“WE ALL SEE ONE MARKET, AND IT’S GLOBAL.”

G’day

Though I shared this insight with you in my last shareholder letter, this year it is even more relevant. In fact, that’s why we are featuring fl ags on the cover of this Annual Report. It’s our way of paying tribute to the many people — in countries all over the world — who are part of our ever-expanding global market.

To see how far we’ve come, let’s take a look back at 1998 for just a moment. That was the year we embarked on a diversifi cation strategy by “brand, borders, and trade channels”. Our sales, totaling about $138 million worldwide, consisted predominantly of lubricants. Fifty-six percent of sales came from the U.S and 44% percent of sales came from other markets.

As we look at our business today, 2007 was a record year for us — with $308 million in net sales. Our lubricant sales comprise 70% of our total business, and 58% of these sales are in markets outside of the U.S. Compared to 1998, our lubricant sales outside of the U.S. have doubled, and we have a sustainable household products segment in the U.S. and a growing household products segment in the United Kingdom and Australia.

INNOVATION

Here at WD-40, we defi ne innovation as “creation in a better form” and we continually strive to deliver it to our customers.

• It has been gratifying to see the development and launch of the WD-40 Smart Straw^® in 2007. Smart Straw is an innovative delivery system that enhances value for our consumers. In an effort to deliver this value to as many consumers as possible in the U.S., we have decided to incorporate the Smart Straw technology into most of our WD-40^® can sizes during the coming year.
• As part of our ongoing commitment to develop environmentally friendly products, this year we introduced Spot Shot “PetClean,™” an innovative product that is not only non-toxic but also biodegradable.

RENOVATION

Renovation, which we defi ne as the process of “improving existing products,” remains another key focus for us.

• This year we re-launched the X-14 The Bathroom X-pert^® product line, positioning it as the “bathroom expert” —capable of helping consumers with a wide range of bathroom cleaning chores.
• Our 3-In-One^® professional line has experienced progressive change this year with the addition of a garage door lube product that incorporates the Smart Straw technology.
• In 2007, we refreshed the packaging and marketing communications in our Carpet Fresh^® product line, and in the coming year we will be revitalizing our Lava^® product packaging.

This past year we also investigated new and different ways of going to market. For example, we are currently experimenting with Direct Response TV as a vehicle for introducing new products to more consumers.

A YEAR OF ACCOMPLISHMENTS

Even with the continued pressure of increased raw material costs, our gross margins have improved , thanks to the focus of our people.

We also opened our subsidiary in China ahead of schedule and under budget — demonstrating our commitment to develop our business in those high potential markets we’ve identified.

Business is not without risk, so you should be continually aware of some of the areas that could affect the company. Litigation in the U.S. continues to be an ever-increasing part of society, and our business along with the entire business community will always have legal exposure. Please be sure to review the complete list of risk factors contained in our Form 10-K.

I believe we have made solid progress on our strategy by expanding our global reach, increasing distribution in new trade channels, and expanding our portfolio of brands. This has resulted in a more robust global business and record sales and earnings, as you will see in the 10-K section of this Annual Report.

In closing, I want to thank you for giving me the opportunity to lead a great team of people, to care for and expand our great brands and to grow a great company.

Garry Ridge
President & CEO