President's Letter for 2002 Annual Report

To Our Shareholders:

In last year's letter, I indicated that 2001 was quite possibly one of the most difficult years our Company had seen in the last twenty years. Unprecedented foreign competition, worldwide manufacturing over-capacity, regulatory pressures, uncooperative weather and the tragic events of September 11 all combined to reduce the Company's results. Despite these challenges, we vowed to respond to our circumstances with renewed energy and determination to build a stronger more profitable company. Having completed 2002, we are pleased to report that the employees of Tecumseh Products Company are fulfilling that promise.

As a result of continued rationalization of the Company, the Compressor operations showed positive results in 2002 with Compressor Group operating profit improving 43% over the prior year. We had similar success in the Pump group where operating profit improved 28% over the prior year. We did not, however, have similar success in the Engine & Power Train Group. A primary reason for the decline in this segment was rather weak industry sales of snow throwers, which are currently a critical market for the Group.

Beyond just operating results and perhaps more importantly, we remain dedicated to our mission to design and manufacture products that improve the human condition, to create a workplace of mutual respect and pride, where employees can build foundations for their families, and to be responsible to the communities in which we operate. As management, we are keenly aware of the importance of our stewardship in maintaining a healthy organization that can pursue its mission today, tomorrow and well into the future.

During 2002 we took some very significant steps to solidify the Company's future. Foremost, on December 30, 2002 we purchased the FASCO Motors Group, a leading manufacturer of fractional horsepower electric motors in the U.S. market. The acquisition serves several strategic objectives. First, it positions the Company to build more complete value-added systems for our customers across each of our markets. Second, it provides an opportunity to expand into additional geographic markets and applications. And third, it provides a prudent investment for our extensive cash resources. FASCO has a sound organization and shares the same core values as our other business segments.

The acquisition is indicative of the Company's key strategy of delivering greater value to our customers, by leveraging our broad expertise in mechanical and electrical engineering, and common manufacturing processes. However, at the same time, by operating our compressor, engine, pump and motor business units independently, each remains focused and responsive to the needs of our customers.

While we have much for which to be proud in 2002, there is still substantial work to be done. There is no end to our mission, nor is there a finish line to cross. We must make it better, faster, safer, cheaper and more reliable every day. This is the challenge to which every Tecumseh Products Company employee is dedicated.

On February 26, 2003, at the age of 81, my father and Chairman of the Board of Tecumseh Products Company, Kenneth Herrick, announced his retirement after 63 years of service to the Company. The Chairman was one of those dedicated employees with whom Tecumseh has been blessed. Because of his efforts and the efforts of his contemporaries, we must give thanks for much of the success we have enjoyed. The Board of Directors, employees, and I want to thank the Chairman for the years he has given us and wish him the best in his retirement.

Todd W. Herrick
Chairman of the Board of Directors,
CEO and President

January 31, 2003