What changed in this filing

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Item 1. Financial Statements

2021-07-07 compared with 2021-04-08 · 110 added, 104 removed, 434 unchanged (33% of the section changed)

5 unchanged sentences

Cash and cash equivalents

Trade accounts receivable, less allowance for doubtful

accounts of $ 550 and $ 362 at February 28, 2021

Trade and other accounts receivable, less allowance for doubtful

accounts of $ 620 and $ 362 at May 31, 2021

and August 31, 2020, respectively

21 unchanged sentences

Common stock ― authorized 36,000,000 shares, $ 0.001 par value;

19,855,666 and 19,812,685 shares issued at February 28, 2021 and

19,855,666 and 19,812,685 shares issued at May 31, 2021 and

August 31, 2020, respectively;

and 13,707,767 and 13,664,786 shares

outstanding at February 28, 2021 and August 31, 2020, respectively

outstanding at May 31, 2021 and August 31, 2020, respectively

Additional paid-in capital

1 unchanged sentence

Accumulated other comprehensive loss

Common stock held in treasury, at cost ― 6,147,899 and 6,147,899

shares at February 28, 2021 and August 31, 2020, respectively

Common stock held in treasury, at cost ― 6,147,899 shares

at both May 31, 2021 and August 31, 2020

Total shareholders'

4 unchanged sentences

(Unaudited and in thousands, except per share amounts)

Three Months Ended February 28/29,

Six Months Ended February 28/29,

Three Months Ended May 31,

Nine Months Ended May 31,

Cost of products sold

14 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

WD-40 CO MPANY

WD-40 COMPANY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited and in thousands)

Three Months Ended February 28/29,

Six Months Ended February 28/29,

Three Months Ended May 31,

Nine Months Ended May 31,

Other comprehensive income (loss):

2 unchanged sentences

See accompanying notes to condensed consolidated financial statements.

WD- 40 COMPANY

WD-40 COM PANY

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS'

17 unchanged sentences

Balance at February 28, 2021

Stock-based compensation

Cash dividends ($ 0.72 per share)

Foreign currency translation adjustment

Balance at May 31, 2021

See accompanying notes to condensed consolidated financial statements.

21 unchanged sentences

Balance at February 29, 2020

Stock-based compensation

Cash dividends ($ 0.67 per share)

Acquisition of treasury stock

Foreign currency translation adjustment

Balance at May 31, 2020

See accompanying notes to condensed consolidated financial statements.

WD-40 CO MPANY

WD-40 COMPA NY

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited and in thousands)

Six Months Ended February 28/29,

Nine Months Ended May 31,

Operating activities:

5 unchanged sentences

Stock-based compensation

Unrealized foreign currency exchange losses (gains)

Unrealized foreign currency exchange (gains) losses

Provision for bad debts

Changes in assets and liabilities:

Trade accounts receivable

Trade and other accounts receivable

Operating lease assets and liabilities, net

48 unchanged sentences

COVID-19 Considerations

The COVID-19 pandemic has adversely impacted global economic conditions and has contributed to significant volatility in financial markets beginning in early calendar year 2020, as described in the “ Significant Developments ” section included in Part I – Item 2.

The COVID-19 pandemic has adversely impacted global economic conditions and has contributed to significant volatility in financial markets beginning in early calendar year 2020, as described in the “ Impact of COVID-19 on Our Business ” section included in Part I – Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Although the Company’s current estimates contemplate current conditions, the inputs into certain of the Company’s significant and critical accounting estimates include judgments and assumptions about the economic implications of the COVID-19 pandemic and how management expects them to change in the future, as appropriate.

It is reasonably possible that actual results experienced

may differ materially from the Company’s estimates in future periods, which could materially affect our results of operations and financial condition.

It is reasonably possible

that actual results experienced may differ materially from the Company’s estimates in future periods, which could materially affect our results of operations and financial condition.

Foreign Currency Forward Contracts

6 unchanged sentences

Foreign currency forward contracts in an asset position at the end of the reporting period are included in other current assets, while foreign currency forward contracts in a liability position at the end of the reporting period are included in accrued liabilities in the Company’s consolidated balance sheets .

At February 28, 2021, the Company had a notional amount of $ 8.9 million outstanding in foreign currency forward contracts, which matured on March 30, 2021 .

Unrealized net gains and losses related to foreign currency forward contracts were no t significant at February 28, 2021 and August 31, 2020 .

Realized net gains and losses related to foreign currency forward contracts were no t significant for both the three months ended February 28, 2021 and February 29, 2020.

Realized net gains and losses related to foreign currency forward contracts were no t significant for both the six months ended February 28, 2021 and February 29, 2020.

At May 31, 2021, the Company had a notional amount of $ 15.8 million outstanding in foreign currency forward contracts, which matured on June 29, 2021 .

Unrealized net gains and losses related to foreign currency forward contracts were no t significant at May 31, 2021 and August 31, 2020 .

Realized net gains and losses related to foreign currency forward contracts were no t significant for both the three months ended May 31, 2021 and 2020.

Realized net gains and losses related to foreign currency forward contracts were no t significant for both the nine months ended May 31, 2021 and 2020.

Both unrealized and realized net gains and losses are recorded in other income (expense), net on the Company’s condensed consolidated statements of operations.

6 unchanged sentences

Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.

As of February 28, 2021, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

As of May 31, 2021, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy.

The carrying values of cash equivalents and short-term borrowings are recorded at cost, which approximates their fair values, primarily due to their short-term nature.

1 unchanged sentence

The Company’s fixed rate long-term borrowings consist of senior notes and are recorded at carrying value.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 67.9 million as of February 28, 2021, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 69.6 million .

During the six months ended February 28, 2021, the Company did no t record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 66.4 million as of May 31, 2021, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to their carrying value of $ 69.2 million .

During the nine months ended May 31, 2021, the Company did no t record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

Recently Issued Accounting Standards

5 unchanged sentences

Inventories consist primarily of raw materials and components, finished goods, and product held at third-party contract manufacturers.

Inventories are stated at the lower of cost or market and cost is determined based on a first-in, first-out method or, for a portion of raw materials inventory, the average cost method.

Inventories are stated at the lower of cost or net realizable value and cost is determined based on a first-in, first-out method or, for a portion of raw materials inventory, the average cost method.

Inventories consisted of the following (in thousands):

15 unchanged sentences

Translation adjustments

Balance as of February 28, 2021

During the second quarter of fiscal year 2021, the Company performed its annual goodwill impairment test.

The annual goodwill impairment test was performed at the reporting unit level as required by the authoritative guidance as of the Company’s most recent goodwill impairment testing date, December 1, 2020.

During the fiscal year 2021 annual goodwill impairment test, the Company performed a qualitative assessment of each reporting unit to determine whether it was more likely than not that the fair value of a reporting unit was less than its carrying amount.

In performing this qualitative assessment, the Company assessed relevant events and circumstances that may impact the fair value and the carrying amount of each of its reporting units.

Factors that were considered included, but were not limited to, the following:

(1) macroeconomic conditions, including the impacts of the COVID-19 pandemic;

(2) industry and market conditions;

(3) historical financial performance and expected financial performance;

(4) other entity specific events, such as changes in management or key personnel;

and (5) events affecting the Company’s reporting units, such as a change in the composition of net assets or any expected dispositions.

Based on the results of this qualitative assessment, the Company determined that it is more likely than not that the carrying value of each of its reporting units is less than its fair value as of the goodwill impairment testing date and, thus, a quantitative analysis was not required.

As a result, the Company concluded that no impairment of its goodwill existed as of December 1, 2020.

In addition, the Company concluded that there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to December 1, 2020 through February 28, 2021.

Balance as of May 31, 2021

There were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its goodwill subsequent to December 1, 2020, the date of its most recent annual goodwill impairment test, which was conducted during the second quarter of fiscal year 2021.

Based on the results of the annual goodwill impairment test, the estimated fair value of each of the Company’s reporting units exceeded their respective carrying values so significantly that an impairment charge to the Company’s goodwill balances is remote.

To date, there have been no impairment losses identified and recorded related to the Company’s goodwill.

5 unchanged sentences

Net carrying amount

There has been no impairment charge for the six months ended February 28, 2021 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.

There has been no impairment charge for the nine months ended May 31, 2021 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets.

The Company’s review of events and circumstances included consideration of the ongoing COVID-19 pandemic.

Changes in the carrying amounts of definite-lived intangible assets by segment for the six months ended February 28, 2021 are summarized below (in thousands):

Changes in the carrying amounts of definite-lived intangible assets by segment for the nine months ended May 31, 2021 are summarized below (in thousands):

Balance as of August 31, 2020

1 unchanged sentence

Translation adjustments

Balance as of February 28, 2021

Balance as of May 31, 2021

The estimated amortization expense for the Company’s definite-lived intangible assets in future fiscal years is as follows (in thousands):

16 unchanged sentences

The Company uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate in the currency of the lease.

As of February 28, 2021, finance leases were not significant and all leases recorded on the Company’s consolidated balances sheets were operating leases.

As of May 31, 2021, finance leases were not significant and all leases recorded on the Company’s consolidated balances sheets were operating leases.

Residual value guarantees, restrictions, covenants, sublease income, net gains or losses from sale and leaseback transactions, and transactions with related parties associated with leases are also not significant.

The Company has made the accounting policy election to use certain ongoing practical expedients made available by ASC 842 to:

(i) not separate lease components from nonlease components for real estate – office buildings, machinery and equipment, lab equipment, office equipment, furniture and fixtures, and IT equipment;

(i) not separate lease components from non-lease components for real estate – office buildings, machinery and equipment, lab equipment, office equipment, furniture and fixtures, and IT equipment;

and (ii) exclude leases with an initial term of 12 months or less (“short-term” leases) from the consolidated balance sheets and will recognize related lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

However, the Company had no significant short-term leases as of February 28, 2021.

The Company obtained additional right-of-use assets of $ 1.1 million in exchange for lease

obligations related to renewals of existing leases during the six months ended February 28, 2021.

The Company did no t obtain significant additional right-of-use assets during the six months ended February 28, 2020.

The Company recorded $ 0.5 million and $ 1.0 million in lease expense during both the three and six months ended February 28, 2021 and February 29, 2020.

However, the Company had no significant short-term leases as of May 31, 2021.

The Company obtained additional right-of-use assets of $ 1.9 million in exchange for lease obligations related to renewals of existing leases during the nine months ended May 31, 2021.

The Company did no t obtain significant additional right-of-use assets during the nine months ended May 31, 2020.

The Company recorded $ 0.5 million and $ 1.5 million in lease expense during both the three and nine months ended May 31, 2021 and 2020.

This lease expense was included in selling, general and administrative expenses.

An insignificant amount of lease expense was classified within cost of products sold for both the three and six months ended February 28, 2021 and February 29, 2020.

During the three and six months ended February 28, 2021 and February 29, 2020, the Company paid cash of $ 0.6 million and $ 1.1 million related to lease liabilities, respectively, compared to $ 0.5 million and $ 1.0 million in the corresponding period of the prior fiscal year.

Variable lease expense under the Company’s lease agreements were not significant for both the three and six months ended February 28, 2021 and February 29, 2020.

As of February 28, 2021, the weighted-average remaining lease term was 6.3 years and the weighted-average discount rate was 2.9 % for the Company’s operating leases.

There were no leases that had not yet commenced as of February 28, 2021 that will create additional significant rights and obligations for the Company.

An insignificant amount of lease expense was classified within cost of products sold for both the three and nine months ended May 31, 2021 and 2020.

During the three and nine months ended May 31, 2021, the Company paid cash of $ 0.5 million and $ 1.6 million related to lease liabilities, respectively, compared to $ 0.5 million and $ 1.5 million in the corresponding period of the prior fiscal year.

Variable lease expense under the Company’s lease agreements was not significant for both the three and nine months ended May 31, 2021 and 2020.

As of May 31, 2021, the weighted-average remaining lease term was 6.9 years and the weighted-

average discount rate was 2.9 % for the Company’s operating leases.

There were no leases that had not yet commenced as of May 31, 2021 that will create additional significant rights and obligations for the Company.

Right-of-use assets and lease liabilities consisted of the following (in thousands):

17 unchanged sentences

Accrued sales taxes and other taxes

Deferred revenue

Short-term operating lease liability

4 unchanged sentences

Accrued payroll taxes

As of February 28, 2021, the Company held borrowings under two separate agreements as detailed below.

As of May 31, 2021, the Company held borrowings under two separate agreements as detailed below.

Note Purchase and Private Shelf Agreement

20 unchanged sentences

Outstanding draws for which management has both the ability and intent to refinance with successive short-term borrowings for a period of at least twelve months are classified as long-term.

As of February 28, 2021, the entire balance on this facility is classified as long-term and only contains amounts denominated in Euros and Pound Sterling.

As of May 31, 2021, the entire balance on this facility is classified as long-term and only contains amounts denominated in Euros and Pound Sterling.

Euro and Pound Sterling denominated draws will fluctuate in U.S.

3 unchanged sentences

(3) On September 30, 2020, the Company refinanced $ 50.0 million of existing draws under its Credit Agreement in the United States through the issuance of two new $ 26.0 million notes (“Series B Notes” and “Series C Notes”, respectively) under its Note Agreement.

Interest on these new notes is payable semi-annually in May and November of each year with no principle due until the maturity date.

The first interest payment on both the Series B and Series C Notes is due in May 2021 .

Interest on these new notes is payable semi-annually in May and November of each year with no principal due until the maturity date.

The first interest payment on both the Series B and Series C Notes was paid in May 2021 .

Both the Note Agreement and the Credit Agreement contain representations, warranties, events of default and remedies, as well as affirmative, negative and other financial covenants customary for these types of agreements.

9 unchanged sentences

The consolidated interest coverage ratio means, as of any date of determination, the ratio of (a) consolidated EBITDA for the most recently completed four fiscal quarters to (b) consolidated interest charges for the most recently completed four fiscal quarters

As of February 28, 2021, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

As of May 31, 2021, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement.

Share Repurchase Plan

On April 8, 2020, the Company elected to suspend repurchases under its previously approved share buy-back plan, which subsequently expired on August 31, 2020.

The Company made this election in order to preserve cash while it continues to monitor the long-term impacts of the COVID-19 pandemic.

Management will continue to evaluate future authorizations under its share buy-back program and the Board will consider approval based on management’s recommendations .

Therefore, no repurchase transactions were made during the six months ended February 28, 2021.

The Company made this election in order to preserve cash while it continued to monitor the long-term impacts of the COVID-19 pandemic.

The Company will continue to evaluate future authorizations of share buy-backs.

No repurchase transactions were made during the nine months ended May 31, 2021.

Earnings per Common Share

The table below reconciles net income to net income available to common shareholders (in thousands):

Three Months Ended February 28/29,

Six Months Ended February 28/29,

Three Months Ended May 31,

Nine Months Ended May 31,

Net income allocated to

2 unchanged sentences

The table below summarizes the weighted-average number of common shares outstanding included in the calculation of basic and diluted EPS (in thousands):

Three Months Ended February 28/29,

Six Months Ended February 28/29,

Three Months Ended May 31,

Nine Months Ended May 31,

Weighted-average common

3 unchanged sentences

shares outstanding, diluted

For the three and six months ended February 28, 2021, there were no anti-dilutive stock-based equity awards outstanding.

For the three and six months ended February 29, 2020, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 7,604 and 9,479 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

For the three and nine months ended May 31, 2021, there were no anti-dilutive stock-based equity awards outstanding.

For the three and nine months ended May 31, 2020, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 9,479 and 8,229 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

Revenue Recognition

29 unchanged sentences

Costs related to rebates, cooperative advertising and other promotional activities and other discounts are recorded as a reduction to sales upon delivery of the Company ’ s products to its customers.

The Company had a $ 7.8 million and $ 7.5 million balance in rebate/other discount liabilities as of February 28, 2021 and August 31, 2020, respectively, which are included in accrued liabilities on the Company ’ s condensed consolidated balance sheets.

The Company recorded approximately $ 5.8 million and $ 11.1 million in rebates/other discounts as a reduction to sales during the three and six months ended February 28, 2021, respectively.

Rebates/other discounts as a reduction to sales during the three and six months ended February 29, 2020 were approximately $ 4.4 million and $ 9.4 million, respectively.

The Company had a $ 8.5 million and $ 7.5 million balance in rebate/other discount liabilities as of May 31, 2021 and August 31, 2020, respectively, which are included in accrued liabilities on the Company ’ s condensed consolidated balance sheets.

The Company recorded approximately $ 7.5 million and $ 20.2 million in rebates/other discounts as a reduction to sales during the three and nine months ended May 31, 2021, respectively.

Rebates/other discounts as a reduction to sales during the three and nine months ended May 31, 2020 were approximately $ 5.2 million and $ 14.6 million, respectively.

Coupons — Coupon costs are based upon historical redemption rates and are recorded as a reduction to sales as incurred, which is when the coupons are circulated.

Coupon redemption liabilities, which are included in accrued liabilities on the Company ’ s condensed consolidated balance sheets, were not significant at February 28, 2021 and August 31, 2020.

Coupons recorded as a reduction to sales during the three and six months ended February 28, 2021 and February 29, 2020, were also not significant.

Coupon redemption liabilities, which are included in accrued liabilities on the Company ’ s condensed consolidated balance sheets, were not significant at May 31, 2021 and August 31, 2020.

Coupons recorded as a reduction to sales during the three and nine months ended May 31, 2021 and 2020, were also not significant.

Cash discounts — The Company offers certain of its customers a cash discount program to incentivize them to pay the invoice earlier than the normal payment date on the invoice.

Although payment terms vary, most customers typically pay within 30 to 90 days of invoicing.

The Company had a $ 0.5 million balance in the allowance for cash discounts at both February 28, 2021 and August 31, 2020.

The Company recorded approximately $ 1.1 million and $ 2.3 million in cash discounts as a reduction to sales during the three and six months ended February 28, 2021, respectively.

Cash discounts as a reduction to sales during the three and six months ended February 29, 2020 were approximately $ 1.0 million and $ 2.0 million, respectively.

The Company had a $ 0.5 million balance in the allowance for cash discounts at both May 31, 2021 and August 31, 2020.

The Company recorded approximately $ 1.3 million and $ 3.6 million in cash discounts as a reduction to sales during the three and nine months ended May 31, 2021, respectively.

Cash discounts as a reduction to sales during the three and nine months ended May 31, 2020 were approximately $ 1.1 million and $ 3.1 million, respectively.

Sales returns — The Company recognizes revenue net of allowances for estimated returns, which is based on historical return rates, with a corresponding reduction to cost of products sold.

2 unchanged sentences

The Company ’ s refund liability for sales returns is included in accrued liabilities and represents the amount expected to be owed to the customers for product returns.

The Company’s refund liability for sales returns was not significant at both February 28, 2021 and August 31, 2020.

The Company’s refund liability for sales returns was not significant at both May 31, 2021 and August 31, 2020.

The Company also records an asset for the value of inventory that represents the right to recover products from customers associated with sales returns.

The value of this inventory is recorded to other current assets and the balance in this account associated with product returns was not significant at February 28, 2021 and August 31, 2020.

The value of this inventory is recorded to other current assets and the balance in this account associated with product returns was not significant at May 31, 2021 and August 31, 2020.

Disaggregation of Revenue

6 unchanged sentences

Revenue is subsequently recognized when revenue recognition criteria are met, generally when control of the product transfers to the customer.

The Company had contract liabilities of $ 2.3 million and $ 1.4 million as of February 28, 2021 and August 31, 2020, respectively.

The Company had contract liabilities of $ 2.2 million and $ 1.4 million as of May 31, 2021 and August 31, 2020, respectively.

These contract liabilities are recorded in accrued liabilities on the Company ’ s condensed consolidated balance sheets.

The Company did no t have any contract assets as of February 28, 2021 and August 31, 2020.

The Company did no t have any contract assets as of May 31, 2021 and August 31, 2020.

Commitments and Contingencies

6 unchanged sentences

Upon the termination of contracts with contract manufacturers, the Company obtains certain inventory control rights and is obligated to work with the contract manufacturer to sell through all product held by or manufactured by the contract manufacturer on behalf of the Company during the termination notification period.

If any inventory remains at the contract manufacturer at the termination date, the Company is obligated to purchase such inventory which may include raw materials,

components and finished goods.

If any inventory remains at the contract manufacturer at the termination date, the Company is obligated to purchase such inventory which may include raw materials, components and finished goods.

The amounts for inventory purchased under termination commitments have been immaterial .

In addition to the commitments to purchase products from contract manufacturers described above, the Company may also enter into commitments with other manufacturers to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives.

As of February 28, 2021, no such commitments were outstanding.

From time to time, the Company is subject to various claims, law suits, investigations and proceedings arising in the ordinary course of business , including but not limited to, product liability litigation and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters .

As of February 28, 2021, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss for the Company and, as to claims that the Company believes may result in a reasonably possible loss, the Company believes that no reasonably possible outcome of any such claim will have a materially adverse impact on the Company’s financial condition , results of operations or cash flows.

As of May 31, 2021, no such commitments were outstanding.

From time to time, the Company is subject to various claims, lawsuits, investigations and proceedings arising in the ordinary course of business, including but not limited to, product liability litigation and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters.

Except as disclosed herein, there are no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss for the Company as of May 31, 2021.

As to claims that the Company believes may result in a reasonably possible loss, the Company believes that no reasonably possible outcome of any such claim will have a materially adverse impact on the Company’s financial condition, results of operations or cash flows.

On or about August 18, 2020, Benny Bong (“Bong”) filed a civil action against the Company and the Company’s wholly-owned subsidiary, WD-40 Manufacturing Company (“WD-40 Manufacturing”), in Indonesia in the Commercial District Court of Central Jakarta, case reference number 41 / Pdt.Sus-Merek / 2020 / PN.Niaga.Jkt.Pst.

(the “Jakarta Litigation”).

In April 2021, the Company and WD-40 Manufacturing, owner of the WD-40 brand trademarks, were served with Summons and Complaint for the Jakarta Litigation, in which Bong is seeking damages based on the Company’s enforcement actions against Bong following registration of a Get All-40 trademark that includes a yellow shield logo similar to the WD-40 brand shield logo.

The complaint asserts claims for damages for more than $25.0 million, and a request for a public apology by the Company and WD-40 Manufacturing.

The dispute underlying the Jakarta Litigation follows 2018 litigation filed by WD-40 Manufacturing, in which the Commercial District Court ordered cancellation of two earlier Get All-40 trademark registrations.

In January 2021, WD-40 Manufacturing filed a new cancellation action seeking to invalidate the most recent Get All-40 trademark registration.

The Company denies the allegations asserted by Bong and will vigorously defend itself in the Jakarta Litigation.

The Company believes that an unfavorable outcome in the Jakarta Litigation is not probable.

Due to the uncertainty as to the claims asserted by Bong for recovery of damages and as to future actions in the Jakarta Litigation, the Company is unable to estimate an amount of possible future loss or a range of possible loss.

For further information on the risks the Company faces from existing and future claims, suits, investigations and proceedings , see the Company’s risk factors disclosed in Part I―Item 1A, “Risk Factors,” in its Annual Report on Form 10-K for the fiscal year ended August 31, 2020, which was filed with the SEC on October 21, 2020.

4 unchanged sentences

As a result of the Company’s insurance coverage, management believes that the estimated fair value of these indemnification agreements is minimal .

Thus, no liabilities have been recorded for these agreements as of February 28, 2021 .

Thus, no liabilities have been recorded for these agreements as of May 31, 2021 .

From time to time, the Company enters into indemnification agreements with certain contractual parties in the ordinary course of business, including agreements with lenders, lessors, contract manufacturers, marketing distributors, customers and certain vendors.

1 unchanged sentence

Although the maximum amount of future payments that the Company could be required to make under these indemnification agreements is unlimited, management believes that the Company maintains adequate levels of insurance coverage to protect the Company with respect to most potential claims arising from such agreements and that such agreements do not otherwise have value separate and apart from the liabilities incurred in the ordinary course of the Company’s business.

Thus, no liabilities have been recorded with respect to such indemnification agreements as of February 28, 2021 .

Thus, no liabilities have been recorded with respect to such indemnification agreements as of May 31, 2021 .

The Company uses an estimated annual effective tax rate, which is based on expected annual income, statutory tax rates and tax planning opportunities available in the various jurisdictions in which the Company operates, to determine its quarterly provision for income taxes.

Certain significant or unusual items are separately recognized in the quarter in which they occur and can be a source of variability in the effective tax rates from quarter to quarter.

The provision for income taxes was 15.0 % and 17.6 % of income before income taxes for the three months ended February 28, 2021 and February 29, 2020, respectively.

The decrease in the effective income tax rate from period to period was primarily due to an increase in excess tax benefits from settlements of stock-based equity awards, as well as the release of liabilities related to uncertain tax positions due to the expiration of statutes during the second quarter of fiscal year 2021.

The provision for income taxes was 15.4 % and 16.3 % of income before income taxes for the six months ended February 28, 2021 and February 29, 2020, respectively.

The decrease in the effective income tax rate from period to period was primarily due to a benefit from the High Tax Exemption associated with Global Intangible Low Taxed Income during the first half of fiscal year 2021, as well as an increase in excess tax benefits from settlements of stock-based equity awards.

The impact of these items on income tax expense percentages was partially offset by the effect of significantly higher pre-tax income for the six months ended February 28, 2021 when compared to the corresponding period in the prior fiscal year.

The provision for income taxes was 21.9 % and 23.9 % of income before income taxes for the three months ended May 31 2021 and 2020, respectively.

The decrease in the effective income tax rate from period to period was primarily due to higher earnings from foreign operations resulting in an increase in the benefit received from the application of the Foreign-Derived Intangible Income calculation, coupled with a one-time benefit received in fiscal year 2021 from an Investment Tax Credit.

The provision for income taxes was 17.7 % and 19.1 % of income before income taxes for the nine months ended May 31, 2021 and 2020, respectively.

The decrease in the effective income tax rate from period to period was primarily due to a benefit from the High Tax Exception associated with Global Intangible Low Taxed Income during the first half of fiscal year 2021, as well as an increase in excess earnings from foreign operations resulting in an increase in the benefit received from the application of the Foreign-Derived Intangible Income calculation.

The Company is subject to taxation in the U.S.

4 unchanged sentences

The Company is currently under audit in various state jurisdictions for fiscal years 2017 through 2019.

Estimated unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months were not significant.

Estimated unrecognized tax benefits related to income tax positions affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months were not significant.

Audit outcomes and the timing of settlements are subject to significant uncertainty .

10 unchanged sentences

Corporate (1)

February 28, 2021:

May 31, 2021:

Income from operations

3 unchanged sentences

Interest expense

February 29, 2020:

May 31, 2020:

Income from operations

3 unchanged sentences

Interest expense

Six Months Ended:

February 28, 2021:

Nine Months Ended:

May 31, 2021:

Income from operations

3 unchanged sentences

Interest expense

February 29, 2020:

May 31, 2020:

Income from operations

7 unchanged sentences

Net sales by product group are as follows (in thousands):

Three Months Ended February 28/29,

Six Months Ended February 28/29,

Three Months Ended May 31,

Nine Months Ended May 31,

Maintenance products

1 unchanged sentence

Subsequent Events

On March 16, 2021, the Company’s Board of Directors approved a 7 % increase in the regular quarterly cash dividend, increasing it from $ 0.67 per share to $ 0.72 per share.

The $ 0.72 per share dividend declared on March 16, 2021 is payable on April 30, 2021 to shareholders of record on April 16 , 2021 .

On June 15, 2021, the Company’s Board of Directors declared a cash dividend of $ 0.72 per share payable on July 30, 2021 to shareholders of record on July 16 , 2021 .

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements