G’day,

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us...

— Charles Dickens, A Tale of Two Cities, English novelist (1812-1870)

PERSPECTIVE ON THE YEAR’S PERFORMANCE

Net Sales: $317.1 million
Net Income: $27.6 million
Earnings per share: $1.64
Dividend per share: $1.00

The past year can certainly be characterized as the best of times and the worst of times for WD-40 Company, and the same can probably be said for a lot of companies throughout the global business community. We experienced “the best of times” with the increased international growth of our WD-40® and 3-IN-ONE® brands. And we faced “the worst of times” as a result of the continually rising costs of components and raw materials. Through it, our people worked tirelessly to meet the growing challenges of dynamic economic times. We also refined our diversification strategy to meet the market realities today — and in the future.

As I mentioned in last year’s shareholder letter, back in 1998 we embarked on a diversification strategy by “brands, borders and trade channels.” As I reflect on this year’s results, I see this strategy is paying off. Despite the current economic turmoil, we have managed to grow and expand our market share internationally.

We see the strategy paying off through the diversifica-tion of our borders and our core brand with the continued growth and expansion in our international markets and the U.S. conversion of the WD-40 Smart Straw®.

THE WORST OF TIMES

This past year, we once again experienced the rising costs of components and raw materials—and the volatility in crude oil prices. We started the year with crude oil prices at around $80 a barrel; then oil prices peaked at around $145 a barrel in July and finished the year at $115 a barrel (*). As you know this has a major impact on our oil-based products, our plastic components and the cost of the diesel fuel we use for transporting our products.

Steel prices have also continued to rise due to the strong demand in China, India, Russia and emerging markets. WD-40 cans are manufactured with tinplate steel, which has increased 20% over the last two years.

Historically, our Company has been able to withstand turmoil in the economy. We have products that consumers need in good times and bad. We are also a well-managed company — and a learning organization capable of responding to dynamic market conditions. This past year, however, was particularly challenging since we faced an environment of massive swings in commodity prices. The erratic behavior of commodities forced us to execute accelerated margin enhancement strategies. Throughout the year, we continuously monitored the markets and prepared our teams to respond accordingly. For example, one of our teams — focused on cost containment and margin enhancement strategies — met regularly to respond to market conditions as they evolved. While we were able to implement these strategies, we could not shield the Company completely from the effects of the volatility in commodity pricing, and this had an impact on the year’s results.

We also experienced higher SG&A expenses, which increased 7% during fiscal year 2008 compared to the prior fiscal year. And although freight costs rose, they could have been much higher if the Company had not implemented an integrated freight management solution — resulting in reduced carrier rates and improved shipping efficiency in the U.S. Changes in foreign currency contributed to higher SG&A expenses as well. We also hired staff to support our growing international operations, and our legal expenses went up due to increased activity in our litigation caseload and increased intellectual property activity.

The Company recorded an impairment cost of $1.3 million related to its indefinite-lived intangible assets of the X-14® brand. This was due primarily to the forward-looking impact of our strategic decision to withdraw a number of products from the grocery trade channel —an important first step in transitioning the brand.

THE BEST OF TIMES

We are very excited about our growth in international markets. For the first time in WD-40 Company’s history — and as we celebrate our 55th birthday —over half (53%) of our total revenues are generated outside of the United States. The percentage of WD-40 product sales outside of the U.S. grew from 57% to 62% in 2008. Europe experienced 15% growth compared to the prior fiscal year, primarily due to sales from the new Smart Straw® technology, expansion in developing markets, and growth in our 3-IN-ONE professional products.

China sales increased 66% in fiscal 2008 compared to the prior fiscal year. This growth was a direct result of the Company’s decision to develop direct sales activity in that region. Asia sales increased 24% compared to prior fiscal year, and WD-40 sales in Latin America and Canada grew 19% and 6%, respectively. All of these regions grew through increased promotional activity, and Latin America, in particular, grew as a result of new distribution.

We implemented the U.S. conversion of our traditional WD-40 product to our new WD-40 Smart Straw technology, featuring a dual spray and a permanent straw attached. This new technology has allowed us to enhance our margins, while resolving our customers’ number one complaint about the product. (We’d like to think that, from now on, our consumers will “never lose the straw again!”). Following this conversion, which was completed in April 2008, the market demand for product outpaced supply and we worked hard to meet these expectations. While we’re still in the early stages, the results we’re seeing from the Smart Straw introduction look promising.

We launched several new products this year. In the U.S., we introduced the first non-toxic and biodegradable carpet stain remover, a product called Spot Shot Pet Clean™. We also launched 3-IN-ONE No-Rust Shield ™, a product that protects tools and valuables from rust and corrosion in small enclosed areas, as well as the 3-IN-ONE professional Garage Door Lube, which also features the Smart Straw® technology. In Germany, we launched 3-IN-ONE professional products — introducing the 3-IN-ONE brand name in that country for the first time.

We continue to tighten our new product development process to focus only on those products that meet our core consumers’ needs, as we learn more about how to better align our new product development resources with our Company’s strategic direction.

A STRONG AND STABLE COMPANY — AND A SOLID LONG-TERM INVESTMENT

We pay close attention to our credit exposure. The Company maintains strong credit relationships with large and trusted financial organizations, and we continue to manage these relationships closely. We have always monitored the health of our suppliers and major customers as well as our financial vendors to ensure we minimize the exposure to third-party relationships. To mitigate our credit risk, we use credit insurance within our international marketing distributor market. We also monitor our direct sales markets very closely, and historically our bad debt expense has been low.

We have a strong balance sheet. Not only does our level of debt remain low, but we continue to de-lever the company and have access to additional borrowing sources as needed. We have $42.9 million remaining on an original $75 million fixed rate term loan and remain in compliance with all of our debt covenants.

We continue to implement best practices with our working capital and cash management strategies. The company also has strong free cash flow, with cash available for investments — and for funding our regular quarterly dividend, debt payment and operating activities.

Over the past 55 years, our Company has fared well in difficult economic cycles. And we will continue managing the business to ensure long-term sustainability.

As you review the 10-K, you will see in detail how we have managed the business given the dynamic evolution of our markets. Over the past year, we have also invested time and resources in reviewing our strategy with the objective of answering the following question, “Where do we NOW have the ‘right to win’ and the ability to play?” All the work we have done in this area confirms a shift in our belief that “We must now focus on adjacent business opportunities by leveraging the WD-40 and 3-IN-ONE brands.” We believe this is the direction that will provide us with the best global opportunities.

LOOKING AHEAD

Now that we have identified where we have the “right to win”, our diversification strategy has a tighter focus and will help us respond to evolving market dynamics. As you know, our diversification strategy consists of three areas of focus:

Diversify through Brands

Diversify through Borders

Diversify through Trade Channels

In this 10-K report, we will start reporting our product offerings in one of two categories: Multi-Purpose Maintenance Products and Homecare and Cleaning Products. The WD-40 and 3-IN-ONE brand revenues will be reported under the Multi-Purpose Maintenance Products category, and all of our other consumer product revenues will be reported under the Homecare and Cleaning products category.

While the turbulence of the markets brings uncertainty, we believe that such economic conditions can also create desirable acquisition opportunities. In fact, right now the potential to find attractively valued acquisitions is greater than it has been in the past few years. However, as I have been telling investors for years, the Company will never make an acquisition at unrealistic multiples.

OUR OBJECTIVE FOR FY 2009

We don’t believe we have seen the end of the rising costs of commodities for fiscal 2009, so we have planned additional margin enhancement strategies for next year. In these uncertain times, there is much we don’t know. What we do know, however, is that WD-40 Company will remain a stable investment in your diversified portfolio, and we intend to continue to deliver value to our shareholders regardless of what happens in the economy.

Ultimately, we will deliver value by providing products of choice for consumers — and by developing and acquiring products that consumers buy in our global distribution channels of demonstrated strength, where we have the “right to win”. Ultimately, we would like all of our products to create the same positive lasting memories as our flagship product, WD-40.

We are also maximizing the power of the WD-40 brand by changing our corporate logo to reflect more closely the likeness of the brand. We feel this will help us leverage the popularity of our world-famous flagship brand — and the unique position it has in the hearts and minds of consumers everywhere. We hope consumers will recognize over time our corporate logo as an endorsement that identifies the WD-40 Company family of brands.

As we increase our focus on our global brands from the Multi-Purpose Maintenance Products category, which includes WD-40 and 3-IN-ONE, and develop these brands in our international markets; as we tighten our focus on strategy to develop new revenue opportunities in markets where we have the “right to win”; as we develop cost containment and margin enhancement strategies; and as we practice high ethical standards and deliver positive lasting memories to our consumers, we believe the Company will get through these tough times and keep delivering on our strategy.

I invite you to read the 10-K Annual Report for details on the past year’s performance.

Thank you for giving me the opportunity to help lead a dedicated team of people, in these best and worst of times.

Garry O. Ridge

President & CEO

(*) Energy Information Administration, official energy statistics from the U.S. Government