-----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, R6DSzJ4fOpbHqETLl7Ej7xfpKQJlDS9Mr8UGZlHGJ99slJyIoE2E3CH7w/HZnT/4 7nJcwk4c7arrGRvyMDWM6Q== 0000950124-06-007804.txt : 20061222 0000950124-06-007804.hdr.sgml : 20061222 20061222154816 ACCESSION NUMBER: 0000950124-06-007804 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20061220 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20061222 DATE AS OF CHANGE: 20061222 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-00452 FILM NUMBER: 061297034 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 8-K 1 k11051e8vk.txt CURRENT REPORT, DATED DECEMBER 20, 2006 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported): DECEMBER 20, 2006 TECUMSEH PRODUCTS COMPANY - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) MICHIGAN 0-452 38-1093240 - -------------------------------------------------------------------------------- (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 100 EAST PATTERSON STREET TECUMSEH, MICHIGAN 49286 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (517) 423-8411 (NOT APPLICABLE) - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION. Our press release dated December 19, 2006 regarding our third quarter 2006 consolidated results is furnished as Exhibit 99.1 to this report. We hosted our third quarter 2006 earnings conference call and webcast on Friday, December 22, 2006 at 11:00 a.m. Eastern Time. Via the webcast, we presented our Third Quarter 2006 Investor Presentation, which contains a summary of our financial results for the quarter. We are furnishing a copy of the Third Quarter 2006 Investor Presentation as Exhibit 99.2 to this report. The Investor Presentation will be posted on our website, www.tecumseh.com, through at least January 31, 2007. Exhibit 99.2 is incorporated by reference under this Item 2.02. The information in this Item 2.02 and in Exhibits 99.1 and 99.2 shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, except as shall be expressly set forth by specific reference in the filing. The inclusion of any information in this Item 2.02 is not an admission as to the materiality of the information. ITEM 5.03 AMENDMENTS TO THE ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR. On December 20, 2006, the board of directors amended our bylaws to separate the offices of Chairman of the Board of Directors and Chief Executive Officer, to create the office of Chief Operating Officer, and to make other conforming changes. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. The following exhibits are filed or furnished with this report:
Exhibit No. Description - ----------- ----------- 3.1 Amended and Restated Bylaws of Tecumseh Products Company as amended through December 20, 2006 99.1 Press Release dated December 19, 2006 99.2 Third Quarter 2006 Investor Presentation
SIGNATURES 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 hereunto duly authorized. TECUMSEH PRODUCTS COMPANY Date: December 22, 2006 By /s/ James S. Nicholson ------------------------------------ James S. Nicholson Vice President, Treasurer and Chief Financial Officer -2- EXHIBIT INDEX
Exhibit No. Description - ----------- ----------- 3.1 Amended and Restated Bylaws of Tecumseh Products Company as amended through December 20, 2006 99.1 Press Release dated December 19, 2006 99.2 Third Quarter 2006 Investor Presentation
-3- EX-3.1 2 k11051exv3w1.txt AMENDED AND RESTATED BYLAWS EXHIBIT 3.1 AMENDED AND RESTATED BYLAWS OF TECUMSEH PRODUCTS COMPANY AS AMENDED THROUGH DECEMBER 20, 2006 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, 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 a majority of the Board of Directors or by the requisite shareholders as above provided, the Secretary of this Corporation shall prepare, sign, and mail or transmit electronically, the notices requisite to such meeting. -2- 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. SECTION 8. REGULAR MEETINGS OF BOARD. Regular meetings of the board of directors shall be held at such times and places as the board of directors shall from time to time determine by resolution adopted at any regular or special meeting of the board of directors. 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 by any other member 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 Director [name]" 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 -3- 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, 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 -4- 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 -5- date shall not be more than sixty (60) days before the payment of the 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 -6- 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 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 -7- 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. 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 Secretary of the Board of Directors, a Chairman of the Board of Directors Emeritus, and one or more Vice-Presidents, Assistant -8- Secretaries, and Assistant Treasurers. None of said officers, except the Chairman of the Board of Directors need be a member of the Board of Directors. Any two of the aforementioned offices, except those 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. 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. -9- 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 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 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- -10- 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 Corporation's non-employee directors as "Lead Director." The Lead Director, if any, shall be responsible for calling, establishing -11- 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 non-employee director as Lead Director. 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, to the extent authorized by the Board of Directors. If directed 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. CHIEF EXECUTIVE OFFICER. The Board of Directors may appoint a Chief Executive Officer, who may also be the President . The Chief Executive Officer shall supervise and manage the business affairs of this Corporation, except to the extent that responsibility for supervision and management of such business affairs is vested in a President and Chief Operating Officer, and shall perform those duties normally and customarily incident to the office of chief executive officer of a corporation other than those duties assigned to the President and Chief Operating Officer. He shall perform such other duties and functions as shall be assigned to him from time to time by the Board of Directors. SECTION 3. PRESIDENT AND CHIEF OPERATING OFFICER. The Board of Directors shall appoint a President who, unless appointed as the Chief Executive Officer of this Corporation by the Board of Directors, shall be the Chief Operating Officer of this Corporation. He shall have general charge, control, and supervision over the administration and operations of the Corporation, shall have control of the operational aspects of the business and affairs of the Corporation, and shall perform any other duties normally and customarily incident to the office of chief operating officer of a corporation. He shall report to the Chief Executive Officer and shall perform such other duties and functions as shall be assigned to him from time to time by the Board of Directors or the Chief Executive Officer. -12- SECTION 4. VICE-PRESIDENTS. The Board of Directors may designate one or more Vice-Presidents as Executive Vice-Presidents. The Vice-Presidents shall report to the President and shall perform such duties as may be delegated to them by 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 report to the President and shall perform such other duties as may be delegated to him by 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 any of 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 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. -13- 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 or the President. SECTION 10. CHIEF FINANCIAL OFFICER. As and whenever it determines the same to be appropriate, the Board of Directors may designate 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, -14- 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. 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 -15- 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. 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 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 -16- 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 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. -17- EX-99.1 3 k11051exv99w1.txt PRESS RELEASE DATED DECEMBER 19, 2006 EXHIBIT 99.1 TECUMSEH PRODUCTS COMPANY REPORTS THIRD QUARTER 2006 RESULTS Tecumseh, Michigan, December 19, 2006 . . . . Tecumseh Products Company (NASDAQ-TECUA, TECUB) announced today its 2006 third quarter consolidated results as summarized in the following Consolidated Condensed Statements of Operations. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended (Dollars in millions except per share amounts) September 30, September 30, ---------------------------------------------- --------------------------- ---------------------------- 2006 2005 2006 2005 ----------------------------------------------------------- NET SALES $ 429.4 $ 449.9 $ 1,331.8 $ 1,322.9 Cost of sales 407.9 409.8 1,251.8 1,224.9 Selling and administrative expenses 42.4 37.2 131.9 121.4 Impairments, restructuring charges and other items 8.4 1.4 14.0 111.3 ----------------------------------------------------------- OPERATING PROFIT (LOSS) (29.3) 1.5 (65.9) (134.7) Interest expense (10.0) (6.3) (29.4) (18.0) Interest income and other, net 2.1 1.9 10.0 6.9 ----------------------------------------------------------- LOSS FROM CONTINUING OPERATIONS BEFORE TAXES (37.2) (2.9) (85.3) (145.8) Tax provision (benefit) 8.1 34.9 (3.7) 28.3 ----------------------------------------------------------- Loss from continuing operations (45.3) (37.8) (81.6) (174.1) Income from discontinued operations, net of tax 7.5 0.6 65.1 2.5 ----------------------------------------------------------- NET LOSS ($ 37.8) ($ 37.2) ($ 16.5) ($ 171.6) ----------------------------------------------------------- Basic and diluted income (loss) per share: Continuing operations ($ 2.45) ($ 2.05) ($ 4.42) ($ 9.42) Discontinued operations 0.40 $ 0.04 3.52 $ 0.13 ----------------------------------------------------------- NET LOSS PER SHARE ($ 2.05) ($ 2.01) ($ 0.90) ($ 9.29) ----------------------------------------------------------- WEIGHTED AVERAGE SHARES (in thousands of shares) 18,480 18,480 18,480 18,480 ===========================================================
Consolidated net loss from continuing operations for the third quarter of 2006 was $45.3 million ($2.45 per share) compared to loss of $37.8 million ($2.05 per share) in the third quarter of 2005, as restated. The change in loss from continuing operations reflected a $30.8 million increase in operating loss before interest and taxes, driven primarily by unfavorable foreign currency fluctuations, higher costs for copper and other commodities, and writedown of impaired assets. Reported results for the third quarter of 2006 included restructuring and asset impairment charges of $8.4 million, related to asset impairments in the Engine & Power Train business for the writedown of assets that have become idled under the segment's overall restructuring program. Reported results for the third quarter of 2005 included restructuring and asset impairment charges of $1.4 million related to the European Engine & Power Train ($0.4 million), Compressor ($0.5 million) and Electrical Components ($0.5 million) segments. Interest expense amounted to $10.0 million in the third quarter of 2006, compared to $6.3 million in the third quarter of 2005. The increase was primarily related to the higher average interest rates associated with the Company's current borrowing arrangements. 1 In determining the loss from continuing operations, the Company recognized a tax provision of $8.1 million, which includes a valuation allowance of $5.9 million ($0.32 per share) established against its remaining foreign deferred tax assets in Brazil, and reversal of tax benefits recorded during the first half of the year. The Company also booked a tax expense of $0.9 million recognized in conjunction with the gain on sale of a subsidiary, which is included in discontinued operations. This compares to a $34.9 million income tax provision in the third quarter of 2005, which primarily reflected the recognition of deferred tax asset valuation allowances for tax jurisdictions in which the Company is in a three year cumulative loss position, including the U.S. During the second quarter of 2006, the Company completed the sale of 100% of its ownership in Little Giant Pump Company. The operating results of Little Giant Pump Company for 2006 and the comparable prior year periods have been reclassified from continuing operations to income from discontinued operations. Under accounting rules, the Company has also allocated the portion of its interest expense associated with this operation to the discontinued operations line item. Proceeds from the sale were approximately $121 million. The Company recognized a pre-tax gain on the sale of $77.9 million. The gain on the sale, plus earnings during the Company's period of ownership, net of taxes and interest, is presented in income from discontinued operations and amounted to $65.1 million net of tax ($3.52 per share). Gains of $8.4 million ($7.5 million net of tax) primarily associated with curtailment of employee benefits formerly provided to Little Giant employees were reflected in third quarter financial results. As required by the Company's lending agreements, the proceeds were utilized to repay a portion of the Company's debt. Consolidated net loss from continuing operations for the first nine months of 2006 was $81.6 million ($4.42 per share) compared to a loss of $174.1 million ($9.42 per share) for the same period in 2005, as restated. Year-to-date results reflected a $68.7 million reduction in operating loss before interest and taxes including lower restructuring charges of $97.3 million, partially offset by lower product margins in the second and third quarters due to unfavorable foreign currency rates, higher commodity costs, and fees to AlixPartners for consulting services provided to our Engine & Power Train business. Interest expense for the nine months ended September 30, 2006 amounted to $29.4 million, compared to $18.0 million in the period ended September 30, 2005. The increase was primarily related to the higher average interest rates associated with the Company's current borrowing arrangements. For the nine months ended September 30, 2006, the Company recognized a tax benefit of $3.7 million, which includes a U.S. tax benefit of $11.2 million, partially offset by the valuation allowance of $5.9 million established against foreign deferred tax assets in Brazil in the third quarter and other foreign tax provisions. The U.S. tax benefit is offset by tax expense recorded in discontinued operations and Other Comprehensive Income. This compares to a $28.3 million income tax provision for the nine months ended September 30, 2005, which primarily reflected the recognition of deferred tax asset valuation allowances for tax jurisdictions in which the Company is in a three year cumulative loss position, including the U.S. Consolidated net sales from continuing operations in the third quarter of 2006 decreased to $429.4 million from $449.9 million in 2005. Excluding the increase in sales due to the effects of foreign currency translation of $10.2 million, 2006 third quarter sales decreased by 6.8%. Sales increases attributable to the Compressor and Electrical Components segments were more than offset by a substantial decline in sales in the Engine & Power Train segment. 2 Consolidated net sales from continuing operations for the first nine months of 2006 increased to $1,331.8 million from $1,322.9 million. Excluding the increase in sales due to the effects of foreign currency translation of $30.2 million, 2006 nine month sales decreased by 1.6%. Like the third quarter, increases attributable to the Compressor and Electrical Components segments were more than offset by a substantial decline in the Engine & Power Train segment. The Company has restated the consolidated financial statements for the three and nine months ended September 30, 2005 for errors in the interim period tax provisions. Generally accepted accounting principles require interim period income taxes to be recorded based on an estimated annual effective rate. The Company in error combined the income from foreign jurisdictions with losses from foreign jurisdictions for which tax benefits are not expected to be realizable, which resulted in an understatement in the tax provision of $4.4 million and $3.9 million for the three and nine months, respectively, ended September 30, 2005. While these errors impacted the quarterly tax provisions, they had no impact on the full year 2005 income tax provision. Additionally, as a result of the sale of Little Giant Pump Company in the second quarter of 2006, the Company has recasted the Consolidated Statement of Operations for the three and nine months ended September 30, 2005 to show the Little Giant Pump Company as a discontinued operation. The Company has also restated its consolidated financial statements for the first and second quarters of 2006 for errors in interim period tax provisions. Previously reported net loss for the three month period ended March 31, 2006 increased by $3.0 million, and the previously reported net income for the three month period ended June 30, 2006 increased by $0.2 million. COMPRESSOR BUSINESS Third quarter 2006 sales in the Compressor business increased to $230.8 million from $218.6 million in the prior year. Compressor business sales in the first nine months of 2006 increased to $755.6 million from $707.2 million in the first nine months of 2005. Excluding the increase in sales due to the effects of foreign currency translation of $9.3 million for the third quarter and $28.9 million for the first nine months, sales increased by 1.3% and 2.8% in the third quarter and first nine months, respectively. The balance of the increases was primarily attributable to higher unit volumes in aftermarket and commercial distribution markets in the U.S. and Europe as a result of favorable weather conditions, and higher selling prices implemented over the course of 2006 to offset increases in material costs. Compressor business operating results for the third quarter of 2006 amounted to a loss of $6.5 million versus net income of $7.6 million in the third quarter of 2005. Operating loss for the nine months ended September 30, 2006 amounted to $3.7 million compared to net income of $23.6 million for the first nine months of 2005. The lower operating income was attributable to unfavorable foreign currency rates and higher material and other input costs, and unfavorable variances associated with shipping bottlenecks experienced subsequent to the conversion to a new ERP management system, partially offset by price advances, better volumes, headcount reductions, and productivity improvements. For the third quarter, the Brazilian real was on average 7.3% stronger against the U.S. dollar in 2006 versus 2005, and the results of hedging activities were less favorable year over year in the third quarter than compared to the second quarter. Including the effects of hedging activities, the Company estimates that changes in foreign exchange rates decreased operating income by approximately $9.7 million compared to the third quarter of 2005. 3 ELECTRICAL COMPONENTS BUSINESS Electrical Components business sales were $109.3 million for the third quarter of 2006, an increase of 5.8% over sales of $103.3 million in the same quarter last year. Electrical Components business sales in the first nine months of 2006 increased 6.3% to $325.3 million from $305.9 million. Sales were higher in the residential and commercial markets (up 10.8% year-to-date) due to strong HVAC-related sales. Sales in the automotive motor market in the third quarter were flat versus the same period of 2005; however, sales in that market were lower in the first and second quarters (down 5.5% year-to-date) as a result of lower build schedules and market share losses by the Company's customers at their respective OEM's. Electrical Components operating results for the third quarter of 2006 amounted to a loss of $0.5 million compared to income of $4.8 million in the third quarter of 2005. For the first nine months of 2006, operating income was $2.7 million compared to operating income of $4.0 million in the first nine months of 2005. Approximately half of the decline during the third quarter was related to production inefficiencies, including ERP conversion issues, associated with a facility in Mexico. The remaining differences were primarily related to a shortfall of price increases versus current commodity costs, including copper. Commodity cost increases were also a significant factor in the first and second quarters of 2006 as compared to the comparable period in 2005. The cost of copper and other commodities were approximately $2.8 million higher in the third quarter when compared to prices at the beginning of the year. ENGINE & POWER TRAIN BUSINESS Engine & Power Train business sales were $85.2 million in the third quarter of 2006 compared to $124.2 million for the same period a year ago. The year-over-year decline in sales was partially attributable to lower sales of generators (down $14.9 million versus 2005) caused by a lack of significant hurricane or other storm activity during the 2006 season. In addition, sales volumes of snowthrowers have declined $12.3 million as compared to the third quarter of 2005, due to a shift by our customers to more aggressive inventory management policies. In snowthrower units sold, the third quarter of 2006 lagged the same period of 2005 by approximately 18.2%. The remaining sales decline in the quarter was due to a decrease in transmission business and loss of sales into the Europe market. Sales in the first nine months of 2006 amounted to $237.6 million compared to $297.8 million in the first nine months of 2005. The most significant decline in the nine month period was primarily attributable to the loss of sales of $23.9 million into the European market from the Company's former Italian subsidiary, which was shut down at the end of 2005. A year-over-year decline in sales volumes for generators reflects the lack of a significant hurricane or other storm activity during the 2006 season, and is down $16.3 million versus the same period in 2005. In addition, sales volumes of snowthrowers declined $13.3 million as compared to the first nine months of 2005, due to a shift by our customers to more aggressive inventory management policies. In units sold, 2006 volumes of snowthrowers sold year to date lagged the same period of 2005 by approximately 16.3%. The full year 2006 is currently forecasted to show a decline of 11.7% when compared to the prior year. The remaining sales decline was attributable to a decrease in transmission business. Engine & Power Train business operating loss for the third quarter of 2006 was $9.2 million compared to a loss of $5.2 million during the same period a year ago. For the first nine months of 2006, the business incurred an operating loss of $38.9 million compared to an operating loss of $41.6 million in 2005. Included in the 2006 loss were AlixPartners' fees of $5.5 million in the third quarter and $18.8 million in the first nine months, and a $3.5 million gain from the sale of the Douglas, Georgia engine facility in the first quarter of 2006. Excluding these two items, operating results improved by 4 approximately 40.5% and 43.3% in the third quarter and first nine months of 2006, respectively, versus the comparable prior year periods. The improvement in the third quarter reflected lower fixed costs associated with plant closures and higher productivity levels in Brazil, partially offset by higher commodity and transportation costs and a less favorable value of the Brazilian Real. LIQUIDITY AND CAPITAL RESOURCES Historically, cash flows from operations and borrowing capacity under previous credit facilities were sufficient to meet our long-term debt maturities, projected capital expenditures and anticipated working capital requirements. However, in recent years cash flows from operations have been negative and the Company has had to rely on existing cash balances, proceeds from credit facilities and asset sales to fund its needs. Throughout the third quarter, our main domestic credit facilities were provided under two credit agreements we signed on February 6, 2006: a $275 million First Lien Credit Agreement and a $100 million Second Lien Credit Agreement. Both agreements provided for security interests in substantially all of the Company's assets and specific financial covenants related to EBITDA (as defined under the agreements and hereafter referred to as our "Adjusted EBITDA"), capital expenditures, fixed charge coverage, and limits on additional foreign borrowings. During the third quarter, the weighted average annual interest rate on our borrowings under these agreements was 8.8%. During 2006 the Company's results from operations have continued to be impacted by unfavorable events that have caused a shortfall of Adjusted EBITDA versus the covenant levels. As a result, the Company sought, and on November 3, 2006 it signed, amendments to its lending arrangements with its first and second lien lenders. The principal terms of the November 3 amendments were described in a Current Report on Form 8-K we filed on November 8, 2006. On November 13, 2006 we signed a new $100 million Second Lien Credit Agreement with Tricap Partners LLC and a corresponding amendment to our February 6, 2006 First Lien Credit Agreement. The new second lien facility provides the Company with additional liquidity and greater relief from existing financial covenants. We borrowed $100 million under the new Second Lien Credit Agreement and used the proceeds to repay in full the outstanding balance of $54.6 million under the old Second Lien Credit agreement, plus a 2.0% prepayment premium, and to repay $40.0 million of borrowings under the First Lien Credit Agreement. Under the terms of the First Lien Credit Agreement, as amended, the Company has the capacity for additional borrowings under the borrowing base formula of $65.3 million in the U.S. and $58.3 million in foreign jurisdictions. Both the First Lien Credit Agreement as amended and the new Second Lien Credit Agreement have three year terms. Interest on the New Second Lien Agreement is equal to LIBOR plus 6.75% plus paid in kind ("PIK") interest of 1.5%. PIK interest accrues monthly on the outstanding debt balance and is paid when the associated principal is repaid. This compares to the previous second lien arrangement, as amended, of interest of LIBOR plus 7.5% plus PIK interest of 2.0%. While the new Second Lien Agreement has more favorable interest terms than its predecessor, our weighted average cost of borrowing under the current agreements is higher than it was before the November 13 refinancing. This is attributable to a greater proportion of our total debt being borrowed under the Second Lien Agreement ($100 million versus $54.6 million) and less under the First Lien Agreement. Giving effect to the Company's new and amended arrangements, our weighted average interest rate for all borrowings is 10.4% compared to 8.8% prior to the November 13 refinancing. 5 Other interest rate related terms of the new Second Lien Credit Agreement provide for additional PIK interest at the rate of 5.0% if outstanding debt balances are not reduced by certain specified dates. This additional PIK interest would apply to the difference between a target amount of aggregate reduction in debt and the actual amount of first and second lien debt reduction according to the following milestones: Milestone Date Aggregate Reduction June 30, 2007 $20.0 million September 30, 2007 $40.0 million December 31, 2007 $60.0 million The new Second Lien Credit Agreement also provides for an additional 2.5% in PIK interest if certain assets are not sold by December 31, 2007. Sources of funds to make the principal reductions could include, but are not limited to, cash from operations, reductions in working capital, or asset sales. After giving effect to the refinancing, waivers and amendments discussed above, we are currently in compliance with the covenants of our domestic debt agreements. Achieving the level of future financial performance that would support our lending arrangements, and that is required by the financial covenants, will depend on a variety of factors, including customer price increases to cover increases in commodity costs, further employee headcount reductions, consolidation of productive capacity and rationalization of various product platforms. While we are currently moving forward with these actions, there can be no assurance that any of these initiatives will be sufficient if certain risks continue to impede our progress. Those risks include currency fluctuations, weather, the extent to which the Company may lose sales in reaction to higher product prices, or adverse publicity. The principal terms of the November 13 amendments were described in a Current Report on Form 8-K we filed on November 15, 2006. In our November 15, 2006 Form 8-K, we disclosed that the Company was in negotiations with its lenders in Brazil to reschedule maturities of its current lending arrangements for its Brazilian engine manufacturing subsidiary. The Company's Brazilian engine manufacturing subsidiary has its own financing arrangements with Brazilian banks under which it is required to pay principal installments of various amounts throughout the remainder of 2006 through 2009. Historically, the subsidiary has experienced negative cash flows from operations indicating that it may not have sufficient liquidity on its own to make all required debt repayments as currently scheduled. On November 21, 2006, lenders representing greater than 60% of the outstanding amounts borrowed, executed a restructuring agreement whereby scheduled maturities were deferred for eighteen months, with subsequent amortization over the following eighteen months. Other provisions of the agreement included a pledge of certain of the assets of the Brazilian engine subsidiary, and a parent guarantee of the obligation, which would only become effective after full repayment of the Second Lien lender. Two banks representing less than 40% of the outstanding balances did not participate in the restructuring agreement. We ceased further payments to those banks effective November 15, 2006 and are seeking remedies available to us under Brazilian law that would require those banks to abide by the terms of the restructuring agreement. While the non-payments constitute a default under the debt agreements, the lenders under the First Lien Credit Agreement, as amended, and the new Second Lien Credit Agreement have waived, for a time, any cross-default that otherwise would result from our failing to make a required 6 payment on these Brazilian loans. The waiver will expire 180 days after November 15, 2006, though either the First Lien or Second Lien lenders have the authority to shorten the 180-day period to 100 days. The waiver will expire immediately if a Brazilian lender takes legal action to collect and the action is not stayed within ten days. If, before the waiver expires we succeed in our legal action to compel the non-agreeing banks to abide by the terms of the restructuring agreement, the First Lien and Second Lien lenders will have no further right to declare a cross-default based on the Brazilian non-payments so long as we comply with our obligations under the restructuring agreement. The agreement with the Brazilian banks was subject to the approval of our First and Second Lien credit holders. This approval was obtained through amendments to our existing agreements, which were effective on December 11, 2006. The principal terms of the December 11 amendments were described on a Current Report on Form 8-K we filed on December 15, 2006. Terms of the amendments included fees paid of $750,000, and an additional pre-payment penalty with respect to the Second lien obligations of $1.0 million. In addition, the availability reserve of $10.0 million instituted under a previous amendment to the First Lien credit agreement became permanent. OUTLOOK Information in this "Outlook" section should be read in conjunction with the cautionary language and discussion of risks included below. The outlook for the remainder of 2006 is subject to the same variables that negatively impacted the Company throughout 2005 and the first nine months of 2006. Commodity costs, key currency rates, weather and the overall growth rates of the respective economies around the world are all important to future performance. Overall, the Company does not expect these factors to become any more favorable in the foreseeable future. Certain key commodities, including copper and aluminum, continue to trade at elevated levels compared to recent history. From January 1, 2006 through October 31, 2006, the prices of copper and aluminum have increased approximately 60% and 23%, respectively. Lack of storm activity has significantly reduced sales of engines used for generators and has left the Company and the industry with above-normal inventory levels. The Brazilian real continues to strengthen against the dollar, and as of October 31, 2006 had strengthened 8.5% since the beginning of the year. Accordingly, the Company expects to continue to incur losses in the fourth quarter 2006, as we do not expect improvements in any of the key factors noted above. Specifically, the Compressor and Electrical Components groups' fourth quarter results are expected to lag the results of the comparable 2005 period. On the other hand, despite the expectation of continued lower levels of sales in the Engine group because of unfavorable market conditions, results in the Engine Group are expected to improve over the very poor 2005 fourth quarter excluding restructuring charges. This improvement continues to be driven by the overall restructuring efforts undertaken by AlixPartners and as further restructuring steps are completed it is expected that additional excess capacity will become idle and impairments might need to be recognized. While no such actions have been approved, these actions could have a significant effect on the consolidated financial position and future results of operations of the Company. To respond to the continued losses and consumption of capital resources, the Company is seeking price increases to cover its increased input costs, and has planned further employee headcount reductions, consolidation of productive capacity and rationalization of product platforms. We believe that such actions will contribute to restoring the profitability of the Company, will help to mitigate such negative external factors as currency fluctuation and increased commodity costs and will result in improved operating performance in all business segments in 2007. These actions also could result in restructuring and/or asset impairment charges in the foreseeable future and accordingly, could have a significant effect on the consolidated financial position and future results of operations of the Company. 7 In addition, we are also concerned about the amount of debt carried by the Company during this period of unfavorable operating environment. As a result, the Company will be evaluating the feasibility of asset sales as a means to reduce the overall amount of Company indebtedness. Such transactions could also have a significant effect on future results of operations. 8 RESULTS BY BUSINESS SEGMENTS (UNAUDITED)
Three Months Ended Nine Months Ended (Dollars in millions) September 30, September 30, ------------------- ------------------------ 2006 2005 2006 2005 ----------------------------------------------- NET SALES: Compressor Products $ 230.8 $ 218.6 $ 755.6 $ 707.2 Electrical Components Products 109.3 103.3 325.3 305.9 Engine & Power Train Products 85.2 124.2 237.6 297.8 Other (a) 4.1 3.8 13.3 12.0 ----------------------------------------------- Total net sales $ 429.4 $ 449.9 $ 1,331.8 $ 1,322.9 =============================================== OPERATING INCOME (LOSS): Compressor Products ($ 6.5) $ 7.6 ($ 3.7) $ 23.6 Electrical Components Products (0.5) 4.8 2.7 4.0 Engine & Power Train Products (9.2) (5.2) (38.9) (41.6) Other (a) -- 0.3 0.7 0.2 Corporate expenses (4.7) (4.6) (12.7) (9.6) Impairments, restructuring charges, and other items (8.4) (1.4) (14.0) (111.3) ----------------------------------------------- Total operating income (loss) from continuing operations (29.3) 1.5 (65.9) (134.7) Interest expense (10.0) (6.3) (29.4) (18.0) Interest income and other, net 2.1 1.9 10.0 6.9 ----------------------------------------------- LOSS FROM CONTINUING OPERATIONS BEFORE TAXES ($ 37.2) ($ 2.9) ($ 85.3) ($ 145.8) ===============================================
- ---------- (a) "Other" consists of non-reportable business segments. Previously, the Company also reported a Pump Products business segment. However, as a result of the decision to sell Little Giant Pump Company, which represented approximately 90% of the previously reported segment, such operations are no longer included in loss from continuing operations before tax. As the Company's remaining pump business does not meet the definition of an operating segment as defined by SFAS No. 131, "Segment Reporting," the Company will no longer report a Pump Products segment, and operating results of the remaining pump business are included in Other for segment reporting purposes. 9 CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
SEPTEMBER 30, December 31, (Dollars in millions) 2006 2005 ------------------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 58.7 $ 116.6 Accounts receivable, net 247.4 211.1 Inventories 368.6 346.8 Other current assets 91.2 132.6 ------------------------- Total current assets 765.9 807.1 PROPERTY, PLANT AND EQUIPMENT - NET 569.0 578.6 GOODWILL AND OTHER INTANGIBLES 179.4 185.7 OTHER ASSETS 297.8 229.1 ------------------------- TOTAL ASSETS $ 1,812.1 $ 1,800.5 ========================= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable, trade $ 215.1 $ 187.3 Short-term borrowings 95.0 82.5 Accrued liabilities 139.3 135.3 ------------------------- Total current liabilities 449.4 405.1 LONG-TERM DEBT 265.7 283.0 DEFERRED INCOME TAXES 7.6 25.0 PENSION AND POSTRETIREMENT BENEFITS 217.9 226.1 PRODUCT WARRANTY AND SELF-INSURED RISKS 11.3 14.5 OTHER NON-CURRENT LIABILITIES 42.0 32.4 ------------------------- Total liabilities 993.9 986.1 STOCKHOLDERS' EQUITY 818.2 814.4 ------------------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,812.1 $ 1,800.5 =========================
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended Nine Months Ended (Dollars in millions) September 30, September 30, -------------------- ---------------------- 2006 2005 2006 2005 ---------------------------------------------- TOTAL STOCKHOLDERS' EQUITY BEGINNING BALANCE $ 858.0 $ 908.6 $ 814.4 $ 1,018.3 Comprehensive income (loss): Net loss (37.8) (37.2) (16.5) (171.6) Other comprehensive income (loss) (2.0) 20.8 20.3 57.3 ---------------------------------------------- Total comprehensive income (loss) (39.8) (16.4) 3.8 (114.3) Cash dividends declared -- -- -- (11.8) ---------------------------------------------- TOTAL STOCKHOLDERS' EQUITY ENDING BALANCE $ 818.2 $ 892.2 $ 818.2 $ 892.2 ==============================================
10 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended (Dollars in millions) September 30, -------------------- 2006 2005 -------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Cash used by operating activities ($ 129.4) ($ 34.6) -------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of assets 132.4 -- Capital expenditures (45.6) (88.6) Business acquisition (2.0) -- -------------------- Cash provided by (used in) investing activities 84.8 (88.6) -------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid -- (11.8) Repayment of Senior Guaranteed Notes (250.0) (50.0) Repayment of Industrial Development Revenue Bonds (10.5) -- Proceeds from First Lien Credit Agreement 147.5 -- Proceeds from Second Lien Credit Agreement 100.0 -- Repayments of Second Lien Credit Agreement (45.4) -- Other borrowings, net 45.6 (38.2) -------------------- Cash used in financing activities (12.8) (23.0) -------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (0.5) 2.2 -------------------- DECREASE IN CASH AND CASH EQUIVALENTS (57.9) (144.0) CASH AND CASH EQUIVALENTS: Beginning of period 116.6 227.9 -------------------- End of period $ 58.7 $ 83.9 ====================
CAUTIONARY STATEMENT 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. 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 our 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, copper 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) our 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 our manufacturing operations or system implementations, the ultimate cost of those initiatives and the amount of savings actually realized; xiii) the extent of any business disruption caused by work stoppages initiated by organized labor unions; xiv)the ability of the Company to maintain adequate liquidity in total and within each foreign operation; xv) potential political and economic adversities that could adversely affect anticipated 11 sales and production in Brazil; xvi) potential political and economic adversities that could adversely affect anticipated sales and production in India, including potential military conflict with neighboring countries; xvii) our ability to reduce a substantial amount of costs in the Engine & Power Train group associated with excess capacity, and xviii) the ongoing financial health of major customers. These forward-looking statements are made only as of the date of this report, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. Tecumseh Products Company will host a conference call to report on the third quarter 2006 results on Friday, December 22, 2006 at 11:00 a.m. ET. The call will be broadcast live over the Internet and then available for replay through the Investor Relations section of Tecumseh Products Company's website at www.tecumseh.com. Press releases and other investor information can be accessed via the Investor Relations section of Tecumseh Products Company's Internet web site at http://www.tecumseh.com. Contact: Teresa Hess Director, Investor Relations Tecumseh Products Company 517-423-8455 12 EX-99.2 4 k11051exv99w2.txt THIRD QUARTER 2006 INVESTOR PRESENTATION EXHIBIT 99.2 THIRD QUARTER 2006 INVESTOR PRESENTATION JAMES S. NICHOLSON, VICE PRESIDENT, TREASURER AND CHIEF FINANCIAL OFFICER DECEMBER 22, 2006 Thank you, Amanda. Good morning, everyone. Welcome to our belated third quarter 2006 conference call. This call is being simultaneously broadcast on the internet and will also be archived for replay starting this afternoon. The replay can be accessed at our web site, www.tecumseh.com. Consistent with my normal protocol, I will start our conversation this morning with some brief comments expanding on our third quarter press release, as well as some commentary on our various 8-K filings subsequent to the quarter's end. Following my comments, we will open the call for your questions. I would remind you that my prepared comments this morning, and the answers to your questions, contain forward-looking statements within the meaning of the Securities laws. I refer you to the cautionary statements contained in our press release concerning significant risks and uncertainties involved with forward-looking statements that could cause actual results to differ materially from projected results. Well, needless to say it has been very busy here over the last several months. System conversions, multiple amendments to our lending agreements, new financing arrangements and financial statement restatements have been time-consuming activities. I plan to touch on all of these subjects in my commentary this morning, but most importantly, we are pleased to have resolution to these issues so that we can refocus all of our attention to improving future financial results. So let us begin with our more customary topic; first, that being our third quarter financial results. Reported results for the third quarter 2006 amounted to a net loss of $37.8 million, or $2.05 per share, compared to a net loss of $37.2 million, or $2.01 per share, in the third quarter of 2005. The third quarter 2005 results have been restated from their previous presentation due to an error in interperiod tax allocation. As a result, the restated third quarter net loss is $4.4 million worse than the previously reported net loss of $32.8 million; however, please note that there was no change to our full year reported results for 2005. While 2006 bottom line results were similar to the results of last year, they were negatively affected by lower operating profits and higher interest cost, and positively affected by a lower tax provision and the recognition of additional gain associated with the sale of Little Giant Pump Company resulting from a curtailment gain related to its associated benefit plans. With respect to operating profit, results were negatively impacted by lower sales, higher commodity costs, less favorable currency values and impairments, restructuring charges and other items that increased by $7.0 million over the prior year. In a moment, I will detail these factors by segment but, generally speaking, these factors contributed to lower operating results in all of the Company's business segments. The higher interest expense reflects the higher average borrowing costs of our current debt arrangements versus those in effect last year. With respect to taxes, both the current year and previous year's provisions are primarily the result of the establishment of valuation allowances against deferred tax assets in various taxing jurisdictions. Otherwise, except for intraperiod tax allocation, it is a reasonable expectation that the Company will have little tax expense in the upcoming quarters. While we continue to make progress with our profit improvement initiatives, we continue to face unfavorable external factors. In addition to the continuation of higher copper costs and unfavorable foreign currency rates that negatively impacted the first half of the year, unfavorable weather had a significant effect on sales in the Engine & Powertrain Group, and the difficulties of our system implementation caused lost sales in our Compressor Group. At September 30, 2006 the cost of copper, a key input into both motors and compressors, was approximately 60% higher from the beginning of the year and 133% higher from the beginning of 2005. And with respect to foreign currency, our primary exposure is the Brazilian Real, which, on average, was 7.3% stronger versus the dollar during the third quarter of 2006 versus 2005. Consolidated sales for the quarter amounted to $429.4 million, down 4.6% from last year's third quarter sales of $449.9 million. The effects of foreign currency translation increased sales by $10.2 million. Net of this effect from foreign currency translation, sales decreased by 6.8%. Sales increases in the Compressor and Electrical Components groups were more than offset by the lower sales in the Engine & Power Train segment. With this as an overview, I will now address our respective business segments in more detail, starting with the Compressor segment. Excluding the effects of foreign currency translation of $9.3 million, sales increased by $2.9 million, or 1.3% for the quarter. For the quarter, higher selling prices were the primary driver for the increase. Otherwise, the favorable effects of hot weather on aftermarket volumes were mitigated by shipping shortfalls that resulted from the implementation of our new ERP system. Compressor segment operating results, however, amounted to a loss of $6.5 million in the quarter versus income of $7.6 million a year ago. We estimate that approximately $9.7 million of the year-over-year decline was due to the effects of changes in foreign currency values. The remainder of the decline was attributable to higher input costs and costs associated with the ERP implementation, partially offset by price advances and various cost reduction activities, including headcount reductions. Our outlook for the Compressor Group for the remainder of 2006 is consistent with that expressed during our last call and is based upon an expectation that the value of the Real will not appreciably improve, and therefore, Compressor Group earnings will continue to lag results of the prior year. However, due to implemented price increases and cost reduction activities, we would expect the magnitude of the year-over-year decline to be less than that experienced during the third quarter. With respect to 2007, we expect results to improve based upon anticipated cost improvement initiatives, as well as previous, and to be implemented pricing actions. In addition, the Company has increased its level of hedging activity for copper since mid-year 2006 in order to reduce its exposure to the effects of fluctuations in copper prices in both the Compressor and the Electrical Components businesses. Moving to the Electrical Components Group. For the quarter, the Group reported sales of $109.3 million, a 5.8% increase over last year. The change in sales reflected a strong HVAC market during the quarter. We have noticed that the strength of this market has begun to wane as we have begun to experience a rather warm winter thus far. Electrical Components operating results for the quarter was a loss of a half of a million dollars compared to a profit of $4.8 million a year ago, and loss of $1.7 million last quarter. This quarter's results were consistent with the previous quarter in that the higher cost of copper and production inefficiencies associated with our Juarez, Mexico facility were the primary drag on earnings. While the Electrical Components Group has also implemented price increases to combat higher input costs, this business segment historically takes longer to recoup commodity cost increases than does our Compressor business. Looking at the rest of 2006 for the Electrical Components business, results will be disappointing. Shortfalls of aggregate price increases to rising commodity costs and other input costs, start-up costs of new automotive-related programs, and continued production inefficiencies in Juarez, Mexico will continue to depress earnings. However, like the Compressor Group, we anticipate improvements throughout 2007 as a result of further pricing actions, cost reduction activities and corrections to the difficulties being experienced in the Juarez facility. Now for the Engine & Power Train Group. Sales in this group were down $39 million, or 31% compared to prior year's third quarter. The decrease was mostly attributable to unfavorable weather patterns. The lack of hurricane and severe storm activity significantly reduced sales of engines used for generators. In addition, consistent with the green season, where retailers were conservative in stocking their shelves, the same can be true for the winter season. As a result, sales of engines used for snow throwers are off to a slower start than last year. Overall, our current estimate is that the snow season will be around 12% below previous year's sales and this could worsen if there continues to be lack of snowfall throughout the whole winter. As far as we know, all of the volume declines are representative of industry volumes and not the result of any share losses. Due to the significant fall off in sales volume, the Group's operating results declined by $4.0 million in comparison to the prior year's third quarter. Overall, improvements in cost structure were offset by lower contribution from lower sales and by fees earned by AlixPartners. Excluding fees recognized in the quarter for AlixPartners' services of $5.5 million and impairment and restructuring charges related to the Engine business, results improved by approximately 29%, but would have been substantially better had volumes met initial expectations. During the quarter, the group also recognized impairment charges of $8.4 million, resulting from the idling of excess capacity under our overall restructuring plan. Our expectations for the future remain consistent with previous guidance. We expect our overall market share in 2007 to be consistent with 2006, based upon planned placements with our OEM customers and retailers for the upcoming season. During this process, we also completed a new three-year agreement for the supply of engines with one of our major customers. Cost savings from the restructuring actions are expected to bring the operations into the black for the 2007 year as a whole, but overall industry volumes and the performance of new offshore suppliers will be determining factors in reaching this expectation. In addition, we expect to conclude AlixPartners' engagement with respect to the Engine & Power Train business during 2007, such that the majority of the costs associated with this project will be fully recognized by the end of the first quarter 2007. Now that completion of the restructuring efforts are within sight, we recently negotiated a new contract with AlixPartners that ceases any further fees based upon future savings computations. The purpose of the new arrangement is to bring more certainty with respect to the Company's payments to AlixPartners so that the Company can better predict its overall cash flows. Having covered the basic results of the groups, I would like to take a moment to address all those other matters that have transpired since we last had a chance to speak. Let's start by addressing our financial statement restatement. All of us at Tecumseh, regardless of whether involved in the preparation of such financial statements or not, strive to comply with all expectations of our constituents, whether they be shareholders, regulatory bodies, customers or employees. Our restatement involves how we compute our provision or benefit for income tax and how we allocate the expected provision or benefit to the interim periods of the year as well as the geography within our financial statements for the period. We have a very unique tax position not commonly seen among practitioners due to many factors including our policy of providing taxes for unremitted earnings of foreign subsidiaries, the establishment of valuation allowances in various taxing jurisdictions, and the allocation of taxes to discontinued operations and other comprehensive income. Our tax situation results in benefits recorded in one portion of the statement being partially or totally offset in other portions of the financial statements with the amount of "gross up" being subject to limitations both within the period and across the whole year. I merely mention these factors to demonstrate the complexity of our tax computation. Applying these rules is difficult and subject to interpretation, despite several levels of professional review. While these restatements affected 2004, 2005 and 2006 interim periods I would like to point out that they did not change full year results in 2004 or 2005, nor do they affect cash flow from operations or measures critical to our debt covenant compliance like minimum EBITDA. In addition, I would emphasize that a normal expectation for our provision is that there would be very little tax expense in total, representing foreign withholding taxes and income taxes in profitable foreign jurisdictions. Otherwise, the majority of total net tax expense recognized over this past two year period is associated with the establishment of valuation allowances against deferred tax asset balances. Also, as you know, while we were working with our accounting firm to correct our financial statements, we were also addressing debt compliance issues and various debt restructurings. Throughout this period we have been filing 8-K's to keep investors abreast of these developments. In summary, the poor third quarter and lack of accrual reversal with respect to social taxes in Brazil resulted in a shortfall of EBITDA versus our minimum EBITDA covenant. As a result, we obtained amendments from our then current first and second lien lenders. However, the Company had also determined that its forecast of available liquidity may not have been adequate under its existing lending arrangements during the period while the Company completed its restructuring efforts and therefore sought additional capital from a new second lien lender. The new second lien arrangement increased our second lien outstandings from approximately $55 million to $100 million, and proceeds were used to pay down our first lien lenders and to pay transaction expenses. In addition, while the Company was completing these arrangements in the United States, it was also negotiating new maturity schedules with its lenders in Brazil. The Company successfully reached an agreement with a majority of these lenders, but not all. These arrangements were subject to the approval of its current first and second lien lenders which we received in early December. The Company is currently addressing the two minority banks that did not participate in the restructuring in Brazil by pursuing a legal remedy under the law in Brazil whereby lenders representing a minority of outstanding balances of a class of creditors are forced to accept the terms that were acceptable to the lenders representing the majority of outstanding balances. The Company expects to prevail in its legal proceeding or to reach a mutual agreement with these remaining lenders. While the Company believes it has secured sufficient funding to successfully complete its restructuring, the result is more leverage than we would prefer to carry over several business cycles given the variability in earnings that can occur due to factors like weather and currency. As a result, we believe it is prudent to explore options that would allow the Company to accelerate debt reductions and therefore reduce our overall borrowing costs and debt service requirements. Among such alternatives are sales of assets. In this regard, under the direction of the Board of Directors, the Company is evaluating all of its assets. Included in this evaluation are factors such as whether the operations fit the Company's core operations, whether the Company can sustain a competitive advantage, and whether the assets would generate more value in a sale versus being internally managed. You may recall that when Little Giant Pump Company was sold, it was based upon these same criteria. The operation was not deemed to be near the Company's core and the value that was achieved in sale was worth more than the Company felt could be generated internally. Along these lines, investment bankers have been engaged to help the Company to evaluate whether various assets would meet the Company's sale criteria; however, we are not ready at this point in time to make any specific announcements about which assets may or may not be sold. Lastly, I thought I might anticipate any questions regarding our announcement regarding succession planning. I believe our press release on November 15, 2006 fully describes our intention to complete a natural and orderly transition of the Company's Chief Executive Officer. At this point in time, the Company has engaged an executive search firm to find and evaluate candidates for the position under the direction of the Company's Board of Directors. There is no definitive timetable for the completion of this search and our current CEO, Todd Herrick, will continue to serve as Chairman of the Board of Directors after his retirement as CEO. In conclusion, we remain highly committed to executing the plans that will yield improved results and enhance the overall liquidity of the Company. These plans are being executed and are producing favorable results; however, our overall success may also depend on conditions that are not totally within the Company's control, such as the cost of commodities, foreign currency exchange rates, and weather. While we are taking steps to mitigate the short-term effects of these factors, there are no assurances as to their longer term effects. That concludes my prepared comments, Amanda. I am now pleased to take your questions. -----END PRIVACY-ENHANCED MESSAGE-----