Tecumseh Products Company Reports First Quarter 2009 Results

- The pace of the global economic contraction in the fourth quarter of 2008
continued into the first quarter of 2009, resulting in similar downward
pressures on sales volumes and margins, culminating in a net loss of $23.9
million for the quarter

- Total cash and equivalents amounted to $88.0 million, a reduction of $25.1
million when compared to the beginning of the year. Included in the cash
reduction was a $13.1 million payment to the purchaser of the Engine and
Powertrain business for purchase price adjustments related to final working
capital. Otherwise, cash was utilized in the first quarter 2009 to manage the
downturn in volume.

- The Company continues to meet the demands of the challenging economic
environment and position itself for the eventual recovery, with ongoing
efforts to match infrastructure with current volumes, improve efficiencies and
reduce operating costs

ANN ARBOR, Mich., May 11 /PRNewswire-FirstCall/ -- Tecumseh Products Company
(Nasdaq: TECUA, TECUB), a leading global manufacturer of compressors and
related products, today announced results for its first quarter ended Mar. 31,
2009.

"As in the fourth quarter of 2008, the global economy remained very weak in
the first quarter of 2009, resulting in considerable downward pressure on
volumes and margins," said Ed Buker, Chairman, President and CEO of Tecumseh
Products. "Moreover, some regions, such as Europe, worsened during the first
quarter of 2009 when compared to the end of last year. Faced with these
conditions, during the quarter just ended we took additional actions to reduce
costs and adjust to lower output levels, and we will continue to do so until
global economies recover."

Consolidated net sales from continuing operations in the first quarter of 2009
decreased to $148.1 million from $275.2 million in 2008. After consideration
for the effect of currency translation, which decreased sales in U.S. dollars
by $28.3 million, sales declined by $98.8 million or 36%. Sales for
refrigeration & freezer ("R&F") applications recorded the most significant
decline, with sales reduced by $58.0 million or 66% year-on-year. Volumes for
R&F product were the most substantially affected by the global economic
contraction, as consumer credit has become more constrained than in the first
quarter of 2008 and the rate of housing starts has declined. The downturn in
market volumes for R&F applications was the end-result of a twofold effect of
these economic conditions; a decreased demand by consumers, combined with
lower demand from our R&F customers as they brought their own inventories in
line with lower volumes. Compressors for commercial and aftermarket
applications also showed a substantial decline when compared to the first
quarter of 2008, down by $52.4 million or 38%. For the commercial and
aftermarket business, volume declines were also driven by softer economic
conditions as well as lower shipments to customers as they too reduced
inventory balances to better reflect current sales levels. Sales of
compressors for air conditioning and other applications declined by $16.7
million or 34%.

Cost of sales was $138.8 million in the three months ended March 31, 2009
compared to $229.7 million in the three months ended March 31, 2008. As a
percentage of net sales, cost of sales was 93.7% and 83.5% in the first
quarters of 2009 and 2008, respectively. Gross profit (defined as net sales
less cost of sales) declined by $36.2 million, from $45.5 million in the first
quarter of 2008 to $9.3 million in the first quarter of 2009. The most
substantial impact to profitability in the first quarter of 2009 was volume
declines, which had an unfavorable impact of $29.6 million when compared to
the same quarter of 2008. Unfavorable commodity costs of $4.6 million when
compared to the prior year were also a factor; while we saw commodities
generally move in directions favorable to us over the second half of 2008, our
practice of mitigating our exposure to such movements will result in limited
benefit being realized, particularly in the first half of 2009. All other
purchasing-related costs were also unfavorable by $4.5 million. Pricing and
mix impacts were unfavorable by $3.3 million, and the effect of all other
income and expense items reduced operating results year-on-year by a total of
$8.4 million. These declines were offset by productivity gains of $9.8
million, reflecting cost reduction and efficiency improvements that have been
implemented over the course of the past twelve months. Currency impacts were
also favorable in the quarter, due to the strengthening U.S. dollar, improving
results by $4.4 million.

Selling and administrative ("S&A") expenses were $32.2 million and $31.6
million in the three months ended March 31, 2009 and 2008 respectively. As a
percentage of net sales, S&A expenses were 21.7% in the first quarter of 2009
compared to 11.5% in the first quarter of 2008. We recorded expenditures of
approximately $3.3 million in the first quarter of 2009 for one-time
professional fees, which primarily comprised legal fees for corporate
governance issues. This expenditure constituted an increase of $1.6 million
in professional fees incurred for one-time projects when compared to the same
period in 2008. All other S&A expenses were reduced by a total of $1.0
million.

Buker commented, "We continue to make progress in reducing costs and
increasing global operating efficiency, including working toward eliminating
waste created over the past several decades. While we are being very
judicious in our moves in order to conserve our cash resources, we believe the
Company is poised to return to profitability when volumes rebound."

Interest expense amounted to $2.9 million in the three months ended March 31,
2009 compared to $7.3 million in the same period of 2008. The substantially
lower interest expense in the current quarter was primarily attributable to
reduced borrowings, including both debt balances and accounts receivable
factoring, in the quarter just ended. In addition, interest expense in the
first quarter of 2008 included $1.4 million in fees associated with our former
first lien credit agreement that were expensed upon its termination. Interest
income and other, net was $0.8 million in the first quarter of 2009 compared
to $1.8 million in the first quarter of 2008, reflecting the lower levels of
cash and short-term investments held in 2009.

The Company recorded expense of $5.9 million and $0.5 million in impairments,
restructuring charges, and other items in the periods ended March 31, 2009 and
2008 respectively. A summary of these charges (gains) is as follows:

Three Months Three Months
Ended Ended
(Dollars in millions) March 31, 2009 March 31, 2008
Excise tax expense on proceeds from
salaried retirement plan reversion $--- $20.0
Severance, restructuring costs, and
special termination benefits 3.3 2.6
Gain on sale of buildings and machinery --- (0.6)
Loss on transfer of surplus land 0.3 ---
Environment reserve on held-for-sale
building 2.3 ---
Curtailment and settlement (gains) / losses --- (21.5)
Total impairments, restructuring charges,
and other items $5.9 $0.5

As a result of the factors described above, losses from continuing operations
were $24.5 million in the current quarter, compared to a profit of $6.7
million in the first quarter of the prior year.

As of March 31, 2009, the Company reported total cash and cash equivalents of
$88.0 million. Cash used by operations amounted to $28.3 million in 2009, as
compared to cash provided by operations of $120.5 million in 2008. The 2009
results incorporated a net loss of $23.9 million, which included the non-cash
impact of $9.5 million in depreciation expense. The Company also paid a
working capital settlement to the purchaser of its former Engine & Powertrain
business of $13.1 million. In the first quarter of 2008, the $80 million in
net proceeds realized from the reversion of the Company's salaried retirement
plan was a significant element of the increase in cash, as was net income of
$17.0 million.

With respect to working capital, inventories decreased by $10.1 million during
2009, reflecting the lower balances required in the first quarter of 2009 to
address current manufacturing requirements as well as global efforts to reduce
inventories. Accounts receivable also declined by $5.8 million from the
beginning of the year. Both days sales outstanding ("DSO") and days inventory
on hand ("DOH") improved considerably when compared to the end of 2008,
declining by eight and eleven days respectively. The Company also recorded
decreases to accounts payable and other accrued expenses and liabilities (down
$27.4 million since the end of 2008), which was primarily attributable to the
current dip in sales volumes (which lead to reduced purchases of raw
materials), as well as the payment of the working capital settlement described
above.

Cash used by investing activities was $2.1 million in the first three months
of 2009 versus cash used by investing activities of $1.6 million for the same
period of 2008. $6.8 million in proceeds were received from the sale of
assets during 2008, while no such proceeds were recorded in the first three
months of 2009. Changes in restricted cash balances represented a source of
$0.5 million in cash in 2009 and a use of $7.6 million in cash in 2008.

Cash provided by financing activities was $7.2 million in the first quarter of
2009 as compared to cash provided by financing activities of $3.2 million in
the comparable period of 2008. The changes in both periods were due to
increases in borrowing at foreign facilities.

Tecumseh reported that the condition of the global economy as discussed above
as well as dramatic fluctuations in commodity costs and key currency rates had
a significant impact on its business operations in the first quarter of 2009.
The outlook for the remainder of 2009 is subject to these same variables.

The Company continues to be concerned about maintaining its expected level of
sales volumes, particularly in light of current global economic conditions.
The negative volume trends in the third and fourth quarters of 2008 were
significantly more pronounced than the Company had anticipated earlier in that
year, and sales volumes in the first quarter of 2009 were consistent with
performance in the fourth quarter of 2008. The Company cannot currently
project when sales volumes may begin to rebound. If a greater-than-expected
decline in volume occurs in key markets, this could have a further adverse
effect on the Company's current outlook.

Certain key commodities, including copper, saw significant fluctuations in
pricing during 2008 and the first quarter of 2009; copper prices increased by
more than 22% through July and then dropped almost 63% in August through
December, before rising by nearly 24% in the first quarter of 2009. As of
March 31, 2009, the Company held approximately 70% of its total projected
copper requirements for the remainder of 2009 in the form of forward purchase
contracts and futures, which will provide it with substantial (though not
total) protection from any resurgence in price during the remainder of the
year but also will detract from its ability to benefit from any price
decreases. The Company expects the total 2009 cost of purchased materials for
the full year, including the impact of hedging activities, to be slightly
higher than the prior year, depending on commodity cost levels (particularly
steel costs) over the course of the year. As a partial means of addressing
the escalating costs of commodities in 2008, the Company implemented price
increases; over the course of 2009 it expects to monitor pricing levels
closely to ensure they correspond appropriately to changes, either favorable
or unfavorable, in cost structure.

"In the first quarter we saw some benefit from the strengthening of the
dollar, but the effect was somewhat muted by our currency hedging programs and
the sharply lower volumes," noted James Nicholson, Chief Financial Officer of
Tecumseh Products. "Although we saw some stability in commodity prices late
in the fourth quarter and early in the first quarter, the prices of some
inputs, notably copper, have again become volatile. Our hedging portfolio
contains many contracts executed when copper was at substantially higher
prices, which will continue to limit the benefit of improved lower copper
prices, particularly through the first half of 2009. While we expect that our
current hedging will mitigate a considerable portion of this volatility, we
will continue to work with our global supply base to enhance productivity and
reduce costs. We will also remain diligent in our use of forwards and futures
to hedge our exposure to both commodities and currencies."

The Brazilian real, euro and Indian rupee continue to show significant
volatility against the U.S. dollar. The Company has considerable forward
purchase contracts to cover its exposure to fluctuations in value during 2009.
In the aggregate, the changes in foreign currency exchange rates, after
giving consideration to open contracts and including the impact of balance
sheet re-measurement, are expected to have a favorable financial impact
totaling approximately $18 million when compared to 2008 at current projected
exchange rates.

As part of its efforts to offset unfavorable market conditions, improve
profitability and reduce the consumption of capital resources, the Company's
plans for 2009 include continued cost reduction activities including, but not
limited to, further employee headcount reductions, consolidation of productive
capacity and rationalization of product platforms, and revised sourcing plans.
During 2008, the Company reduced its headcount by approximately 2,400 people;
further headcount reductions of approximately 600 people since January 1, 2009
reflect the Company's ongoing efforts to scale the business to current levels
of volume.

The amount of capital expenditures incurred during 2009 will ultimately depend
on the timing and extent of economic recovery. The Company anticipates that
2009 capital expenditures will be in the range of $15 to $18 million - below
its current target average of $20 to $25 million per year - as the Company
carefully manages and prioritizes expenditures based on the potential to
achieve rapid return on the capital invested.

Buker concluded: "Wherever possible, we continue to control our spending very
carefully. We continue to share the frustration regarding the high costs
associated with addressing legacy issues created by former management and
remain committed to resolving these items as efficiently as possible. Even
amid the current global economic downturn, we remain unwavering in our
commitment to transforming Tecumseh into a world-class competitor in our core
compressor market. We have made significant strides in streamlining our
operations and global manufacturing footprint, and are benefiting from the
expertise of the team of high-caliber professionals we have assembled to
manage our business. The next step in the Company's evolution will occur at
our upcoming annual meeting, where shareholders will have the opportunity to
support the modernization of our capital structure and select the group of
highly qualified, seasoned directors put forth by our Board to manage
Tecumseh's future growth. I trust our shareholders will make the right
decision and support the Company's current leadership in adopting these
measures."

Conference Call to Discuss First Quarter 2009 Results
Tecumseh Products Company will host a conference call to report on the
Company's first quarter 2009 results on Tuesday, May 12, 2009 at 11:00 a.m.
ET. The call will be broadcast live over the Internet and then be made
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 web site at
http://www.tecumseh.com.

Cautionary Statements Relating to Forward-Looking Statements
This release 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) unfavorable changes in macro-economic conditions and the
condition of credit markets, which may magnify other risk factors; ii) the
success of our ongoing effort to bring costs in line with projected production
levels and product mix; iii) financial market changes, including fluctuations
in foreign currency exchange rates and interest rates; iv) availability and
cost of materials, particularly commodities, including steel and copper, whose
cost can be subject to significant variation; v) actions of competitors; vi)
our ability to maintain adequate liquidity in total and within each foreign
operation; vii) the effect of terrorist activity and armed conflict; viii)
economic trend factors such as housing starts; ix) the ultimate cost of
resolving environmental and legal matters, including any liabilities resulting
from the regulatory antitrust investigations commenced by the United States
Department of Justice Antitrust Division, the Secretariat of Economic Law of
the Ministry of Justice of Brazil or the European Commission, any of which
could preclude commercialization of products or adversely affect profitability
and/or civil litigation related to such investigations; x) emerging
governmental regulations; xi) the ultimate cost of resolving environmental and
legal matters; xii) our ability to profitably develop, manufacture and sell
both new and existing products; xiii) 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; xiv) the extent of any business
disruption caused by work stoppages initiated by organized labor unions; xv)
potential political and economic adversities that could adversely affect
anticipated 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) increased or unexpected warranty claims; and xviii) the
ongoing financial health of major customers. These forward-looking statements
are made only as of the date of this release, and the Company undertakes no
obligation to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)*

Three Months Ended
(Dollars in millions, except per share data) March 31,
2009 2008

Net sales $148.1 $275.2
Cost of sales 138.8 229.7
Selling and administrative expenses 32.2 31.6
Impairments, restructuring charges, and other items 5.9 0.5
Operating (loss) income (28.8) 13.4
Interest expense (2.9) (7.3)
Interest income and other, net 0.8 1.8
(Loss) income from continuing operations before taxes (30.9) 7.9
Tax (benefit) expense (6.4) 1.2
(Loss) income from continuing operations (24.5) 6.7
Income from discontinued operations, net of tax 0.6 10.3
Net (loss) income ($23.9) $17.0

Basic (loss) earnings per share*:
(Loss) income from continuing operations (1.32) 0.36
Income from discontinued operations 0.03 0.56
(Loss) income per share, basic ($1.29) $0.92

Diluted (loss) earnings per share**:
(Loss) income from continuing operations (1.32) 0.34
Income from discontinued operations 0.03 0.52
(Loss) income per share, diluted ($1.29) $0.86

Weighted average shares, basic (in thousands) 18,480 18,480
Weighted average shares, diluted (in thousands) 19,871 19,871

Cash dividends declared per share $0.00 $0.00

* The consolidated condensed financial statements of Tecumseh Products
Company and Subsidiaries (the "Company") are unaudited and reflect all
adjustments (including normal recurring adjustments) which are, in the
opinion of management, necessary for a fair statement of the financial
position and operating results for the interim periods. The Dec. 31, 2008
consolidated condensed balance sheet data was derived from audited
financial statements, but does not include all disclosures required by
generally accepted accounting principles in the United States ("U.S.
GAAP"). The consolidated condensed financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
contained in the Company's Annual Report for the fiscal year ended Dec.
31, 2008. Due to the seasonal nature of certain product lines, the
results of operations for the interim period are not necessarily
indicative of the results for the entire fiscal year.

** In 2007, we issued a warrant to a lender to purchase 1,390,944 shares
of our Class A Common Stock, which is equivalent to 7% of our fully
diluted common stock (including both Class A and Class B shares). Diluted
earnings per share for the three months ended March 31, 2008 are therefore
calculated based on a total of 19,870,628 shares. For the three months
ended March 31, 2009, however, this warrant is not included in diluted per
share information, as the effect would be antidilutive due to the losses
recorded in continuing operations.

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

March 31, December 31,
(Dollars in millions) 2009 2008
Assets
Current assets:
Cash and cash equivalents $88.0 $113.1
Restricted cash 12.0 12.5
Accounts receivable, net 80.5 88.1
Inventories 111.5 123.0
Assets held for sale 19.7 21.7
Other current assets 50.5 54.2
Total current assets 362.2 412.6
Property, plant and equipment - net 235.7 244.3
Prepaid pension expense 81.1 81.0
Other assets 60.7 60.6
Total assets $739.7 $798.5
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, trade $89.5 $109.6
Short-term borrowings 37.2 30.4
Liabilities held for sale 0.7 1.0
Accrued liabilities 76.1 98.2
Total current liabilities 203.5 239.2
Long-term debt 0.3 0.4
Deferred income taxes 4.2 8.7
Pension and postretirement benefits 57.2 58.2
Product warranty and self-insured risks 6.4 8.0
Other non-current liabilities 7.5 6.6
Total liabilities 279.1 321.1
Stockholders' equity 460.6 477.4
Total liabilities and stockholders' equity $739.7 $798.5

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three Months Ended
(Dollars in millions) March 31,
2009 2008
Cash flows from operating activities:
Cash (used in) provided by operating activities ($28.3) $120.5
Cash flows from investing activities:
Proceeds from sale of assets --- 6.8
Capital expenditures (2.6) (0.8)
Change in restricted cash 0.5 (7.6)
Cash used in investing activities (2.1) (1.6)
Cash flows from financing activities:
Debt issuance / amendment costs --- (1.6)
Borrowings / (repayments), net 7.2 4.8
Cash provided by financing activities 7.2 3.2
Effect of exchange rate changes on cash (1.9) (1.9)
(Decrease) increase in cash and cash equivalents (25.1) 120.2
Cash and cash equivalents:
Beginning of period 113.1 76.8
End of period $88.0 $197.0

Contact:
Teresa Hess
Director, Investor Relations
Tecumseh Products Company
734-585-9507

SOURCE Tecumseh Products Company

Teresa Hess, Director, Investor Relations, Tecumseh Products Company,
+1-734-585-9507