-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PFsdcjyuPTicj86/Tq1NA5k5qWz9+UeQR5BM06z//t2M8Mav0SZWPA2z3hUYiYFL 3kl2CfRfxPEFXFeHth/Ziw== 0000950124-04-001997.txt : 20040503 0000950124-04-001997.hdr.sgml : 20040503 20040503163916 ACCESSION NUMBER: 0000950124-04-001997 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040331 FILED AS OF DATE: 20040503 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECUMSEH PRODUCTS CO CENTRAL INDEX KEY: 0000096831 STANDARD INDUSTRIAL CLASSIFICATION: AIR COND & WARM AIR HEATING EQUIP & COMM & INDL REFRIG EQUIP [3585] IRS NUMBER: 381093240 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-00452 FILM NUMBER: 04774005 BUSINESS ADDRESS: STREET 1: 100 E PATTERSON ST CITY: TECUMSEH STATE: MI ZIP: 49286 BUSINESS PHONE: 5174238411 MAIL ADDRESS: STREET 1: 100 EAST PATTERSON STREET CITY: TECUMSEH STATE: MI ZIP: 49286 10-Q 1 k84961e10vq.txt QUARTERLY REPORT FOR PERIOD ENDED 03/31/04 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 March 31, 2004 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.
Class of Stock Outstanding at March 31, 2004 -------------- ----------------------------- Class B Common Stock, $1.00 par value 5,077,746 Class A Common Stock, $1.00 par value 13,401,938
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TABLE OF CONTENTS Page 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 and Results of Operations.................................... 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk... 18 Item 4. Controls and Procedures...................................... 19 Part II. Other Information.............................................. 20 Item 6. Exhibits and Reports on Form 8-K............................. 20 Signatures............................................................... 21 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
Page 2 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION - ITEM 1 CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
(Dollars in millions, except share data) MARCH 31, December 31, ASSETS 2004 2003 ---------- ---------- Current Assets: Cash and cash equivalents $ 322.1 $ 344.6 Accounts receivable, less allowance for doubtful accounts of $6.2 in 2004 and $6.5 in 2003 272.6 235.0 Inventories 282.9 298.2 Deferred and recoverable income taxes 74.6 71.8 Other current assets 43.4 30.5 ---------- ---------- Total current assets 995.6 980.1 Property, plant, and equipment, at cost, net of accumulated depreciation of $807.1 in 2004 and $797.8 in 2003 544.7 554.6 Goodwill 242.7 242.7 Other intangibles 71.7 74.8 Deferred income taxes 25.2 26.1 Prepaid pension expense 159.0 155.3 Other assets 72.2 72.2 ---------- ---------- Total assets $ 2,111.1 $ 2,105.8 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, trade $ 174.3 $ 172.4 Income taxes payable 10.7 10.7 Short-term borrowings 86.1 89.6 Accrued liabilities 165.5 161.9 ---------- ---------- Total current liabilities 436.6 434.6 Long-term debt 331.6 327.6 Deferred income taxes 38.6 36.5 Other postretirement benefit liabilities 212.9 212.6 Product warranty and self-insured risks 24.2 24.4 Accrual for environmental matters 44.4 44.6 Pension liabilities 19.9 20.7 ---------- ---------- Total liabilities 1,108.2 1,101.0 ---------- ---------- Stockholders' Equity: Class A common stock, $1 par value; authorized 75,000,000 shares; issued and outstanding 13,401,938 shares in 2004 and 2003 13.4 13.4 Class B common stock, $1 par value; authorized 25,000,000 shares; issued and outstanding 5,077,746 shares in 2004 and 2003 5.1 5.1 Retained earnings 1,055.9 1,055.4 Accumulated other comprehensive loss (71.5) (69.1) ---------- ---------- Total stockholders' equity 1,002.9 1,004.8 ---------- ---------- Total liabilities and stockholders' equity $ 2,111.1 $ 2,105.8 ========== ==========
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements. Page 3 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION - ITEM 1 CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
THREE MONTHS ENDED (Dollars in millions, except per share data) MARCH 31, ------------------------------- 2004 2003 ---------- ---------- Net sales $ 477.0 $ 473.9 Cost of sales and operating expenses 421.5 414.9 Selling and administrative expenses 44.7 41.2 Restructuring charges, impairments and other items -- 13.6 ---------- ---------- Operating income 10.8 4.2 Interest expense (5.6) (5.3) Interest income and other, net 4.6 4.9 ---------- ---------- Income before taxes 9.8 3.8 Tax provision 3.4 1.4 ---------- ---------- Net income $ 6.4 $ 2.4 ---------- ---------- Basic and Diluted Earnings Per Share $ 0.34 $ 0.13 ---------- ---------- Weighted average shares (in thousands) 18,480 18,480 ========== ========== Cash dividends declared per share $ 0.32 $ 0.32 ========== ==========
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements. Page 4 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION - ITEM 1 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
THREE MONTHS ENDED (Dollars in millions) MARCH 31, ----------------------- 2004 2003 ------ ------ Cash Flows from Operating Activities: Net income $ 6.4 $ 2.4 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 23.2 24.1 Loss on disposal of property and equipment 1.1 1.6 Accounts receivable (38.5) (75.6) Inventories 14.1 3.7 Payables and accrued expenses 5.9 9.2 Employee retirement benefits (4.3) (0.9) Deferred and recoverable taxes 1.0 3.6 Net effect of environmental payment -- (25.6) Other (12.7) (24.8) ------ ------ Cash used In operating activities (3.8) (82.3) ------ ------ Cash Flows from Investing Activities: Business acquisition, net of cash acquired -- (3.1) Capital expenditures (12.1) (7.9) ------ ------ Cash used in investing activities (12.1) (11.0) ------ ------ Cash Flows from Financing Activities: Dividends paid (5.9) (5.9) Increase (decrease) in borrowings, net 0.8 (15.7) Debt issuance costs -- (2.1) ------ ------ Cash used in financing activities (5.1) (23.7) ------ ------ Effect of exchange rate changes on cash (1.5) 2.7 ------ ------ Decrease in cash and cash equivalents (22.5) (114.3) Cash and Cash Equivalents: Beginning of period 344.6 333.1 ------ ------ End of period $322.1 $218.8 ====== ======
The accompanying notes are an integral part of these Consolidated Condensed Financial Statements. Page 5 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. 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, 2003 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, 2003. 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. Comprehensive Income
(Dollars in millions) THREE MONTHS ENDED MARCH 31, -------------------- 2004 2003 ----- ----- Net income $ 6.4 $ 2.4 Other comprehensive income (loss): Foreign currency translation adjustments (2.2) 10.6 Loss on Derivatives (0.2) -- ----- ----- Total comprehensive income (loss) $ 4.0 $13.0 ===== =====
3. Inventories
MARCH 31, DECEMBER 31, (Dollars in millions) 2004 2003 ------ ------ Raw material and work in process $158.9 $170.6 Finished goods 117.6 122.7 Supplies 6.3 4.9 ------ ------ Total Inventories $282.8 $298.2 ====== ======
Page 6 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 4. Business Segments 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. Revenues and operating income by segment for the periods indicated are as follows:
BUSINESS SEGMENT DATA THREE MONTHS ENDED (Dollars in millions) MARCH 31, 2004 2003 ------ ------ Net sales: Compressor Products $211.9 $203.7 Electrical Component Products 107.0 107.8 Engine & Power Train Products 124.3 130.3 Pump Products 33.4 31.9 Other (a) 0.4 0.2 ------ ------ Total Net Sales $477.0 $473.9 ====== ====== Operating income (loss): Compressor Products $ 11.9 $ 20.9 Electrical Component Products 3.4 1.9 Engine & Power Train Products (2.9) (3.7) Pump Products 3.3 3.5 Other (b) (0.9) (1.0) Corporate expenses (4.0) (3.8) Restructuring charges, impairments and other items -- (13.6) ------ ------ Total operating income 10.8 4.2 Interest expense (5.6) (5.3) Interest income and other, net 4.6 4.9 ------ ------ Income before taxes $ 9.8 $ 3.8 ====== ======
(a) "Other" consists of non-reportable business segments, primarily MDSI. The Electrical Component Products had intersegment sales $15.2 million and $13.3 million in 2004 and 2003, respectively. Page 7 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 5. Goodwill and Other Intangible Assets At March 31, 2004, goodwill by segment consisted of Electrical Components - $217.7 million, Compressors - $17.4 million, Pumps - $5.1 million, and Engine & Power Train - $2.5 million. Other intangible assets consisted of the following:
GROSS CARRYING ACCUMULATED AMOUNT AMORTIZATION NET AMORTIZABLE LIFE ------ ------------ --- ---------------- Intangible assets subject to amortization: Two year non-compete agreement $15.0 $9.4 5.6 2 years Customer relationships and contracts 39.3 3.4 35.9 6-15 years Technology 15.4 2.7 12.7 3-10 years Trade-name and trademarks 0.8 0.2 0.6 3-8 years ----- ----- ----- Total 70.5 15.7 54.8 Intangible assets not subject to amortization: Trade name 16.9 16.9 ----- ----- ----- Total intangible assets $87.4 $15.7 $71.7 ===== ===== =====
The estimated amortization expense over the next five years is $12.5 million for 2004 and approximately $5.0 million annually for 2005 through 2008. Amortization expense for the three months ended March 31, 2004 was $3.1 million compared to $2.5 million for the three months ended March 31, 2003. 6. Pension and Other Postretirement Benefit Plans Components of net periodic benefit (income) cost for the three months ended March 31:
PENSION BENEFITS OTHER BENEFITS --------------------- -------------------- 2004 2003 2004 2003 ----- ----- ----- ----- Service Cost $ 2.2 $ 2.0 $ 1.1 $ 1.2 Interest Cost 5.4 5.6 2.8 3.1 Expected return on plan assets (10.5) (9.8) -- -- Amortization of prior service costs 0.3 0.4 (0.3) (0.3) Amortization of net (gain) loss (1.1) (1.4) (1.0) (1.1) ----- ----- ----- ----- Net periodic benefit (income) cost ($3.7) ($3.2) $ 2.6 $ 2.9 ===== ===== ===== =====
The Company previously disclosed in its financial statements for the year ended December 2003, that it expected to contribute $0.2 million to one of its pension plans in 2004. As of March 31, 2004, $0.03 million of contributions have been made. The Company presently anticipates contributing an additional $0.1 million to fund this pension plan in 2004 for a total of $0.13 million. Page 8 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS On December 8, 2003, President Bush signed into law a bill that expands Medicare, primarily adding a prescription drug benefit for Medicare-eligible retirees starting in 2006. The Company anticipates that the benefits it pays after 2006 will be lower as a result of the new Medicare provisions; however, the retiree medical obligations and costs reported do not reflect the impact of this legislation. Deferring the recognition of the new Medicare provisions' impact is permitted by Financial Accounting Standards Board Staff Position 106-1 due to open questions about some of the new Medicare provisions and a lack of authoritative accounting guidance about certain matters. The final accounting guidance could require changes to previously reported information. 7. Restructuring Charges, Impairments and Other Items First quarter 2003 results were adversely affected by a $13.6 million ($8.7 million net of tax or $0.47 per share) charge 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, the 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 facility was subsequently closed during the third quarter of 2003, and in October 2003, the Company transferred title of the property to PRS pursuant to the overall arrangement. 8. Guarantees and Warranties A portion of accounts receivable at the Company's Brazilian subsidiary are sold with recourse. Brazilian receivables sold at March 31, 2004 and December 31, 2003 were $52.6 million and $64.5 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. Page 9 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 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:
Three Months Ended (Dollars in millions) March 31, 2004 -------------- Balance at January 1, 2004 $34.0 Accruals for warranties 6.8 Settlements made (in cash or in kind) (4.4) Effect of foreign currency translation (0.1) ----- Balance at March 31, 2004 $36.3 =====
9. Environmental Matters 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. The Consent Decree has also been approved by the U.S. Department of Justice, but has yet to become a final judgment pending approval by the pertinent federal district court. 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 30 year term, in the amount of $100.0 million and Environmental Site Liability insurance in the amount of $20.0 million. 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. 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 Page 10 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS $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 environmental liability arising from operations at the Site, including potential residual liabilities not assumed by PRS pursuant to the Liability Transfer Agreement. 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 legal 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, without limitation, 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 March 31, 2004, 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 cleanup 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 approximately $2.5 million for these 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 March 31, Page 11 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 2004 and December 31, 2003, the Company had accrued $46.4 million and $46.6 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. 10. Commitments and Contingencies 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. Page 12 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Consolidated net income for the first quarter of 2004 amounted to $6.4 million or $0.34 per share compared to $2.4 million or $0.13 per share in the first quarter of 2003. First quarter 2003 results included a charge of $13.6 million ($8.7 million net of tax or $0.47 per share) related to environmental costs at the Company's Sheboygan Falls, Wisconsin facility. Exclusive of this environmental-related charge, 2004 first quarter operating results declined from the first quarter 2003 primarily due to lower results from the compressor business. As described in more detail below, the trends that influenced these operating results included differences in exchange rates, higher commodity prices, and ongoing competitive pressures from foreign competition. Consolidated net sales in the first quarter of 2004 increased to $477.0 million from $473.9 million in 2003. Changes in foreign currency exchange rates increased sales by $20.5 million in comparison to the first quarter 2003. Excluding the effects of currency fluctuation, sales in the first quarter 2004 declined primarily due to the Engine & Power Train business, where sales volumes were lower in both North America and Europe, and the North American-based compressor operations. Compressor Products First quarter 2004 sales in the Company's compressor business increased to $211.9 million from $203.7 million in the first quarter of 2003 due to the effects of foreign currency translation, which increased sales by approximately $14.7 million. This currency-related sales increase was partially offset by a $4.3 million decline in sales of compressors built in North America and used in unitary air conditioning applications. Compressor business operating income for the first quarter of 2004 amounted to $11.9 million compared to $20.9 million in the first quarter of 2003. The decrease in operating income for the first quarter of 2004 versus the comparable 2003 quarter reflected specific factors that affected operating results in Brazil, India and North America. Operating income attributable to the Brazilian operations was lower by $6.1 million due to the weak U.S. Dollar that narrowed margins on U.S. Dollar-denominated sales, an unfavorable shift in product sales mix, and higher commodity prices. The average exchange rate for the first quarter of 2004 was 17% weaker than the average for the first quarter of 2003. Despite the decline in results, the Brazilian operations remain important to the group, and for the three month periods ended March 31, 2004 and 2003, represented 64% and 66%, respectively, of operating income of the Compressor business. Operating income attributable to the Indian operations declined by $1.6 million due to the government's lowering of duties on compressors imported into India, which had a significant deflationary effect on compressor prices within India. Higher commodity prices and higher fixed costs associated with production enhancements were also factors in India. North American operation's operating income declined by $1.2 million. The deterioration was commensurate with the continued decline in North American-sourced sales, which were 8% lower in the first quarter of 2004 versus 2003. Page 13 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS Electrical Component Products Electrical Components business sales were $107.0 million in the first quarter of 2004 compared to $107.8 million in the first quarter of 2003. Volume declines in gear motor and actuator sales were offset by higher sales in the Asian region, mostly attributable to the effects of foreign currency translation. Electrical Components operating income for the first quarter of 2004 amounted to $3.4 million compared to $1.9 million in the first quarter of 2003. The improvement in operating income largely resulted from the absence in 2004 of the $4.2 million write-up of FASCO inventory, recorded at December 31, 2002 in connection with purchase accounting, that was subsequently recognized in cost of sales during the first quarter of 2003. This improvement was partially offset by commodity cost increases; warranty, response and expediting costs incurred as a result of a product design change for an automotive segment customer; and higher intangible amortization resulting from the finalization of purchase accounting in the second quarter of 2003. Engine & Power Train Products Engine & Power Train business sales amounted to $124.3 million in the first quarter of 2004 compared to $130.3 million in the first quarter of 2003. The decline in sales for the first quarter reflected a 40% decline in sales volumes at the Company's European operations, where the effects of a dry, hot summer in 2003 left excess inventory in the retail pipeline, and the strength of the Euro versus the Dollar weakened the operation's competitiveness. This decline equated to $11.2 million excluding the effects of currency translation. In addition, sales volumes declined by 4% in North America due to temporary shortfalls in engine shipments. Despite strong industry demand, difficulties in achieving normal production levels in Brazil and difficulties experienced with the domestic third-party supply of aluminum castings resulted in some delayed shipping to certain of the Company's North American customers. Engine & Power Train business operating loss in the first quarter of 2004 amounted to $2.9 million compared to a loss of $3.7 million in the first quarter of 2003. The improvement in first quarter results reflected a significant improvement in the operating results of the North American engine operations due to the cost reductions achieved with the closure of the Douglas, Georgia and Sheboygan Falls, Wisconsin facilities last year and a favorable shift in product sales mix in 2004. These gains were partially offset by start-up costs and ramp-up inefficiencies at the Curitiba, Brazil facility, reduced profitability at the European operations due to the lower sales volumes, and product rework involving engines produced in the Company's facility in the Czech Republic that was necessitated by defective parts received from a supplier. Pump Products Pump business sales in the first quarter of 2004 amounted to $33.4 million compared to $31.9 million in 2003. The 5% increase in first quarter sales was primarily attributed to robust sales in Page 14 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS the water gardening and HVAC markets, partially offset by a decline in pumps sold directly to one retailer who elected to exit the category. Operating income amounted to $3.3 million in the first quarter of 2004 compared to $3.5 million in 2003. The slight decrease in operating income was primarily attributable to higher engineering and administrative costs. Restructuring Charges, Impairments and Other Items First quarter 2003 results were adversely affected by a $13.6 million ($8.7 million net of tax or $0.47 per share) charge 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 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 cost of the liability transfer arrangement was $39.2 million. The charge consisted of the difference between the cost of the arrangement and amounts previously accrued for the cleanup. This facility was subsequently closed during the third quarter of 2003, and in October 2003, the Company transferred the title of the property to PRS pursuant to the overall arrangement. Interest Expense Interest expense amounted to $5.6 million in the first quarter of 2004 compared to $5.3 million in the first quarter of 2003. The increase is primarily related to a higher effective rate on the Company's Senior Guaranteed Notes, including the effects of its interest rate swap agreement versus the rate applicable to the bridge financing in effect between December 30, 2002, the date of the FASCO acquisition, and March 5, 2003, the date of the Senior Guaranteed Note Issuance. Interest Income and Other, Net Interest income and other, net amounted to $4.6 million in the first quarter of 2004 compared to $4.9 million in the first quarter of 2003. This decrease resulted primarily from lower average interest rates applicable to deposits in Brazil. Taxes on Income The effective income tax rate for the first three months of 2004 was 34.7% compared to 36.8% for the same period in 2003. The lower rate in 2004 is reflective of the Company's most recent experience, whereas first quarter 2003 was reflective of the Company's initial estimate of the effect of the addition of FASCO to the Company. Outlook The Company does not expect 2004 worldwide market conditions in its major segments to improve much over 2003. Recent growth in overall economic activity will only have a moderately Page 15 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS positive effect given the fundamental characteristics of these markets, which include worldwide over-capacity, deflationary pricing, and an erosion of U.S.-based customers. In addition, weakness in the U.S. Dollar will continue to negatively affect the Company's comparable year-over-year earnings in the near term, and significant increases in commodity prices will also adversely affect comparative earnings if adequate product price increases are not accepted in the marketplace. While the Company has taken significant actions over the last several years to improve its cost position, product competitiveness and value proposition to its customers, more will be needed in order to meet the growth and profitability objectives of the Company. Alternatives continue to be evaluated on how best to compete in the highly competitive segments in which the Company operates. As further actions are taken, it is likely that additional restructuring charges impacting future results will be incurred. While the amount and timing of these charges cannot currently be accurately predicted, they may affect several quarterly periods or years, and they could be material to the reported results in the particular quarter or year in which they are recorded. 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 quarter of 2004 used cash of $3.8 million compared to $82.3 million in 2003. The improvement in 2004 resulted primarily from a smaller additional investment in net working capital over the quarter in comparison to the previous year's quarter and the absence of the $39.2 cash payment for the Liability Transfer and Assumption Agreement. Working capital of $559.0 million at March 31, 2004 was up slightly from $545.5 million at the end of 2003. Working capital requirements and planned capital investments for 2004 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. 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 initiatives will take place during 2004 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 6 to the financial statements.) Liabilities, relating to probable remediation activities, are recorded when the costs of such activities can be Page 16 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 March 31, 2004 and December 31, 2003, the Company had accrued $46.4 and $46.6 million, respectively, for environmental remediation. 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, particularly commodities, including steel, cooper and aluminum, whose cost can be subject to significant variation; ix) actions of competitors; x) the ultimate cost of resolving environmental matters; xi) the Company's ability to profitably develop, manufacture and sell both 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) potential political and economic adversities that could adversely affect anticipated sales and production in Brazil; and xiv) potential political and economic adversities that could adversely affect anticipated sales and production in India, including potential military conflict with neighboring countries. 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 17 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. 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. Fluctuations in commodity prices and foreign currency exchange rates can be volatile, and the Company's risk management activities do not totally eliminate these risks. Consequently, these fluctuations can have a significant effect on results. 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 quarter of 2004. 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 March 31, 2004 and December 31, 2003, the Company held foreign currency forward exchange contracts and foreign currency call options with total notional values in the amount of $24.5 and $16.3 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 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 March 31, 2004 and December 31, 2003 were $12.5 and $16.1 million, respectively. The Company is subject to interest rate risk, primarily associated with its borrowings. The Company's $300 million Senior Guaranteed Notes are fixed-rate debt. The Company has entered into fixed to variable interest rate swaps with notional amounts totaling $125.0 million. The Company's remaining borrowings, which consist of bank borrowings by its foreign subsidiaries and Industrial Development Revenue Bonds, are variable-rate debt. Currently, including the effect of the interest rate swaps, 42% of the Company's total debt is fixed-rate. While changes in interest rates impact the fair value of this debt, there is no impact to earnings and cash flow because the Company intends to hold these obligations to maturity unless refinancing conditions are favorable. Alternatively, while changes in interest rates do not affect the fair value of the Company's variable-interest rate debt, they do affect future earnings and cash flows. A 1% increase in interest rates would increase interest expense for the year by approximately $2.4 million. Page 18 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. 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 19 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareholders of Tecumseh Products Company was held on April 28, 2004. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934, and there was no solicitation in opposition to management's solicitation. All of management's nominees for directors as listed in the proxy statement were elected with the following votes:
VOTES DIRECTOR VOTES FOR WITHHELD -------- --------- -------- Peter M. Banks 4,687,750 3,846 Jon E. Barfield 4,688,151 3,445 J. Russell Fowler 4,686,570 5,026 Todd W. Herrick 4,660,721 30,875 Virginia A. Kamsky 4,673,766 17,830 David M. Risley 4,159,510 532,086
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 January 22, 2004, the Company filed a report on Form 8-K regarding the recognition of $29.5 million charge for the impairment of goodwill. On January 30, 2004, the Company filed a report on Form 8-K reporting its fourth quarter and full year 2003 financial data and investor presentation. On March 16, 2004, the Company filed a report on Form 8-K regarding the resignation of its Vice President, Treasurer, Chief Financial Officer and director, David W. Kay. On April 1, 2004, the Company filed a report on Form 8-K regarding the appointment of James S. Nicholson as Vice President, Treasurer and Chief Financial Officer. Page 20 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES SIGNATURE 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: May 3, 2004 BY: /s/ JAMES S. NICHOLSON -------------------------- -------------------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer (on behalf of the Registrant and as principal financial officer) Page 21 EXHIBIT INDEX 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. EX-31.1 2 k84961exv31w1.txt CERTIFICATION OF PRESIDENT AND CEO Exhibit 31.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER I, Todd W. Herrick, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Tecumseh Products Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the Audit Committee of the Registrant's Board of Directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting. Dated: April 30, 2004 BY: /s/ TODD W. HERRICK --------------------------------------- Todd W. Herrick Chairman, President and Chief Executive Officer EX-31.2 3 k84961exv31w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 31.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER I, James S. Nicholson, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Tecumseh Products Company; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report; 4. The Registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the Registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the Registrant's internal control over financial reporting that occurred during the Registrant's most recent fiscal quarter (the Registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the Registrant's internal control over financial reporting; and 5. The Registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant's auditors and the Audit Committee of the Registrant's Board of Directors (or persons performing the equivalent function): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant's internal controls over financial reporting. Dated: April 30, 2004 BY: /s/ JAMES S. NICHOLSON ----------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer EX-32.1 4 k84961exv32w1.txt CERTIFICATION OF PRESIDENT AND CEO Exhibit 32.1 CERTIFICATION OF CHIEF EXECUTIVE OFFICER In connection with the quarterly report of Tecumseh Products Company (the "Company") on Form 10-Q for the period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Form 10-Q"), I, Todd W. Herrick, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: April 30, 2004 BY: /s/ TODD W. HERRICK ----------------------------- Todd W. Herrick Chairman, President and Chief Executive Officer EX-32.2 5 k84961exv32w2.txt CERTIFICATION OF CHIEF FINANCIAL OFFICER Exhibit 32.2 CERTIFICATION OF CHIEF FINANCIAL OFFICER In connection with the quarterly report of Tecumseh Products Company (the "Company") on Form 10-Q for the period ended March 31, 2004 as filed with the Securities and Exchange Commission on the date hereof (the "Form 10-Q"), I, James S. Nicholson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and (2) The information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: April 30, 2004 BY: /s/ JAMES S. NICHOLSON ----------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----