Tecumseh Products 2012 Annual Report Download - page 4

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PART I
ITEM 1. BUSINESS
General
Tecumseh Products Company is a Michigan corporation organized in 1934. Unless the context states otherwise, the terms
“Company”, “we”, “us” and “our” refer to Tecumseh Products Company and its consolidated subsidiaries. We are a global
manufacturer of hermetically sealed compressors for residential and specialty air conditioning, household refrigerators and
freezers and commercial refrigeration applications.
Our products include air conditioning and refrigeration compressors, as well as condensing units, heat pumps and complete
refrigeration systems. Products range from fractional horsepower reciprocating compressors used in small refrigerators and
dehumidifiers to large reciprocating, rotary and scroll compressors used in commercial air conditioning and refrigeration
systems. We sell compressors for three primary applications: (i) commercial refrigeration, including walk-in coolers and
freezers, ice makers, dehumidifiers, water coolers, food service equipment and refrigerated display cases and vending
machines; (ii) household refrigerators and freezers; and (iii) residential and specialty air conditioning and heat pumps,
including window air conditioners, packaged terminal air conditioners and recreational vehicle and mobile air conditioners.
Tecumseh’s products are sold to original equipment manufacturers (“OEMs”) and authorized wholesale distributors.
Foreign Operations and Sales
We maintain manufacturing plants in the United States (“U.S.”), Brazil, France, and India as well as assembly plants in Canada,
Mexico, Malaysia and a joint venture in China. In 2012, sales to customers outside the U.S. represented approximately 80% of
total sales.
Our dependence on sales, assembly and manufacturing in foreign countries entails certain commercial and political risks,
including currency fluctuations, unstable economic or political conditions in some areas and the possibility of U.S. government
embargoes on sales to certain countries. In 2012, the U.S. government extended economic sanctions and export controls to Iran
and Syria. None of our sales in these countries in 2012, even prior to the extended sanctions, would have violated extended
economic sanctions and export controls to Iran and Syria. Our foreign manufacturing operations are subject to other risks
including, governmental expropriation, governmental regulations that may be disadvantageous to businesses owned by foreign
nationals and instabilities in the workforce due to changing political and social conditions. These considerations exist in all of
our foreign countries, but are especially significant in the context of our Brazilian operations, given the importance of their
overall size and performance in relation to our total operating results.
Compressor Product Lines
A compressor is a device that compresses a refrigerant gas. In applications that utilize compressors, when the gas is later
permitted to expand, it removes heat from the room or appliance by absorbing and transferring it, producing a cooling effect.
This technology forms the basis for a wide variety of refrigeration and air conditioning products. All of the compressors we
produce are hermetically sealed. Our current compressor line consists primarily of reciprocating, rotary, and scroll designs.
Our lines of compressors include:
• reciprocating piston models ranging from 145 to 1,100 BTU/hour used in household refrigerators and freezers,
• reciprocating piston models ranging from 365 to 73,000 BTU/hour used in commercial refrigeration applications, such
as ice makers, vending machines, food service equipment, display cases and refrigerated walk-in cold rooms,
• rotary compressors ranging from approximately 5,000 to 32,000 BTU/hour used in stationary and mobile air
conditioning applications, and
• scroll compressors ranging from 7,400 to 44,000 BTU/hour that are designed specifically for demanding commercial
refrigeration applications.
Rotary and scroll compressors generally provide increased operating efficiency, lower equipment space requirements and
reduced sound levels when compared to reciprocating piston models. In addition, we produce variable speed compressors for a
wide range of uses, including military, medical, telecommunications, aircraft, transportation and automotive applications. These
compressors use a variety of refrigerants for different applications, including hydrocarbon refrigerants. We also produce sub-
assemblies and complete refrigeration systems that use our compressors as components. Such products include indoor and