##### 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 September 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)
 
  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 October 31, 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
    
    
    30Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    46Item 4. Controls and Procedures
    
    
    49Part II. Other InformationItem 1. Legal Proceedings
    
    
    51Item 1A. Risk Factors
    
    
    53Item 4. Submission of Matters to a Vote of Security Holders
    
    
    54Item 6. Exhibits
    
    
    55Signatures
    
    
    57Exhibits and Schedules to Credit Agreement dated as of March 20, 2008
among Tecumseh Products Company, the Lenders Party thereto, and JPMorgan
Chase Bank, N.A., as Administrative Agent
    
    Exh. 4.1Amendment No. 4, dated as of October 20, 2009, to the Credit Agreement
dated as of March 20, 2008 among Tecumseh Products Company, the Lenders
Party thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent
    
    Exh. 4.2Settlement Agreement and Waiver of All Rights and Claims, dated as of
October 5, 2009, between Tecumseh Products Company and Edwin L. Buker.
    
    Exh. 10.1Certification of President Pursuant to Section 302
    
    Exh 31.1Certification of CFO Pursuant to Section 302
    
    Exh 31.2Certification of President Pursuant to Section 906
    
    Exh 32.1Certification of CFO Pursuant to Section 906
    
    Exh 32.2EX-4.1EX-4.2EX-10.1EX-31EX-32
  Page 2




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
  
   September 30,
    
    
    December 31,(Dollars in millions, except share data)
    
    2009
    
    
    2008ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    84.9
    
    
    $
    113.1Restricted cash and cash equivalents
    
    
    11.4
    
    
    
    12.5Accounts receivable, trade, less allowance for
doubtful accounts of $1.0 in 2009 and $1.2 in 2008
    
    
    98.8
    
    
    
    88.1Inventories
    
    
    106.1
    
    
    
    123.0Deferred and recoverable income taxes
    
    
    7.2
    
    
    
    23.2Recoverable non-income taxes
    
    
    12.9
    
    
    
    11.7Assets held for sale
    
    
    15.9
    
    
    
    21.7Fair value of hedge
    
    
    10.5
    
    
    
    Prepaid expenses
    
    
    10.5
    
    
    
    13.8Other current assets
    
    
    7.5
    
    
    
    5.5Total current assets
    
    
    365.7
    
    
    
    412.6Property, plant and equipment, net
    
    
    259.4
    
    
    
    244.3Long-term investments
    
    
    4.9
    
    
    
    4.8Prepaid pension expense
    
    
    82.9
    
    
    
    81.0Recoverable non-income taxes
    
    
    51.7
    
    
    
    37.0Other assets
    
    
    19.5
    
    
    
    18.8Total assets
    
    $
    784.1
    
    
    $
    798.5LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Accounts payable, trade
    
    $
    108.1
    
    
    $
    109.6Short-term borrowings
    
    
    34.9
    
    
    
    30.4Liabilities held for sale
    
    
    1.6
    
    
    
    1.0Accrued liabilities:Employee compensation
    
    
    31.0
    
    
    
    26.1Product warranty and self-insured risks
    
    
    11.2
    
    
    
    12.1Fair value of hedge
    
    
    3.5
    
    
    
    38.6Other
    
    
    21.8
    
    
    
    21.4Total current liabilities
    
    
    212.1
    
    
    
    239.2Long-term debt
    
    
    0.3
    
    
    
    0.4Deferred income taxes
    
    
    6.5
    
    
    
    8.7Other postretirement benefit liabilities
    
    
    38.6
    
    
    
    39.5Product warranty and self-insured risks
    
    
    5.9
    
    
    
    8.0Pension liabilities
    
    
    19.2
    
    
    
    18.7Other non-current liabilities
    
    
    7.3
    
    
    
    6.6Total liabilities
    
    
    289.9
    
    
    
    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
    
    
    441.5
    
    
    
    504.4Accumulated other comprehensive (loss) income:Other comprehensive loss
    
    
    (4.0
    )
    
    
    (88.4
    )Postretirement and postemployment benefits
    
    
    27.2
    
    
    
    31.9Total stockholders equity
    
    
    494.2
    
    
    
    477.4Total liabilities and stockholders equity
    
    $
    784.1
    
    
    $
    798.5
  Page 3




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Dollars in millions, except per share data)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net sales
    
    $
    208.0
    
    
    $
    256.2
    
    
    $
    517.3
    
    
    $
    805.2Cost of sales
    
    
    189.4
    
    
    
    238.7
    
    
    
    484.3
    
    
    
    708.6Selling and administrative expenses
    
    
    29.4
    
    
    
    33.7
    
    
    
    94.7
    
    
    
    99.6Impairments, restructuring charges,
and other items
    
    
    3.6
    
    
    
    16.2
    
    
    
    10.6
    
    
    
    20.0Operating loss
    
    
    (14.4
    )
    
    
    (32.4
    )
    
    
    (72.3
    )
    
    
    (23.0
    )Interest expense
    
    
    3.0
    
    
    
    7.0
    
    
    
    7.9
    
    
    
    20.5Interest income and other, net
    
    
    0.5
    
    
    
    2.7
    
    
    
    1.8
    
    
    
    7.8Loss from continuing operations before taxes
    
    
    (16.9
    )
    
    
    (36.7
    )
    
    
    (78.4
    )
    
    
    (35.7
    )Tax (benefit) expense
    
    
    (0.7
    )
    
    
    (0.2
    )
    
    
    (14.4
    )
    
    
    0.6Loss from continuing operations
    
    
    (16.2
    )
    
    
    (36.5
    )
    
    
    (64.0
    )
    
    
    (36.3
    )Income from discontinued operations, net of tax
    
    
    2.1
    
    
    
    23.3
    
    
    
    1.1
    
    
    
    49.1Net (loss) income
    
    $
    (14.1
    )
    
    $
    (13.2
    )
    
    $
    (62.9
    )
    
    $
    12.8Basic (loss) earnings per share:*Loss from continuing operations
    
    
    (0.87
    )
    
    
    (1.98
    )
    
    
    (3.46
    )
    
    
    (1.96
    )Income from discontinued operations, net of tax
    
    
    0.11
    
    
    
    1.27
    
    
    
    0.06
    
    
    
    2.65Net (loss) income per share, basic
    
    $
    (0.76
    )
    
    $
    (0.71
    )
    
    $
    (3.40
    )
    
    $
    0.69Diluted (loss) earnings per share:**Loss from continuing operations
    
    
    (0.87
    )
    
    
    (1.98
    )
    
    
    (3.46
    )
    
    
    (1.96
    )Income from discontinued operations, net of tax
    
    
    0.11
    
    
    
    1.27
    
    
    
    0.06
    
    
    
    2.65Net (loss) income per share, diluted
    
    $
    (0.76
    )
    
    $
    (0.71
    )
    
    $
    (3.40
    )
    
    $
    0.69Weighted 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). For the periods presented above, 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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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
   Nine Months EndedSeptember 30,(Dollars in millions)
    
    2009
    
    
    2008Cash Flows from Operating Activities:Net (loss) income
    
    $
    (62.9
    )
    
    $
    12.8Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:Depreciation and amortization
    
    
    30.8
    
    
    
    34.6Impairment of long-lived assets and goodwill
    
    
    2.2
    
    
    
    13.4Gain on sale of discontinued operations
    
    
    
    
    
    
    (7.9
    )Impairment of prepaid asset
    
    
    1.5Loss (gain) on disposal of property and equipment
    
    
    2.4
    
    
    
    (3.5
    )Changes in assets and liabilities:Accounts receivable
    
    
    0.9
    
    
    
    (36.9
    )Inventories
    
    
    31.0
    
    
    
    8.0Payables and accrued expenses
    
    
    (7.8
    )
    
    
    (2.8
    )Employee retirement benefits
    
    
    (10.0
    )
    
    
    34.4Deferred and recoverable taxes
    
    
    (11.6
    )
    
    
    3.3Other
    
    
    12.7
    
    
    
    (31.3
    )Cash (used in) provided by operating activities
    
    
    (10.8
    )
    
    
    24.1Cash Flows from Investing Activities:(Payments made) proceeds from sale of assets
    
    
    (13.3
    )
    
    
    22.6Capital expenditures
    
    
    (5.7
    )
    
    
    (5.5
    )Long-term investments
    
    
    (0.2
    )
    
    
    Change in restricted cash and cash equivalents
    
    
    1.2
    
    
    
    (7.6
    )Cash (used in) provided by investing activities
    
    
    (18.0
    )
    
    
    9.5Cash Flows from Financing Activities:Debt issuance / amendment costs
    
    
    
    
    
    
    (1.6
    )Other (payments) borrowings, net
    
    
    (3.0
    )
    
    
    0.5Cash used in financing activities
    
    
    (3.0
    )
    
    
    (1.1
    )Effect of exchange rate changes on cash
    
    
    3.6
    
    
    
    16.8(Decrease) increase in cash and cash equivalents
    
    
    (28.2
    )
    
    
    49.3Cash and Cash Equivalents:Beginning of period
    
    
    113.1
    
    
    
    76.8End of period
    
    $
    84.9
    
    
    $
    126.1Refunds received for income taxes
    
    
    (13.2
    )
    
    
    (4.0
    )Cash paid for interest
    
    
    9.1
    
    
    
    16.3
  Page 5




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
     Electrical Components
   Three Months
    
    
    Three MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(Dollars in millions)


2009



2008Net sales
    
    $
    3.3
    
    
    $
    9.2Cost of sales
    
    
    1.7
    
    
    
    7.9Selling and administrative expenses
    
    
    0.1
    
    
    
    0.2Impairments, restructuring charges, and other items
    
    
    (2.1
    )
    
    
    1.5Operating income (loss)
    
    
    3.6
    
    
    
    (0.4
    )Income (loss) from discontinued operations before
income taxes
    
    $
    3.6
    
    
    
    ($0.4
    )
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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Nine Months
    
    
    Nine MonthsEnded
    
    
    EndedSeptember 30,
    
    
    September 30,(Dollars in millions)


2009



2008Net sales
    
    $
    9.8
    
    
    $
    23.6Cost of sales
    
    
    8.9
    
    
    
    20.4Selling and administrative expenses
    
    
    1.1
    
    
    
    0.5Impairments, restructuring charges, and other items
    
    
    (3.5
    )
    
    
    1.0Operating income
    
    
    3.3
    
    
    
    1.7Income from discontinued operations before income
taxes
    
    $
    3.3
    
    
    $
    1.7
   Other businesses
   Page 7




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Electrical Components
    
    $
    3.6
    
    
    $
    (0.4
    )
    
    $
    3.3
    
    
    $
    1.7Engine & Power Train
    
    
    (1.0
    )
    
    
    28.3
    
    
    
    (2.0
    )
    
    
    42.2MP Pumps (including gain on sale)
    
    
    
    
    
    
    0.7
    
    
    
    
    
    
    
    9.7Income taxes on discontinued operations
    
    
    (0.5
    )
    
    
    (5.3
    )
    
    
    (0.2
    )
    
    
    (4.5
    )Income from discontinued operations
    
    $
    2.1
    
    
    $
    23.3
    
    
    $
    1.1
    
    
    $
    49.1
  September 30,(Dollars in millions)
    
    2009ASSETS:Accounts receivable, net
    
    $
    1.8Inventories
    
    
    5.8Other assets
    
    
    0.1Property, plant and equipment, net
    
    
    8.2Total assets held for sale
    
    $
    15.9LIABILITIES:Accounts payable, trade
    
    $
    1.0Accrued liabilities
    
    
    0.6Total liabilities held for sale
    
    $
    1.6Net assets held for sale
    
    $
    14.3
  September 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Raw material
    
    $
    53.9
    
    
    $
    62.6Work in progress
    
    
    1.0
    
    
    
    9.3Reserve for obsolete and slow moving inventory
    
    
    (4.9
    )
    
    
    (5.5
    )Finished goods
    
    
    56.6
    
    
    
    57.2Less: reserve for lower of cost or market
    
    
    (0.5
    )
    
    
    (0.6
    )Finished goods, net
    
    
    56.1
    
    
    
    56.6Total inventories
    
    $
    106.1
    
    
    $
    123.0
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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  September 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Land and land improvements
    
    $
    16.0
    
    
    $
    16.5Buildings
    
    
    104.4
    
    
    
    95.1Machinery and Equipment
    
    
    844.8
    
    
    
    734.3965.2
    
    
    
    845.9Less accumulated depreciation
    
    
    (708.4
    )
    
    
    (603.9
    )256.8
    
    
    
    242.0Construction in process
    
    
    2.6
    
    
    
    2.3Property, plant and equipment, net
    
    $
    259.4
    
    
    $
    244.3
   Pension Benefits
    
    
    Other BenefitsThree Months Ended
    
    
    Three Months EndedSeptember 30,
    
    
    September 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    0.6
    
    
    $
    0.6
    
    
    $
    0.1
    
    
    $
    0.3Interest cost
    
    
    2.9
    
    
    
    3.0
    
    
    
    0.6
    
    
    
    0.9Expected return on plan assets
    
    
    (4.1
    )
    
    
    (4.6
    )
    
    
    
    
    
    
    (0.1
    )Amortization of prior service costs
    
    
    
    
    
    
    (0.1
    )
    
    
    (2.4
    )
    
    
    (2.5
    )Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (0.1
    )
    
    
    (0.4
    )Net periodic benefit income
    
    
    (0.6
    )
    
    $
    (1.1
    )
    
    
    (1.8
    )
    
    $
    (1.8
    )Curtailment gains
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (30.2
    )Total pension / OPEB income
    
    $
    (0.6
    )
    
    $
    (1.1
    )
    
    $
    (1.8
    )
    
    $
    (32.0
    )
 Page 9




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Pension Benefits
    
    
    Other BenefitsNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Service cost
    
    $
    1.8
    
    
    $
    1.8
    
    
    $
    0.4
    
    
    $
    1.0Interest cost
    
    
    8.8
    
    
    
    10.8
    
    
    
    1.9
    
    
    
    3.1Expected return on plan assets
    
    
    (12.2
    )
    
    
    (17.0
    )
    
    
    
    
    
    
    (0.2
    )Amortization of prior service costs
    
    
    
    
    
    
    (0.4
    )
    
    
    (7.4
    )
    
    
    (8.1
    )Amortization of net gain
    
    
    
    
    
    
    
    
    
    
    (0.3
    )
    
    
    (1.4
    )Net periodic benefit income
    
    
    (1.6
    )
    
    $
    (4.8
    )
    
    
    (5.4
    )
    
    $
    (5.6
    )Curtailment losses (gains),
settlement charges (gains) and
special termination charges
(benefits)
    
    
    0.5
    
    
    
    (2.0
    )
    
    
    
    
    
    
    (60.9
    )Total pension / OPEB income
    
    $
    (1.1
    )
    
    $
    (6.8
    )
    
    $
    (5.4
    )
    
    $
    (66.5
    )
  Pension Benefits
    
    
    Other BenefitsThree Months Ended
    
    
    Three Months Ended}September 30,
    
    
    September 30,(Dollars in millions)
    
    2009
    
    2008
    
    2009
    
    2008Recorded in discontinued operations:Engine & Power train curtailment gain
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (30.2
    )Total curtailment gains

    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (30.2
    )
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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Pension Benefits
    
    
    Other BenefitsNine Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (34.9
    )Total discontinued operations
    
    
    
    
    
    
    (3.0
    )
    
    
    
    
    
    
    (41.8
    )Total curtailment losses (gains),
settlement charges (gains) and special
termination charges (benefits)
    
    $
    0.5
    
    
    $
    (2.0
    )
    
    $
    
    
    
    $
    (60.9
    )
     Page 11




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
       September 30,
    
    
    December 31,(Dollars in millions)
    
    2009
    
    
    2008Brazil
    
    $
    56.1
    
    
    $
    40.2India
    
    
    7.6
    
    
    
    8.5Europe
    
    
    0.9
    
    
    
    Total recoverable non-income taxes
    
    $
    64.6
    
    
    $
    48.7
    Page 12




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##### Table of Contents



TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
  Nine Months
Ended
    
    
    Nine Months
Ended(Dollars in millions)
    
    September 30,
2009
    
    
    September 30,
2008Balance at January 1
    
    $
    6.6
    
    
    $
    9.7Settlements made (in cash or in kind)
    
    
    (4.1
    )
    
    
    (5.4
    )Current year accrual
    
    
    3.6
    
    
    
    5.1Adjustments to preexisting warranties
    
    
    (1.1
    )
    
    
    (0.2
    )Effect of foreign currency translation
    
    
    0.3
    
    
    
    (0.4
    )Sale of MP Pumps
    
    
    
    
    
    
    (0.1
    )Balance at September 30
    
    $
    5.3
    
    
    $
    8.7
       Page13




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
        Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(Dollars in millions)
    
    2009
    
    
    2008
    
    
    2009
    
    
    2008Net (loss) income
    
    $
    (14.1
    )
    
    $
    (13.2
    )
    
    $
    (62.9
    )
    
    $
    12.8Other comprehensive income (loss):Foreign currency translation adjustments
    
    
    18.0
    
    
    
    (64.0
    )
    
    
    53.3
    
    
    
    (31.5
    )Gain (loss) on derivatives, net of tax
    
    
    3.9
    
    
    
    (26.2
    )
    
    
    31.1
    
    
    
    (17.6
    )Total comprehensive income (loss)
    
    $
    7.8
    
    
    $
    (103.4
    )
    
    $
    21.5
    
    
    $
    (36.3
    )
  Page14




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##### Table of Contents



TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
      Nonvested
    
    
    Vested
    
    
    TotalWeighted average
    
    
    
    
    
    
    Weighted averageNumber of
    
    
    grant date value
    
    
    Number of
    
    
    grant date valueSARs:
    
    awards
    
    
    per share
    
    
    awards
    
    
    per share
    
    
    Number of awardsOutstanding at
December 31, 2008
    
    
    327,599
    
    
    $
    15.16
    
    
    
    108,334
    
    
    $
    15.16
    
    
    
    435,933Granted in 2009
    
    
    305,939
    
    
    
    6.19
    
    
    
    
    
    
    
    
    
    
    
    305,939Vested
    
    
    (145,311
    )
    
    
    15.16
    
    
    
    145,311
    
    
    
    15.16
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
September 30, 2009
    
    
    488,227
    
    
    $
    9.54
    
    
    
    253,645
    
    
    $
    15.16
    
    
    
    741,872
 Phantom Stock Units:Outstanding at
December 31, 2008
    
    
    362,719
    
    
    $
    16.72
    
    
    
    
    
    
    
    
    
    
    
    362,719Granted
    
    
    191,857
    
    
    
    9.86
    
    
    
    
    
    
    
    
    
    
    
    191,857Vested
    
    
    (61,125
    )
    
    
    8.18
    
    
    
    61,125
    
    
    $
    8.18
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
September 30, 2009
    
    
    493,451
    
    
    $
    15.11
    
    
    
    61,125
    
    
    $
    8.18
    
    
    
    554,576
 Page 15




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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 ofSARs:
    
    awards
    
    
    share
    
    
    awards
    
    
    share
    
    
    awardsOutstanding at
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    435,933
    
    
    $
    15.16
    
    
    
    
    
    
    
    
    
    
    
    435,933Vested
    
    
    (108,334
    )
    
    
    15.16
    
    
    
    108,334
    
    
    $
    15.16
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
September 30, 2008
    
    
    327,599
    
    
    $
    15.16
    
    
    
    108,334
    
    
    $
    15.16
    
    
    
    435,933Phantom Stock Units:Outstanding at
December 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Granted
    
    
    148,030
    
    
    $
    28.82
    
    
    
    
    
    
    
    
    
    
    
    148,030Vested
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Forfeited
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Outstanding at
September 30, 2008
    
    
    148,030
    
    
    $
    28.82
    
    
    
    
    
    
    
    
    
    
    
    148,030
      Page 16




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  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
   Award
    
    
    
    
    
    Risk-free
    
    Dividend
    
    Remaining
    
    
    
    
    
    value perDate
    
    Strike price
    
    interest rate
    
    yield
    
    life (years)
    
    Volatility
    
    award3/4/08
    
    $
    28.82
    
    
    
    2.93
    %
    
    
    0.0
    %
    
    
    5.4
    
    
    
    91.65
    %
    
    $
    6.711/2/09
    
    
    10.07
    
    
    
    2.93
    %
    
    
    0.0
    %
    
    
    6.3
    
    
    
    91.65
    %
    
    
    8.913/16/09
    
    
    4.17
    
    
    
    2.93
    %
    
    
    0.0
    %
    
    
    6.4
    
    
    
    91.65
    %
    
    
    9.906/15/09
    
    
    9.31
    
    
    
    2.93
    %
    
    
    0.0
    %
    
    
    6.8
    
    
    
    91.65
    %
    
    
    9.19
   Page 17




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Three Months Ended
    
    
    Nine Months Ended(Dollars in millions, except per share data)
    
    September 30,
    
    
    September 30,2009
    
    
    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
    
    
    
    1.0
    
    
    
    5.5
    
    
    
    6.9Loss on transfer of surplus land
    
    
    
    
    
    
    
    
    
    
    0.3
    
    
    
    Impairments of buildings and machinery
    
    
    
    
    
    
    15.2
    
    
    
    
    
    
    
    15.2Gain on sale of buildings and machinery
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (0.6
    )Impairment of investment in subsidiary
    
    
    1.0
    
    
    
    
    
    
    
    1.0
    
    
    
    Impairment of prepaid outside sales expense
    
    
    1.5
    
    
    
    
    
    
    
    1.5Total impairments, restructuring charges, and
other items
    
    $
    3.6
    
    
    $
    16.2
    
    
    $
    10.6
    
    
    $
    20.0
    Page 18




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         Page 19




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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.
  Page 20




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Cash and cash equivalents; restricted cash and cash equivalents
  Short and long term investments
   Foreign currency forward purchases and commodity futures contracts
  Page 21




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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
    
    $
    84.9
    
    
    $
    84.9
    
    
    $
    
    
    
    $
    Restricted cash and cash equivalents
    
    
    11.4
    
    
    
    11.4
    
    
    
    
    
    
    
    Auction rate certificates
    
    
    4.3
    
    
    
    
    
    
    
    
    
    
    
    4.3Auction rate securities rights
    
    
    0.6
    
    
    
    
    
    
    
    
    
    
    
    0.6Commodity futures contracts
    
    
    3.2
    
    
    
    
    
    
    
    3.2
    
    
    
    Foreign currency derivatives
    
    
    7.3
    
    
    
    
    
    
    
    7.3
    
    
    
    Balance as of September 30, 2009
    
    $
    111.7
    
    
    $
    96.3
    
    
    $
    10.5
    
    
    $
    4.9Liabilities:Commodity futures contracts
    
    $
    3.5
    
    
    $
    
    
    
    $
    3.5
    
    
    $
    Balance as of September 30, 2009
    
    $
    3.5
    
    
    $
    
    
    
    $
    3.5
    
    
    $
    
 Page 22




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           Page 23




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
       Asset (Liability) Derivatives(Dollars in millions)
    
    September 30, 2009
    
    
    December 31, 2008Financial
    
    
    
    
    
    FinancialPosition Location
    
    Fair Value
    
    
    Position Location
    
    Fair ValueDerivatives designated as
hedging instrumentsCommodity futures contracts
    
    Fair value of hedge (asset)
    
    $
    3.2
    
    
    Fair value of hedge (asset)
    
    $
    Commodity futures contracts
    
    Fair value of hedge (liability)
    
    
    (3.5
    )
    
    Fair value of  hedge (liability)
    
    
    (13.2
    )Foreign currency derivatives
    
    Fair value of hedge (asset)
    
    
    7.3
    
    
    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
    
    
    
    
    
    $
    7.0
    
    
    
    
    
    
    $
    (38.6
    )
  Amount of Gain orAmount of Gain or
    
    
    
    
    
    
    (Loss) Reclassified(Loss) Recognized
    
    
    Location of Gain or
    
    
    from Accumulatedin OCI (Effective
    
    
    (Loss) Reclassified
    
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    
    (Effective Portion)Three Months Ended
    
    
    OCI into Income
    
    
    Three Months Ended(Dollars in millions)
    
    September 30, 2009
    
    
    (Effective Portion)
    
    
    September 30, 2009Derivatives designated as hedging
instrumentsCommodity futures contracts
    
    $
    (5.5
    )
    
    Cost of sales
    
    $
    1.4Foreign currency derivatives
    
    
    11.6
    
    
    Cost of sales
    
    
    0.2Total
    
    $
    6.1
    
    
    
    
    
    
    $
    1.6
 Amount of Gain or(Loss) ReclassifiedAmount of Gain or
    
    
    Location of Gain or
    
    
    from Accumulated(Loss) Recognized
    
    
    (Loss) Reclassified
    
    
    OCI into Incomein OCI (Ineffective
    
    
    from Accumulated
    
    
    (IneffectivePortion)
    
    
    OCI into Income
    
    
    Portion)Three Months Ended
    
    
    (Ineffective
    
    
    Three Months Ended(Dollars in millions)
    
    September 30, 2009
    
    
    Portion)
    
    
    September 30, 2009Derivatives designated as hedging
instrumentsCommodity futures contracts
    
    $
    (0.4
    )
    
    Cost of sales
    
    $
    0.3Foreign currency derivatives
    
    
    
    
    
    Cost of sales
    
    
    Total
    
    $
    (0.4
    )
    
    
    
    
    
    $
    0.3
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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
     Amount of Gain orAmount of Gain or
    
    
    
    
    
    
    (Loss) Reclassified(Loss) Recognized
    
    
    Location of Gain or
    
    
    from Accumulatedin OCI (Effective
    
    
    (Loss) Reclassified
    
    
    OCI into IncomePortion)
    
    
    from Accumulated
    
    
    (Effective Portion)Nine Months Ended
    
    
    OCI into Income
    
    
    Nine Months Ended(Dollars in millions)
    
    September 30, 2009
    
    
    (Effective Portion)
    
    
    September 30, 2009Derivatives designated as hedging
instrumentsCommodity futures contracts
    
    $
    10.5
    
    
    Cost of sales
    
    $
    (2.5
    )Foreign currency derivatives
    
    
    26.4
    
    
    Cost of sales
    
    
    (6.1
    )Total
    
    $
    36.9
    
    
    
    
    
    
    $
    (8.6
    )
 Amount of Gain or(Loss) ReclassifiedAmount of Gain or
    
    
    Location of Gain or
    
    
    from Accumulated(Loss) Recognized
    
    
    (Loss) Reclassified
    
    
    OCI into Incomein OCI (Ineffective
    
    
    from Accumulated
    
    
    (IneffectivePortion)
    
    
    OCI into Income
    
    
    Portion)Nine Months Ended
    
    
    (Ineffective
    
    
    Nine Months Ended(Dollars in millions)
    
    September 30, 2009
    
    
    Portion)
    
    
    September 30, 2009Derivatives designated as hedging
instrumentsCommodity futures contracts
    
    $
    0.6
    
    
    Cost of sales
    
    $
    0.6Foreign currency derivatives
    
    
    
    
    
    Cost of sales
    
    
    Total
    
    $
    0.6
    
    
    
    
    
    
    $
    0.6
    Page 25




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      Page 26




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       Page 27




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
     Subsequent Events
  Accounting for Transfers of Financial Assets
  Consolidation of Variable Interest Entities
  Page 28




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
    Page 29




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
 
 Executive Summary
     Page 30




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
      Page 31




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
    Page 32




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Results of Operations
  Three Months Ended September 30,(dollars in millions)
    
    2009
    
    
    %
    
    
    2008
    
    
    %Net sales
    
    $
    208.0
    
    
    
    100.0
    %
    
    $
    256.2
    
    
    
    100.0
    %Cost of sales
    
    
    189.4
    
    
    
    91.1
    %
    
    
    238.7
    
    
    
    93.2
    %Selling and administrative expenses
    
    
    29.4
    
    
    
    14.1
    %
    
    
    33.7
    
    
    
    13.2
    %Impairments, restructuring
charges, and other items
    
    
    3.6
    
    
    
    1.7
    %
    
    
    16.2
    
    
    
    6.3
    %Operating loss
    
    
    (14.4
    )
    
    
    (6.9
    %)
    
    
    (32.4
    )
    
    
    (12.7
    %)Interest expense
    
    
    (3.0
    )
    
    
    (1.4
    %)
    
    
    (7.0
    )
    
    
    (2.7
    %)Interest income and other, net
    
    
    0.5
    
    
    
    0.2
    %
    
    
    2.7
    
    
    
    1.1
    %Loss from continuing operations
before taxes
    
    
    (16.9
    )
    
    
    (8.1
    %)
    
    
    (36.7
    )
    
    
    (14.3
    %)Tax benefit
    
    
    0.7
    
    
    
    0.3
    %
    
    
    0.2
    
    
    
    0.1
    %Loss from continuing operations
    
    $
    (16.2
    )
    
    
    (7.8
    %)
    
    $
    (36.5
    )
    
    
    (14.2
    %)
 Three Months Ended September 30, 2009 vs. Three Months Ended September 30, 2008
   Page 33




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       Page 34




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 Nine Months Ended September 30,(dollars in millions)
    
    2009
    
    
    %
    
    
    2008
    
    
    %Net sales
    
    $
    517.3
    
    
    
    100.0
    %
    
    $
    805.2
    
    
    
    100.0
    %Cost of sales
    
    
    484.3
    
    
    
    93.6
    %
    
    
    708.6
    
    
    
    88.0
    %Selling and administrative expenses
    
    
    94.7
    
    
    
    18.3
    %
    
    
    99.6
    
    
    
    12.4
    %Impairments, restructuring charges,
and other items
    
    
    10.6
    
    
    
    2.1
    %
    
    
    20.0
    
    
    
    2.5
    %Operating loss
    
    
    (72.3
    )
    
    
    (14.0
    %)
    
    
    (23.0
    )
    
    
    (2.9
    %)Interest expense
    
    
    (7.9
    )
    
    
    (1.5
    %)
    
    
    (20.5
    )
    
    
    (2.5
    %)Interest income and other, net
    
    
    1.8
    
    
    
    0.3
    %
    
    
    7.8
    
    
    
    1.0
    %Loss from continuing operations
before taxes
    
    
    (78.4
    )
    
    
    (15.2
    %)
    
    
    (35.7
    )
    
    
    (4.4
    %)Tax (benefit) expense
    
    
    (14.4
    )
    
    
    2.8
    %
    
    
    0.6
    
    
    
    (0.1
    %)Loss from continuing operations
    
    $
    (64.0
    )
    
    
    (12.4
    %)
    
    $
    (36.3
    )
    
    
    (4.5
    %)
 Nine Months Ended September 30, 2009 vs. Nine Months Ended September 30, 2008
    Page 35




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
        Page 36




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 OTHER MATTERS
    Cash Flow
   Page 37




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Credit Facilities and Cash on Hand
     Page 38




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
     Accounts Receivable Sales
  Adequacy of Liquidity Sources
   Page 39




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
       Page 40




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
        Significant Accounting Policies and Critical Accounting Estimates
  Page 41




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
      OUTLOOK
  Page 42




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
        Page 43




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
     Page 44




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
    Page 45




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TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
  
   Credit Risk 
   Interest Rate Risk 
 Commodity Price Risk 
 Page 46




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Foreign Currency Exchange Risk 
  Page 47




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Page 48




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  
  Disclosure Controls and Procedures
    Changes In Internal Control Over Financial Reporting
  Limitations On The Effectiveness Of Controls And Procedures
  Page 49




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Page 50




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 
  
 Item1. Legal Proceedings
 Compressor industry antitrust investigation
     Herrick Foundation litigation
  Page 51




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##### Table of Contents



TECUMSEH
PRODUCTS COMPANY AND SUBSIDIARIES
  Kahn shareholder lawsuit
  Judicial Restructuring for Brazilian Engine Manufacturing Subsidiary
  Horsepower label litigation
 th
 Page 52




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##### Table of Contents



TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  Other Litigation
  
 Item1A. Risk Factors
  We may not maintain our current level of liquidity.
   A change in control could result in significant additional expense and loss of critical
management personnel.
  Page 53




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
    
 Item 4. Submission of Matters to a Vote of Security Holders
    Page 54




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
   Director
    
    Votes For
    
    Votes WithheldWilliam R. Barker
    
    
    2,893,072
    
    
    
    1,859David A. Bloss, Sr.
    
    
    2,893,072
    
    
    
    1,859Edwin L. Buker
    
    
    2,854,080
    
    
    
    40,851Zachary E. Savas
    
    
    2,703,921
    
    
    
    3,050Terence C. Seikel
    
    
    2,703,921
    
    
    
    3,050Kent B. Herrick
    
    
    2,703,821
    
    
    
    3,150Steven J. Lebowski
    
    
    2,703,821
    
    
    
    3,150Leonard M. Anthony
    
    
    2,123,596
    
    
    
    1,909Greg C. Smith
    
    
    2,123,396
    
    
    
    2,109William E. Aziz
    
    
    2,084,454
    
    
    
    41,051Jeffry N. Quinn
    
    
    2,051,142
    
    
    
    74,363
   Votes For

    
    Votes Against
    
    Abstentions4,514,310

    
    
    2,548
    
    
    
    315,6183) Say on Pay proposalVotes For

    
    Votes Against
    
    Abstentions3,259,727

    
    
    1,557,626
    
    
    
    15,1234) Recapitalization proposalVotes For
    
    Votes Against
    
    AbstentionsClass A shareholders
    
    
    10,831,279
    
    
    
    1,122,519
    
    
    
    2,284Class B shareholders
    
    
    2,124,493
    
    
    
    2,703,676
    
    
    
    4,307
  
 Item 6. Exhibits
 (a)
    
    ExhibitNumber
    
    Description4.1
    
    
    Exhibits and Schedules to the Credit Agreement dated as
of March 20, 2008 among Tecumseh Products Company, the
Lenders Party thereto, and JPMorgan Chase Bank, N.A. as
Administrative Agent .4.2
    
    
    Amendment No. 4, dated as of October 20, 2009, to the
Credit Agreement dated as of March 20, 2008 among
Tecumseh Products Company, the Lenders Party thereto, and
JPMorgan Chase Bank, N.A. as Administrative Agent.10.1
    
    
    Settlement Agreement and Waiver of All Rights and Claims,
dated as of October 5,
 Page 55




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
 2009, between Tecumseh Products
Company and Edwin L. Buker.31.1
    
    
    Certifications of the President and principal executive
officer pursuant to Section 302 of the Sarbanes-Oxley Act
of 2002.31.2
    
    
    Certifications of the Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the President 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:      November 5, 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 57




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TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES
  ExhibitNumber
    
    Exhibit Description4.1
    
    Exhibits and Schedules to the Credit Agreement dated as of March
20, 2008 among Tecumseh Products Company, the Lenders Party
thereto, and JPMorgan Chase Bank, N.A. as Administrative Agent .4.2
    
    Amendment No. 4, dated as of October 20, 2009, to the Credit
Agreement dated as of March 20, 2008 among Tecumseh Products
Company, the Lenders Party thereto, and JPMorgan Chase Bank, N.A.
as Administrative Agent.10.1
    
    Settlement Agreement and Waiver of All Rights and Claims, dated as
of October 5, 2009, between Tecumseh Products Company and Edwin L.
Buker.31
    
    Certifications pursuant to Exchange Act Rule 13a-14(a)32
    
    Certifications pursuant to Exchange Act Rule 13a-14(b) and 18
U.S.C. Section 1350.
 Page 58