<HTML> <HEAD> <TITLE>WD-40 Company - 10Q</TITLE> </HEAD> <BODY> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 1, page: 1" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2></FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>SECURITIES AND EXCHANGE COMMISSION</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>Washington, D. C.</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>20549</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>___________________________________</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>FORM 10-Q</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>QUARTERLY REPORTS UNDER SECTION 13 OR 15(d)<BR>OF THE SECURITIES EXCHANGE ACT OF 1934</FONT></H1> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>For the Quarter Ended February 29, 2000<BR>Commission File No. 0-6936-3 </FONT></P> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>WD-40 COMPANY</FONT></H1> <!-- MARKER FORMAT-SHEET="Para Center 10" --> <P ALIGN=CENTER><FONT SIZE=2>(Exact Name of Registrant as specified in its charter) </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD WIDTH=40% ALIGN=CENTER><FONT SIZE=2>Delaware<BR>(State or other jurisdiction of<BR>incorporation or organization)<BR><BR> 1061 Cudahy Place, San Diego, California<BR>(Address of principal executive offices)</FONT></TD> <TD WIDTH=20%> </TD> <TD WIDTH=40% ALIGN=CENTER><FONT SIZE=2>95-1797918<BR>(I.R.S. Employer<BR>Identification Number)<BR><BR>92110<BR>(Zip Code)</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Registrant’s telephone number, including area code: (619) 275-1400 </FONT></P> <!-- MARKER FORMAT-SHEET="Para 10" --> <P><FONT SIZE=2> Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: </FONT></P> <!-- MARKER FORMAT-SHEET="Para Center 10" --> <P ALIGN=CENTER><FONT SIZE=2>Yes <U> X </U> No <U> </U> </FONT></P> <!-- MARKER FORMAT-SHEET="Para 10" --> <P><FONT SIZE=2> Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: </FONT></P> <!-- MARKER FORMAT-SHEET="Para 10" --> <P><FONT SIZE=2> Common Stock as of April 7, 2000 15,431,554 </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 2, page: 2" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Part I Financial Information <BR>Item 1. Financial Statements</FONT></H2> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2><U>WD-40 Company <BR>Consolidated Condensed Balance Sheet <BR>Assets</U></FONT></H1> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1"><U>(unaudited)</U><BR>February 29, 2000</FONT><HR WIDTH=80% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">August 31, 1999</FONT><HR WIDTH=80% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="56%" ALIGN="LEFT"><FONT SIZE="2">Current assets:</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 2,776,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 9,935,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Trade accounts receivable, less allowance for</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> cash discounts and doubtful accounts</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> of $866,000 and $710,000</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">31,203,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">28,646,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Product held at contract packagers</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,351,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,868,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Inventories</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6,189,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6,104,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Other current assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">4,497,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5,594,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Total current assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">46,016,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">52,147,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Property, plant, and equipment, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">4,553,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,861,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Low income housing investments</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,279,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,312,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Goodwill, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">29,609,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">30,792,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,888,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,845,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$85,345,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$91,957,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD COLSPAN=6 ALIGN="CENTER"><FONT SIZE="2"><B><U>Liabilities and Shareholders’ Equity</U></B></FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Current liabilities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Accounts payable and accrued liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 9,887,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$11,262,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Accrued payroll and related expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,871,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,328,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Income taxes payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">4,173,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,311,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Line of credit</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,774,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Current portion of long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,600,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">2,461,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Total current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">21,305,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">20,362,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,320,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">14,065,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Deferred employee benefits</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,433,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,356,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">33,058,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">35,783,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Shareholders’ equity:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Common stock, no par value, 36,000,000 shares</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> authorized -- shares issued and outstanding</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> of 15,431,554 and 15,603,146</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,062,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,143,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Paid-in capital</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">509,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">509,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Retained earnings</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">41,542,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">45,208,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Accumulated other comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">174,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">314,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Total shareholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">52,287,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">56,174,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$85,345,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$91,957,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <BR> <!-- MARKER FORMAT-SHEET="Para Center 10" --> <P ALIGN=CENTER><FONT SIZE=2>(See accompanying notes to consolidated condensed financial statements.) </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 3, page: 3" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2></FONT></H1> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>WD-40 Company <BR><U>Consolidated Condensed Statement of Income</U> <BR>(Unaudited)</FONT></H1> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Three Months Ended</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="4"><FONT SIZE="-1">Six Months Ended</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28, 1999</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28, 1999</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="39%" ALIGN="LEFT"><FONT SIZE="2">Net sales</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$ 42,602,000</FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$ 41,709,000</FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$ 74,784,000</FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="12%" ALIGN="RIGHT"><FONT SIZE="2">$71,326,000</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Cost of product sold</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">18,932,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">18,583,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">33,667,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">31,699,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Gross profit</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">23,670,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">23,126,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">41,117,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">39,627,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Operating expenses:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Selling, general & administrative</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">8,975,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">8,367,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">17,329,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,940,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Advertising & sales promotions</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,758,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,817,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">7,363,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6,883,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Amortization</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">599,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">269,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,198,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">538,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Income from operations</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,338,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,673,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,227,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">16,266,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other income (expense)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Interest income (expense), net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(160,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">51,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(365,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">130,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Other income (expense), net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">29,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(26,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(27,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">135,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Income before income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,207,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">10,698,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">14,835,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">16,531,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Provision for income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,543,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,907,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5,118,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6,038,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Net Income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 6,664,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 6,791,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 9,717,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$10,493,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Basic earnings per share</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.43</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.44</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.63</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.67</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Diluted earnings per share</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.43</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.43</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.63</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 0.67</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Basic common equivalent shares</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,497,831</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,597,704</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,522,132</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,597,225</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Diluted common equivalent shares</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,499,356</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,662,081</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,526,207</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">15,649,355</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Center 10" --> <P ALIGN=CENTER><FONT SIZE=2>(See accompanying notes to consolidated condensed financial statements.) </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 4, page: 4" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> </td> </tr> </TABLE> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>WD-40 Company <BR><U>Consolidated Condensed Statement of Cash Flows <BR>(Unaudited)</U></FONT></H1> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Six Months Ended</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28, 1999</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="53%" ALIGN="LEFT"><FONT SIZE="2">Cash flows from operating activities:</FONT></TD> <TD WIDTH="3%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Net income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 9,717,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 10,493,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Adjustments to reconcile net income to</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> net cash provided by operating activities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,700,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">968,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Gain on sale of equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(11,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Deferred income taxes</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">16,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Changes in assets and liabilities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Trade accounts receivable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(2,718,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(7,266,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Product held at contract packagers</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">516,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(391,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Inventories</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(96,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">46,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Other assets</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">1,076,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(404,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Accounts payable and accrued expenses</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(2,794,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,294,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Income taxes payable</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">883,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">736,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Long-term deferred employee benefits</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">78,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">152,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Net cash provided by operating activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">8,367,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">7,628,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Cash flows from investing activities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Decrease in short-term investments</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">388,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Proceeds from sale of equipment</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">73,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">43,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Capital expenditures</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(1,269,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(580,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Net cash used in investing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(1,196,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(149,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Cash flows from financing activities:</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Proceeds from issuance of common stock</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">47,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">420,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Repurchase of common stock</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(3,590,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(1,245,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Borrowings on line of credit, net</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3,774,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Repayment of long-term debt</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(4,604,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(819,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Dividends paid</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(9,921,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(9,977,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Net cash used in financing activities</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(14,294,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(11,621,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Effect of exchange rate changes on cash</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(36,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(60,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Decrease in cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(7,159,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(4,202,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Cash and cash equivalents at beginning of period</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">9,935,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">8,572,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Cash and cash equivalents at end of period</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 2,776,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 4,370,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Center 10" --> <P ALIGN=CENTER><FONT SIZE=2>(See accompanying notes to consolidated condensed financial statements.) </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 5, page: 5" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2>WD-40 COMPANY <BR>NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS</FONT></H1> <BR> <!-- MARKER FORMAT-SHEET="Head Major 10" --> <H1 ALIGN=CENTER><FONT SIZE=2><U>February 29, 2000</U> <BR>(Unaudited)</FONT></H1> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTE 1 - BASIS OF PRESENTATION</FONT></H2> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Principles of Consolidation</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, WD-40 Manufacturing Company, WD-40 Company Ltd. (U.K.), WD-40 Products (Canada) Ltd. and WD-40 Company (Australia) Pty. Ltd. All significant intercompany transactions and balances have been eliminated. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The financial statements included herein have been prepared by the Company, without audit, according to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In the opinion of management, the unaudited financial information for the interim periods shown reflects all adjustments (which include only normal, recurring adjustments) necessary for a fair presentation thereof. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended August 31, 1999. </FONT></P> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Use of Estimates</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The preparation of financial statements, in conformity with generally accepted accounting principles, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. </FONT></P> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Earnings per Share</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Common stock equivalents of 1,525 and 64,377 shares for the three months ended February 29, 2000 and February 28, 1999 were used to calculate diluted earnings per share. Common stock equivalents of 4,075 and 52,130 shares for the six months ended February 29, 2000 and February 28, 1999 were used to calculate diluted earnings per share. Common stock equivalents are comprised of options granted under the Company’s stock option plan. There were no reconciling items in calculating the numerator for basic and diluted earnings per share for any of the periods presented. For the three months ended February 29, 2000 and February 28, 1999, 748,148 and 134,400 options outstanding were excluded from the calculation of diluted EPS, as their effect would have been antidilutive. For the six months ended February 29, 2000 and February 28, 1999, 654,948 and 134,400 options outstanding were excluded from the calculation of diluted EPS, as their effect would have been antidilutive. </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 6, page: 6" --> <HR SIZE=5 NOSHADE> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <BR> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS <BR>(continued)</FONT></H2> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>New Pronouncement</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In June 1998, the Financial Accounting Standards Board issued SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” as amended by SFAS No. 137, “Accounting for Derivative Instruments and Hedging Activities -Deferral of the Effective Date of FASB Statement No. 133, an Amendment of FASB Statement No. 133.” SFAS No. 133 standardizes the accounting for derivative instruments by requiring that all derivatives be recognized as assets and liabilities and measured at fair value. The Company will be required to adopt this standard during the year ending August 31, 2001. The Company has not determined what impact, if any, the adoption of SFAS No. 133 will have on the Company’s consolidated financial position or results of operations. </FONT></P> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Reclassifications</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Certain fiscal year 1999 balances have been reclassified to conform to fiscal year 2000 presentation. </FONT></P> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTE 2 - COMMITMENTS AND CONTINGENCIES</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company is party to various claims, legal actions and complaints, including product liability litigation, arising in the ordinary course of business. In the opinion of management, all such matters are adequately covered by insurance or will not have a material adverse effect on the Company’s financial position or results of operations. </FONT></P> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTE 3 - COMPREHENSIVE INCOME</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>WD-40 Company’s total comprehensive income was as follows: </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Three Months Ended</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">2000</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">1999</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="54%" ALIGN="LEFT"><FONT SIZE="2">Net income</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2">$ 6,664,000</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2">$ 6,791,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Foreign currency translation adjustments</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(77,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(129,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Total comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 6,587,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 6,662,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 7, page: 7" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS <BR>(continued)</FONT></H2> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">Six Months Ended</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">2000</FONT><HR WIDTH=95% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">1999</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="54%" ALIGN="LEFT"><FONT SIZE="2">Net income</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2">$ 6,664,000</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2">$ 6,791,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other comprehensive income (loss):</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Foreign currency translation adjustments</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(140,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(234,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Total comprehensive income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 9,577,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 10,259,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTE 4 -SELECTED FINANCIAL STATEMENT INFORMATION</FONT></H2> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">August 31, 1999</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="54%" ALIGN="LEFT"><FONT SIZE="2">Inventories</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2"></FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Raw Materials</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 830,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 520,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Finished Goods</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5,359,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5,584,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$6,189,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$6,104,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH> <TH COLSPAN="2"><FONT SIZE="-1">August 31, 1999</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="54%" ALIGN="LEFT"><FONT SIZE="2">Property, plant and equipment</FONT></TD> <TD WIDTH="4%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2">$ 8,785,000</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2">$ 7,744,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Accumulated depreciation</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(4,232,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(3,883,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 4,553,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 3,861,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Goodwill</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 34,991,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 34,991,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Accumulated amortization</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(5,382,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(4,199,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 29,609,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 30,792,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>NOTE 5 -SUBSEQUENT EVENTS</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>On March 28, 2000, the Company’s Board of Directors declared a cash dividend of $.32 per share payable on April 28, 2000 to shareholders of record on April 12, 2000. </FONT></P> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 8, page: 8" --> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <BR> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2>Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION <BR> AND RESULTS OF OPERATIONS</FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2> </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>RESULTS OF OPERATIONS </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>SECOND QUARTER OF FISCAL YEAR 2000 COMPARED TO SECOND QUARTER OF FISCAL YEAR 1999 </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Net sales were $42.6 million in the quarter ended February 29, 2000 an increase of 2% from net sales of $41.7 million in the comparable prior year period. Sales for the Company’s three trading blocs are broken down as follows (in millions): </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="8"><FONT SIZE="-1">Three months ended</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">February 29, 2000</FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">February 28, 1999</FONT></TH></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="32%" ALIGN="LEFT"><FONT SIZE="2">Americas</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2">$29.4</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">69</FONT></TD> <TD WIDTH="9%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2">$29.5</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">71</FONT></TD> <TD WIDTH="2%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Europe</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">9.9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">23</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">9.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">23</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Asia Pacific</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">3.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">2.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">TOTAL</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$42.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$41.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> </TABLE> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In the Americas region, sales for the second quarter ended February 29, 2000 were flat in comparison to the prior year period. Overall, Latin America sales increased 46%, while U.S. sales and Canada sales were down by 3% and 12% respectively in comparison to second quarter of the prior year. For the region, 83% of the sales in the first quarter came from the U.S., and 17% came from Canada and Latin America. This distribution reflects a change from the second quarter of fiscal 1999 in which 86% of the sales came from the U.S., and 14% came from Canada and Latin America. The increase in Latin America is due to strong sales of WD-40, which increased by 61% or $1million over the prior year quarter. While WD-40 sales increased significantly in Latin America, they lagged behind the prior year by 12% in both the U.S. and Canada. The fall-off in WD-40 sales can be attributed to the timing of promotions in the quarter. Most of the WD-40 shortfall in the U.S. was offset by Lava sales, which were $2.0 million in the quarter. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In Europe, second quarter sales were 4% higher than sales in the comparable period of fiscal 1999, primarily due to increased sales volume in Germany and the distributor markets. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In the Asia/Pacific region, total sales were up 26% over the prior year period. Sales have remained strong throughout the second quarter as the region continues to rebound from its recent economic troubles </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Gross profit was $23.7 million, or 55.6% of sales in the second quarter, up from $23.1million, or 55.4% of sales in the comparable period last year. Changes in gross profit percentage from quarter to quarter are due primarily to changes in average selling prices arising from both the mix of products sold and the mix of customers and trade channels in which the products are sold. The Company expects continued pressure on gross profit due to changes in its customer mix, as an increasing portion of the Company’s sales are made to fewer, but larger, customers with greater purchasing power, negatively impacting selling prices and margins. The Company raised the price of WD-40 in the U.S. effective 2/1/00, which should ease some of the pressure on gross profit and allow the percentage to remain near recent historical levels. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Selling, general, & administrative expenses for the quarter ended February 29, 2000 increased to $9.0 million from $8.4 million for the comparable prior year period. As a percentage of sales, SG&A increased slightly to 21.1% in the second quarter from 20.1% last year. The increase in SG&A is due primarily to the Company’s continued investment in people and systems in support of improving the efficiency and productivity of the supply chain. </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 9, page: 9" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Advertising and sales promotion expense remained at $3.8 million for both the second quarter of fiscal 2000 and fiscal 1999. Advertising and sales promotion as a percentage of sales decreased to 8.8% in the second quarter from 9.2% in the comparable prior year period. The decrease is primarily due to the timing of certain expenditures and promotions. For the year the Company still expects advertising and sales promotion to be in the historical range of about 10% of sales. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Amortization expense was $.6 million for the second quarter compared to $.3 million in the comparable period last year. The increased expense is due to the amortization of goodwill associated with the Lava acquisition. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Income from operations was $10.3 million, or 24.3% of sales in the second quarter, compared to $10.7 million, or 25.6% of sales in the second quarter of fiscal 1999. The decline in income from operations as a percentage of sales was due to the items discussed above, namely the increases in SG&A and amortization costs. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The components of other income (expense) are shown below: </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">For the three months ended</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28, 1999</FONT></TH></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="52%" ALIGN="LEFT"><FONT SIZE="2">Interest Income (Expense), net</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="15%" ALIGN="RIGHT"><FONT SIZE="2">($160,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2">$ 51,000</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Foreign Currency (Losses)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(46,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(46,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Gain (Loss) on Disposal of PP&E</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(1,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other Income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">70,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">21,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">TOTAL</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">($131,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$ 25,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The change in interest income (expense) net from $51,000 of income for the quarter ended February 28, 1999 to $160,000 of expense for the quarter ended February 29, 2000 is due to the interest costs associated with funds borrowed to finance the Lava acquisition. To finance this acquisition, the Company obtained a $16.0 million term loan from a bank. Foreign currency exchange, primarily between European currencies, produced losses of $46,000 in the second quarters of both fiscal 2000 and fiscal 1999. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company’s effective tax rate for the second quarter of fiscal 2000 is 34.7% compared to 36.5% for the year ended August 31, 1999. The difference in the effective tax rates is due to different allocations of taxable income between taxing jurisdictions from year to year primarily as a result of operational changes within the U.S. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Net income was $6.7 million, or $.43 per share on a fully diluted basis for the second quarter of fiscal 2000, versus $6.8 million, or $.43 in the comparable period last year. </FONT></P> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 10, page: 10" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>SIX MONTHS ENDED FEBRUARY 29, 2000 COMPARED TO SIX MONTHS ENDED FEBRUARY 28, 1999 </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Net sales were $74.8 million in the six months ended February 29, 2000 an increase of 4.8% from net sales of $71.3 million in the comparable prior year period. Sales for the Company’s three trading blocs are broken down as follows (in millions): </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="8"><FONT SIZE="-1">Six months ended</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">February 29, 2000</FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">February 28, 1999</FONT></TH></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="28%" ALIGN="LEFT"><FONT SIZE="2"> The Americas</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2">$50.4</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">67</FONT></TD> <TD WIDTH="9%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD WIDTH="11%" ALIGN="RIGHT"><FONT SIZE="2">$47.4</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="7%" ALIGN="RIGHT"><FONT SIZE="2">67</FONT></TD> <TD WIDTH="6%" ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Europe</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">17.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">24</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">18.7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">26</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Asia Pacific</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">6.6</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">9</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">5.2</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">7</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2"> Total</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$74.8</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$71.3</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">100</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">%</FONT></TD></TR> <TR> <TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In the Americas region, sales for the six months ended February 29, 2000 were up 6% over the prior year period. This increase is due to $4.0 million of Lava sales in the U.S., as well as increases in sales of WD-40 in Latin America and 3-IN-ONE in the U.S. Latin America WD-40 sales increased 37% and U.S. 3-IN-ONE sales increased 33% over the prior year period. Canada sales were down by 2% in comparison to the first six months of the prior year. While WD-40 sales increased significantly in Latin America, they lagged behind the prior year in both the U.S. and Canada, off 5% and 2% respectively. The fall-off in WD-40 sales can be attributed to the timing of promotions during the period. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In Europe, sales for the first six months were down 3% from the same period in the prior year due to sluggish sales in the first quarter. Second quarter sales in France and the Middle East were not enough to offset the slow first quarter sales in these regions. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>In the Asia/Pacific region, total sales were up 28% over the first six months of the prior year. Strong sales during the last half of fiscal year 1999 have continued throughout the first six months of the year as the region continues to rebound from its recent economic troubles. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Gross profit was $41.1 million, or 55.0% of sales for the first six months, up from $39.6 million, or 55.6% of sales in the comparable period last year. While the gross profit percentage decreased slightly, it continues to remain strong. The Company’s continued emphasis on removing inefficiencies in the supply chain has helped to maintain margins. The price increase for WD-40 in the U.S. effective 2/1/00, is expected to further support the margin throughout the year. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Selling, general, & administrative expenses for the six months ended February 29, 2000 increased to $17.3 million from $15.9 million for the comparable prior year period. As a percentage of sales, SG&A increased slightly to 23.2% for the first six months from the 22.3% last year. The increase in SG&A is due to an increased investment in supply chain and information systems, restructuring of the sales force, and increased freight costs on shipments to customers. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Advertising and sales promotion expense rose slightly to $7.4 million for the first six months of fiscal 2000 from $6.9 million for same period of fiscal 1999. Advertising and sales promotion as a percentage of sales increased slightly to 9.8% for the six months ended February 29, 2000 from 9.7% in the comparable prior year period. The increase is primarily due to the timing of certain expenditures and promotions. For the year the Company expects advertising and sales promotion to be in the historical range of 10% of sales. </FONT></P> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 11, page: 11" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Amortization expense was $1.2 million for the first six months of fiscal 2000 compared to $.5 million in the comparable period last year. The increased expense is due to the amortization of goodwill associated with the Lava acquisition. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Income from operations was $15.2 million, or 20.4% of sales for the first six months of fiscal 2000, compared to $16.3 million, or 22.8% of sales for the comparable period of fiscal 1999. The decline in income from operations as a percentage of sales was due to the items discussed above, namely the increases in SG&A and amortization costs. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The components of other income (expense) are shown below: </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR> <TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600"> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="4"><FONT SIZE="-1">For the six months ended</FONT></TH></TR> <TR VALIGN="BOTTOM"> <TH COLSPAN="2"><FONT SIZE="-1"></FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 29, 2000</FONT></TH> <TH COLSPAN="2"><FONT SIZE="-1">February 28, 1999</FONT></TH></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD WIDTH="48%" ALIGN="LEFT"><FONT SIZE="2">Interest Income (Expense), net</FONT></TD> <TD WIDTH="5%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD WIDTH="16%" ALIGN="RIGHT"><FONT SIZE="2">($365,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD WIDTH="17%" ALIGN="RIGHT"><FONT SIZE="2">$130,000</FONT></TD> <TD WIDTH="7%" ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Foreign Currency Gains (Losses)</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">(110,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">91,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Gain on Disposal of PP&E</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">11,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">0</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">Other Income</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">72,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">44,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> <TR VALIGN="BOTTOM"> <TD ALIGN="LEFT"><FONT SIZE="2">TOTAL</FONT></TD><TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">($392,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2">)</FONT></TD> <TD ALIGN="RIGHT"><FONT SIZE="2">$265,000</FONT></TD> <TD ALIGN="LEFT"><FONT SIZE="2"> </FONT></TD></TR> <TR> <TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The change in interest income (expense) net from $130,000 of income for the six months ended February 28, 1999 to $365,000 of expense for the six months ended February 29, 2000 is due to the interest costs associated with the debt related to the Lava acquisition. To finance this acquisition, the Company obtained a $16.0 million term loan from a bank. Foreign currency exchange produced losses of $110,000 for the first six months of fiscal 2000 compared to gains of $91,000 for the comparable prior year period. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company’s effective tax rate for the second quarter of fiscal 2000 is 34.5% compared to 36.5% for the year ended August 31, 1999. The difference in the effective tax rates is due to different allocations of taxable income between taxing jurisdictions from year to year primarily as a result of operational changes within the U.S. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Net income was $9.7 million, or $.63 per share on a fully diluted basis for the first six months of fiscal 2000, versus $10.5 million, or $.67 in the comparable period last year. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>LIQUIDITY AND CAPITAL RESOURCES </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Cash and cash equivalents decreased by $7.1 million from $9.9 million at the end of fiscal 1999 to $2.8 million at February 29, 2000. The Company used $3.6 million of its cash to acquire a portion of the outstanding common stock. Accounts receivable increased by $2.6 million from $28.6 million to $31.2 million due to the timing of sales promotions during the quarter. Normal fluctuations in the timing of purchases and payments resulted in a decrease of $2.8 million for accounts payable, accrued liabilities and payroll related expenses. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>At February 29, 2000 working capital was $24.7 million, a decrease of $7.1 million from $31.8 million at the end of fiscal 1999. The current ratio of 2.2 at February 29, 2000 is slightly lower than the 2.6 at the end of fiscal 1999 primarily due to the Company’s use of cash to repurchase shares of its common stock. On September 30, 1998, the Company announced that its board of directors had authorized the Company to repurchase up to five percent of its then outstanding common shares. In fiscal 1999, the Company repurchased 53,620 shares of the Company’s common stock. During the first six month of fiscal 2000, the Company repurchased 174,536 shares of the Company’s common stock at a cost of $3.6 million. </FONT></P> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 12, page: 12" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company has an unsecured $20.0 million credit facility with Union Bank of California. The line is comprised of a $16.0 million term loan, which matures on May 1, 2006 and a $4.0 million revolving line of credit facility, which matures on April 30, 2001. At February 29, 2000, $11.9 million remained due under the term loan, with $3.8 million outstanding under the revolving line of credit. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company’s primary source of funds is cash flow from operations, which is expected to provide sufficient funds to meet both short and long-term operating needs, as well as future dividends. In an effort to augment the growth of the business by leveraging its core competencies, the Company has announced that it is seeking to make an acquisition of one or more branded products in related markets. If the Company is successful in doing so, existing cash flow may not be sufficient and additional financing may be required to support the acquisition. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company spent $1.3 million for new capital assets during the first six months, primarily in the area of computer hardware and software and vehicle replacements. In fiscal 2000, the Company expects to spend approximately $2.2 million for new capital assets, primarily for computer hardware and software in support of sales and operations, production molds for new products, and vehicle replacements in Europe. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>YEAR 2000 ISSUE </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company has not experienced any business disruption due to year 2000 issues in the period from January 1, 2000 to date. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>MARKET RISK </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company is exposed to a variety of risks, including foreign currency fluctuations. In the normal course of its business, the Company employs established policies and procedures to manage its exposure to fluctuations in foreign currency values. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Company’s objective in managing its exposure to foreign currency exchange rate fluctuations is to reduce the impact of adverse fluctuations in earnings and cash flows associated with foreign currency exchange rate changes. Accordingly, the Company’s U.K. subsidiary utilizes forward contracts to hedge its exposure on converting cash balances maintained in French francs, German marks, Italian lira and Spanish pesetas into sterling. The Company regularly monitors its foreign exchange exposures to ensure the overall effectiveness of its foreign currency hedge positions. However, there can be no assurance the Company’s foreign currency hedging activities will substantially offset the impact of fluctuations in currency exchange rates on its results of operations and financial position. </FONT></P> <BR> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 14, page: 14" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>FORWARD LOOKING STATEMENTS </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for certain forward-looking statements. This report contains forward-looking statements, which reflect the Company’s current views with respect to future events and financial performance. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>These forward-looking statements are subject to certain risks and uncertainties. The words “aim,” “believe,” “expect,” “anticipate,” “intend,” “estimate” and other expressions that indicate future events and trends identify forward-looking statements. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Actual future results and trends may differ materially from historical results or those anticipated depending upon factors including, but not limited to, the rate of sales growth in Latin America, The Middle East, the Asia/Pacific region and direct European countries, the impact of customer mix on gross margins, the effect of increasing WD-40 selling prices on gross margins, the amount of future advertising and promotional expenses, the effect of future income tax provisions, the impact of one or more acquisitions, the amount of future capital expenditures, foreign exchange rates and fluctuations in those rates, the effects of, and changes in, worldwide economic conditions, the impact of the year 2000 issue, and legal proceedings. </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Readers also should be aware that while the Company does, from time to time, communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or other confidential commercial information. Accordingly, shareholders should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report. Further, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Accordingly, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of the Company. </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 13, page: 13" --> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2><B>PART II Other Information</B> </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2><B>Item 6. Exhibits and Reports on Form 8-K</B>. </FONT></P> </TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=3%><FONT SIZE=2>(a) </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=94%><FONT SIZE=2>Exhibits.</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Exhibit No. Description </FONT></P> <!-- MARKER FORMAT-SHEET="Para Flush 10 In 1" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=11%> </TD> <TD WIDTH=89%><FONT SIZE=2> Certificate of Incorporation and Bylaws</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10 In 1" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=5%><FONT SIZE=2>3(a) </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=89%><FONT SIZE=2>The Certificate of Incorporation of WD-40 Company is incorporated by reference from the Registrant’s Form 10-Q Quarterly Report filed November 14, 1999, Exhibit 3 (a) thereto.</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10 In 1" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=5%><FONT SIZE=2>3(b) </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=89%><FONT SIZE=2>The Bylaws of WD-40 Company are incorporated by reference from the Registrant’s Form 10-Q Quarterly Report filed November 14, 1999, Exhibit 3 (b) thereto.</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10 In 1" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=5%><FONT SIZE=2>27 </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=89%><FONT SIZE=2>Financial Data Schedule (electronic filing only)</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=3%><FONT SIZE=2>(b) </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=94%><FONT SIZE=2>Reports on Form 8-K.</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Para Hang Arabic 10 In 1" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=6%><FONT SIZE=2></FONT></TD> <TD WIDTH=3%><FONT SIZE=2>(1) </FONT></TD> <TD WIDTH=3%><FONT SIZE=2></FONT></TD> <TD WIDTH=88%><FONT SIZE=2>On December 15, 1999, the Registrant filed a Form 8-K to report the filing of a Certificate of Merger to complete a change in the Registrant’s state of incorporation from California to Delaware and to report an increase in the authorized number of shares of common stock from Eighteen Million (18,000,000) to Thirty-Six Million (36,000,000).</FONT></TD> </TR> </TABLE> <BR> <!-- *************************************************************************** --> <!-- MARKER LABEL="sheet: 1, page: 1" --> <HR SIZE=5 NOSHADE> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <BR> <!-- MARKER FORMAT-SHEET="Head Minor" --> <H2 ALIGN=LEFT><FONT SIZE=2></FONT></H2> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>SIGNATURES </FONT></P> <!-- MARKER FORMAT-SHEET="Para 10" --> <P><FONT SIZE=2> Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <BR><BR> <!-- MARKER FORMAT-SHEET="Para Flush 10 In 2" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=30%> </TD> <TD WIDTH=70%><FONT SIZE=2>WD-40 COMPANY Registrant</FONT></TD> </TR> </TABLE> <BR> <!-- MARKER FORMAT-SHEET="Page Width Start" --> <TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0> <TR VALIGN=TOP> <TD> <!-- MARKER FORMAT-SHEET="Para Flush 10" --> <P><FONT SIZE=2>Date: April 14, 2000 </FONT></P> <!-- MARKER FORMAT-SHEET="Page Width End" --> </TD> </TR> </TABLE> <!-- MARKER FORMAT-SHEET="Para Flush 10 In 2" --> <TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0> <TR VALIGN=TOP> <TD WIDTH=30%> </TD> <TD WIDTH=70%><FONT SIZE="2"><U>/s/ Thomas J. Tranchina </U><BR> Thomas J. Tranchina <BR>Chief Financial Officer <BR>(Principal Financial Officer)</FONT></TD> </TR> </TABLE> <BR> </body> </HTML>