-----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, TTY3zUI1hy/4TSNiHzE/2LSiwmPn7au5A1muBoLw7ksWitOM4j8+4pzsB4XbKVSY IMyRT1np6t5L0UFIpZlwsw== 0000950124-04-003649.txt : 20040806 0000950124-04-003649.hdr.sgml : 20040806 20040806162145 ACCESSION NUMBER: 0000950124-04-003649 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040806 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: 04958373 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 k86670e10vq.txt QUARTERLY REPORT FOR PERIOD ENDED JUNE 30, 2004 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 June 30, 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 June 30, 2004 - ------------------------------------ ---------------------------- Class B Common Stock, $1.00 par value 5,077,746 Class A Common Stock, $1.00 par value 13,401,938 Page 1 TABLE OF CONTENTS
Page Part I. Financial Information Item 1. Financial Statements Consolidated Condensed Balance Sheets..................................................... 3 Consolidated Condensed Statements of Operations........................................... 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............................................................ 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk........................... 22 Item 4. Controls and Procedures.............................................................. 23 Part II. Other Information.......................................................................... 24 Item 6. Exhibits and Reports on Form 8-K..................................................... 24 Signatures........................................................................................... 25 Certification of CEO Pursuant to Section 302......................................................... Exh 31.1 Certification of CFO Pursuant to Section 302......................................................... Exh 31.2 Certification of CEO Pursuant to Section 906......................................................... Exh 32.1 Certification of CFO Pursuant to Section 906......................................................... Exh 32.2
Page 2 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART I. FINANCIAL INFORMATION - ITEM 1 CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
JUNE 30, December 31, (Dollars in millions, except share data) 2004 2003 ---------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 283.1 $ 344.6 Accounts receivable, less allowance for doubtful accounts of $5.5 in 2004 and $6.5 in 2003 272.3 235.0 Inventories 304.9 298.2 Deferred and recoverable income taxes 77.5 71.8 Other current assets 46.5 30.5 ---------- ---------- Total current assets 984.3 980.1 Property, plant, and equipment, at cost, net of accumulated depreciation of $801.4 in 2004 and $797.8 in 2003 526.9 554.6 Goodwill 242.3 242.7 Other intangibles 68.7 74.8 Deferred income taxes 25.2 26.1 Prepaid pension expense 162.7 155.3 Other assets 69.2 72.2 ---------- ---------- Total assets $ 2,079.3 $ 2,105.8 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable, trade $ 187.0 $ 172.4 Income taxes payable 6.2 10.7 Short-term borrowings 51.8 89.6 Accrued liabilities 181.7 161.9 ---------- ---------- Total current liabilities 426.7 434.6 Long-term debt 326.7 327.6 Deferred income taxes 33.6 36.5 Other postretirement benefit liabilities 213.1 212.6 Product warranty and self-insured risks 25.6 24.4 Accrual for environmental matters 44.1 44.6 Pension liabilities 19.7 20.7 ---------- ---------- Total liabilities 1,089.5 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 1,053.9 1,055.4 Accumulated other comprehensive loss (82.6) (69.1) ---------- ---------- Total stockholders' equity 989.8 1,004.8 ---------- ---------- Total liabilities and stockholders' equity $ 2,079.3 $ 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 OPERATIONS (Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED (Dollars in millions, except per share data) JUNE 30, JUNE 30, ------------------------------ ------------------------------ 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Net sales $ 484.2 $ 482.3 $ 961.2 $ 956.2 Cost of sales and operating expenses 421.6 418.1 843.1 833.0 Selling and administrative expenses 51.1 44.9 95.8 86.1 Restructuring charges, impairments and other items 3.6 28.5 3.6 42.1 ------------ ------------ ------------ ------------ Operating income (loss) 7.9 (9.2) 18.7 (5.0) Interest expense (5.6) (6.2) (11.2) (11.5) Interest income and other, net 3.8 5.2 8.4 10.1 ------------ ------------ ------------ ------------ Income (Loss) before taxes 6.1 (10.2) 15.9 (6.4) Tax provision 2.1 (3.7) 5.5 (2.3) ------------ ------------ ------------ ------------ Net income (loss) $ 4.0 ($ 6.5) $ 10.4 ($ 4.1) ============ ============ ============ ============ Basic and diluted earnings per share $ 0.22 ($ 0.35) $ 0.56 ($ 0.22) ============ ============ ============ ============ Weighted average shares (in thousands) 18,480 18,480 18,480 18,480 ============ ============ ============ ============ Cash dividends declared per share $ 0.32 $ 0.32 $ 0.64 $ 0.64 ============ ============ ============ ============
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)
SIX MONTHS ENDED (Dollars in millions) JUNE 30, ------------------------ 2004 2003 -------- -------- Cash flows from Operating activities: Net income (loss) $ 10.4 ($ 4.1) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 48.8 46.2 Non-cash restructuring charges, impairments and other 3.3 26.6 Loss on disposal of property and equipment 6.2 4.3 Accounts receivable (42.7) (30.4) Inventories (12.9) (12.3) Payables and accrued expenses 36.2 22.7 Employee retirement benefits (7.9) (8.6) Deferred and recoverable taxes (7.7) (14.4) Net effect of environmental payment -- (25.6) Other (5.8) (18.2) -------- -------- Cash provided by (used in) operating activities 27.9 (13.8) -------- -------- Cash Flows from Investing Activities: Business acquisition, net of cash acquired -- 10.6 Capital expenditures (37.7) (31.6) -------- -------- Cash used in investing activities (37.7) (21.0) -------- -------- Cash Flows from Financing Activities: Dividends paid (11.8) (11.8) Decrease in borrowings, net (29.8) (34.0) -------- -------- Cash used in financing activities (41.6) (45.8) -------- -------- Effect of exchange rate changes on cash (10.1) 13.1 -------- -------- Decrease in cash and cash equivalents (61.5) (67.5) Cash and Cash Equivalents: Beginning of period 344.6 333.1 -------- -------- End of period $ 283.1 $ 265.6 ======== ========
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
THREE MONTHS ENDED SIX MONTHS ENDED (Dollars in millions) JUNE 30, JUNE 30, -------------------- -------------------- 2004 2003 2004 2003 ------- ------- ------- ------- Net income (loss) $ 4.0 ($ 6.5) $ 10.4 ($ 4.1) Other comprehensive income (loss): Foreign currency translation adjustments (11.1) 27.0 (13.3) 37.6 Loss on derivatives (0.1) (0.1) (0.3) (0.1) ------- ------- ------- ------- Total comprehensive income (loss) ($ 7.2) $ 20.4 ($ 3.2) $ 33.4 ======= ======= ======= =======
3. Inventories
JUNE 30, December 31, (Dollars in millions) 2004 2003 -------- -------- Raw material and work in process $ 177.9 $ 170.6 Finished goods 121.0 122.7 Supplies 6.0 4.9 -------- -------- Total inventories $ 304.9 $ 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:
THREE MONTHS ENDED SIX MONTHS ENDED Business Segment Data JUNE 30, JUNE 30, ------------------------ ------------------------ (Dollars in millions) 2004 2003 2004 2003 -------- -------- -------- -------- Net sales: Compressor products $ 234.1 $ 223.1 $ 446.0 $ 426.8 Electrical Component products 105.2 106.5 212.2 214.3 Engine & Power Train products 104.0 113.6 228.3 243.9 Pump products 40.6 39.0 74.0 70.9 Other (a) 0.3 0.1 0.7 0.3 -------- -------- -------- -------- Total Net Sales $ 484.2 $ 482.3 $ 961.2 $ 956.2 ======== ======== ======== ======== Operating income (loss): Compressor products $ 18.8 $ 19.5 $ 30.7 $ 40.4 Electrical Component products 4.0 5.7 7.4 7.6 Engine & Power Train products (10.7) (6.7) (13.6) (10.4) Pump Products 4.8 4.9 8.1 8.4 Other (a) (0.9) (1.1) (1.8) (2.1) Corporate expenses (4.5) (3.0) (8.5) (6.8) Restructuring charges, impairments and other items (3.6) (28.5) (3.6) (42.1) -------- -------- -------- -------- Total operating income (loss) 7.9 (9.2) 18.7 (5.0) Interest expense (5.6) (6.2) (11.2) (11.5) Interest income and other, net 3.8 5.2 8.4 10.1 -------- -------- -------- -------- Income (Loss) before taxes $ 6.1 ($ 10.2) $ 15.9 ($ 6.4) ======== ======== ======== ========
(a) "Other" consists of non-reportable business segments, primarily MDSI. The Electrical Component Products had intersegment sales of $18.3 million and $18.8 million in the second quarter of 2004 and 2003, respectively, and $33.5 million and $34.8 million for the first six months of 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 June 30, 2004, goodwill by segment consisted of Electrical Components - $217.7 million, Compressors - $17.0 million, Pumps - $5.1 million, and Engine & Power Train - $2.5 million. Other intangible assets consisted of the following:
GROSS CARRYING ACCUMULATED AMORTIZABLE AMOUNT AMORTIZATION NET LIFE -------- ------------ ------ ----------- Intangible assets subject to amortization: Two year non-compete agreement $ 15.0 $ 11.1 $ 3.9 2 years Customer relationships and contracts 39.3 4.0 35.3 6-15 years Technology 15.4 3.3 12.1 3-10 years Trade-name and trademarks 0.8 0.3 0.5 3-8 years -------- ------ ------ Total 70.5 18.7 51.8 Intangible assets not subject to amortization: Trade name 16.9 -- 16.9 -------- ------ ------ Total intangible assets $ 87.4 $ 18.7 $ 68.7 ======== ====== ======
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 June 30 was $3.1 million and $3.6 million for 2004 and 2003, respectively. Amortization expense for year to date ended June 30 was $6.2 million and $6.1 million for 2004 and 2003, respectively. Page 8 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 6. Pension and Other Postretirement Benefit Plans Components of net periodic benefit (income) cost are as follows:
PENSION BENEFITS OTHER BENEFITS ------------------------ -------------------- THREE MONTHS ENDED THREE MONTHS ENDED JUNE 30, JUNE 30, ------------------------ -------------------- 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 (1.1) (1.4) (1.0) (1.1) ------- ------ ------ ------ Net periodic benefit (income) cost ($ 3.7) ($ 3.2) $ 2.6 $ 2.9 ======= ====== ====== ======
SIX MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, ------------------------ -------------------- 2004 2003 2004 2003 ------- ------ ------ ------ Service Cost $ 4.4 $ 4.0 $ 2.2 $ 2.4 Interest Cost 10.8 11.2 5.6 6.2 Expected return on plan assets (21.0) (19.6) -- -- Amortization of prior service costs 0.6 0.8 (0.6) (0.6) Amortization of net gain (2.2) (2.8) (2.0) (2.2) ------- ------ ------ ------ Net periodic benefit (income) cost ($ 7.4) ($ 6.4) $ 5.2 $ 5.8 ======= ====== ====== ======
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. In accordance with the transition provisions under FASB Staff Position (FSP) 106-2, Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003 ("the Act"), the Company will reflect the effects of the Act in its measurement of the postretirement benefit obligation and net periodic postretirement benefit cost in the quarter ending September 30, 2004. The effects of the Act are not reflected in the consolidated financial statements included in this Report or in the Notes thereto. 7. Restructuring Charges, Impairments and Other Items Second quarter 2004 results include restructuring and impairment charges totaling $3.6 million ($2.3 million net of tax or $0.13 per share) related to previously announced facility consolidation actions affecting several of the Company's facilities in its North American Compressor and Electrical Components businesses. The consolidation actions within the Compressor business include a move of compressor machining and assembly operations from its Tecumseh, Michigan facility to its existing compressor facility located in Tupelo, Mississippi. In conjunction, aftermarket distribution Page 9 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS operations located in Clinton, Michigan will be relocated to the Tecumseh facility affecting 340 employees. Charges related to the Compressor business action recognized during the second quarter include asset impairment charges of $1.6 million. Additional severance and asset relocation costs, estimated to be approximately $1.5 million to $2.2 million, will be recognized during the third and fourth quarters of 2004 as the consolidation action is completed. Actions in the Electrical Components business include the closure of the Company's manufacturing facility in St. Clair, Missouri. Gear machining operations will be consolidated into the Company's Salem, Indiana facility and motor assembly operations will be consolidated into the Company's Piedras Negras and Juarez, Mexico facilities. This action will affect 250 current employees. Charges related to the Electrical Components business action recognized during the second quarter included asset impairment charges of $1.7 million and employment-related charges of $0.3. Additional restructuring and impairment charges, estimated to be approximately $2.6 million to $3.7 million, will be recognized during the third and fourth quarters of 2004 as the plant closure and consolidation action is completed. Second quarter 2003 results were adversely affected by a restructuring charge of $28.5 million ($18.2 million net of tax or $0.99 per share) related to the consolidation of operations in the Engine & Power Train business. The restructuring included the closure of the Company's Douglas, Georgia and Sheboygan Falls, Wisconsin production facilities and the relocation of certain production capacities to the new Curitiba, Brazil facility and other existing U.S. locations. The restructuring charge included approximately $6.8 million in earned severance pay and future benefit costs relating to manpower reductions, $2.0 million in plant closing and exit costs incurred through June 30, 2003, and $19.7 million in asset impairment charges for idled equipment and facilities. First half 2003 results were adversely affected by a $13.6 million ($8.7 million net of tax or $0.47 per share) charge, recognized in the first quarter, related to environmental costs at the Company's Sheboygan Falls, Wisconsin facility. On March 25, 2003, with the cooperation of the Environmental Protection Agency, the Company entered into a liability transfer 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 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 cost of the liability transfer arrangement was $39.2 million. The charge consists of the difference between the cost of the arrangement and amounts previously accrued for the cleanup. The Company also maintains a reserve of $0.5 million to reflect its potential environmental liability arising from operations at the Site, including potential liabilities not assumed by PRS pursuant to the arrangement. Additional information is available in the Company's Form 8-K filed on April 9, 2003. Also, pursuant to the overall arrangement, the Company transferred the title to the property to PRS in October, 2003. Page 10 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 8. Guarantees and Warranties A portion of accounts receivable at the Company's Brazilian subsidiary are sold with recourse. Brazilian receivables sold at June 30, 2004 and December 31, 2003 were $67.2 million and $64.5 million, respectively. The Company estimates the fair value of the contingent liability related to these receivables to be $0.8 million, which is included in operating income and the allowance for doubtful accounts. A provision for estimated future warranty costs and estimated returns for credit relating to warranty are recorded when products are sold and revenue recognized. A reconciliation of the changes in the Company's product warranty liability follows:
Six Months Ended (Dollars in millions) June 30, 2004 ----------------- Balance at January 1, 2004 $ 34.0 Accruals for warranties 13.2 Settlements made (in cash or in kind) (9.0) Effect of foreign currency translation (0.2) ------- Balance at June 30, 2004 $ 38.0 =======
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, and became a final judgment during the second quarter 2004. 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 Page 11 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 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 $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 June 30, 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 Page 12 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 1 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS source area near its facility. The next phase of the cooperative effort is scheduled to occur during 2004 involving a segment downstream of the source area. The Company has provided approximately $2.3 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 June 30, 2004 and December 31, 2003, the Company had accrued $46.1 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, including class actions, 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 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 RESULTS OF OPERATIONS Consolidated results for the second quarter of 2004 amounted to net income of $4.0 million or $0.22 per share compared to a net loss of $6.5 million or $0.35 per share in the second quarter of 2003. Reported results for the second quarter 2004 included restructuring and asset impairment charges of $3.6 million ($2.3 million net of tax or $0.13 per share) from previously announced actions involving the Compressor and Electrical Components businesses. Second quarter 2003 results included a charge of $28.5 million ($18.2 million net of tax or $0.99 per share) related to the consolidation of operations in the Engine & Power Train business and related plant closings. Consolidated net income for the six months ended June 30, 2004 amounted to $10.4 million or $0.56 per share compared to a net loss of $4.1 million or $0.22 per share for the same period in 2003. In addition to the 2003 second quarter restructuring charge noted above, the 2003 first half results also included a charge of $13.6 million ($8.7 million net of tax or $0.47 per share) recorded in the first quarter, related to environmental costs at the Company's Sheboygan Falls, Wisconsin facility. Exclusive of these respective restructuring charges, impairments and other items, second quarter and first half 2004 operating results declined from the respective 2003 periods, primarily due to lower results from the Engine & Power Train, Compressor and Electrical Components businesses. In addition, second quarter and first half 2004 corporate expenses exceeded the comparable 2003 periods, reflecting the costs associated with due diligence of a potential acquisition target since abandoned and costs of complying with the Sarbanes-Oxley Act of 2002. Consolidated net sales in the second quarter of 2004 increased to $484.2 million from $482.3 million in 2003. Consolidated net sales for the first half of 2004 amounted to $961.2 million compared to $956.2 million in the first half of 2003. The effects of foreign currency translation increased sales by $8.6 million in comparison to the second quarter 2003 and $26.6 million in comparison to the first six months of 2003. Excluding the effects of currency translation, sales in the second quarter and first half 2004 declined primarily due to the Engine & Power Train business, where sales volumes were lower in both North America and Europe, and to a lesser extent, the North American-based Compressor operations and the Electrical Components businesses. Compressor Business Second quarter 2004 sales in the Company's compressor business increased to $234.1 million from $223.1 million in the second quarter of 2003. The increase over the comparable quarter from the prior year was due to the effects of foreign currency translation, which increased sales by $6.4 million, and increases in sales of European-built compressors used in commercial applications and Indian-built compressors used in room air conditioning. Sales of Indian-built compressors for room air conditioning more than doubled over the prior year period due to growth in the Indian domestic market and greater export sales. Compressor business sales in the first six months of 2004 increased by $19.2 million, or approximately 4.5%, from the first six months of 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 2003. The effects of foreign currency translation of $20.3 million accounted for the increase. In addition, declines in sales of compressors used in unitary air conditioning applications and aftermarket distribution in the U.S. were offset by higher levels of sales of compressors used in commercial applications and room air conditioning due to an improving global economic climate. Compressor business operating income for the second quarter of 2004 amounted to $18.8 million compared to $19.5 million in the second quarter of 2003. Operating income for the six months ended June 30, 2004 amounted to $30.7 million compared to $40.4 million for the first six months of 2003. The decrease in operating income for the second quarter of 2004 versus the comparable 2003 quarter reflected specific factors that affected operating results in Brazil and India. Operating income attributable to the Brazilian operations was lower by $0.9 million for the second quarter. While average exchange rates for the quarter were comparable year over year, significant commodity cost increases negatively affected results. With respect to the first six months, Brazilian operating results declined by $7.0 million due to weakness in the U.S. Dollar during the first quarter that narrowed margins on U.S. Dollar-denominated sales, an unfavorable shift in product sales mix, and higher commodity prices. Operating income attributable to the Indian operations declined for the second quarter and first half 2004 by $2.3 million and $3.9 million, respectively, 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 which offset the positive effects of a 21% increase in sales. Results in North America improved by $2.0 million in the second quarter despite lower sales, as a result of continued cost reduction efforts. Electrical Components Business Electrical Components business sales were $105.2 million in the second quarter of 2004 compared to $106.5 million in the second quarter of 2003. First half 2004 sales amounted to $212.2 compared to $214.3 million in the first half of 2003. Second quarter and first half volume declines in gear motor and actuator sales were partially offset by higher sales to the automotive market and foreign currency-related increases in the Asian region. Electrical Components operating income for the second quarter of 2004 amounted to $4.0 million compared to $5.7 million in the second quarter of 2003. Segment operating profit for the first half of the year was $7.4 million compared to $7.6 million for the same period in 2003. The decline in second quarter operating income largely resulted from commodity cost increases. First half results were also impacted by 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. These costs were partially offset by 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. 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 Engine & Power Train Business Engine & Power Train business sales amounted to $104.0 million in the second quarter of 2004 compared to $113.6 million in the second quarter of 2003. Sales in the first half of 2004 were $228.3 million compared to $243.9 million in the first half of 2003. The decline in sales for the second quarter and first half reflected an approximate 41% 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. The second quarter and year-to-date decline in Europe, excluding the effects of currency translation, equated to $7.1 million and $18.3 million, respectively. In addition, first half 2004 sales volumes declined by 2.7% in North America mostly due to shortfalls in engine shipments that occurred in the first quarter. 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 second quarter of 2004 amounted to $10.7 million compared to a loss of $6.7 million in the second quarter of 2003. For the first half of 2004, the business incurred an operating loss of $13.6 million compared to an operating loss of $10.4 million in 2003. The decline in second quarter and first half results reflected many factors including currency losses of $1.6 million on dollar-dominated borrowings in Brazil, start up costs and ramp up inefficiencies at the Curitiba, Brazil facility, the impact of increased commodity costs, 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. The declines were partially offset by the 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. Pump Business Pump business sales in the second quarter of 2004 amounted to $40.6 million compared to $39.0 million in same period in 2003. First half sales amounted to $74.0 million in 2004 compared to $70.9 million the previous year. The 4.1% increase in second quarter sales was primarily attributed to robust sales in the plumbing markets due to wet weather and the HVAC market due to strong OEM demand. With respect to the 4.4% increase in the first half of the year, in addition to the second quarter factors, sales of water gardening products were up 19% during the first quarter. Operating income amounted to $4.8 million in the second quarter of 2004 compared to $4.9 million in the same period in 2003. Operating income in the first half of 2004 was $8.1 million compared to $8.4 million in 2003. The slight decrease in operating income was primarily attributable to higher engineering, administrative and promotional costs. 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 Restructuring Charges, Impairments and Other Items Second quarter 2004 results include restructuring and impairment charges totaling $3.6 ($2.3 million net of tax or $0.13 per share) million related to previously announced facility consolidation actions affecting several of the Company's facilities in its North American Compressor and Electrical Components businesses. The consolidation actions within the Compressor business include a move of compressor machining and assembly operations from its Tecumseh, Michigan facility to its existing compressor facility located in Tupelo, Mississippi. In conjunction, aftermarket distribution operations located in Clinton, Michigan will be relocated to the Tecumseh facility. Charges related to the Compressor business action recognized during the second quarter include asset impairment charges of $1.6 million. Additional severance and asset relocation costs, estimated to be approximately $1.5 million to $2.2 million, will be recognized during the third and fourth quarters of 2004 as the consolidation action is completed. Actions in the Electrical Components business include the closure of the Company's manufacturing facility in St. Clair, Missouri. Gear machining operations will be consolidated into the Company's Salem, Indiana facility and motor assembly operations will be consolidated into the Company's Piedras Negras and Juarez, Mexico facilities. Charges related to the Electrical Components business action recognized during the second quarter included asset impairment charges of $1.7 million and employment-related charges of $0.3. Additional restructuring and impairment charges, estimated to be approximately $2.6 million to $3.7 million, will be recognized during the third and fourth quarters of 2004 as the plant closure and consolidation action is completed. Second quarter 2003 results were adversely affected by a restructuring charge of $28.5 million ($18.2 million net of tax or $0.99 per share) related to the consolidation of operations in the Engine & Power Train business. The restructuring included the closure of the Company's Douglas, Georgia and Sheboygan Falls, Wisconsin production facilities and the relocation of certain production capacities to the new Curitiba, Brazil facility and other existing U.S. locations. The restructuring charge included approximately $6.8 million in earned severance pay and future benefit costs relating to manpower reductions, $2.0 million in plant closing and exit costs incurred through June 30, 2003, and $19.7 million in asset impairment charges for idled equipment and facilities. First half 2003 results were adversely affected by a $13.6 million ($8.7 million net of tax or $0.47 per share) charge, recognized in the first quarter, related to environmental costs at the Company's Sheboygan Falls, Wisconsin facility. On March 25, 2003, with the cooperation of the Environmental Protection Agency, the Company entered into a liability transfer 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 arrangements with PRS are sufficient to satisfy substantially all of the Company's environmental responsibilities with respect to Page 17 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 Site, these arrangements do not constitute a legal discharge or release of the Company's liabilities with respect to the Site. The cost of the liability transfer arrangement was $39.2 million. The charge consists of the difference between the cost of the arrangement and amounts previously accrued for the cleanup. The Company also maintains a reserve of $0.5 million to reflect its potential environmental liability arising from operations at the Site, including potential liabilities not assumed by PRS pursuant to the arrangement. Additional information is available in the Company's Form 8-K filed on April 9, 2003. Also, pursuant to the overall arrangement, the Company transferred the title to the property to PRS in October, 2003. Interest Expense Interest expense amounted to $5.6 million in the second quarter of 2004 compared to $6.2 million in the second quarter of 2003. Interest expense amounted to $11.2 million in the first half of 2004 compared to $11.5 million in the same period of 2003. The decrease in second quarter interest expense is the result of debt repayments over the first half of 2004. This is somewhat offset by 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 for the year-to-date comparison. Interest Income and Other, Net Interest income and other, net amounted to $3.8 million in the second quarter of 2004 compared to $5.2 million in the second quarter of 2003. Interest income and other, net amounted to $8.4 million in the first half of 2004 compared to $10.1 million in the same period of 2003. This decrease resulted primarily from lower average interest rates applicable to deposits in Brazil. Taxes on Income The effective income tax rate was 35.0% for the second quarter and year-to-date 2004 compared to 35.0% in the comparable periods in 2003. The consistency in the effective rate in 2004 is reflective of the consistency in the nature of the Company's operations. Outlook The outlook for the balance of the year is subject to many variables which could significantly impact the Company's results. While the general economic climate is improving and past restructuring actions are providing positive contributions, the continued escalation of commodity costs, weakness in the U.S. Dollar, and pricing pressures from Asian-based competition will challenge each of the Company's businesses in various ways making any predictions difficult. The Company mitigates only a portion of its exposure to future material price increases through forward contracts. Given the competitive nature of the industries in which the Company competes, the Company most likely will not be able to fully recover such cost increases through product pricing actions. Accordingly, additional commodity cost increases, in the absence of other manufacturing cost reductions, could be expected to negatively impact future gains. Subject to Page 18 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 preceding caveat, the Company expects second half 2004 operating results to be better than the first half of 2004, consistent with the overall seasonality of our businesses, but to fall short of the comparable 2003 period, excluding restructuring charges. The Company has taken significant actions over the last several years to improve its cost position, product competitiveness, and value proposition to its customers. 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 possible that additional restructuring charges will be incurred, particularly outside North America. 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 half of 2004 provided cash of $27.9 million compared to $13.8 million in cash used during the same period of 2003. The improvement in 2004 resulted primarily from the absence of the $39.2 cash payment for the Liability Transfer and Assumption Agreement. Working capital of $557.6 million at June 30, 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 or federal investment incentive programs. The Company will continue to focus its efforts on improving the profitability and competitiveness of its worldwide operations. As indicated under the caption "Restructuring Charges, Impairments and Other Items," the Company will be completing previously announced actions over the remainder of the year that will result in the recognition of charges throughout the balance of 2004. It is also possible that additional restructuring initiatives could be announced, particularly outside North America, during 2004 that could have a material effect on the consolidated financial position and future results of operations of the Company. Other potential 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 19 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 June 30, 2004 and December 31, 2003, the Company had accrued $46.1 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. Internal Controls Among the provisions of the Sarbanes-Oxley Act of 2002 (the "Act") is the requirement under Section 404 for management to assess the effectiveness of the Company's internal control structure and procedures for financial reporting as of the end of the fiscal year. In addition, the Section requires the Company's auditors to attest to and report on the assessment made by management. During the second quarter, the Securities and Exchange Commission approved Auditing Standard No. 2 issued by the Public Company Accounting Oversight Board ("PCAOB") establishing rules regarding both management's responsibilities and procedures to be completed by the auditors. The specified rules are comprehensive and require an unprecedented level of documentation and evaluation that goes beyond the procedures historically utilized by management to assess its internal controls. The Company has a program in place designed to comply with these requirements. Given the breadth and depth of the documentation and testing requirements promulgated under the PCAOB rules and the Act, the lack of experience with this approach, and the early stages of management's testing, the outcome of management's testing and the attestation of the Company's auditors is uncertain at this time. 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." Page 20 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART 1. FINANCIAL INFORMATION - ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 and legal 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 21 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 second 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 June 30, 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 $14.6 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 June 30, 2004 and December 31, 2003 were $18.1 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, 46% 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 $2.0 million. Page 22 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 23 TECUMSEH PRODUCTS COMPANY AND SUBSIDIARIES PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit Number Description 3 The Company's Amended and Restated Bylaws as amended through June 30, 2004. 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 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. On April 29, 2004, the Company filed a report on Form 8-K reporting its first quarter 2004 financial data and investor presentation. On May 21, 2004, the Company filed a report on Form 8-K announcing facility consolidation. On June 15, 2004, the Company filed a report on Form 8-K regarding global implementation of ORACLE(R) E-Business Suite. On July 29, 2004, the Company filed a report on Form 8-K reporting its second quarter 2004 financial data and investor presentation. Page 24 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: August 6, 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 25 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ----------- ----------- 3 The Company's Amended and Restated Bylaws as amended through June 30, 2004. 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-3 2 k86670exv3.txt AMENDED AND RESTATED BYLAWS EXHIBIT 3 AMENDED AND RESTATED BYLAWS OF TECUMSEH PRODUCTS COMPANY ARTICLE I MEETINGS SECTION 1. PLACE OF MEETING. Any or all meetings of the shareholders, and of the Board of Directors, of this Corporation may be held within or without the State of Michigan provided that no meeting shall be held at a place other than the registered office in Michigan, except pursuant to Bylaw or resolution adopted by the Board of Directors. SECTION 2. ANNUAL MEETING OF SHAREHOLDERS. An annual meeting of the shareholders shall be held in each calendar year on the last Wednesday of April of such calendar year at 10:30 a.m., local time, or at such other date and time as shall be determined from time to time by the Board of Directors, for the election of directors and for the transaction of such other business as may come before such annual meeting. SECTION 3. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS. Except as otherwise provided in the Michigan Business Corporation Act, as amended from time to time (the "Act"), at least ten (10) but not more than sixty (60) days prior to the date fixed by Section 2 of this Article for the holding of the annual meeting of shareholders, written notice of the time, place, and purposes of such meeting shall be given either personally, by mail, or by electronic transmission as hereinafter provided, to each shareholder entitled to vote at such meeting. SECTION 4. BUSINESS AT ANNUAL MEETINGS. At an annual meeting of the shareholders of the Corporation, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a shareholder. For business to be properly brought before an annual meeting by a shareholder, if such business relates to the election of directors of the Corporation, the procedures in Article IV, Section 2, of these Bylaws must be complied with. If such business relates to any other matter, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice must be delivered by mail or electronic transmission to the Secretary and received at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of shareholders; provided however that in the event that the annual meeting is called for a date that is not within 20 days before or after such anniversary date, such notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting is mailed, transmitted electronically, or public disclosure of the date of the annual meeting is made, whichever first occurs. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting containing all material information relating thereto and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's books, of the shareholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the shareholder, and (d) any material interest of the shareholder in such business. Notwithstanding anything in the Bylaws to the contrary, no business shall be conducted at any annual meeting except in accordance with the procedures set forth in this Section 4. The officer presiding over the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 4, and if he or she should so determine, the presiding officer shall so declare to the meeting that any such business not properly brought before the meeting shall not be transacted. SECTION 5. SPECIAL MEETINGS OF SHAREHOLDERS. A special meeting of the shareholders, for any purpose or purposes proper for shareholder action and specified in the notice of such meeting, may be called at any time by the Chairman of the Board of Directors or President, (or, during the absence or disability of both the Chairman of the Board of Directors and the President or while both such offices are vacant, by the Vice-Chairman of the Board of Directors) and shall be so called at the request in writing of a majority of the Board of Directors or of shareholders entitled to vote not less than an aggregate of fifty percent (50%) of the outstanding shares of the Corporation having the right to vote at such special meeting. Any such request shall state the purpose or purposes of the proposed meeting. The method by which such meeting may be called is as follows: upon receipt of a specification, in writing, setting forth the date and objects of such proposed special meeting, signed by the Chairman of the Board of Directors or the President (or, during the absence or disability of both the Chairman of the Board of Directors and the President or while both such offices are vacant, by the Vice-Chairman of the Board of Directors) or of a request by a majority of the Board of Directors, or by shareholders as above provided, the Secretary of this Corporation shall prepare, sign, and mail or transmit electronically, the notices requisite to such meeting. SECTION 6. NOTICE AND BUSINESS AT SPECIAL MEETINGS OF SHAREHOLDERS. At least ten (10) but not more than sixty (60) days prior to the date fixed for the holding of any special meeting of shareholders, written notice of the time, place, and purposes of such meeting shall be given either personally, by mail, or by electronic transmission to each shareholder entitled to vote at such meeting. The business transacted at any such special meeting, other than procedural matters and matters relating to the conduct of the meeting, shall be limited to the purpose or purposes set forth in the notice. The officer presiding at the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section 6, and if he or she should so determine, such presiding officer shall so declare to the meeting that any business not properly brought before the meeting shall not be transacted. SECTION 7. ORGANIZATION MEETING OF BOARD. At the place of holding the annual meeting of shareholders, and immediately following the annual meeting of shareholders, the Board of Directors, as constituted upon final adjournment of such annual meeting, shall convene for the purpose of election of officers and transacting any other business properly brought before it, provided, that the organization meeting in any year may be held at a different time and place than that herein provided by consent of a majority of the directors of such new board. No notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present, unless the meeting is not held at the place of holding and immediately following the annual meeting of shareholders. -2- SECTION 8. REGULAR MEETINGS OF BOARD. Regular meetings of the Board of Directors shall be held not less frequently than once in each month other than July and December, and at such time and place as the Board of Directors shall from time to time determine. No notice of regular meetings of the Board of Directors shall be required. SECTION 9. SPECIAL MEETING OF BOARD. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors or the President (or, during the absence or disability of both the Chairman of the Board of Directors and the President or while both such offices are vacant, by the Vice-Chairman of the Board of Directors) at any time by means of notice of the time and place thereof to each Director given not less than twenty-four (24) hours before the time such special meeting is to be held, but action taken at any such meeting shall not be invalidated for want of notice if such notice shall be waived as hereinafter provided. SECTION 10. NOTICES AND MAILING. All notices required to be given by any provision of these Bylaws shall state the authority pursuant to which they are issued (as, "by order of the Chairman of the Board of Directors" or "by order of the President" or "by order of the Vice-Chairman of the Board of Directors" or "by request of the Board of Directors" or "by request of shareholders," as the case may be) and shall bear the written or printed signature of the Secretary. Every notice to a shareholder shall be plainly addressed to the sendee at such shareholder's last address appearing upon the original or duplicate stock ledger of this Corporation. Every notice to a director shall be plainly addressed to the sendee at his last address appearing on the records of this Corporation. Every notice by mail shall be deemed duly served when the same has been deposited in the United States mail with postage fully prepaid so addressed to the sendee. Written notice may also be given in person or by telegram, telecopy, telex, radiogram, cablegram, electronic transmission, or mailgram, and such notice shall be deemed duly given when the recipient receives the notice personally or when notice, so addressed to the sendee, has been delivered to the company, or to the equipment transmitting such notice. SECTION 11. WAIVER OF NOTICE. Notice of the time, place, and purpose of any meeting of the shareholders or of the Board of Directors may be waived in writing, either before or after such meeting has been held. Any and all requirements of the laws of the State of Michigan, and of the Articles of Incorporation, and of the Bylaws with respect to the calling of any meeting of the shareholders or of the Board of Directors may be waived in writing, either before or after such meeting has been held. Neither the business to be transacted at, nor the purpose of, a regular or special meeting of the Board of Directors need be specified in the waiver of notice of the meeting. Written waiver of notice may be given in person or by telegram, telecopy, telex, radiogram, cablegram, electronic transmission, or mailgram, and such waiver of notice shall be deemed duly given when the Corporation receives the notice personally or when notice, so addressed to the Corporation, has been delivered to the Secretary of the Corporation, or to the equipment transmitting such waiver of notice. SECTION 12. PROCEDURAL MATTERS. At each meeting of the shareholders, the officer presiding over the meeting shall fix and announce the date and time of the opening and the closing of the polls for each matter upon which the shareholders will vote at the meeting and shall determine the order of business and all other matters of procedure. Except to the extent inconsistent with any such rules and regulations as adopted by the Board of Directors, such presiding officer may establish rules, which need not be in writing, to maintain order for the conduct of the meeting, including, -3- without limitation, restricting attendance to bona fide shareholders of record and their proxies and other persons in attendance at the invitation of the Board or such presiding officer and making rules governing speeches and debates. The presiding officer acts in his or her absolute discretion and his or her rulings are not subject to appeal. SECTION 13. PARTICIPATION IN MEETING BY TELEPHONE OR REMOTE COMMUNICATION. By resolution of the Board of Directors, shareholders may participate in the annual or a special meeting of shareholders by means of conference telephone or other remote communications equipment through which all persons participating in the meeting can communicate with the other participants. Participation in a meeting pursuant to this Section constitutes presence in person at the meeting. ARTICLE II QUORUM SECTION 1. QUORUM OF SHAREHOLDERS. A majority of the outstanding shares of this Corporation entitled to vote, present by the record holders thereof in person or by proxy, shall constitute a quorum at any meeting of the shareholders. SECTION 2. QUORUM OF DIRECTORS. A majority of the members of the Board of Directors then in office shall constitute a quorum for transaction of business. ARTICLE III VOTING, ELECTIONS AND PROXIES SECTION 1. WHO IS ENTITLED TO VOTE. Except as the Articles of Incorporation of this Corporation otherwise provide, each shareholder of this Corporation shall, at every meeting of the shareholders, be entitled to one vote in person or by proxy for each share of capital stock of this Corporation held by such shareholder, subject, however, to the full effect of the limitations imposed by the fixed record date for determination of shareholders set forth in Section 2 of this Article. SECTION 2. RECORD DATE FOR DETERMINATION OF SHAREHOLDERS. For the purpose of determining shareholders entitled to notice of and to vote at a meeting of shareholders or an adjournment of a meeting, the Board of Directors may fix a record date, which shall not precede the date on which the resolution fixing the record date is adopted by the Board. The date shall not be more than sixty (60) nor less than ten (10) days before the date of the meeting. If a record date is not fixed, the record date for determination of shareholders entitled to notice of or to vote at a meeting of shareholders shall be the close of business on the day next preceding the day on which notice is given, or if no notice is given, the day next preceding the day on which the meeting is held. When a determination of shareholders of record entitled to notice of or to vote at a meeting of shareholders has been made as provided in this Section, the determination applies to any adjournment of the meeting, unless the Board of Directors fixes a new record date under this Section for the adjourned meeting. For the purpose of determining shareholders entitled to receive payment of a share dividend or distribution, or allotment of a right, or for the purpose of any other action, the Board of Directors may fix a record date, which shall not precede the date on which the resolution fixing the record date is adopted by the Board. The date shall not be more than sixty (60) days before the payment of the -4- share dividend or distribution or allotment of a right or other action. If a record date is not fixed, the record date shall be the close of business on the day on which the resolution of the Board of Directors relating to the corporate action is adopted. SECTION 3. PROXIES. No proxy shall be deemed operative unless and until signed by the shareholder or his or her authorized agent or representative and filed with the Corporation. In the absence of limitation to the contrary contained in the proxy, the same shall extend to all meetings of the shareholders and shall remain in force three years from its date and no longer. SECTION 4. VOTE BY SHAREHOLDER CORPORATION. Any other corporation owning voting shares in this Corporation may vote upon the same by the President of such shareholder corporation, or by proxy appointed by him or, in absence of the President and his proxy, by its Treasurer or, in their absence, by its Secretary. The Board of Directors of such shareholder corporation may appoint some other person to vote such shares. SECTION 5. INSPECTORS OF ELECTION. The Board of Directors, in advance of a shareholders' meeting, may appoint one (1) or more inspectors of election to act at the meeting or any adjournment thereof. If inspectors are not so appointed, the person presiding at a shareholders' meeting may, and on request of a shareholder entitled to vote thereat shall, appoint one (1) or more inspectors. In case a person appointed fails to appear or act, the vacancy may be filled by appointment made by the Board of Directors in advance of the meeting or at the meeting by the person presiding thereat. The inspectors shall determine the number of shares outstanding and the voting power of each, the shares represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes or ballots, hear and determine challenges and questions arising in connection with the right to vote, count and tabulate votes or ballots, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting or a shareholder entitled to vote thereat, the inspectors shall make and execute a written report to the person presiding at the meeting of any of the facts found by them and matters determined by them. The report shall be prima facie evidence of the facts stated and of the vote as certified by the inspectors. ARTICLE IV BOARD OF DIRECTORS SECTION 1. NUMBER AND TERM OF DIRECTORS. The business and affairs of the Corporation shall be managed by a Board of Directors composed of not less than five (5) nor more than ten (10) members. The number of directors which shall constitute the Board of Directors at any given time shall be determined by resolution of the Board of Directors; provided, however, that in the absence of an express determination by the Board of Directors, the number of directors, until changed by the Board, shall be that number of directors elected at the most recently held annual meeting of shareholders and, provided further, that no decrease in the number of directors constituting the whole Board of Directors shall shorten the term of any then incumbent director. At each annual meeting of shareholders, the shareholders shall elect directors to hold office until the succeeding annual meeting. The Board of Directors may thereafter increase the number of directors from time to time up to a maximum of ten (10) and may then fill the vacancies resulting from such increase as provided by Section 3 of this Article IV. A director shall hold office for the term for -5- which he or she is elected and until his or her successor is elected and qualified, or until his or her resignation or removal. Directors need not be shareholders. SECTION 2. NOMINATIONS. Nominations for election to the Board of Directors at a meeting of shareholders may be made by the Board of Directors or by a committee thereof, or by any shareholder of the Corporation entitled to vote for the election of directors at such meeting. Such nominations, other than those made by or on behalf of the Board of Directors, shall be made by notice in writing delivered, transmitted electronically, or mailed by first class United States mail, postage prepaid, to the Secretary of the Corporation, and received (1) in the case of an annual meeting, not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of the shareholders; provided, however, that in the event that the annual meeting is called for a date that is not within 20 days before or after such anniversary date, such notice by the shareholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting is mailed, transmitted electronically, or public disclosure of the date of the annual meeting is made, whichever first occurs, or (2) in the case of a special meeting of shareholders called for the purpose of electing directors, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting is mailed, transmitted electronically, or public disclosure of the date of the special meeting is made, whichever first occurs. Such notice shall set forth (a) as to each proposed nominee (i) the name, date of birth, business address, and residence address of such nominee, (ii) the principal occupation or employment of such nominee during the past five years, (iii) the number of shares of stock of the Corporation which are beneficially owned by such nominee, and (iv) any other information concerning such nominee that must be disclosed as to nominees in proxy solicitations pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act") (including such person's written consent to be named as a nominee and to serve as a director if elected), and (b) as to the shareholder giving the notice (i) the name and address of such shareholder, as they appear on the Corporation's books, (ii) the class or classes and number(s) of shares of the Corporation which are beneficially owned by such shareholder, (iii) a description of all arrangement or understandings between such shareholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder, and (iv) any other information relating to such shareholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. At the request of the Board of Directors, any person nominated by the Board of Directors for election as a director shall furnish to the Secretary of the Corporation that information required to be set forth in a shareholder's notice of nomination which pertains to the nominee. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 2 of the Bylaws. The officer presiding over a meeting of shareholders may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he or she should so determine, the presiding officer shall so declare to the meeting and the defective nomination shall be disregarded. -6- SECTION 3. VACANCIES. Unless otherwise limited by the articles of incorporation, if a vacancy, including a vacancy resulting from an increase in the number of directors, occurs in the Board of Directors, the vacancy may be filled as follows: (a) The shareholders may fill the vacancy at an annual meeting of shareholders or a special meeting called for such purpose. (b) The Board may fill the vacancy. (c) If the directors remaining in office constitute fewer than a quorum of the Board of Directors, they may fill the vacancy by the affirmative vote of a majority of all the directors remaining in office. SECTION 4. ACTION BY UNANIMOUS WRITTEN CONSENT. Action required or permitted to be taken under authorization voted at a meeting of the Board of Directors or a committee of the Board of Directors, may be taken without a meeting if, before or after the action, all members of the Board then in office or of the committee consent to the action in writing. The written consents shall be filed with the minutes of the proceedings of the Board of Directors or committee. The consent has the same effect as a vote of the Board of Directors or committee for all purposes. SECTION 5. POWER TO ELECT OFFICERS. The Board of Directors shall elect a Chairman of the Board of Directors, a President, a Secretary, and a Treasurer and may elect a Vice-Chairman of the Board of Directors, a Secretary of the Board of Directors, a Chairman of the Board of Directors Emeritus, and one or more Vice-Presidents, Assistant Secretaries, and Assistant Treasurers. None of said officers, except the Chairman of the Board of Directors, the President, and the Vice-Chairman of the Board of Directors, need be a member of the Board of Directors, but a Vice-President who is not a director shall not succeed to or fill the office of Chairman of the Board of Directors or President. Any two of the aforementioned offices, except those of Chairman of the Board of Directors and Vice-Chairman of the Board of Directors, or of President and Vice-President, may be held by the same person, but no officer shall execute, acknowledge, or verify any instrument or document in more than one capacity if the instrument or document is required by law or the Articles of Incorporation or by these Bylaws to be executed, acknowledged, or verified by two or more officers. SECTION 6. POWER TO APPOINT OTHER OFFICERS AND AGENTS. The Board of Directors shall have power to appoint such other officers and agents as the Board may deem necessary for transaction of the business of the Corporation. SECTION 7. REMOVAL OF OFFICERS AND AGENTS. Any officer or agent may be removed by the Board of Directors, with or without cause, whenever in the judgment of the Board the business interests of the Corporation will be served thereby. SECTION 8. POWER TO FILL VACANCIES. The Board shall have power to fill any vacancy in any office occurring from any reason whatsoever. SECTION 9. DELEGATION OF POWERS. For any reason deemed sufficient by the Board of Directors, whether occasioned by absence or otherwise, the Board may delegate all or any of the powers and duties of any officer to any other officer or director, but no officer or director shall execute, acknowledge, or verify any instrument or document in more than one capacity. -7- SECTION 10. POWER TO APPOINT EXECUTIVE AND OTHER COMMITTEES. The Board of Directors shall have power to appoint by resolution an Executive Committee composed of two or more directors who, to the extent provided in such resolution and except as otherwise provided in the Act, shall have and may exercise the authority of the Board of Directors in the management of the business of the Corporation between meetings of the Board. The Board of Directors may also designate one or more other committees, each such committee to consist of one or more of the directors of the Corporation. Any such other committee, to the extent provided in the resolution of the Board of Directors creating such committee and except as otherwise provided in the Act, may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. The Board may designate one or more directors as alternate members of any committee, who may replace an absent or disqualified member at a meeting of the committee. Any committee, and each member thereof, shall serve at the pleasure of the Board of Directors. SECTION 11. POWER TO REQUIRE BONDS. The Board of Directors may require any officer or agent to file with the Corporation a satisfactory bond conditioned for faithful performance of his duties. SECTION 12. COMPENSATION. The compensation of directors, officers, and agents may be fixed by the Board. SECTION 13. OATH OF DIRECTORS. Each person who shall be elected a director of this Corporation shall promptly, after being so elected, and before assuming his duties as such director for the term for which he has been so elected, have administered to him, and shall take, in such manner, and at such time and place as the Chairman of the Board of Directors or the President shall determine and decide, an oath substantially as follows: I, ___________________________________, being duly elected to the Board of Directors of Tecumseh Products Company, do hereby accept such office and solemnly swear or affirm that I, conscientiously, honestly, lawfully, and to the best of my ability, will perform the duties and discharge the responsibilities of a director of this Corporation. SECTION 14. HONORARY MEMBERS OF THE BOARD OF DIRECTORS. There shall be such number of Honorary Members of the Board of Directors as the Board of Directors shall from time to time determine and decide. The Board of Directors may appoint as an Honorary Member of the Board of Directors any person who at the time of his appointment as such is not, but who at any time prior to his appointment as such has been, a member of the Board of Directors, as a reward for and in recognition of distinguished service to the Corporation as a member of its Board of Directors. An Honorary Member of the Board of Directors shall have the right, but not the obligation, to attend meetings of the Board of Directors and shall receive for such attendance such fee or other compensation as the Board of Directors shall from time to time fix and determine. An Honorary Member of the Board of Directors shall have the right to participate in any discussions and deliberations at any meeting of the Board of Directors in the same manner and to the same extent as if he were a member of the Board of Directors but shall have no right to vote on or with respect to any resolution adopted or to be adopted, any business transacted or to be transacted, or any action taken or to be taken by the Board of Directors at any such meeting. Except as expressly provided -8- herein, an Honorary Member of the Board of Directors shall have only such authority, and shall perform only such duties, in, or in connection with, the management of the property and affairs of the Corporation and the transaction of its business as the Board of Directors shall from time to time delegate to him with his consent. SECTION 15. MANDATORY RETIREMENT AGE FOR DIRECTORS. Except as hereinafter provided, no person shall be eligible for election or re-election as a member, other than as an Honorary Member, of the Board of Directors of the Corporation after he shall have attained the age of 70 years. Each person who attains the age of 70 years during his term as a member, other than an Honorary Member, of the Board of Directors shall retire as a member of the Board of Directors of the Corporation not later than at the expiration of any term of office for which he shall have been elected and which began before, and ended after, such person shall have attained the age of 70 years. Notwithstanding the foregoing, any member of the Board of Directors who has attained the age of 71 years prior to February 24, 1993 shall be eligible for re-election as a member of the Board of Directors. SECTION 16. MANDATORY RESIGNATION UPON CHANGE IN DIRECTOR'S EMPLOYMENT. If any member of the Board of Directors of the Corporation ceases for any reason (including retirement, resignation, discharge, or any other reason) to be actively employed by the same employer, if any, by which such member was employed at the time of his or her most recent election to the Board of Directors, then such person shall tender his or her resignation from the Board of Directors to the Nominating Committee of the Board of Directors (or, if there is no such committee, to the full Board of Directors) no later than 60 days after the date of such change in employment, and the Nominating Committee, with the director in question taking no part in such action if he or she is a member of the Nominating Committee (or, if there is no such committee, the Board of Directors, with the director in question taking no part in such action), shall determine whether or not such resignation shall be accepted, and if such resignation is so accepted, it shall be effective as of the date of such acceptance. If the Nominating Committee (or, if there is no such committee, the Board of Directors) refuses such resignation, or if it does not accept such resignation within 60 days after it is tendered, then such resignation shall be of no force or effect. Each person who accepts election to the Board of Directors after April 24, 2002 (the date of adoption of this Section 16) shall be deemed to have agreed to comply with the provisions of this Section 16. SECTION 17. PARTICIPATION IN MEETING BY TELEPHONE OR REMOTE COMMUNICATION. By oral or written permission of a majority of the Board of Directors, a member of the Board of Directors or of a committee designated by the Board may participate in a meeting by means of conference telephone or other remote communications equipment through which all persons participating in the meeting can communicate with the other participants. Participation in a meeting pursuant to this Section constitutes presence in person at the meeting. SECTION 18. LEAD DIRECTOR. The Board of Directors may from time to time designate one of the independent directors as "Lead Director." The Lead Director, if any, shall be responsible for calling, establishing an agenda for, and moderating executive sessions of independent directors. At any time and from time to time, the Board may withdraw such designation from the then incumbent Lead Director, and in such event, the Board may, but shall not be required to, designate a different independent director as Lead Director. As used in this section, the term "independent director" means a member of the Board of Directors who meets all applicable independence criteria -9- for eligibility to serve on the Corporation's audit committee, as such criteria are specified from time to time in applicable statutes, rules of the Securities and Exchange Commission, and rules and listing standards of any stock exchange or automated interdealer quotation system on which the Corporation's securities are listed or quoted. ARTICLE V OFFICERS SECTION 1. CHAIRMAN OF THE BOARD OF DIRECTORS. The Chairman of the Board of Directors shall be selected by, and from among the membership of, the Board of Directors. He shall preside at all meetings of the shareholders and of the Board of Directors and of any Executive Committee at which he is in attendance. He shall perform such other duties and functions as shall be assigned to him from time to time by the Board of Directors. Except where by law the signature of the President of this Corporation is required, the Chairman of the Board of Directors shall possess the same power and authority as the President to sign all certificates, contracts, instruments, papers, and documents of every conceivable kind and character whatsoever, in the name of and on behalf of this Corporation, which may be authorized by the Board of Directors. During the absence or disability of the President, the Chairman of the Board of Directors shall exercise all of the powers and discharge all of the duties of the President. SECTION 2. VICE-CHAIRMAN OF THE BOARD OF DIRECTORS. If the Board of Directors elects a Vice-Chairman of the Board of Directors, he shall be selected from the membership of the Board of Directors. During the absence or disability of both the Chairman of the Board of Directors and the President, or while both such offices are vacant, he shall preside at all meetings of the shareholders, of the Board of Directors, and of any Executive Committee. During the absence or disability of both the President and the Chairman of the Board of Directors, or while both such offices are vacant for any reason, the Vice-Chairman of the Board of Directors shall have and may exercise any and all of the powers and duties of the President and of the Chairman of the Board of Directors. At all other times the Vice-Chairman of the Board of Directors shall be responsible to the Chairman of the Board of Directors and through him (or during the absence or disability of the Chairman of the Board of Directors or while that office is vacant for any reason, directly) to the Board of Directors for the exercise, performance, and discharge of such powers, duties, and responsibilities as the Chairman of the Board of Directors or the Board of Directors shall see fit to vest in or delegate to him or which are vested in or imposed upon him by the Bylaws. SECTION 3. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President shall be selected by, and from among the membership of, the Board of Directors. He shall be (and may identify himself and execute instruments and other documents using the title of) the Chief Executive Officer of this Corporation and shall, in general, supervise and manage the business affairs of this Corporation, including, but not limited to, any and all duties normally and customarily incident to the office of the President and Chief Executive Officer of a corporation and such other duties and functions as shall be assigned to him from time to time by the Board of Directors. During the absence or disability of the Chairman of the Board of Directors, or while such office is vacant, the President shall perform all duties and functions, and while so acting shall have all of the powers and authority, of the Chairman of the Board of Directors. -10- SECTION 4. VICE-PRESIDENTS. The Board of Directors may designate one or more Vice-Presidents as Executive Vice-Presidents. Except as otherwise expressly provided in the Bylaws of this Corporation, or unless the Board of Directors shall otherwise provide by resolution duly adopted by it, such of the Vice-Presidents as shall have been designated Executive Vice-Presidents and are members of the Board of Directors in order of their seniority as members of the Board of Directors (or if no Vice-President who is a member of the Board of Directors shall have been designated an Executive Vice-President, then such Vice-Presidents as are members of the Board of Directors specified by the Board of Directors) shall perform the duties and exercise the power of the President, of the Chairman of the Board of Directors, and of the Vice-Chairman of the Board of Directors during the absence or disability of all of the persons occupying said offices. The Vice-Presidents shall perform such other duties as may be delegated to them by the Board of Directors, any Executive Committee, the Chairman of the Board of Directors, or the President. SECTION 5. SECRETARY. The Secretary shall attend all meetings of the shareholders and of any Executive Committee and, during the absence or disability of the Secretary of the Board of Directors or while such office is vacant, all meetings of the Board of Directors, and the Secretary shall preserve in the books of the Corporation true minutes of the proceedings of the shareholders and of any Executive Committee and, during the absence or disability of the Secretary of the Board of Directors or while such office vacant, the minutes of all meetings of the Board of Directors. He shall safely keep in his custody the seal of the Corporation and shall have authority to affix the same to all instruments where its use is required by statute, bylaw, or resolution. He shall perform such other duties as may be delegated to him by the Board of Directors, any Executive Committee, the Chairman of the Board of Directors, or the President. SECTION 6. TREASURER. The Treasurer shall have custody of all corporate funds and securities and shall keep in books belonging to the Corporation full and accurate accounts of all receipts and disbursements; he shall deposit all moneys, securities, and other valuable effects in the name of the Corporation in such depositories as may be designated for that purpose by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chairman of the Board of Directors, the President, and the Board of Directors whenever requested by them an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, he shall keep in force a bond, in form, amount, and with a surety or sureties satisfactory to the Board of Directors, conditioned for faithful performance of the duties of his office, and for restoration to the Corporation in case of his death, resignation, retirement, or removal from office, of all books, papers, vouchers, money, and property of whatever kind in his possession or under his control belonging to the Corporation. He shall perform such other duties as may be delegated to him by the Board of Directors, any Executive Committee, the Chairman of the Board of Directors, or the President. SECTION 7. ASSISTANT SECRETARY AND ASSISTANT TREASURER. The Assistant Secretary or Assistant Secretaries, in the absence or disability of the Secretary, shall perform the duties and exercise the powers of the Secretary. The Assistant Treasurer or Assistant Treasurers, in the absence or disability of the Treasurer, shall perform the duties and exercise the powers of the Treasurer. Any Assistant Treasurer, if required by the Board of Directors, shall keep in force a bond as provided in Section 6 of this Article V. -11- SECTION 8. SECRETARY OF THE BOARD OF DIRECTORS. The Secretary of the Board of Directors shall attend all meetings of the Board of Directors, and shall preserve in books of the Corporation true minutes of all such meetings. He shall have authority to affix the seal of the Corporation to all certificates or other instruments embodying or relating to any resolution adopted by, or proceedings taken at any meeting of, the Board of Directors of the Corporation. He shall perform such other duties as may be delegated to him by the Board of Directors. SECTION 9. CHAIRMAN OF THE BOARD OF DIRECTORS EMERITUS. The Board of Directors may designate as Chairman of the Board of Directors Emeritus any person who at any time prior to such designation has been Chairman of the Board of Directors, and who at the time of his designation as Chairman of the Board of Directors Emeritus is a member of the Board of Directors of the Corporation, as a reward for and in recognition of distinguished service to this Corporation as Chairman of the Board of Directors. He shall be considered an Honorary Director and shall perform such duties as may be delegated to him by the Board of Directors, any Executive Committee, or the Chairman of the Board or the President. SECTION 10. CHIEF FINANCIAL OFFICER. As and whenever it determines the same to be appropriate, the Board of Directors may designate the President, an Executive Vice-President, a Vice-President, or the Treasurer as the Chief Financial Officer of the Corporation, and any such officer so designated (while he continues to hold the office held at the time of such designation and until such designation is revoked or a different officer is so designated by the Board of Directors) may identify himself and execute instruments and other documents using the title of Chief Financial Officer. ARTICLE VI STOCK AND TRANSFERS SECTION 1. CERTIFICATES FOR SHARES. Every shareholder shall be entitled to a certificate evidencing the shares of the capital stock of the Corporation owned by him, signed by the President or a Vice-President, and by the Secretary, the Treasurer, an Assistant Secretary, or an Assistant Treasurer, under the seal of the Corporation, certifying the number and class of shares, evidenced by such certificate, which certificate may, but need not be, also signed by the Chairman of the Board of Directors, shall be in such manner and form as shall have been approved by the Board of Directors, and shall set forth such terms and provisions as shall from time to time be required by the laws of the State of Michigan to be set forth in such certificate; provided, that where any such certificate is signed: (i) by a transfer agent or an assistant transfer agent or (ii) by a transfer clerk acting on behalf of this Corporation, and by a registrar, the signature of any such President, Vice-President, Secretary, Assistant Secretary, Treasurer, or Assistant Treasurer, or of the Chairman of the Board of Directors, and the seal of the Corporation, may be a facsimile. SECTION 2. TRANSFERABLE ONLY ON BOOKS OF CORPORATION. Shares shall be transferable only on the books of the Corporation by the person named in the certificate, or by attorney lawfully constituted in writing, and upon surrender of the certificate therefor. A record shall be made of every such transfer and issue. Whenever any transfer is made for collateral security and not absolutely, the fact shall be so expressed in the entry of such transfer. -12- SECTION 3. REGISTERED STOCKHOLDERS. The Corporation shall have the right to treat the registered holder of any share as the absolute owner thereof and shall not be bound to recognize any equitable or other claim to, or interest in, such share on the part of any other person, whether or not the Corporation shall have express or other notice thereof, save as may be otherwise provided by the statutes of Michigan. SECTION 4. TRANSFER AGENT AND REGISTRAR. The Board of Directors may appoint a transfer agent and a registrar of transfers, and may require all certificates of shares to bear the signature of such transfer agent and of such registrar of transfers, or as the Board may otherwise direct. SECTION 5. REGULATIONS. The Board of Directors shall have power and authority to make all such rules and regulations as the Board shall deem expedient regulating the issue, transfer, and registration of certificates for shares in this Corporation. ARTICLE VII DIVIDENDS AND RESERVES SECTION 1. DIVIDENDS. The Board of Directors shall have the power and authority to declare dividends or other distributions to security holders to the full extent permitted by applicable law. Dividends may be paid in cash or other property of the Corporation, in shares, obligations, or other securities of the Corporation, or in any other form permitted by applicable law. SECTION 2. RESERVES. The Board of Directors shall have power and authority to set apart such reserve or reserves, for any proper purpose, as the Board in its discretion shall approve; and the Board shall have power and authority to abolish any reserve created by the Board. ARTICLE VIII LIST OF SHAREHOLDERS SECTION 1. LIST OF SHAREHOLDERS ENTITLED TO VOTE. The officer or agent having charge of the stock transfer books for shares of the Corporation shall make and certify a complete list of the shareholders entitled to vote at a shareholders' meeting or any adjournment thereof. The list shall: (a) Be arranged alphabetically within each class and series, with the address of, and the number of shares held by, each shareholder. (b) Be produced at the time and place of the meeting. (c) Be subject to inspection by any shareholder during the whole time of the meeting (if the meeting is held solely by means of remote communication, the list shall be posted on a reasonably accessible electronic network). (d) Be prima facie evidence as to who are the shareholders entitled to examine the list or to vote at the meeting. -13- ARTICLE IX GENERAL PROVISIONS SECTION 1. CHECKS, ETC. All checks, drafts, and orders for payment of money shall be signed in the name of the Corporation by one or more of such officers or agents as the Board of Directors shall from time to time designate for that purpose or as shall be designated from time to time by any officer of the Corporation authorized by the Board of Directors to make such designations. SECTION 2. CONTRACTS, CONVEYANCES, ETC. When the execution of any contract, conveyance, or other instrument has been authorized without specification of the executing officers, the Chairman of the Board of Directors, the President, or any Vice-President, and the Secretary or any Assistant Secretary, may execute the same in the name and behalf of this Corporation and may affix the corporate seal thereto. The Board of Directors shall have power to designate the officers and agents who shall have authority to execute any instrument in behalf of this Corporation. SECTION 3. VOTING SECURITIES. Unless otherwise directed by the Board of Directors, the Chairman of the Board of Directors, or the President, or, in the case of their absence or inability to act, the Vice-Presidents, in order of their seniority, shall have full power and authority on behalf of this Corporation to attend and to act and to vote, or to execute in the name or on behalf of this Corporation a consent in writing in lieu of a meeting of shareholders or a proxy authorizing an agent or attorney-in-fact for this Corporation to attend and vote, at any meetings of security holders of corporations in which this Corporation may hold securities, and at such meetings he or his duly authorized agent or attorney-in-fact shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, this Corporation might have possessed and exercised if present. The Board of Directors by resolution from time to time may confer like power upon any other person or persons. ARTICLE X AMENDMENT SECTION 1. MANNER OF AMENDMENT. The Bylaws of the Corporation may be amended, altered, changed, added to, or repealed, in whole or in part, by the affirmative vote of a majority of the shares of the capital stock of the Corporation entitled to vote thereat, present in person or proxy at any annual or special meeting of the shareholders of the Corporation at which a quorum is present, if notice of the proposed amendment, alteration, change, addition, or repeal is contained in the notice of such meeting. The Bylaws may also be amended, altered, changed, added to, or repealed, in whole or in part, by the affirmative vote of a majority of the Board of Directors, at any regular meeting of the Board of Directors at which a quorum is present, or at any special meeting of the Board of Directors at which a quorum is present if notice of the proposed amendment, alteration, change, addition, or repeal is contained in the notice of such special meeting, unless and to the extent that the power to amend or repeal the Bylaws is reserved exclusively to the shareholders of the Corporation in its Articles of Incorporation. The power and authority of the Board of Directors to amend, alter, change, add to, or repeal the Bylaws shall extend and be exercisable with respect to not only all or any portion of the Bylaws adopted by the Board of Directors but also with respect to all or -14- any portion of the Bylaws adopted by the shareholders, provided, however, that the shareholders may, if they elect so to do, prescribe in the Bylaws that any or all of the provisions of the Bylaws adopted by the shareholders shall not be altered or repealed by the Board of Directors. ARTICLE XI CHAPTER 7B OF MICHIGAN BUSINESS CORPORATION ACT SECTION 1. CHAPTER 7B NOT APPLICABLE. Chapter 7B of the Act (entitled "Control Share Acquisitions") does not apply to control share acquisitions of shares of the Corporation. -15- EX-31.1 3 k86670exv31w1.txt CERTIFICATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 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: August 6, 2004 BY: /s/ TODD W. HERRICK ------------------------------------------- Todd W. Herrick Chairman, President and Chief Executive Officer EX-31.2 4 k86670exv31w2.txt CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 302 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: August 6, 2004 BY: /s/ JAMES S. NICHOLSON ------------------------------------ James S. Nicholson Vice President, Treasurer and Chief Financial Officer EX-32.1 5 k86670exv32w1.txt CERTIFICATION OF THE PRESIDENT AND CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 906 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 June 30, 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: August 6, 2004 BY: /s/ TODD W. HERRICK --------------------------------------- Todd W. Herrick Chairman, President and Chief Executive Officer EX-32.2 6 k86670exv32w2.txt CERTIFICATION OF THE CHIEF FINANCIAL OFFICER PURSUANT TO SECTION 906 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 June 30, 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: August 6, 2004 BY: /s/ JAMES S. NICHOLSON -------------------------------------- James S. Nicholson Vice President, Treasurer and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----