
    
    
    3.7
    
    
    
    (11.1
    )Cash (used in) provided by operating activities
    
    
    (24.1
    )
    
    
    79.7Cash Flows from Investing Activities:(Payments made) proceeds from sale of assets
    
    
    (13.1
    )
    
    
    22.6Capital expenditures
    
    
    (5.2
    )
    
    
    (2.7
    )Long term investments
    
    
    (0.1
    )
    
    
    Change in restricted cash and cash equivalents
    
    
    0.6
    
    
    
    (7.6
    )Cash (used in) provided by investing activities
    
    
    (17.8
    )
    
    
    12.3Cash Flows from Financing Activities:Debt issuance / amendment costs
    
    
    
    
    
    
    (1.6
    )Other borrowings, net
    
    
    2.3
    
    
    
    2.5Cash provided by financing activities
    
    
    2.3
    
    
    
    0.9Effect of exchange rate changes on cash
    
    
    1.3
    
    
    
    9.0(Decrease) increase in cash and cash equivalents
    
    
    (38.3
    )
    
    
    101.8Cash and Cash Equivalents:Beginning of period
    
    
    113.1
    
    
    
    76.8End of period
    
    $
    74.8
    
    
    $
    178.6Cash paid (refunds received) for income taxes
    
    
    0.1
    
    
    
    (0.3
    )Cash paid for interest
    
    
    5.8
    
    
    
    10.9
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
       Electrical Components
    Page 6




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Three Months
    
    
    Three MonthsEnded
    
    
    Ended(Dollars in millions)
    
    June 30, 2009
    
    
    June 30, 2008Net sales
    
    $
    3.0
    
    
    $
    7.9Cost of sales
    
    
    4.0
    
    
    
    6.6Selling and administrative expenses
    
    
    0.3
    
    
    
    0.1Impairments, restructuring charges, and other items
    
    
    0.4
    
    
    
    (1.5
    )Operating (loss) income
    
    
    (1.7
    )
    
    
    2.7(Loss) income from discontinued operations before
income taxes
    
    $
    (1.7
    )
    
    $
    2.7
  Six Months
    
    
    Six MonthsEnded
    
    
    Ended(Dollars in millions)
    
    June 30, 2009
    
    
    June 30, 2008Net sales
    
    $
    6.5
    
    
    $
    14.4Cost of sales
    
    
    7.2
    
    
    
    12.5Selling and administrative expenses
    
    
    0.9
    
    
    
    0.3Impairments, restructuring charges, and other items
    
    
    (1.4
    )
    
    
    (0.5
    )Operating (loss) income
    
    
    (0.2
    )
    
    
    2.1(Loss) income from discontinued operations before
income taxes
    
    $
    (0.2
    )
    
    $
    2.1
   Other businesses
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
    Three MonthsEnded
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Electrical Components
    
    $
    (1.7
    )
    
    $
    2.7
    
    
    $
    (0.2
    )
    
    $
    2.1Engine & Power Train
    
    
    (0.1
    )
    
    
    4.1
    
    
    
    (1.0
    )
    
    
    13.9MP Pumps (including gain on sale)
    
    
    
    
    
    
    8.8
    
    
    
    
    
    
    
    9.8Income taxes on discontinued operations
    
    
    0.2
    
    
    
    
    
    
    
    0.2
    
    
    
    (Loss) income from discontinued operations
    
    $
    (1.6
    )
    
    $
    15.6
    
    
    $
    (1.0
    )
    
    $
    25.8
  June 30,(Dollars in millions)
    
    2009ASSETS:Accounts receivable, net
    
    $
    1.3Inventories
    
    
    6.8Other assets
    
    
    Property, plant, and equipment, net
    
    
    8.2Total assets held for sale
    
    $
    16.3LIABILITIES:Accounts payable, trade
    
    $
    0.8Accrued liabilities
    
    
    0.5Total liabilities held for sale
    
    $
    1.3Net assets held for sale
    
    $
    15.0
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  June 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Raw material
    
    $
    60.4
    
    
    $
    62.6Work in progress
    
    
    0.9
    
    
    
    9.3Finished goods
    
    
    57.3
    
    
    
    57.2Reserve for obsolete and slow moving inventory
    
    
    (4.6
    )
    
    
    (5.5
    )Reserve for lower of cost or market
    
    
    (0.6
    )
    
    
    (0.6
    )Total inventories
    
    $
    113.4
    
    
    $
    123.0
  June 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Land and land improvements
    
    $
    15.7
    
    
    $
    16.5Buildings
    
    
    100.1
    
    
    
    95.1Machinery and Equipment
    
    
    799.2
    
    
    
    734.3915.0
    
    
    
    845.9Less accumulated depreciation
    
    
    (664.2
    )
    
    
    (603.9
    )250.8
    
    
    
    242.0Assets in process
    
    
    3.3
    
    
    
    2.3Property, plant and equipment, net
    
    $
    254.1
    
    
    $
    244.3
   Pension Benefits
    
    
    Other BenefitsThree Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    0.6
    
    
    $
    0.6
    
    
    $
    0.1
    
    
    $
    0.3Interest cost
    
    
    3.0
    
    
    
    3.0
    
    
    
    0.7
    
    
    
    1.0Expected return on plan assets
    
    
    (4.0
    )
    
    
    (4.5
    )
    
    
    
    
    
    
    Amortization of prior service costs
    
    
    
    
    
    
    (0.2
    )
    
    
    (2.5
    )
    
    
    (2.8
    )Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.5
    )Net periodic benefit income
    
    
    (0.4
    )
    
    
    (1.1
    )
    
    
    (1.8
    )
    
    
    (2.0
    )Curtailment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.8
    )Total pension / OPEB income
    
    $
    (0.4
    )
    
    $
    (1.1
    )
    
    $
    (1.8
    )
    
    $
    (6.8
    )
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Pension Benefits
    
    
    Other BenefitsSix Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.2
    
    
    $
    1.2
    
    
    $
    0.3
    
    
    $
    0.7Interest cost
    
    
    5.9
    
    
    
    7.9
    
    
    
    1.3
    
    
    
    2.2Expected return on plan assets
    
    
    (8.1
    )
    
    
    (12.4
    )
    
    
    
    
    
    
    (0.1
    )Amortization of prior service costs
    
    
    
    
    
    
    (0.3
    )
    
    
    (5.0
    )
    
    
    (5.6
    )Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (0.2
    )
    
    
    (1.0
    )Net periodic benefit income
    
    
    (1.1
    )
    
    
    (3.6
    )
    
    
    (3.6
    )
    
    
    (3.8
    )Curtailment losses (gains),
settlement charges (gains) and
special termination charges
(benefits)
    
    
    0.5
    
    
    
    (2.0
    )
    
    
    
    
    
    
    (30.8
    )Total pension / OPEB income
    
    $
    (0.6
    )
    
    $
    (5.6
    )
    
    $
    (3.6
    )
    
    $
    (34.6
    )
  Pension Benefits
    
    
    Other BenefitsThree Months Ended
    
    
    Three Months EndedJune 30,
    
    
    June 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Recorded in discontinued operations:Engine & Power train curtailment gain
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (4.8
    )Total  curtailment gains
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (4.8
    )
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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Pension Benefits
    
    
    Other BenefitsSix Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Recorded in continuing operations:Hourly pension plan curtailment loss
    
    $
    
    
    
    $
    3.9
    
    
    $
    
    
    
    $
    Hourly plan special termination
benefit charge
    
    
    
    
    
    
    2.4
    
    
    
    
    
    
    
    Salaried plan settlement gain on
annuities
    
    
    
    
    
    
    (6.3
    )
    
    
    
    
    
    
    Salaried plan special termination
benefit charge
    
    
    0.5
    
    
    
    1.0
    
    
    
    
    
    
    
    Hourly plan OPEB curtailment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19.1
    )Total  continuing operations
    
    
    0.5
    
    
    
    1.0
    
    
    
    
    
    
    
    (19.1
    )Recorded in discontinued operations:Salaried plan curtailment gain
    
    
    
    
    
    
    (2.9
    )
    
    
    
    
    
    
    Consolidated plan curtailment gain
    
    
    
    
    
    
    (0.1
    )
    
    
    
    
    
    
    Salaried OPEB plan curtailment gain
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6.9
    )Engine & Power Train curtailments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4.8
    )Total  discontinued operations
    
    
    
    
    
    
    (3.0
    )
    
    
    
    
    
    
    (11.7
    )Total  curtailment losses (gains),
settlement charges (gains) and special
termination charges (benefits)
    
    $
    0.5
    
    
    $
    (2.0
    )
    
    $
    
    
    
    $
    (30.8
    )
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
        June 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Brazil
    
    $
    51.4
    
    
    $
    40.2India
    
    
    8.8
    
    
    
    8.5Total recoverable non-income taxes
    
    $
    60.2
    
    
    $
    48.7
  Page 12




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Six Months Ended
    
    
    Six Months Ended(Dollars in millions)
    
    June 30, 2009
    
    
    June 30, 2008Balance at January 1
    
    $
    6.6
    
    
    $
    9.7Settlements made (in cash or in kind)
    
    
    (2.3
    )
    
    
    (3.0
    )Current year accrual
    
    
    3.3
    
    
    
    3.5Adjustments to preexisting warranties
    
    
    (2.1
    )
    
    
    (0.3
    )Effect of foreign currency translation
    
    
    0.2
    
    
    
    0.2Sale of MP Pumps
    
    
    
    
    
    
    (0.1
    )Balance at June 30
    
    $
    5.7
    
    
    $
    10.0
       Page 13




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,(Dollars in millions)
    
    2009
    
    2008
    
    2009
    
    2008Net (loss) income
    
    $
    (24.9
    )
    
    $
    9.0
    
    
    $
    (48.8
    )
    
    $
    26.0Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    15.0
    
    
    
    23.8
    
    
    
    27.2
    
    
    
    32.5Gain on derivatives, net of tax
    
    
    38.7
    
    
    
    10.0
    
    
    
    35.3
    
    
    
    8.6Total comprehensive income
    
    $
    28.8
    
    
    $
    42.8
    
    
    $
    13.7
    
    
    $
    67.1
    Nonvested
    
    Vested
    
    TotalWeighted
    
    
    
    
    
    Weightedaverage grant
    
    
    
    
    
    average grantNumber of
    
    date value per
    
    Number of
    
    date value per
    
    Number ofawards
    
    share
    
    awards
    
    share
    
    awardsSARs:Outstanding at
December 31, 2008
    
    
    327,599
    
    
    $
    15.16
    
    
    
    108,334
    
    
    $
    15.16
    
    
    
    435,933Granted
    
    
    305,939
    
    
    
    6.19
    
    
    
    
    
    
    
    
    
    
    
    305,939Vested
    
    
    (36,977
    )
    
    
    15.16
    
    
    
    36,977
    
    
    
    15.16
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
June 30, 2009
    
    
    596,561
    
    
    $
    10.46
    
    
    
    145,311
    
    
    $
    15.16
    
    
    
    741,872Phantom Stock Units:Outstanding at
December 31, 2008
    
    
    362,719
    
    
    
    16.72
    
    
    
    
    
    
    
    
    
    
    
    362,719Granted
    
    
    191,857
    
    
    
    9.86
    
    
    
    
    
    
    
    
    
    
    
    191,857Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
June 30, 2009
    
    
    554,576
    
    
    $
    14.34
    
    
    
    
    
    
    
    
    
    
    
    554,576
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Nonvested
    
    Vested
    
    TotalWeighted
    
    
    
    
    
    Weightedaverage grant
    
    
    
    
    
    average grantNumber of
    
    date value per
    
    Number of
    
    date value per
    
    Number ofawards
    
    share
    
    awards
    
    share
    
    awardsSARs:Outstanding at
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    435,933
    
    
    $
    15.16
    
    
    
    
    
    
    
    
    
    
    
    435,933Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
June 30, 2008
    
    
    435,933
    
    
    $
    15.16
    
    
    
    
    
    
    
    
    
    
    
    435,933Phantom Stock Units:Outstanding at
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    148,030
    
    
    $
    28.82
    
    
    
    
    
    
    
    
    
    
    
    148,030Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
June 30, 2008
    
    
    148,030
    
    
    $
    28.82
    
    
    
    
    
    
    
    
    
    
    
    148,030
     Award
    
    
    
    
    
    
    
    Risk-free
    
    Dividend
    
    Expected
    
    
    
    
    
    Initial valueDate
    
    
    
    Strike price
    
    interest rate
    
    yield
    
    life (years)
    
    Volatility
    
    per award3/4/08
    
    
    
    $
    28.82
    
    
    
    3.37
    %
    
    
    0.0
    %
    
    
    7
    
    
    
    51.18
    %
    
    $
    15.161/2/09
    
    
    
    
    10.07
    
    
    
    1.87
    %
    
    
    0.0
    %
    
    
    7
    
    
    
    62.78
    %
    
    
    6.243/16/09
    
    
    
    
    4.17
    
    
    
    2.50
    %
    
    
    0.0
    %
    
    
    7
    
    
    
    84.70
    %
    
    
    3.176/15/09
    
    
    
    
    9.31
    
    
    
    3.45
    %
    
    
    0.0
    %
    
    
    7
    
    
    
    90.20
    %
    
    
    7.40
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Award
    
    
    
    
    
    
    
    Risk-free
    
    Dividend
    
    Remaining
    
    
    
    
    
    Value perDate
    
    
    
    Strike price
    
    interest rate
    
    yield
    
    life (years)
    
    Volatility
    
    award3/4/08
    
    
    
    $
    28.82
    
    
    
    3.19
    %
    
    
    0.0
    %
    
    
    5.7
    
    
    
    90.56
    %
    
    $
    5.641/2/09
    
    
    
    
    10.07
    
    
    
    3.19
    %
    
    
    0.0
    %
    
    
    6.5
    
    
    
    90.56
    %
    
    
    7.503/16/09
    
    
    
    
    4.17
    
    
    
    3.19
    %
    
    
    0.0
    %
    
    
    6.7
    
    
    
    90.56
    %
    
    
    8.416/15/09
    
    
    
    
    9.31
    
    
    
    3.19
    %
    
    
    0.0
    %
    
    
    7.0
    
    
    
    90.56
    %
    
    
    7.75
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in millions, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Excise tax expense on proceeds from salaried
retirement plan reversion
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    20.0Curtailment and settlement (gains) / losses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21.5
    )Environmental reserve on held-for-sale building
    
    
    
    
    
    
    
    
    
    
    2.3
    
    
    
    Severance, restructuring costs, and special
termination benefits
    
    
    1.1
    
    
    
    3.3
    
    
    
    4.4
    
    
    
    5.9Loss on transfer of surplus land
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Gain on sale of buildings and machinery
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Total impairments, restructuring charges, and
other items
    
    $
    1.1
    
    
    $
    3.3
    
    
    $
    7.0
    
    
    $
    3.8
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  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.
  Cash and cash equivalents; restricted cash and cash equivalents
  Short and long term investments
   Foreign currency forward purchases and commodity futures contracts
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Assets and liabilities recorded at fair value on a recurring basis
  Total Fair(Dollars in millions)
    
    Value
    
    
    Level 1
    
    
    Level 2
    
    
    Level 3Assets:Cash and cash equivalents
    
    $
    74.8
    
    
    $
    74.8
    
    
    $
    
    
    
    $
    Restricted cash and cash equivalents
    
    
    11.9
    
    
    
    11.9
    
    
    
    
    
    
    
    Auction rate certificates
    
    
    4.3
    
    
    
    
    
    
    
    
    
    
    
    4.3Auction rate securities rights
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Commodity futures contracts
    
    
    0.1
    
    
    
    
    
    
    
    0.1
    
    
    
    Foreign currency derivatives
    
    
    5.2
    
    
    
    
    
    
    
    5.2
    
    
    
    Balance as of June 30, 2009
    
    $
    96.9
    
    
    $
    86.7
    
    
    $
    5.3
    
    
    $
    4.9Liabilities:Commodity futures contracts
    
    $
    5.6
    
    
    $
    
    
    
    $
    5.6
    
    
    $
    Balance as of June 30, 2009
    
    $
    5.6
    
    
    $
    
    
    
    $
    5.6
    
    
    $
    
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Asset (Liability) DerivativesJune 30, 2009
    
    
    December 31, 2008Financial
    
    
    
    
    
    Financial(Dollars in millions)
    
    Position Location
    
    Fair Value
    
    
    Position Location
    
    Fair ValueDerivatives designated as
hedging instruments under SFAS 133Commodity futures contracts
    
    Fair value of hedge (asset)
    
    $
    0.1
    
    
    Fair value of hedge (asset)
    
    $
    Commodity futures contracts
    
    Fair value of hedge (liability)
    
    
    (5.6
    )
    
    Fair value of hedge (liability)
    
    
    (13.2
    )Foreign currency derivatives
    
    Fair value of hedge (asset)
    
    
    5.2
    
    
    Fair value of hedge (asset)
    
    
    Foreign currency derivatives
    
    Fair value of hedge (liability)
    
    
    
    
    
    Fair value of hedge (liability)
    
    
    (25.4
    )Total derivatives designated as
hedging instruments under SFAS 133
    
    
    
    $
    (0.3
    )
    
    
    
    $
    (38.6
    )
  Amount of Gain orAmount of Gain or
    
    
    
    
    (Loss) Reclassified(Loss) Recognized in
    
    
    Location of Gain or
    
    from AccumulatedOCI (Effective
    
    
    (Loss) Reclassified
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    (Effective Portion)Three Months Ended
    
    
    OCI into Income
    
    Three Months Ended(Dollars in millions)
    
    June 30, 2009
    
    
    (Effective Portion)
    
    June 30, 2009Derivatives designated as hedging
instruments under SFAS 133Commodity futures contracts
    
    $
    13.7
    
    
    Cost of sales
    
    $
    1.3Foreign currency derivatives
    
    
    10.0
    
    
    Cost of sales
    
    
    0.7Total
    
    $
    23.7
    
    
    
    
    $
    2.0
 Amount of Gain orAmount of Gain or
    
    
    
    
    (Loss) Reclassified(Loss) Recognized in
    
    
    Location of Gain or
    
    from AccumulatedOCI (Ineffective
    
    
    (Loss) Reclassified
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    (Ineffective Portion)Three Months Ended
    
    
    OCI into Income
    
    Three Months Ended(Dollars in millions)
    
    June 30, 2009
    
    
    (Ineffective Portion)
    
    June 30, 2009Derivatives designated as hedging
instruments under SFAS 133Commodity futures contracts
    
    $
    1.0
    
    
    Cost of sales
    
    $
    0.3Foreign currency derivatives
    
    
    
    
    
    Cost of sales
    
    
    Total
    
    $
    1.0
    
    
    
    
    $
    0.3
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Amount of Gain orAmount of Gain or
    
    
    
    
    (Loss) Reclassified(Loss) Recognized in
    
    
    Location of Gain or
    
    from AccumulatedOCI (Effective
    
    
    (Loss) Reclassified
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    (Effective Portion)Six Months Ended
    
    
    OCI into Income
    
    Six Months Ended(Dollars in millions)
    
    June 30, 2009
    
    
    (Effective Portion)
    
    June 30, 2009Derivatives designated as hedging
instruments under SFAS 133Commodity futures contracts
    
    $
    16.0
    
    
    Cost of sales
    
    
    ($1.1
    )Foreign currency derivatives
    
    
    14.8
    
    
    Cost of sales
    
    
    (5.9
    )Total
    
    $
    30.8
    
    
    
    
    
    ($7.0
    )
 Amount of Gain orAmount of Gain or
    
    
    
    
    (Loss) Reclassified(Loss) Recognized in
    
    
    Location of Gain or
    
    from AccumulatedOCI (Ineffective
    
    
    (Loss) Reclassified
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    (Ineffective Portion)Six Months Ended
    
    
    OCI into Income
    
    Six Months Ended(Dollars in millions)
    
    June 30, 2009
    
    
    (Ineffective Portion)
    
    June 30, 2009Derivatives designated as hedging
instruments under SFAS 133Commodity futures contracts
    
    $
    1.0
    
    
    Cost of sales
    
    $
    0.3Foreign currency derivatives
    
    
    
    
    
    Cost of sales
    
    
    Total
    
    $
    1.0
    
    
    
    
    $
    0.3
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       Page 24




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
       Business combinations / Noncontrolling interests in consolidated financial statements
  Page 25




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Recognition and Presentation of Other-Than-Temporary Impairments
  Interim Disclosures about Fair Value of Financial Instruments
  Fair Value
  Subsequent Events
  Page 26




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Accounting for Transfers of Financial Assets
  Consolidation of Variable Interest Entities
  Accounting Standards Codification
  Page 27




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
    Executive Summary
     Page 28




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      Page 29




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Results of Operations
  Three Months Ended June 30,(dollars in millions)
    
    2009
    
    
    %
    
    
    2008
    
    
    %Net sales
    
    $
    161.2
    
    
    
    100.0
    %
    
    $
    273.8
    
    
    
    100.0
    %Cost of sales
    
    
    156.1
    
    
    
    96.8
    %
    
    
    240.3
    
    
    
    87.8
    %Selling and administrative expenses
    
    
    33.1
    
    
    
    20.5
    %
    
    
    34.3
    
    
    
    12.5
    %Impairments, restructuring
charges, and other items
    
    
    1.1
    
    
    
    0.7
    %
    
    
    3.3
    
    
    
    1.2
    %Operating loss
    
    
    (29.1
    )
    
    
    (18.1
    %)
    
    
    (4.1
    )
    
    
    (1.5
    %)Interest expense
    
    
    (2.1
    )
    
    
    (1.3
    %)
    
    
    (6.2
    )
    
    
    (2.3
    %)Interest income and other, net
    
    
    0.6
    
    
    
    0.4
    %
    
    
    3.3
    
    
    
    1.2
    %Loss from continuing operations
before taxes
    
    
    (30.6
    )
    
    
    (19.0
    %)
    
    
    (7.0
    )
    
    
    (2.6
    %)Tax benefit
    
    
    (7.3
    )
    
    
    (4.5
    %)
    
    
    (0.4
    )
    
    
    0.2
    %Loss from continuing operations
    
    $
    (23.3
    )
    
    
    (14.5
    %)
    
    $
    (6.6
    )
    
    
    (2.4
    %)
 Three Months Ended June 30, 2009 vs. Three Months Ended June 30, 2008
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Six Months Ended June 30,(dollars in millions)
    
    2009
    
    
    %
    
    
    2008
    
    
    %Net sales
    
    $
    309.3
    
    
    
    100.0
    %
    
    $
    549.0
    
    
    
    100.0
    %Cost of sales
    
    
    294.9
    
    
    
    95.3
    %
    
    
    469.9
    
    
    
    85.6
    %Selling and administrative expenses
    
    
    65.3
    
    
    
    21.1
    %
    
    
    65.9
    
    
    
    12.0
    %Impairments, restructuring charges, and
other items
    
    
    7.0
    
    
    
    2.3
    %
    
    
    3.8
    
    
    
    0.7
    %Operating (loss) income
    
    
    (57.9
    )
    
    
    (18.7
    %)
    
    
    9.4
    
    
    
    1.7
    %Interest expense
    
    
    (5.0
    )
    
    
    (1.6
    %)
    
    
    (13.5
    )
    
    
    (2.5
    %)Interest income and other, net
    
    
    1.4
    
    
    
    0.5
    %
    
    
    5.1
    
    
    
    0.9
    %(Loss) income from continuing
operations before taxes
    
    
    (61.5
    )
    
    
    (19.9
    %)
    
    
    1.0
    
    
    
    0.1
    %Tax (benefit) expense
    
    
    (13.7
    )
    
    
    (4.4
    %)
    
    
    0.8
    
    
    
    (0.1
    %)(Loss) income from continuing operations
    
    $
    (47.8
    )
    
    
    (15.5
    %)
    
    $
    0.2
    
    
    
    *
    *
 
 **
    
    Less than 0.1% Six Months Ended June 30, 2009 vs. Six Months Ended June 30, 2008
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        Page 34




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   OTHER MATTERS
    Cash Flow
   Page 35




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
    Credit Facilities and Cash on Hand
      Page 36




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Accounts Receivable Sales
  Adequacy of Liquidity Sources
     Page 37




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         Page 38




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Significant Accounting Policies and Critical Accounting Estimates
  OUTLOOK
    Page 39




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
      Page 40




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  Credit Risk 
   Interest Rate Risk 
 Commodity Price Risk 
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  Foreign Currency Exchange Risk 
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 Disclosure Controls and Procedures
    Changes In Internal Control Over Financial Reporting
  Limitations On The Effectiveness Of Controls And Procedures
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 Item1. Legal Proceedings
 Compressor industry antitrust investigation
     Herrick Foundation litigation
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Kahn shareholder lawsuit
  Judicial Restructuring for Brazilian Engine Manufacturing Subsidiary
  Horsepower label litigation
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 Other Litigation
  
 Item 6. Exhibits
 (a)
    
    ExhibitNumber
    
    Description31.1
    
    
    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.
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
   TECUMSEH PRODUCTS COMPANY
          
          (Registrant)Dated: August 6, 2009
    BY:
    /s/   James S. NicholsonJames S. NicholsonVice President, Treasurer and
   Chief Financial Officer (on behalf
   of the Registrant and as principal
   financial officer) Page 50