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WD-40 Company Reports Increase in Fourth Quarter Sales and Income Exceeds Guidance

10/14/09

SAN DIEGO, Oct. 14 /PRNewswire-FirstCall/ -- WD-40 Company (Nasdaq: WDFC) today reported net sales for the fourth quarter ended August 31, 2009 of $77.8 million, an increase of 1.1% from the fourth quarter last year. Year-to-date net sales were $292.0 million, down 7.9% from the same period last year.

Net income for the fourth quarter was $7.6 million, up 63.8% compared to the prior year's quarter. Earnings per share in the fourth quarter were $0.46 compared to $0.28 during the same period last year. Year-to-date net income was $26.3 million, a decrease of 4.8% from last year. For the year, earnings per share were $1.58, compared to $1.64 for the same period last year. More detailed information will be available on WD-40 Company's 10-K that will be filed the week of October 19, 2009.

"While we have seen tough times during the past year with lots of uncertainty, our tribe focused on reaching our target goals and delivered impressive results," said Garry Ridge , WD-40 Company President and CEO. "During the year we made strategic decisions that should benefit us in the long-term. These include diverting R&D resources to our multi-purpose maintenance products and adjacent categories, exploring the opportunities for the WD-40 brand, developing our business through acquisitions and strategic partnerships, and continuing our efforts to expand geographically around the world."

During the year foreign currency exchange rates negatively affected net sales by $30.0 million and net income by $4.5 million.

"In constant currency, we would have seen sales increases of 2% for the year and net income increases of 11% for the year," Ridge said.

The Company's constant currency disclosures represent the translation of the Company's current fiscal year revenues and expenses from the functional currencies of WD-40 Company subsidiaries to U.S. dollars utilizing the exchange rates in effect for the corresponding period of the prior fiscal year.

Summary

-- Net sales increased 1.1% to $77.8 million for the fourth quarter compared to the prior year's quarter. Year-to-date net sales declined 7.9% to $292.0 million from the same period last year.

-- Fourth quarter multi-purpose maintenance product sales, which include the WD-40 and 3-IN-ONE brands, were $59.6 million, up 2.6%, and $225.1 million for the year, down 4.6% from the prior year. Homecare and cleaning product sales, which include all of our other brands, were $18.2 million for the quarter, down 3.4% from the fourth quarter last year, and were $66.9 million year-to-date, down 17.6% from the prior year.

-- America's segment fourth quarter sales were up 4.0% compared to the prior year's quarter and were down 4.8% year-to-date from the prior year. Europe segment sales for the fourth quarter were up 0.2% compared to the prior year's quarter and were down 11.8% year-to-date from the prior year. Asia/Pacific segment sales for the fourth quarter were down 12.0% compared to the prior year's quarter and were down 12.2% year-to-date from the prior year.

Total sales by segment for the fiscal year were 58% from the Americas, 33% from Europe and 9% from Asia/Pacific.

Fourth quarter gross margin was 51.6% of sales compared to 44.8% in the same period last year. For the year, gross margin was 49.5% of sales, compared to 46.8% in the prior year.

"We are pleased to see our gross margin recover as we drew closer to our target of 50% as a percentage of net sales for FY09," Ridge said. "During the quarter, margin benefited from stabilization in the cost of petroleum-based products as well as positive impacts from investments related to our supply chain we made during the year.

During the past year, the Company recorded impairment charges amounting to $6.7 million related to the X-14 and Carpet Fresh brands. Impairments were due to the decline in profit margins and future forecasted sales levels resulting primarily from lost distribution and our strategic decision to divert research and development efforts to other brands.

Advertising and sales promotion expenses were down 10.7% for the fourth quarter compared to the same period last year and were down 1.9% for the year from the prior year.

"During the past year we launched the WD-40 Trigger Pro(TM), a non-aerosol delivery system developed for industrial end-users, and increased distribution of the 3-In-One No Rust Shield and 3-In-One Professional Garage Door Lube products," Ridge said. "We are also launching a new brand in the coming months called Blue Works(TM) that features best-in-class products developed for industrial users that will carry the WD-40 Company signature of endorsement."

Selling, general and administrative expenses were down 0.5% in the fourth quarter to $20.7 million compared to the prior year's quarter and were down 6.9% for the year to $78.1 million from the prior year.

The board of directors of WD-40 Company declared on Friday, October 2, 2009 the regular quarterly dividend of $.25 per share, payable October 30, 2009 to stockholders of record on October 16, 2009.

Fiscal Year 2010 Guidance

WD-40 Company expects fiscal year 2010 net sales to grow 2%-9% to $298-$318 million. The company expects earnings per share of $1.80 to $1.95 based on an estimated 16.8 million shares outstanding.

WD-40 Company, with headquarters in San Diego, is a global consumer product company dedicated to delivering unique, high value and easy-to-use solutions for a wide variety of maintenance needs of "doer" and "on-the-job" users by leveraging and building the brand fortress of the Company.

The Company markets two multi-purpose maintenance product brands, WD-40(R), and 3-IN-ONE(R), and eight homecare and cleaning product brands, X-14(R) mildew stain remover and automatic toilet bowl cleaners, 2000 Flushes(R) automatic toilet bowl cleaners, Carpet Fresh(R ) and No Vac (R) rug and room deodorizers, Spot Shot(R) aerosol and liquid carpet stain removers, 1001(R) carpet and household cleaners and rug and room deodorizers, and Lava (R) and Solvol (R) heavy-duty hand cleaners.

WD-40 Company markets its products in more than 160 countries worldwide and recorded sales of $292.0 million in fiscal year 2009. Additional information about WD-40 Company can be obtained online at http://www.wd40company.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 the impact of commodity prices, changes in foreign exchange rates, impacts of new product and brands and fluctuating 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 Statements of Operations
                      -------------------------------------
                (in thousands, except share and per share amounts)


                             Three Months Ended      Fiscal Year Ended
                                 August 31,              August 31,
                             ------------------      -----------------
                              2009         2008       2009         2008
                              ----         ----       ----         ----


    Net sales                $77,752     $76,916    $292,002    $317,118
    Cost of products
     sold(1)                  37,596      42,439     147,469     168,848
                              ------      ------     -------     -------

        Gross profit          40,156      34,477     144,533     148,270

    Operating expenses:
      Selling, general
       and administrative     20,686      20,786      78,051      83,800
      Advertising and
       sales promotion         4,121       4,615      19,459      19,837
      Amortization of
       intangible asset          122         148         468         597
      Impairment of
       indefinite-lived
       intangible assets       3,950       1,340       6,710       1,340
                               -----       -----       -----       -----

        Total operating
         expenses             28,879      26,889     104,688     105,574
                              ------      ------     -------     -------

    Income from operations    11,277       7,588      39,845      42,696

    Other (expense) income:
      Interest expense, net     (546)       (450)     (2,064)     (1,679)
      Other (expense)
       income, net                (1)        229         543         982
                                  --         ---         ---         ---

    Income before income
     taxes                    10,730       7,367      38,324      41,999

    Provision for income
     taxes                     3,108       2,714      12,037      14,377
                               -----       -----      ------      ------


        Net income            $7,622      $4,653     $26,287     $27,622
                              ======      ======     =======     =======

    Earnings per common share:
      Basic                    $0.46       $0.28       $1.59       $1.66
                               =====       =====       =====       =====

      Diluted                  $0.46       $0.28       $1.58       $1.64
                               =====       =====       =====       =====

    Shares used in per share calculations:
      Basic               16,515,450  16,450,953  16,503,265  16,637,740
                          ==========  ==========  ==========  ==========
      Diluted             16,652,835  16,621,139  16,655,699  16,815,361
                          ==========  ==========  ==========  ==========

    Dividends declared
     per share                 $0.25       $0.25       $1.00       $1.00
                               =====       =====       =====       =====


    (1)  Includes cost of products acquired from related party of $125 and
         $4,653  for the three months ended August 31, 2009 and 2008,
         respectively; and $11,675 and $21,757 for the fiscal years ended
         August 31, 2009 and 2008, respectively.




                                  WD-40 Company
                           Consolidated Balance Sheets
                          -----------------------------
                       (In thousands, except share amounts)




                                     August 31, 2009     August 31, 2008
                                     ---------------     ---------------
                           Assets
                           ------
      Cash and cash equivalents           $45,956             $41,983
      Trade accounts receivable,
       less allowance for doubtful
       accounts of $694 and $486 at
       August 31, 2009 and 2008,
       respectively                        48,061              49,271
      Product held at contract
       packagers                            1,797               2,453
      Inventories                          15,858              18,280
      Current deferred tax assets, net      4,369               4,045
      Other current assets                  4,736               3,453
                                            -----               -----

        Total current assets              120,777             119,485

    Property, plant and equipment, net     10,930              11,309
    Goodwill                               95,424              95,909
    Other intangible assets, net           32,205              39,992
    Investment in related party                 -                 435
    Other assets                            3,281               3,543
                                            -----               -----

        Total assets                     $262,617            $270,673
                                         ========            ========


                Liabilities and Shareholders' Equity
                ------------------------------------

      Accounts payable                    $12,529             $22,985
      Accounts payable to related
       party                                    -                 547
      Accrued liabilities                  15,233              13,143
      Current portion of long-term
       debt                                10,714              10,714
      Accrued payroll and related
       expenses                             7,168               6,084
      Income taxes payable                  2,570               1,090
                                            -----               -----

        Total current liabilities          48,214              54,563

    Long-term debt                         21,429              32,143
    Long-term deferred tax liabilities,
     net                                   16,868              16,876
    Deferred employee benefits and other
     long-term liabilities                  3,159               3,099
                                            -----               -----

        Total liabilities                  89,670             106,681
                                           ------             -------

    Shareholders' equity:
      Common stock --  authorized
        36,000,000 shares, $0.001 par value;
        18,093,879 and 18,041,715 shares
        issued at August 31, 2009 and 2008,
        respectively; and 16,530,381 and
        16,478,217 shares outstanding at
        August 31, 2009 and 2008,
        respectively                           18                  18
      Additional paid-in capital           86,729              82,647
      Retained earnings                   138,367             128,627
      Accumulated other comprehensive
       (loss) income                       (2,101)              2,766
      Common stock held in treasury, at
       cost -- 1,563,498 shares           (50,066)            (50,066)
                                          -------             -------

        Total shareholders' equity        172,947             163,992
                                          -------             -------

        Total liabilities and
         shareholders' equity            $262,617            $270,673
                                         ========            ========




                                   WD-40 Company
                       Consolidated Statements of Cash Flows
                       -------------------------------------
                                   (In thousands)
                                    -------------

                                            Fiscal Year Ended August 31,
                                            ---------------------------
                                              2009          2008
                                              ----          ----
    Operating activities:
      Net income                            $26,287        $27,622
      Adjustments to reconcile net income to
       net cash provided by
       operating activities:
        Depreciation and amortization         3,727          3,827
        Impairment of indefinite-lived
         intangible assets                    6,710          1,340
        Net gains on sales and
         disposals of
         property and equipment                 (17)           (41)
        Deferred income tax expense            (266)           911
        Excess tax benefits from exercises
         of stock options and
         conversions of restricted
         stock units to common shares          (101)          (294)
        Distributions received and
         equity losses from
         related party, net                     435            580
        Stock-based compensation              2,688          2,398
        Unrealized foreign currency
         exchange gains, net                   (696)        (1,697)
        Provision for bad debts                 500            782
        Changes in assets and liabilities:
            Trade accounts receivable        (1,349)        (4,062)
            Product held at contract
             packagers                          632           (969)
            Inventories                       2,034         (5,375)
            Other assets                     (1,643)          (281)
            Accounts payable and
             accrued expenses and
             liabilities                     (6,669)         1,085
            Accounts payable to
             related party                      547            959
            Income taxes payable              1,732          1,571
            Deferred employee
             benefits and other
             long term liabilities               77          1,346
                                                 --          -----

                Net cash provided by
                 operating activities        34,628         29,702
                                             ------         ------

    Investing activities:
      Capital expenditures                   (3,008)        (5,752)
      Proceeds from sales of
       property and equipment                   255            215
      Purchases of marketable
       securities                                 -        (76,175)
      Proceeds from sales of
       marketable securities                      -         76,175
                                                  -         ------

                Net cash used in
                 investing activities       (2,753)         (5,537)
                                            ------          ------

    Financing activities:
      Repayments of long-term debt         (10,714)        (10,714)
      Proceeds from issuance of
       common stock                          1,296           4,208
      Excess tax benefits from exercises
       of stock options and
       conversions of restricted
       stock units to common shares            101             294
      Dividends paid                       (16,547)        (16,691)
      Treasury stock purchases                   -         (17,720)
                                                 -         -------

                Net cash used in
                 financing activities      (25,864)        (40,623)
                                           -------         -------

    Effect of exchange rate changes
     on cash
     and cash equivalents                   (2,038)         (2,637)
                                            ------          ------
    Net increase (decrease) in cash
     and cash equivalents                     3,973        (19,095)
    Cash and cash equivalents at
     beginning of period                     41,983         61,078
                                             ------         ------
    Cash and cash equivalents
     at end of period                       $45,956        $41,983
                                            =======        =======




                                   WD-40 Company
                Consolidated Statements of Comprehensive Income
                -----------------------------------------------
                                    (In thousands)


                                   Three Months     Fiscal Year
                                 Ended August 31,   Ended August 31,
                                 ---------------    ---------------
                                   2009    2008      2009     2008
                                   ----    ----      ----     ----


    Net income                    $7,622  $4,653   $26,287  $27,622

    Other comprehensive income:
      Foreign currency translation
       adjustment, net of tax      1,127  (4,345)   (4,867)  (4,827)
      Other                            -       -         -       89
                                       -       -         -       --
    Total comprehensive
     income                       $8,749    $308   $21,420  $22,884
                                  ======    ====   =======  =======

SOURCE WD-40 Company

Garry O. Ridge of WD-40 Company, +1-619-275-9324

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