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WD-40 Company Reports First Quarter Net Income Up 28.4%


SAN DIEGO, Jan. 6 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the first quarter ended November 30, 2004 of $60.7 million, an increase of 15.5% over the first quarter last fiscal year.

Net income for the quarter was $5.6 million, up 28.4% compared to the prior year's quarter. Earnings per share were $0.34 in the first quarter, compared to $0.26 per share in the same quarter last year.

"We had a good start to our year and are in line with meeting our expectations," said Garry O. Ridge, WD-40 Company president and chief executive officer. "At the same time, we are very concerned about rising costs for steel, chemicals, and packaging components which are affecting many manufacturers. While containing cost is always a priority, we will have to raise prices during fiscal year 2005. Rising costs will likely have some effect on margins before we can put a price increase into place."

Fiscal Year Guidance

In fiscal year 2005, WD-40 Company still expects net income to increase 5.5% to $27 million, achieving earnings per share of $1.62 based on an estimated 16.7 million shares outstanding.

As previously announced on December 15, 2004, the board of directors of WD-40 Company declared a regular quarterly dividend on December 14, 2004 of $.20 per share, payable January 30, 2005 to stockholders of record on January 8, 2005.

"We are pleased with the work done in the area of product innovation and continue to develop and introduce new products and brand extensions across the globe, and we will provide updates when we can estimate the impact these products will have on the year," Ridge said.

Total sales for the quarter were 71% from the Americas, 24% from Europe and 5% from Asia/Pacific. In the Americas, sales for the first quarter were up 7.8% from a year ago.

In Europe, sales were up 44.9% for the first quarter.

"We are pleased with the 1001 brand and the introduction of new 1001 items," Ridge said. "We have also had good success with the introduction of the 3-IN-ONE Professional Line in Europe, particularly in Spain."

In the Asia/Pacific region, sales for the quarter were up 18.8% from last year.

"We are also pleased with the performance of the household products in Asia/Pacific, particularly with Carpet Fresh No Vac in Australia," Ridge said.

Global sales of the lubricants WD-40(R) and 3-IN-ONE Oil(R) were up 18.4% for the quarter.

"We had strong performance from WD-40 across almost every region and are seeing strong global growth from the 3-IN-ONE brand as well," Ridge said. "The 3-IN-ONE Oil Professional Line continues to perform well as we position that brand to maintain our overall category strength."

Sales of heavy-duty hand cleaners Lava(R) and Solvol(R) were up 9.2% for the quarter.

Sales of household products X-14(R), Carpet Fresh(R), 2000 Flushes(R), Spot Shot(R) and 1001 (R) were up 11.4% compared to the previous year's quarter. Excluding 1001, which was acquired in April 2004, household product sales were up 0.7% versus the first quarter last year.

WD-40 Company's 10-Q will be filed on January 10, 2005.

WD-40 Company, with headquarters in San Diego, is a global consumer products company dedicated to building brand equities that are first or second choice in their respective categories. The company will leverage and build the brand fortress of WD-40 Company by developing and acquiring brands that deliver a unique high value to end users and that can be distributed across multiple trade channels in one or more areas of the world. WD-40 Company produces multi-purpose lubricants, WD-40(R), and 3-IN-ONE(R), the Lava(R) and Solvol(R) brands of heavy-duty hand cleaners, and household products 2000 Flushes(R), X-14(R), Carpet Fresh(R), Spot Shot(R) and 1001(R). WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $242.5 million in fiscal 2004. Additional information about WD-40 Company can be obtained online at www.wd40.com.

Except for the historical information contained herein, this news release contains forward-looking statements concerning WD-40 Company's outlook for sales, earnings, dividends and other financial results. These statements are based on an assessment of a variety of factors, contingencies and uncertainties considered relevant by WD-40 Company. Forward-looking statements involve risks and uncertainties, which cause actual results to differ materially from the forward-looking statements, including impacts of promotional and advertising programs, impacts of new product introductions and innovations, increases in raw material costs, and the uncertainty of market conditions, both in the United States and internationally. The company's expectations, beliefs and projections are expressed in good faith and are believed by the company to have a reasonable basis, but there can be no assurance that the company's expectations, beliefs or projections will be achieved or accomplished.

The risks and uncertainties are detailed from time to time in reports filed by WD-40 Company with the SEC, including Forms 8-K, 10-Q, and 10-K, and readers are urged to carefully review these and other documents.

                                WD-40 Company
                  Consolidated Condensed Statement of Income

                                               Three Months Ended November 30,
                                                      2004           2003

    Net sales                                     $60,688,000    $52,540,000
    Cost of product sold                           30,119,000     24,606,000

    Gross profit                                   30,569,000     27,934,000

    Operating expenses:

      Selling, general and administrative          15,371,000     14,134,000
      Advertising and sales promotions              5,261,000      5,441,000
      Amortization                                    135,000             --

    Income from operations                          9,802,000      8,359,000

    Other income (expense):
      Interest expense, net of interest income
       of $124,000 and $109,000, respectively      (1,456,000)    (1,616,000)
      Other income (expense), net                     324,000        (91,000)

    Income before income taxes                      8,670,000      6,652,000

    Provision for income taxes                      3,035,000      2,262,000

        Net income                                 $5,635,000     $4,390,000

    Earnings per common share:

      Basic                                             $0.34          $0.26

      Diluted                                           $0.34          $0.26

    Weighted average common shares
     outstanding, basic                            16,571,691     16,825,467

    Weighted average common shares
     outstanding, diluted                          16,725,632     17,073,910

    Dividends declared per share                        $0.20          $0.20

                                WD-40 Company
                       Consolidated Condensed Balance Sheet

                                                   November 30,   August 31,
                                                       2004          2004
    Current assets:
      Cash and cash equivalents                    $38,716,000   $29,433,000
      Trade accounts receivable, less allowance
       for cash discounts, returns and
       doubtful accounts of $1,707,000 and
       $1,440,000                                   33,737,000    40,643,000
      Product held at contract packagers             1,198,000     1,975,000
      Inventories                                    6,191,000     6,322,000
      Current deferred tax assets                    2,870,000     2,830,000
      Other current assets                           2,680,000     3,026,000

         Total current assets                       85,392,000    84,229,000

    Property, plant and equipment, net               7,365,000     7,081,000
    Goodwill                                        96,125,000    95,832,000
    Other intangibles, net                          43,733,000    43,428,000
    Other assets                                     6,141,000     6,205,000
                                                  $238,756,000  $236,775,000

                    Liabilities and Shareholders' Equity

    Current liabilities:
      Current portion of long-term debt            $20,714,000   $10,000,000
      Accounts payable                              11,138,000    13,836,000
      Accrued liabilities                           12,112,000    12,151,000
      Accrued payroll and related expenses           4,032,000     3,935,000
      Income taxes payable                           1,606,000     2,613,000

         Total current liabilities                  49,602,000    42,535,000

    Long-term debt                                  64,286,000    75,000,000
    Deferred employee benefits and other
     long-term liabilities                           1,938,000     1,969,000
    Long-term deferred tax liabilities, net          6,631,000     4,853,000

         Total liabilities                         122,457,000   124,357,000

    Shareholders' equity:
      Common stock, $.001 par value,
       36,000,000 shares authorized --
       17,108,671 and 17,089,015 shares issued          17,000        17,000
      Paid-in capital                               50,088,000    49,616,000
      Retained earnings                             78,472,000    76,152,000
      Accumulated other comprehensive income         2,748,000     1,659,000
      Common stock held in treasury, at cost
       (534,698 shares)                            (15,026,000)  (15,026,000)

    Total shareholders' equity                     116,299,000   112,418,000
                                                  $238,756,000  $236,775,000

                                WD-40 Company
                Consolidated Condensed Statement of Cash Flows

                                                Three Months Ended November 30
                                                      2004            2003
    Cash flows from operating activities:
      Net income                                  $5,635,000      $4,390,000
      Adjustments to reconcile net income to
       net cash provided by operating activities:
          Depreciation and amortization              708,000         499,000
          Gains on sales and disposals
           of property and equipment                 (15,000)         (9,000)
          Deferred income tax expense                886,000       1,119,000
          Tax benefit from exercise of
           stock options                              61,000         552,000
          Equity earnings in joint venture in
           excess of distributions received          (46,000)        (82,000)
          Changes in assets and liabilities,
           net of assets and liabilities
            Trade accounts receivable              8,085,000       9,713,000
            Product held at contract packagers       777,000         410,000
            Inventories                              381,000        (205,000)
            Other assets                             441,000      (1,094,000)
            Accounts payable and accrued
             expenses                             (3,185,000)     (5,072,000)
            Income taxes payable                  (1,033,000)     (2,700,000)
            Deferred employee benefits and
             other long-term liabilities             (42,000)         41,000

              Net cash provided by operating
               activities                         12,653,000       7,562,000

    Cash flows from investing activities:
      Capital expenditures                          (727,000)       (858,000)
      Proceeds from sales of property
       and equipment                                  58,000          16,000

              Net cash used in investing
               activities                           (669,000)       (842,000)

    Cash flows from financing activities:
      Proceeds from issuance of common stock         411,000       4,985,000
      Dividends paid                              (3,315,000)     (3,364,000)

              Net cash (used in) provided by
               financing activities               (2,904,000)      1,621,000

    Effect of exchange rate changes on
     cash and cash equivalents                       203,000         264,000

    Increase in cash and cash equivalents          9,283,000       8,605,000

    Cash and cash equivalents at
     beginning of period                          29,433,000      41,971,000

    Cash and cash equivalents at end of period   $38,716,000     $50,576,000

                                WD-40 Company
        Consolidated Condensed Statement of Other Comprehensive Income

                                                     Three Months Ended
                                                November 30,      November 30,
                                                    2004              2003

    Net income                                   $5,635,000        $4,390,000

    Other comprehensive income:

      Foreign currency translation
       adjustments                                1,089,000           880,000

    Total comprehensive income                   $6,724,000        $5,270,000

SOURCE WD-40 Company
CONTACT: Garry O. Ridge of WD-40 Company, +1-619-275-9324
Web site: http://www.wd40.com

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