EXHIBIT 99.1
TECUMSEH PRODUCTS COMPANY REPORTS FIRST QUARTER 2007 RESULTS
Tecumseh, Michigan, May 15, 2007 . . . . Tecumseh Products Company
(NASDAQ-TECUA, TECUB) announced today its 2007 first quarter consolidated
results as summarized in the following Consolidated Condensed Statements of
Operations.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended
March 31,
------------------
(Dollars in millions except per share amounts) 2007 2006
----- -----
NET SALES $460.5 $446.1
Cost of sales 422.5 411.6
Selling and administrative expenses 44.1 45.2
Impairments, restructuring charges and other items -- 0.6
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OPERATING LOSS (6.1) (11.3)
Interest expense (13.3) (8.4)
Interest income and other, net 1.7 5.0
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LOSS FROM CONTINUING OPERATIONS BEFORE TAXES (17.7) (14.7)
Tax benefit (0.9) (2.6)
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LOSS FROM CONTINUING OPERATIONS 16.8 (12.1)
LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX -- (0.5)
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NET LOSS ($16.8) ($12.6)
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BASIC AND DILUTED LOSS PER SHARE:
CONTINUING OPERATIONS ($0.91) ($0.65)
DISCONTINUED OPERATIONS -- ($0.03)
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NET LOSS PER SHARE ($0.91) ($0.68)
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WEIGHTED AVERAGE SHARES (in thousands of shares) 18,480 18,480
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Consolidated net sales from continuing operations in the first quarter of 2007
increased to $460.5 million from $446.1 million in 2006. $13.2 million of the
$14.4 million increase in sales was due to the effects of currency translation.
Sales increases attributable to the Compressor segment ($37.8 million) were
offset by a slight decline in the Electrical Components segment ($5.8 million)
and a substantial decline ($17.9 million) in sales in the Engine & Power Train
segment. The remainder of the changes are attributable to businesses not
associated with any of our three major business segments.
Consolidated net loss from continuing operations for the first quarter of 2007
was $16.8 million ($0.91 per share) compared to net loss of $12.1 million ($0.65
per share) in the first quarter of 2006. The change in loss from continuing
operations, excluding impairments, restructuring charges, and other items,
reflected a $4.6 million improvement in operating loss. Increases in selling
price successfully offset the escalation in commodity pricing, particularly
copper, and improved results by $17.7 million when compared to the 2006 first
quarter. Improvements in productivity and purchasing costs, reductions in fixed
costs primarily associated with plant closures, and favorable pension credits
also contributed $14.4 million to 2007 first quarter results. However,
unfavorable trends in foreign currency exchange resulted in a $16.2 million
decline when compared to the prior year. Profit margins and changes in product
mix reduced operating income by $11.2 million. Although volumes improved in the
Compressor segment, lower sales volumes in the Electrical Components and Engine
& Power train segments, combined with a greater percentage of sales concentrated
in the less-profitable automotive product lines, drove the decrease.
Included in the variances discussed above were improvements in Selling, General
& Administrative expense of $1.1 million. Reductions in SG & A were primarily
attributable to overhead cost improvements that resulted from our restructuring
efforts over the past year, particularly at the Engine & Power Train group,
although these advances were somewhat offset by costs associated with
professional fees. Fees paid to AlixPartners were reduced over the prior year;
$4.0 million was incurred in the first quarter of 2007 for AlixPartners
services, including the services of James Bonsall, while $9.0 million was
incurred in the first quarter of 2006 for their consulting services provided to
our Engine & Power Train business. However, professional fees for the business
as a whole were $10.4 million in the first quarter of 2007, which included $4.6
million in fees in excess of those incurred in the ordinary course of business.
These costs were associated with the amendments to our First and Second Lien
credit agreements, the legal proceedings relating to governance issues, and our
efforts to market portions of the business.
There were no impairments, restructuring charges or other items in the three
months ended March 31, 2007, compared to $0.6 million in the three months ended
March 31, 2006.
Interest expense amounted to $13.3 million in the first quarter of 2007 compared
to $8.4 million in the first quarter of 2006. The increase was primarily related
to the higher average interest rates associated with our current borrowing
arrangements.
The consolidated condensed statement of operations reflects a $0.9 million
income tax benefit for the first quarter 2007 and a $2.6 million income tax
benefit for the first quarter 2006. The first quarters of both years reflected a
tax benefit in continuing operations offset by tax expense in other
comprehensive income and, at March 31, 2006, for discontinued operations as
well.
During the second quarter of 2006, we completed the sale of 100% of our
ownership in Little Giant Pump Company. The operating results of Little Giant
Pump Company for 2006 have been reclassified from continuing operations to
income from discontinued operations. Under accounting rules, we have also
allocated the portion of our interest expense associated with this operation to
the discontinued operations line item. As required by our lending agreements,
the proceeds were utilized to repay a portion of our debt.
COMPRESSOR BUSINESS
First quarter 2007 sales in the Compressor segment increased to $289.3 million
from $251.5 million in the prior year. $12.0 million of the $37.8 million
increase in sales was due to the effects of foreign currency translation. Sales
increases in this segment were led by the refrigeration and freezer product
lines (up $21.4 million), an increase of 24.7%. Consistent with the trends we
experienced in 2006, the sales increase in refrigeration and freezer compressors
was led by growth in new markets in India. Sales were also higher for the
commercial compressor product lines (up $11.8 million). This sales increase was
attributable to pricing advances rather than unit volumes.
Compressor business operating results for the first quarter of 2007 were income
of $10.5 million compared to income of $6.6 million in the first quarter of
2006. The higher operating income was attributable to pricing adjustments and
greater sales volumes ($23.3 million) and productivity and other
improvements ($6.8 million). These year-on-year improvements were partially
offset by unfavorable foreign currency exchange rates ($16.2 million) For the
first quarter, the Brazilian Real was on average 4.9% stronger against the U.S.
Dollar in 2007 versus 2006. The price of copper and other commodities also
contributed unfavorably to results in the first quarter of 2007. Including the
effects of hedging activities, the Company estimates that the continued
escalation in commodity pricing decreased operating income by approximately
$10.8 million compared to the first quarter of 2006.
ELECTRICAL COMPONENTS BUSINESS
Electrical Components business sales were $103.3 million for the first quarter
of 2007, a decrease of 5.3% compared to sales of $109.1 million in the same
quarter last year. Sales increases of $2.4 million in the automotive product
lines reflected the implementation of new programs with our customers and their
respective OEM's. Increases of $2.3 million were reported in the Asia Pacific
markets as well. Sales increases in the Asia Pacific markets were primarily due
to favorable impacts of currency exchange, but also reflected the addition of
new product in Thailand. These advances were offset by declines of $9.5 million
in residential & commercial motors; these declines were primarily due to the
mild winter, which reduced sales of components for gas furnaces and other
heating products.
Electrical Components operating results for the first quarter of 2007 were
income of $1.1 million compared to income of $4.9 million in the first quarter
of 2006. The differences were primarily related to volume declines and a less
favorable product mix ($10.1 million), as automotive product lines carry
substantially lower margins than residential & commercial motors. On the other
hand, productivity and other improvements increased operating income by $3.5
million. In addition, due to better hedging positions on our copper needs in the
first quarter of 2007, and pricing adjustments implemented to offset the
escalation in commodity pricing, commodity cost impacts improved results by $3.1
million compared to the first quarter of 2006.
ENGINE & POWER TRAIN BUSINESS
Engine & Power Train business sales were $63.0 million in the first quarter of
2007 compared to $80.9 million for the same period a year ago. Declines were led
by engines for walk behind mowers (down $5.2 million), a decline of 14.6%.
Engines for generators were also down by $4.7 million, declining by 68.1%,
consistent with an overall market trend due to the lack of significant hurricane
or other storm activity in recent months. Engines for riding mowers were also
down by $2.6 million or 21.2%. Reductions in both walk behind and riding mower
engines were a result of lower sales volumes with certain key customers. To a
lesser extent, the declines also reflected timing of purchases, as customers
delayed purchases into the second quarter of 2007. The remaining decreases in
the Engine & Power Train Group were spread across multiple product lines.
Engine & Power Train business operating loss for the first quarter of 2007 was
$8.0 million compared to a loss of $18.5 million during the same period a year
ago. Included in the results were AlixPartners' fees of $1.3 million in 2007 and
$9.0 million in 2006. Operating loss in the first quarter of 2006 was reduced
due to a gain of $3.5 million in 2006 from the sale of the segment's Douglas,
Georgia facility. The improvement in the first quarter results reflected lower
fixed costs, primarily associated with the segment's restructuring efforts ($5.9
million), and price increases ($2.8 million), offset by lost margins from
reductions in sales volume ($1.7 million).
IMPAIRMENTS AND OTHER RESTRUCTURING ITEMS
There were no impairments, restructuring charges or other items in the three
months ended March 31, 2007, compared to $0.6 million in the three months ended
March 31, 2006.
LEGAL PROCEEDINGS
On March 28, 2007, our Brazilian engine subsidiary, TMT Motoco, was granted
permission by the Brazilian court to pursue a judicial restructuring, which is
similar to U.S. Chapter 11 bankruptcy protection. TMT Motoco has sixty days from
the date the judicial restructuring was granted to submit its restructuring
plan, although that deadline may, under certain circumstances, be extended. The
facility suspended operations on the date it filed for the judicial
restructuring, and it has not been determined whether or when it will re-open in
the future.
The assets and liabilities of TMT Motoco at March 31, 2007 have been removed
from our consolidated balance sheets. The following is a summary of the assets,
liabilities and equity of TMT Motoco at March 31, 2007:
March 31,
(Dollars in millions) 2007
---------
Accounts receivable, net $ 0.6
Inventories 24.6
Other current assets 8.5
Property, plant and equipment, net 63.6
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Total Assets $ 97.3
======
Accounts payable, trade $ 8.0
Other current liabilities 25.7
Noncurrent Liabilities 67.7
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Total Liabilities 101.4
Shareholders' Deficit (4.1)
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Total Liabilities and Shareholders' Equity $ 97.3
======
ADEQUACY OF LIQUIDITY SOURCES
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 2006 and the first quarter of 2007 cash flows from operations were
negative and we have had to rely on existing cash balances, proceeds from credit
facilities and asset sales to fund its needs.
Throughout the first quarter, our main domestic credit facilities were provided
under a $250 million First Lien Credit Agreement and a $100 million Second Lien
Credit Agreement. Both agreements provide 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 first quarter, the weighted average
annual interest rate on our borrowings under these agreements was 10.1%.
Under the terms of the First Lien Credit Agreement, as of March 31, 2007 we had
the capacity for additional borrowings under the borrowing base formula of $32.1
million in the U.S. and $43.4 million in foreign jurisdictions. Both the First
Lien Credit Agreement and the Second Lien Credit Agreement have three year
terms, expiring in November, 2009.
In March of 2007, our Brazilian engine subsidiary, TMT Motoco, was granted
permission by the Brazilian courts to pursue a judicial restructuring, similar
to a U.S. filing for Chapter 11 bankruptcy protection. The TMT Motoco filing in
Brazil constituted an event of default with our domestic lenders. On April 9,
2007 we obtained amendments to our First and Second Lien Credit Agreements that
cured the cross-defaults triggered by the filing in Brazil.
As part of the April 9, 2007 amendments to our First and Second Lien Credit
Agreements, the minimum cumulative Adjusted EBITDA levels (measured from October
1, 2006) for the 2007 quarterly periods (in millions) were set at:
Quarterly Period Ending First Lien Agreement Second Lien Agreement
- ----------------------- -------------------- ---------------------
March 31, 2007 ($8.0) ($10.0)
June 30, 2007 $17.0 $15.0
September 30, 2007 $42.0 $40.0
December 31, 2007 $62.0 $60.0
As defined by the credit agreements, as of March 31, 2007 our cumulative
Adjusted EBITDA was $13.3 million or $21.3 million in excess of the covenant
levels.
These levels of Adjusted EBITDA are subject to further adjustment if certain
business units or product lines are sold during the period. In addition, other
terms of the amendments included limitations on the amounts of capital
expenditures and professional fees during the term of the agreements.
If a permanent Chief Executive Officer was not hired by May 1, 2007, the
amendment to our Second Lien credit agreement also included a 2.5% per annum
step-up in cash interest rate from that day forward until such time as a
permanent CEO was hired. However, the agreement provided that the additional
interest would not be assessed beginning May 1 if the CEO candidate had not
assumed his or her duties due either to a personal emergency or inability to
reach agreement on terms of employment. Since this condition was met, the
additional interest is not being assessed, and will not be assessed as long as
we continue to apply our best efforts to engaging a permanent CEO as soon as
possible.
We paid $625,000 in fees, plus expenses, to the First Lien lender upon execution
of the agreement. In addition to fees paid of $750,000, plus expenses, to the
Second Lien lender, we also granted warrants to purchase a number of shares of
Class A Common Stock equal to 7% of our fully diluted common stock. These
warrants, valued at $7.7 million, expire five years from the date of the
execution of this amendment to the Second Lien credit agreement. The sum of
these costs will be recorded as interest expense in the second quarter of 2007.
Interest on the 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.
The Second Lien Credit Agreement provides 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 required by our
lending arrangements 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.
In the event that we fail to improve performance through these measures, our
ability to raise additional funds through debt financing will be limited. We are
also concerned about the amount of debt we are carrying in this challenging
operating environment and as we seek to improve our company's financial
performance. As a result, we are evaluating the feasibility of asset sales as a
means to reduce our total indebtedness and to increase liquidity.
OUTLOOK
Information in this "Outlook" section should be read in conjunction with the
cautionary statements and discussion of risk factors included elsewhere in this
report.
The outlook for 2007 is subject to the same variables that have negatively
impacted us throughout 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, we do 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 April 30, 2007, the price of
aluminum increased approximately 22%, and the price of copper increased over 64%
in the same time frame. In the first quarter of 2007 alone, copper prices
escalated by over 10%. However, due to copper forward purchase contracts
obtained prior to the cost increase, we were able to maintain costs consistent
with, or slightly better than, our 2007 business plan. We currently hold
approximately 75% of our total projected copper requirements for 2007 in the
form of forward purchase contracts, which will provide us with substantial
(though not total) protection from further price increases during the year but
also will detract from our ability to benefit from any price decreases. In any
case, the cost of copper to the business will continue to run significantly
higher than in 2005 and prior years, and
continued escalation of copper prices through 2007 and into 2008 and beyond
could have a long-term unfavorable impact on our results of operations, if
adequate pricing increases cannot be obtained from our customers. Lack of storm
activity has significantly reduced sales of engines used for generators and
snowthrowers, and has left us and the industry with above normal inventory
levels.
The Brazilian Real continues to strengthen against the dollar, and strengthened
13.1% from January 1, 2006 to April 30, 2007. From January 1 through March 31,
2007, the Real strengthened by 4.1%. Net of currency hedging activities, this
continued strengthening of the Real affected our operating results unfavorably
by approximately $2.4 million when compared to our 2007 plan.
Nonetheless, we expect the operating results of all three of our business
segments to improve in the second quarter of 2007 when compared to the results
of the comparable 2006 period. Pricing adjustments in the Compressor group,
implemented to offset the escalating price of copper, are the most significant
improvement expected in that segment when compared to the prior year. In
addition, for both the Compressor group and the Electrical Components group,
operational efficiencies and productivity improvements are expected to improve
operational margins when compared to the second quarter of 2006.
Despite the expectation of continued lower levels of sales in the Engine & Power
Train group because of unfavorable market conditions, results in that group are
expected to improve over the second quarter of 2006 excluding restructuring
charges. The improvement continues to be driven by the overall restructuring
efforts undertaken by AlixPartners. As part of these efforts, as previously
mentioned, we have recently announced the upcoming closure of our engine
facility in New Holstein, Wisconsin. Although the impairments taken in the
fourth quarter of 2006 represent substantially all of the expected charges
related to the Engine & Power Train Group restructuring, some charges, expected
to be relatively minor, will be incurred in 2007 in order to account for
employee severance costs at the New Holstein facility.
The restructuring plan for our Brazilian engine subsidiary, TMT Motoco, is
currently being developed. It is uncertain at this point whether or when the
facility will re-open. In the interim, we are continuing to meet the needs of
our customers for lawn and garden engines, as a substantial portion of 2007
summer season requirements had already been produced prior to suspension of
operations. We will consider multiple factors in determining the future
viability of TMT Motoco, including (i) customer requirements, (ii) the
willingness of Brazilian lenders to support continued manufacturing operations
in that country, (iii) the impact to profitability from any further
strengthening of the Brazilian Real, and (iv) the cost to retool operations to
address upcoming changes in environmental regulations. The range of potential
outcomes of the restructuring plan include resuming full scale production,
minimal production and/or rental of the facility, or a controlled liquidation.
As further continuous improvement initiatives are executed across all our
business segments, it is possible that additional assets will become impaired.
While no such actions have been approved, they could have a significant effect
on our consolidated financial position and future results of operations.
As part of our efforts to improve profitability and reduce the consumption of
capital resources, we continue to seek price increases to cover our increased
input costs, and expect that further employee headcount reductions,
consolidation of productive capacity and rationalization of product platforms
will be necessary. As part of these efforts, we announced certain operational
actions and staff reductions on April 27, 2007 at the Compressor and Engine &
Power Train business units. While no specific further
actions have been approved, we believe that such actions will contribute to
restoring our profitability, 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 our
consolidated financial position and future results of operations.
In addition, we are also concerned about the amount of debt we are carrying
during this period of unfavorable operating environment. Our weighted average
interest rate for long-term debt at March 31, 2007 was approximately 1.3% higher
than the same period a year ago, resulting in higher interest expense on
approximately similar levels of debt. As well, the Second Lien Credit Agreement
provides for additional paid in kind ("PIK") interest at the rate of 5.0% if
outstanding debt balances are not reduced by certain specified dates.
The 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.
Our success in generating cash flow will depend, in part, on our ability to
efficiently manage working capital. Seasonal patterns and the need to build
inventories to manage production transfers during restructuring programs have
recently caused higher working capital needs. As we complete these restructuring
programs, we expect our need for these higher working capital levels to be
reduced.
As part of addressing the company's liquidity needs, we are planning
substantially lower levels of capital expenditures in 2007. Capital expenditures
in 2007 are projected to be approximately $28 million less than in 2006 and $80
million less than in 2005. This reduction in capital expenditures will further
conserve our cash flows, allowing for additional potential to reduce our
outstanding debt.
We are also evaluating the potential sale of product lines or divisions of the
Company. The proceeds from any such sales would be used to reduce our
indebtedness.
Finally, we are in the process of executing a conversion of our Salaried
Retirement Plan to a new Plan. The existing Plan is substantially over-funded.
We expect that this conversion will make net cash available in late 2007 or 2008
to the Company of approximately $55 million, while still fully securing the
benefits under the old Plan and funding the new Plan, without additional annual
contributions, for six to eight future years.
RESULTS BY BUSINESS SEGMENTS (UNAUDITED)
Three Months Ended
March 31,
-------------------
(Dollars in millions) 2007 2006
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NET SALES:
Compressor Products $ 289.3 $ 251.5
Electrical Components Products 103.3 109.1
Engine & Power Train Products 63.0 80.9
Other (a) 4.9 4.6
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Total net sales $ 460.5 $ 446.1
======= =======
OPERATING INCOME (LOSS):
Compressor Products $ 10.5 $ 6.6
Electrical Components Products 1.1 4.9
Engine & Power Train Products (8.0) (18.5)
Other (a) 0.3 0.3
Corporate expenses (10.0) (4.0)
Impairments, restructuring charges, and other items -- (0.6)
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Total operating income (loss) from continuing operations (6.1) (11.3)
Interest expense (13.3) (8.4)
Interest income and other, net 1.7 5.0
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LOSS FROM CONTINUING OPERATIONS BEFORE TAXES ($17.7) ($14.7)
======= =======
(a) "Other" consists of non-reportable business segments.
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, December 31,
(Dollars in millions) 2007 2006
--------- ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 48.7 $ 81.9
Accounts receivable, net 257.6 219.5
Inventories 321.6 353.4
Other current assets 84.1 78.6
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Total current assets 712.0 733.4
PROPERTY, PLANT AND EQUIPMENT - NET 487.8 552.4
GOODWILL AND OTHER INTANGIBLES 179.4 180.0
OTHER ASSETS 327.0 316.9
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TOTAL ASSETS $1,706.2 $1,782.7
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable, trade $ 221.7 $ 216.0
Short-term borrowings 78.5 163.2
Accrued liabilities 132.1 130.1
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Total current liabilities 432.3 509.3
LONG-TERM DEBT 228.0 217.3
DEFERRED INCOME TAXES 31.5 28.6
PENSION AND POSTRETIREMENT BENEFITS 177.3 180.9
PRODUCT WARRANTY AND SELF-INSURED RISKS 14.4 13.6
OTHER NON-CURRENT LIABILITIES 32.9 34.6
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Total liabilities 916.4 984.3
STOCKHOLDERS' EQUITY 789.8 798.4
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $1,706.2 $1,782.7
======== ========
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS' EQUITY (UNAUDITED)
Three Months Ended
March 31,
------------------
(Dollars in millions) 2007 2006
------ ------
Total Stockholders' Equity
Beginning balance $798.4 $814.4
IMPACT OF THE ADOPTION OF FIN 48 (0.4) --
COMPREHENSIVE INCOME (LOSS):
NET LOSS (16.8) (12.6)
OTHER COMPREHENSIVE INCOME (LOSS) 8.6 18.4
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TOTAL COMPREHENSIVE INCOME (LOSS) (8.2) 5.8
------ ------
Total stockholders' equity
Ending balance $789.8 $820.2
====== ======
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
------------------
(DOLLARS IN MILLIONS) 2007 2006
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CASH FLOWS FROM OPERATING ACTIVITIES:
CASH USED BY OPERATING ACTIVITIES ($50.8) ($44.5)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Cash effect of deconsolidation of TMT Motoco (0.3) --
Proceeds from sale of assets -- 9.0
Capital expenditures (1.9) (20.0)
Business acquisition -- (2.0)
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CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (2.2) (13.0)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Senior Guaranteed Notes -- (250.0)
Repayment of Industrial Development Revenue Bonds -- (10.5)
Proceeds from First Lien Credit Agreement 8.3 168.3
Repayments of First Lien Credit Agreement -- --
Proceeds from Second Lien Credit Agreement -- 100.0
Other proceeds (repayments), net 8.8 16.2
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CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 17.1 24.0
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Effect of exchange rate changes on cash 2.7 (0.3)
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Decrease in cash and cash equivalents (33.2) (33.8)
Cash and cash equivalents:
BEGINNING OF PERIOD 81.9 116.6
------- -------
END OF PERIOD $ 48.7 $ 82.8
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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) our ability to maintain adequate liquidity in total and within each
foreign operation; 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) 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 first
quarter 2007 results on Wednesday, May 16, 2007 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