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WD-40 Company Reports First Quarter Sales Up 10.8%, Net Income Up 33.3%

01/09/06

SAN DIEGO, Jan. 9 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the first quarter ended November 30, 2005 of $67.2 million, an increase of 10.8% over the first quarter last fiscal year.

Net income for the quarter was $7.5 million, up 33.3% compared to the prior year's quarter. Earnings per share were $0.45 in the first quarter, compared to $0.34 per share in the same quarter last year, an increase of 32.9%.

"We had sales growth in lubricants, household products, and hand cleaners during the quarter which contributed to a good start to the year," said Garry O. Ridge, WD-40 Company president and chief executive officer. "We are continuing to make progress in our product innovation program and in growing our fortress of brands."

Cost of goods during the first quarter was 51.9% of sales compared to 49.6% in the first quarter last year.

"We remain concerned about rising costs," Ridge said, "while we look for ways to improve our gross margin."

Fiscal Year Guidance

In fiscal year 2006, WD-40 Company expects net sales to grow 9%-14% to $288-$299 million. WD-40 Company expects net income to be between $24.7 million and $28.0 million, achieving earnings per share of $1.45 to $1.65 based on an estimated 17 million shares outstanding. Fiscal year 2006 results include the expensing of stock options.

As previously announced on December 13, 2005, the board of directors declared a regular quarterly dividend on December 13, 2005 of $0.22 per share, payable January 31, 2006 to stockholders of record on January 6, 2006.

Total sales for the quarter were 69% from the Americas, 25% from Europe and 6% from Asia/Pacific. In the Americas, sales for the first quarter were up 8.0% from a year ago.

"We had growth in all our brands in the Americas during the quarter and are starting to see positive results from our innovation strategies," Ridge said.

In Europe, sales were up 15.4% for the first quarter.

"We had growing sales in Eastern Europe, the Middle East, Germany, Italy, and the UK during the quarter," Ridge said. "Our European business continues to be a significant and growing area of emphasis."

In the Asia/Pacific region, sales for the quarter were up 26.8% from last year.

"We have made a positive turn in Asia and this region continues to represent important long-term growth opportunities for us," Ridge said.

Global sales of the lubricants WD-40(R) and 3-IN-ONE Oil(R) were up 14.4% for the quarter.

"During the quarter we had a positive impact from the new WD-40 delivery systems across the globe," Ridge said. "We are on target with the roll out of these products."

Sales of heavy-duty hand cleaners Lava(R) and Solvol(R) were up 1.1% for the quarter.

Sales of household products X-14(R), Carpet Fresh(R), 2000 Flushes(R), Spot Shot(R) and 1001 (R) were up 5.3% compared to the previous year's quarter.

WD-40 Company's 10-Q will be filed on January 9, 2006.

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 $263.2 million in fiscal 2005.

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 impact of cost of goods, the impact of new product introductions, the uncertainty of market conditions, both in the United States and internationally, the impact of foreign currency exchange rates and the timing of advertising and sales promotion activities. 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 Statements of Income
                                 (unaudited)

                                               Three Months Ended November 30,
                                                     2005            2004

    Net sales                                    $67,215,000     $60,688,000
    Cost of products sold(1)                      34,901,000      30,119,000

        Gross profit                              32,314,000      30,569,000

    Operating expenses:
      Selling, general and administrative         16,357,000      15,371,000
      Advertising and sales promotion              3,345,000       5,261,000
      Amortization of intangible assets              132,000         135,000

    Income from operations                        12,480,000       9,802,000

    Other income (expense):
      Interest expense, net                       (1,005,000)     (1,456,000)
      Other income, net                              141,000         324,000

    Income before income taxes                    11,616,000       8,670,000

    Provision for income taxes                     4,103,000       3,035,000

        Net income                                $7,513,000      $5,635,000

    Earnings per common share:
      Basic                                            $0.45           $0.34

      Diluted                                          $0.45           $0.34

    Weighted-average common shares
     outstanding, basic                           16,688,982      16,571,691

    Weighted-average common shares
     outstanding, diluted                         16,776,627      16,725,632

    Dividends declared per share                       $0.22           $0.20


    (1) Includes cost of products acquired from related party of $10,750,000
        and $9,572,000 for the three months ended November 30, 2005 and 2004,
        respectively.



                                WD-40 Company
                    Consolidated Condensed Balance Sheets
                                 (unaudited)

                                        November 30, 2005  August 31, 2005

                     Assets
    Current assets:
      Cash and cash equivalents            $34,264,000      $37,120,000
      Trade accounts receivable, less
       allowance for cash discounts,
       returns and doubtful accounts
       of $1,572,000 and $1,506,000         37,349,000       44,487,000
      Product held at contract
       packagers                             1,642,000        1,814,000
      Inventories                           10,211,000        8,041,000
      Current deferred tax assets, net       2,944,000        2,946,000
      Other current assets                   6,071,000        6,784,000

         Total current assets               92,481,000      101,192,000

      Property, plant and equipment, net     8,693,000        8,355,000
      Goodwill                              95,684,000       95,858,000
      Other intangibles, net                42,480,000       42,884,000
      Investment in related party            1,093,000        1,112,000
      Other assets                           4,668,000        4,852,000
                                          $245,099,000     $254,253,000


      Liabilities and Shareholders' Equity
    Current liabilities:
      Current portion of long-term debt    $10,714,000      $10,714,000
      Accounts payable                      11,548,000       13,671,000
      Accounts payable to related party      2,501,000        1,945,000
      Accrued liabilities                   13,363,000       14,058,000
      Accrued payroll and related
       expenses                              4,002,000        3,828,000
      Income taxes payable                   2,345,000        2,484,000

         Total current liabilities          44,473,000       46,700,000

    Long-term debt                          53,571,000       64,286,000
      Deferred employee benefits and
       other long-term liabilities           1,862,000        1,838,000
      Long-term deferred tax
       liabilities, net                     11,643,000       11,363,000

         Total liabilities                 111,549,000      124,187,000

    Shareholders' equity:
      Common stock, $.001 par value,
       36,000,000 shares authorized --
       17,226,410 and 17,222,410
       shares issued                            17,000           17,000
      Paid-in capital                       53,373,000       52,990,000
      Unearned stock-based compensation             --         (136,000)
      Retained earnings                     93,825,000       89,983,000
      Accumulated other comprehensive
       income                                1,361,000        2,238,000
      Common stock held in treasury,
       at cost (534,698 shares)            (15,026,000)     (15,026,000)

         Total shareholders' equity        133,550,000      130,066,000
                                          $245,099,000     $254,253,000



                                WD-40 Company
               Consolidated Condensed Statements of Cash Flows
                                 (unaudited)

                                               Three Months Ended November 30,
                                                     2005             2004
    Cash flows from operating activities:
      Net income                                  $7,513,000       $5,635,000
      Adjustments to reconcile net income
       to net cash provided by operating
       activities:
         Depreciation and amortization               848,000          708,000
         Gains on sales and disposals of
          property and equipment                      (9,000)         (15,000)
         Deferred income tax expense                 556,000          886,000
         Tax benefit from exercise of
          stock options                                   --           61,000
         Excess tax benefits from
          exercise of stock options                   (1,000)              --
         Distributions received (equity
          earnings) from related party, net           19,000          (46,000)
         Stock-based compensation                    412,000               --
         Changes in assets and liabilities:
           Trade accounts receivable               6,512,000        8,085,000
           Product held at contract packagers        171,000          777,000
           Inventories                            (2,303,000)         381,000
           Other assets                              595,000          441,000
           Accounts payable and accrued
            expenses                              (2,395,000)      (2,612,000)
           Accounts payable to related party         557,000         (573,000)
           Income taxes payable                     (116,000)      (1,033,000)
           Deferred employee benefits
            and other long-term liabilities           26,000          (42,000)

             Net cash provided by
              operating activities                12,385,000       12,653,000

    Cash flows from investing activities:
      Capital expenditures                          (989,000)        (727,000)
      Proceeds from sales of property
       and equipment                                  19,000           58,000
      Proceeds from collections on notes
       receivable                                     30,000               --

             Net cash used in investing
              activities                            (940,000)        (669,000)

    Cash flows from financing activities:
      Repayments of long-term debt               (10,714,000)              --
      Proceeds from issuance of common stock         106,000          411,000
      Excess tax benefits from exercise
       of stock options                                1,000               --
      Dividends paid                              (3,671,000)      (3,315,000)

             Net cash used in financing
              activities                         (14,278,000)      (2,904,000)

    Effect of exchange rate changes on
     cash and cash equivalents                       (23,000)         203,000

    (Decrease) increase in cash and cash
     equivalents                                  (2,856,000)       9,283,000

    Cash and cash equivalents at
     beginning of period                          37,120,000       29,433,000

    Cash and cash equivalents at end of
     period                                      $34,264,000      $38,716,000



                                WD-40 Company
          Consolidated Condensed Statements of Comprehensive Income
                                 (unaudited)

                                               Three Months Ended November 30,
                                                       2005           2004


    Net income                                      $7,513,000     $5,635,000

    Other comprehensive income:
      Equity adjustment from foreign currency
       translation, net of tax (benefit)/
       provision of ($260,000) and $854,000,
       respectively                                   (877,000)     1,089,000

    Total comprehensive income                      $6,636,000     $6,724,000
SOURCE WD-40 Company
CONTACT:
Garry O. Ridge of WD-40 Company,
+1-619-275-9324
(WDFC)

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