What changed in this filing

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Item 9A. Controls and Procedures

2021-10-22 compared with 2020-10-21 · 209 added, 320 removed, 848 unchanged (38% of the section changed)

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The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”).

The term disclosure controls and procedures means controls and other procedures of a Company that are designed to ensure the information required to be disclosed by the Company in the reports that it files or submits under the Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

The term disclosure controls and procedures means controls and other procedures of a Company that are designed to ensure the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a Company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosures.

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There were no changes to the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter ended August 31, 2021, that materially affected, or would be reasonably likely to materially affect, the Company’s internal control over financial reporting.

Beginning September 1, 2019, the Company implemented the new lease guidance under ASC 842.

In connection with the adoption of this standard, the Company made enhancements to its internal controls over financial reporting and procedures related to lease accounting, as well as the associated control activities within them.

These enhancements included the development of new policies based on the updated lease guidance, new training, ongoing contract review requirements and gathering of information provided for disclosures.

Other Information

Directors, Executive Officers and Corporate Governance

Certain information required by this item is set forth in sections under the headings “Security Ownership of Directors and Executive Officers,” “Nominees for Election as Directors,” and “Audit Committee – Related Party Transactions Review and Oversight” in the Company’s Proxy Statement to be filed with the Securities and Exchange Commission in connection with the 2020 Annual Meeting of Stockholders on December 8, 2020 (“Proxy Statement”), which information is incorporated by reference herein.

Certain information required by this item is set forth in sections under the headings “Security Ownership of Directors and Executive Officers,” “Nominees for Election as Directors,” and “Audit Committee – Related Party Transactions Review and Oversight” in our Proxy Statement to be filed with the Securities and Exchange Commission in connection with the 2021 Annual Meeting of Stockholders on December 14, 2021 (“Proxy Statement”), which information is incorporated by reference herein.

Additional information concerning executive officers of the Registrant required by this item is included in this report following Item 4 of Part I under the heading, "Executive Officers of the Registrant."

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Equity Compensation Plan Information

The following table provides information regarding shares of the Company’s common stock authorized for issuance under equity compensation plans as of August 31, 2020:

The following table provides information regarding shares of our common stock authorized for issuance under equity compensation plans as of August 31, 2021:

Number of securities

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36,594 securities to be issued pursuant to outstanding market share units (“MSUs”) based on 100% of the target number of MSU shares to be issued upon achievement of the applicable performance measure specified for such MSUs;

and 22,914 securities to be issued pursuant to outstanding deferred performance units (“DPUs”) based on 100% of the maximum number of DPU shares to be issued upon achievement of the applicable performance measure specified for such DPUs.

3,729 securities to be issued pursuant to outstanding deferred performance units (“DPUs”);

and 18,252 securities to be issued pursuant to outstanding performance share units (“PSUs”) based on 100% of the maximum number of PSU shares to be issued upon achievement of the applicable performance measure specified for such PSUs.

Certain Relationships and Related Transactions, and Director Independence

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WD-40 Company 2016 Stock Incentive Plan, incorporated by reference from the Registrant’s Proxy Statement filed November 3, 2016, Appendix A thereto.

WD-40 Directors’ Compensation Policy and Election Plan dated October 7, 2019, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2019, Exhibit 10(b) thereto .

WD-40 Directors’ Compensation Policy and Election Plan dated October 12, 2021 .

Form of Indemnity Agreement between the Registrant and its executive officers and directors, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2013, Exhibit 10(d) thereto.

Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal years 2018, 2019 and 2020.

Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal years 2018, 2019 and 2020.

Form of Deferred Performance Unit Award Agreement for grants of Deferred Performance Units to Executive Officers.

Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal years 2019 and 2020, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(d) thereto.

Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal years 2019 and 2020, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(e) thereto.

Form of Deferred Performance Unit Award Agreement for grants of Deferred Performance Units to Executive Officers incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(f) thereto.

Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal year 2021, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(g) thereto.

Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal year 2021 incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(h) thereto.

Form of Performance Share Unit Restricted Stock Award Agreement for grants of Performance Share Units to Executive Officers in fiscal year 2021, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(i) thereto.

Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal year 2022.

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Clampitt dated October 15, 2014, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2014, Exhibit 10(i) thereto.

Change of Control Severance Agreement between WD-40 Company and Stanley A.

Sewitch dated October 15, 2014, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2014, Exhibit 10(j) thereto.

Change of Control Severance Agreement between WD-40 Company and Garry O.

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Olsem dated October 8, 2019, incorporated by reference from the Registrant’s Form 10-Q filed January 9, 2020, Exhibit 10(a) thereto .

Credit Agreement dated June 17, 2011 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 10-K filed October 23, 2017, Exhibit 10(u) thereto.

First Amendment to Credit Agreement dated January 7, 2013 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 10-Q filed January 9, 2013, Exhibit 10(b) thereto.

Second Amendment to Credit Agreement dated May 13, 2015 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K/A filed May 18, 2015, Exhibit 10(a) thereto.

Third Amendment to Credit Agreement dated November 16, 2015 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed November 19, 2015, Exhibit 10(a) thereto.

Fourth Amendment to Credit Agreement dated September 1, 2016 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed September 2, 2016, Exhibit 10(a) thereto.

Fifth Amendment to Credit Agreement dated November 15, 2017 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed November 17, 2018, Exhibit 10(b) thereto.

Sixth Amendment to Credit Agreement dated February 23, 2018 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed February 27, 2018, Exhibit 10(c) thereto .

Seventh Amendment to Credit Agreement dated January 22, 2019 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed January 25, 2019, Exhibit 10(a) thereto.

Change of Control Severance Agreement between WD-40 Company and Jeffrey G.

Lindeman dated December 8, 2020 incorporated by reference from the Registrant's Form 10-Q filed April 8, 2021, Exhibit 10(e) thereto.

Credit Agreement dated March 16, 2020 among WD-40 Company and Bank of America, incorporated by reference from the Registrant’s Form 8-K filed March 20, 2020, Exhibit 10(a) thereto .

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October 22, 2021

LEE, Director

October 22, 2021

/s/ TREVOR I.

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October 22, 2021

/s/ DANIEL E.

PITTARD, Director

October 21, 2020

/s/ GREGORY A.

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October 22, 2021

SCHMALE, Director

October 21, 2020

Report of Independent Reg istered Public Accounting Firm

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of WD-40 Company and its subsidiaries as of August 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended August 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

We have audited the accompanying consolidated balance sheets of WD-40 Company and its subsidiaries (the “Company”) as of August 31, 2021 and 2020, and the related consolidated statements of operations, of comprehensive income, of shareholders’ equity and of cash flows for each of the three years in the period ended August 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of August 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020.

Basis for Opinions

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(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide

reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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In determining the transaction price, management evaluates whether the price is subject to refund or adjustment related to variable consideration to determine the net consideration to which the Company expects to be entitled.

The Company records estimates of variable consideration, which primarily includes rebates/other discounts (cooperative marketing programs, volume-based discounts, shelf price reductions and allowances for shelf space, charges from customers for services they provide to the Company related to the sale and penalties/fines charged to the Company by customers associated with failing to adhere to contractual obligations), coupon offers, cash discount allowances, and sales returns, as a reduction of sales in its consolidated statements of operations.

Management records estimates of variable consideration, which primarily includes rebates/other discounts (cooperative marketing programs, volume-based discounts, shelf price reductions and allowances for shelf space, charges from customers for services they provide to the Company related to the sale and penalties/fines charged to the Company by customers associated with failing to adhere to contractual obligations), coupon offers, cash discount allowances, and sales returns, as a reduction of sales in its consolidated statements of operations.

These estimates are based on the expected value method considering all reasonably available information, including current and past trade promotion spending patterns, status of trade promotion activities, the interpretation of historical spending trends by customer and category, customer agreements and/or currently known factors that arise in the normal course of business.

Management reviews its assumptions and adjusts these estimates accordingly on a quarterly basis.

As of August 31, 2020, the Company had a $7.5 million balance in rebate/other discount liabilities, which are included in accrued liabilities on the Company’s consolidated balance sheet, and recorded approximately $20.7 million in rebates/other discounts as a reduction to sales during fiscal year 2020.

The Company had an $8.4 million balance in rebate/other discount liabilities as of August 31, 2021, which are included in accrued liabilities on the Company’s consolidated balance sheets, and recorded approximately $28.7 million in rebates/other discounts as a reduction to sales during fiscal year 2021.

The principal considerations for our determination that performing procedures relating to the cooperative marketing program accruals is a critical audit matter are (i) the significant judgment by management to estimate the cooperative marketing program accruals, which in turn led to a high degree of auditor judgment in performing procedures to evaluate the status of trade promotion activities within the cooperative marketing program accruals, and (ii) the high level of audit effort and subjectivity in performing procedures to evaluate the current and past trade promotion spending patterns and the status of trade promotion activities used to determine the cooperative marketing program accruals.

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Cash and cash equivalents

Trade accounts receivable, less allowance for doubtful

Trade and other accounts receivable, less allowance for doubtful

accounts of $ 463 and $ 362 at August 31, 2021

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Accumulated other comprehensive income (loss)

Common stock held in treasury, at cost ― 6,147,899 and 6,055,316

shares at August 31, 2020 and 2019, respectively

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

at both August 31, 2021 and 2020

Total shareholders'

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WD-40 COMPANY

CONSOLIDATED STATEM ENTS OF OPERATIONS

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

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Income from operations

Other (expense) income:

Other income (expense):

Interest income

Interest expense

Other income (expense), net

Other (expense) income, net

Income before income taxes

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WD-40 COMPANY

CONSOLIDATED STATEMENTS O F COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

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Foreign currency translation adjustment

Cumulative effect of change in accounting principle

Balance at August 31, 2020

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Cash dividends ($ 2.78 per share)

Acquisition of treasury stock

Foreign currency translation adjustment

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Changes in assets and liabilities:

Trade accounts receivable

Trade and other accounts receivable

Operating lease assets and liabilities, net

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Proceeds from sales of property and equipment

Purchases of intangible assets

Purchases of short-term investments

Maturities of short-term investments

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Dividends paid

Proceeds from issuance of common stock

Proceeds from issuance of long-term senior notes

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Supplemental cash flow information:

Accrued capital expenditures

Cash paid for:

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WD-40 Company (“the Company”), based in San Diego, California, is a global marketing organization dedicated to creating positive lasting memories by developing and selling products that solve problems in workshops, factories and homes around the world.

The Company markets its maintenance products and its homecare and cleaning products under the following well-known brands:

The Company markets a wide range of maintenance products and its homecare and cleaning products under the following well-known brands:

WD-40®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®.

Currently included in the WD-40 brand are the WD-40 Multi-Use Product and the WD-40 Specialist® and WD-40 BIKE® product lines.

The Company’s brands are sold in various locations around the world.

The Company’s products are sold in various locations around the world.

Maintenance products are sold worldwide in markets throughout North, Central and South America, Asia, Australia, Europe, the Middle East and Africa.

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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 II – Item 7.

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 II – Item 7.

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

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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.

Supplier Risk

The Company relies on a limited number of suppliers, including single or sole source suppliers for certain of its raw materials, packaging, product components and other necessary supplies.

Where possible and where it makes business sense, the Company works with secondary or multiple suppliers to qualify additional supply sources.

To date, the Company has been able to obtain adequate supplies of these materials which are used in the production of its maintenance products and homecare and cleaning products in a timely manner from existing sources.

Cash and Cash Equivalents

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Trade accounts receivable are charged against the allowance when the Company believes it is probable that the trade accounts receivable will not be recovered.

The Company does not have any off-balance sheet credit exposure related to its

The Company does not have any off-balance sheet credit exposure related to its customers.

Allowance for doubtful accounts related to the Company’s trade accounts receivable were not significant at August 31, 2021 and 2020.

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The Company transfers certain raw materials and components to these contract manufacturers for use in the manufacturing process.

Contract manufacturers are obligated to pay the Company for these raw materials and components upon receipt.

Amounts receivable from the contract manufacturers as of the balance sheet date related to transfers of these raw materials and components by the Company to its contract manufacturers are considered product held at third-party contract manufacturers and are included in inventories in the accompanying consolidated balance sheets.

Contract manufacturers are obligated to pay the Company for these raw materials and components.

Amounts receivable from the contract manufacturers as of the balance sheet date related to transfers of these raw materials and components by the Company to its contract manufacturers are generally considered product held at third-party contract manufacturers and are included in inventories in the accompanying consolidated balance sheets.

Property and Equipment

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Depreciation expense totaled $ 5.6 million, $ 5.5 million and $ 4.9 million for fiscal years 2021, 2020 and 2019, respectively.

These amounts include equipment depreciation expense which is recognized as cost of products sold and totaled $ 1.4 million in fiscal year 2020, and $ 1.1 million for the fiscal years 2019 and 2018, respectively.

These amounts include equipment depreciation expense which is recognized as cost of products sold and totaled $ 1.2 million in fiscal year 2021, $ 1.4 million in fiscal year 2020 and $ 1.1 million in fiscal year 2019.

The Company capitalizes costs related to computer software obtained or developed for internal use.

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Costs incurred in the application development phase are capitalized and amortized over their useful lives, which are generally three to five years .

In fiscal year 2020, the Company adopted Accounting Standards Update (ASU) No.

2016-02, Leases (Topic 842 or “ASC 842”).

Prior period amounts have not been restated and continue to be reported in accordance with the Company’s historical accounting policies.

The Company leases real estate for its regional sales offices, a research and development facility, and offices located at its international subsidiaries and branch locations.

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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;

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.

(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 recognize related lease payments in the consolidated statements of operations on a straight-line basis over the lease term.

Goodwill represents the excess of the purchase price over the fair value of tangible and intangible assets acquired.

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The Company assesses possible impairments to goodwill at least annually during its second fiscal quarter and otherwise when events or changes in circumstances indicate that an impairment condition may exist.

In performing the annual impairment test of its goodwill, the Company considers the fair value concepts of a market participant and the highest and best use for its intangible assets.

In performing the annual impairment

test of its goodwill, the Company considers the fair value concepts of a market participant and the highest and best use for its intangible assets.

In addition to the annual impairment test, goodwill is evaluated each reporting period to determine whether events and circumstances would more likely than not reduce the fair value of a reporting unit below its carrying value.

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As of August 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, short-term investments and short-term borrowings are recorded at cost, which approximates their fair values, based on Level 2 inputs, primarily due to their short-term maturities.

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.

In addition, the carrying value of borrowings held under the Company’s revolving credit facility approximates fair value, based on Level 2 inputs, due to the variable nature of underlying interest rates, which generally reflect market conditions .

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 $ 20.9 million as of August 31, 2020, which was determined based on a discounted cash flow analysis using current market interest rates for instruments with similar terms, compared to its carrying value of $ 18.0 million.

The Company estimates that the fair value of its senior notes, based on Level 2 inputs, was approximately $ 68.2 million as of August 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 fiscal years ended August 31, 2021, 2020 and 2019, the Company did no t record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition.

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Financial instruments, which potentially subject the Company to significant concentrations of credit risk, consist principally of cash and cash equivalents and trade accounts receivable.

The Company’s policy is to place its cash in high credit quality financial

institutions, in investments that include demand deposits, term deposits and callable time deposits.

The Company’s policy is to place its cash in high credit quality financial institutions, in investments that include demand deposits, term deposits and callable time deposits.

The Company’s trade accounts receivable are derived from customers located in North America, South America, Asia-Pacific, Europe, the Middle East, Africa and India.

The Company limits its credit exposure from trade accounts receivable by performing on-going credit evaluations of customers, as well as insuring its trade accounts receivable in selected markets.

Concentration of Supplier Risk

The Company relies on a limited number of suppliers, including single or sole source suppliers for certain of its raw materials, packaging, product components and other necessary supplies.

Where possible and where it makes business sense, the Company works with secondary or multiple suppliers to qualify additional supply sources.

Historically, the Company has been able to obtain adequate supplies of these materials which are used in the production of its maintenance products and homecare and cleaning products in a timely manner from existing sources and has been able to access adequate production capacity at its third-party manufacturers .

However, during the COVID-19 pandemic, the Company has experienced challenges within its supply chain, but particularly in its Americas supply chain.

These challenges include general aerosol production capacity constraints primarily due to increased demand at the third-party manufacturers that the Company utilizes as well as shortages of certain raw materials.

Insurance Coverage

The Company carries insurance policies to cover insurable risks such as property damage, business interruption, product liability, workers’ compensation and other risks, with coverage and other terms that it believes to be adequate and appropriate.

The Company carries insurance policies to cover insurable risks such as property damage, business interruption, product liability, cyber liability, workers’ compensation and other risks, with coverage and other terms that it believes to be adequate and appropriate.

These policies may be subject to applicable deductible or retention amounts, coverage limitations and exclusions.

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other general and administrative costs related to the Company’s business such as general overhead, legal and accounting fees, insurance, and depreciation;

and other employee-related costs to support marketing, human resources, finance, supply chain, information technology and research and development activities.

and employee-related and various other costs to support marketing, human resources, finance, supply chain, information technology and research and development activities.

Shipping and Handling Costs

Shipping and handling costs associated with in-bound freight and movement of product from third-party contract manufacturers to the Company’s third-party distribution centers are capitalized in the cost of inventory and subsequently included in cost of sales when recognized in the statement of operations.

Shipping and handling costs associated with the movement of finished goods from third-party contract manufacturers to the Company’s third-party distribution centers and from one third-party distribution center to another are capitalized in the cost of inventory and subsequently included in cost of sales when the sale to the customer is recognized in the statement of operations.

Shipping and handling costs associated with out-bound transportation are included in selling, general and administrative expenses and are recorded at the time of shipment of product to the Company’s customers.

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Advertising and sales promotion expenses are expensed as incurred.

Advertising and sales promotion expenses include costs associated with promotional activities that the Company pays to third parties, which include costs for advertising (television, print media and internet), administration of coupon programs, consumer promotions, product demonstrations, public relations, agency costs, package design expenses and market research costs.

Advertising and sales promotion expenses also include product samples which are given to customers and are initiated by the Company and costs associated with shared marketing fund programs that the Company has in place with its marketing distributor customers.

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Gains or losses resulting from foreign currency transactions (transactions denominated in a currency other than the entity’s functional currency) are included as other income in the Company’s consolidated statements of operations.

The Company had $ 0.4 million, $ 0.6 million and $ 0.1 million of net gains in foreign currency transactions in fiscal years 2020, 2019 and 2018, respectively.

The Company had $ 0.3 million in net losses and $ 0.4 million and $ 0.6 million of net gains in foreign currency transactions in fiscal years 2021, 2020 and 2019, respectively.

In the normal course of business, the Company employs established policies and procedures to manage its exposure to fluctuations in foreign currency exchange rates.

The Company’s U.K.

subsidiary, whose functional currency is Pound Sterling, utilizes foreign currency forward contracts to limit its exposure to net asset balances held in non-functional currencies.

The Company regularly monitors its foreign currency exchange rate exposures to ensure the overall effectiveness of its foreign currency hedge positions.

The Company utilizes foreign currency forward contracts to limit its exposure to net asset balances held in non-functional currencies, primarily at its U.K.

The Company regularly monitors its

foreign currency exchange rate exposures to ensure the overall effectiveness of its foreign currency hedge positions.

While the Company engages in foreign currency hedging activity to reduce its risk, for accounting purposes, none of its foreign currency forward contracts are designated as hedges.

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no t significant at August 31, 2021 or 2020.

Realized net losses related to foreign currency forward contracts were no t significant for the fiscal years ended August 31, 2020 and 2019, respectively.

Realized net losses related to foreign currency forward contracts were no t significant for the fiscal years ended August 31, 2021 and 2020.

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

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Compensation expense related to the Company’s stock-based equity awards is recorded as selling, general and administrative expenses in the Company’s consolidated statements of operations.

The Company does not currently grant stock options and the last outstanding stock options were settled in the first quarter of fiscal year 2018.

The fair values of restricted stock unit awards and deferred performance unit awards are based on the fair value of the Company’s common stock on the date that such awards are granted.

The Company does not currently grant stock options.

The fair values of restricted stock unit awards and performance share unit awards are based on the fair value of the Company’s common stock on the date that such awards are granted.

The fair value of market share unit awards is determined using a Monte Carlo simulation model.

For the deferred performance unit awards, the Company adjusts the compensation expense over the service period based upon the expected achievement level of the applicable performance condition.

For the performance share unit awards, the Company adjusts the compensation expense over the service period based upon the expected achievement level of the applicable performance condition.

As the grant date fair value of market share unit awards reflects the probabilities of the actual number of such awards expected to vest, compensation expense for such awards is not adjusted based on the expected achievement level of the applicable performance condition.

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Recently Adopted Accounting Standards

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No.

2016-02, “ Leases ” under ASC 842, which supersedes lease accounting and disclosure requirements in ASC 840.

The new standard establishes a right-of-use model that requires a lessee to record a right-of-use asset and a lease liability on the balance sheet for leases with fixed payment obligations and terms longer than twelve months.

Leases are classified as either finance or operating, with classification affecting the pattern of expense recognition in the income statement.

This guidance is effective for fiscal years beginning after December 15, 2018, including interim periods within that reporting period.

The Company adopted this new guidance on September 1, 2019 following the optional transition method described in ASU No.

2018-11, “ Leases – Targeted

Improvements ” which was issued in July 2018, rather than the original modified retrospective approach that required entities to apply the guidance at the beginning of the earliest period presented in the financial statements.

Under the optional transition method, entities shall recognize the cumulative effect of initially applying the guidance as an adjustment to the opening balance of retained earnings on September 1, 2019.

Therefore, the requirements of this guidance only apply for periods presented after the date of adoption and does not affect comparative periods.

Upon adoption, the Company elected practical expedients 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;

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

The Company did not elect the hindsight practical expedient and also did not elect the package of practical expedients that would allow the Company to retain its conclusions under prior guidance for lease classification and initial direct costs for leases that commenced before the September 1, 2019 implementation date.

During the implementation of this new standard, management was focused principally on, but not limited to, developing a complete inventory of the Company’s lease contracts and the terms and conditions contained within these contracts to appropriately account for them under the new lease model.

Additionally, the Company has implemented updates to its accounting policies, business processes, systems and internal controls in support of adopting this new standard.

Upon adoption on September 1, 2019, the Company recorded operating lease assets of $ 9.0 million and lease liabilities of $ 9.2 million in the Company’s consolidated balance sheets.

The standard did not have a material impact on the consolidated statements of operations or cash flows.

Upon adoption, the cumulative effect of initially applying the guidance was insignificant and therefore no adjustment to the opening balance of retained earnings was made on September 1, 2019.

See Note 6 – Leases for additional information and incremental disclosures related to the adoption of this standard.

In March 2020, the FASB issued ASU No.

2020-04, “ Reference Rate Reform ” under ASC 848, intended to provide temporary optional expedients and exceptions to U.S.

GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

This guidance was effective beginning on March 12, 2020, and the Company may apply the amendments prospectively to contract modifications made or relationships entered into or evaluated through December 31, 2022.

The adoption of this guidance did not have an impact on the Company’s consolidated financial statements in the current period, but we will continue to evaluate the impacts of this guidance on future contract modifications.

The Company did not adopt any new accounting standards during its fiscal year 2021 that had a significant impact on its consolidated financial statements.

However, the adoption of new SEC guidance impacted certain of the Company's disclosure requirements.

In November 2020, the SEC adopted the final rule under SEC Release No.

33-10890, Management’s Discussion and Analysis, Selected Financial Data, and Supplementary Financial Information, to modernize and simplify Management’s Discussion and Analysis and certain financial statement disclosure requirements.

These updates are part of the SEC’s broad disclosure effectiveness initiative intended to improve the content of SEC filings and simplify compliance for registrants.

The SEC also adopted the final rule under SEC Release No.

33-10825, Modernization of Regulation S-K Items 101, 103, and 105, in August 2020.

These amendments modernize the description of business, legal proceedings, and risk factor disclosure requirements, and were effective on November 9, 2020.

The Company updated its disclosures accordingly to comply with these amendments and these amendments do not impact the Company’s consolidated financial statements.

Recently Issued Accounting Standards

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This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year.

Early adoption is permitted.

The Company is in the process of evaluating the impacts of this guidance on its consolidated financial statements and related disclosures .

The Company has evaluated the potential impacts of this updated guidance , and it does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures .

Inventories consisted of the following (in thousands):

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accumulated depreciation and amortization

At August 31, 2019, capital in progress on the balance sheet included £ 9.0 million Pound Sterling ($ 10.9 million in U.S.

Dollars as converted at exchange rates as of August 31, 2019) associated with capital costs related to the purchase of the Company’s new office building and related land in Milton Keynes, England.

Upon completion of the buildout and relocation of employees based in the United Kingdom to this new office building in the first quarter of fiscal year 2020, the Company placed these assets into service and reclassified the amounts recorded in capital in progress to the respective fixed asset categories, which includes amounts attributable to the land.

Since all assets associated with this new office building are denominated in Pound Sterling, amounts will fluctuate in U.S.

Dollars from period to period due to changes in foreign currency exchange rates.

Goodwill and Other Intangible Assets

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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.

The Company performed a quantitative assessment for each of its reporting units to determine whether the fair value of any of the reporting units were less than their carrying amounts.

The Company determined the fair value of its reporting units in the analysis by following the income approach which uses a discounted cash flow methodology.

When using the discounted cash flow methodology, the fair value of each of the reporting units is based on the present value of the estimated future cash flows of each of the respective reporting units.

The discounted cash flow methodology also requires management to make assumptions about certain key inputs in the estimated cash flows, including long-term sales forecasts or growth rates, terminal growth rates and discount rates, all of which are inherently uncertain.

The Company determined that a discount rate of 7 % and a terminal growth rate of 2 % was appropriate to use in the analysis for all of its reporting units.

The forecast of future cash flows was based on historical data and management’s best estimates of sales growth rates and operating margins for each reporting unit for the next five fiscal years.

The discount rate used was based on the current weighted-average cost of capital for the Company.

As these assumptions are largely unobservable, the estimate of fair value analysis falls within Level 3 of the fair value hierarchy.

Based on the results of the quantitative analysis, the Company determined that the estimated fair value of each of its reporting units significantly exceeded their respective carrying values.

As a result, the Company concluded that no impairment of its goodwill existed as of December 1, 2019.

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, even in the event that the impacts of the novel coronavirus (“COVID-19”) pandemic significantly lower results in future periods.

As a result, 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, 2019 through August 31, 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.

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 August 31, 2021.

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

Definite-lived Intangible Assets

The Company’s definite-lived intangible assets, which include the 2000 Flushes, Spot Shot, Carpet Fresh, 1001, EZ REACH and GT85 trade names, the Belgium customer list, the GT85 customer relationships and the GT85 technology are included in other intangible assets, net in the Company’s consolidated balance sheets.

The Company’s definite-lived intangible assets, which include the Spot Shot, Carpet Fresh, 1001, EZ REACH and GT85 trade names, are included in other intangible assets, net in the Company’s consolidated balance sheets.

The following table summarizes the definite-lived intangible assets and the related accumulated amortization (in thousands) :

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Net carrying amount

There has been no impairment charge for the period ended August 31, 2020 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 period ended August 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.

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Balance as of August 31, 2021

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

Customer-Based

Fiscal year 2021

Fiscal year 2022

Fiscal year 2023

Fiscal year 2024

Fiscal year 2025

Included in the total estimated future amortization expense is the amortization expense for the 1001 trade name and the GT85 intangible assets, which are based on current foreign currency exchange rates, and as a result amounts in future periods may differ from those presented due to fluctuations in those rates.

The estimated amortization expense for the Company’s definite-lived intangible assets is not significant in any future individual fiscal year.

The Company leases real estate for its regional sales offices, a research and development facility, and offices located at its international subsidiaries and branch locations.

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

Upon adoption of ASC 842 on September 1, 2019, the Company recorded operating lease assets of $ 9.0 million and lease liabilities of $ 9.2 million in the Company’s consolidated balance sheets.

The adoption of this standard did not have a material impact on retained earnings, the consolidated statements of operations or cash flows.

The Company obtained no significant additional right-of-use assets in exchange for lease obligations during the fiscal year ended August 31, 2020.

The Company recorded $ 2.0 million in lease expense during the fiscal year ended August 31, 2020.

The Company obtained additional right-of-use assets of $ 2.2 million in exchange for lease obligations related to renewals of existing leases during fiscal year 2021.

The Company recorded $ 2.1 million and $ 2.0 million in lease expense during the fiscal years ended August 31, 2021 and 2020, respectively.

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 the fiscal year ended August 31, 2020.

During the fiscal year ended August 31, 2020, the Company paid cash of $ 1.9 million related to lease liabilities.

Variable lease expense under the Company’s lease agreements was not significant for the fiscal year ended August 31, 2020.

The Company recorded $ 0.6 million of lease expense classified within cost of products sold for the fiscal year ended August 31, 2021, and an insignificant amount for the fiscal year ended August 31, 2020.

During the fiscal year ended August 31, 2021 and 2020, the Company paid cash of $ 2.0 million and $ 1.9 million related to lease liabilities, respectively.

Variable lease expense under the Company’s lease agreements was not significant for both the fiscal years ended August 31, 2021 and 2020.

As of August 31, 2021, the weighted-average remaining lease term was 6.7 years and the weighted-average discount rate was 2.8 % for the Company’s operating leases.

As of August 31, 2020, the weighted-average remaining lease term was 6.8 years and the weighted-average discount rate was 3.1 % for the Company’s operating leases.

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

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Present value of lease liabilities

Future fiscal year minimum payments under non-cancelable operating leases in accordance with ASC 840 as of August 31, 2019 are as follows (in thousands):

Fiscal year 2020

Fiscal year 2021

Fiscal year 2022

Fiscal year 2023

Fiscal year 2024

Total undiscounted future cash flows

Accrued and Other Liabilities

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Accrued sales taxes and other taxes

Deferred revenue

Short-term operating lease liability

(1) At August 31, 2019, other accrued liabilities on the balance sheet included £ 1.4 million Pound Sterling ($ 1.7 million in U.S.

Dollars as converted at exchange rates as of August 31, 2019) associated with capital costs related to buildout costs of the Company’s new office building in Milton Keynes, England.

This new office building houses employees of the Company’s EMEA segment that are based in the United Kingdom.

Accrued payroll and related expenses consisted of the following (in thousands):

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Note Purchase and Private Shelf Agreement

On November 15, 2017, the Company entered into the Note Purchase and Private Shelf Agreement (the “Note Agreement”) by and among the Company, PGIM, Inc.

(“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”), pursuant to which the Company agreed to sell $ 20.0 million aggregate principal amount of senior notes (the “Series A Notes”) to certain of the Note Purchasers.

Since November 15, 2017, this note agreement has been amended two times, most recently on March 16, 2020 (the “Second Amendment”).

The Second Amendment amended the Note Agreement to permit the Company (inclusive of its subsidiaries) to enter into an amended and restated credit agreement with Bank of America N.A.

(“Bank of America”) .

In addition, the Second Amendment includes certain conforming amendments to the Note Agreement consistent with the Company’s credit agreement with Bank of America, including a schedule of permitted consolidated capital expenditures and related carryforward provisions for unused portions each fiscal year.

The Series A Notes bear interest at 3.39 % per annum and will mature on November 15, 2032 , unless earlier paid by the Company.

Principal payments are required semi-annually in May and November of each year in equal installments of $ 0.4 million through May 15, 2032 , and the remaining outstanding principal in the amount of $ 8.4 million will become due on November 15, 2032 .

Interest is also payable semi-annually in May and November of each year.

During the fiscal year ended August 31, 2020, the Company repaid $ 0.8 million in principal on the Series A Notes pursuant to its semi-annual principal payment requirements.

Pursuant to the Note Agreement, the Company may from time to time offer for sale, in one or a series of transactions, additional senior notes of the Company (the “Shelf Notes”) in an aggregate principal amount of up to $ 105.0 million.

The Shelf Notes will have a maturity date of no more than 15.5 years after the date of original issuance and may be issued no later than November 15, 2020 .

The Shelf Notes, if issued, would bear interest at a rate per annum as agreed upon amongst the Company and the purchasing parties and would have such other particular terms, as would be set forth in a confirmation of acceptance executed by the purchasing parties prior to the closing of each purchase and sale transaction.

As of August 31, 2020, the Company had no t issued Shelf Notes.

Pursuant to the Note Agreement, the Series A Notes and any Shelf Notes (collectively, the "Notes") can be prepaid at the Company’s sole discretion, in whole at any time or in part from time to time, at 100% of the principal amount of the Notes being prepaid, together with accrued and unpaid interest thereon as well as an additional make-whole payment with respect to such Notes.

On September 30, 2020, the Company entered into an amendment to the Note Agreement and issued $ 52.0 million in Shelf Notes.

See Note 18 – Subsequent Events for additional information on this agreement.

The Company holds borrowings under its Note Purchase and Private Shelf Agreement (the “Note Agreement”) by and among the Company, PGIM, Inc.

(“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”).

The Note Agreement has been amended three times, most recently on September 30, 2020 (the “Third Amendment”).

The Third Amendment permitted the Company to enter into the first amendment of its existing amended and restated revolving credit agreement with Bank of America and also included certain conforming amendments to the credit agreement, including the revision of financial and restrictive covenants.

Credit Agreement

On March 16, 2020, the Company entered into an Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America.

The Credit Agreement modified the Company’s previously existing agreement dated June 17, 2011 (as amended on January 7, 2013, May 13, 2015, November 16, 2015, September 1, 2016, November 15, 2017, February 23, 2018 and January 22, 2019).

The Credit Agreement increased the revolving commitment from $ 100.0 million to $ 150.0 million and increased the sublimit for the revolving commitment for borrowing by WD-40 Company Limited, a wholly owned operating subsidiary of the Company for Europe, the Middle East, Africa and India, from $ 50.0 million to $ 100.0 million.

In addition to other non-material and technical amendments, the Credit Agreement also modified certain restrictive covenants.

The Credit Agreement also includes a new schedule of permitted consolidated capital expenditures to permit the Company to make contemplated capital investments in the current and future fiscal years of up to $ 30.5 million in fiscal year 2020, $ 19.0 million in fiscal year 2021, and $ 15.0 million for fiscal years 2022, 2023, 2024 and 2025.

The Credit Agreement also increased the carryforward from one fiscal year

to the next fiscal year of unused Permitted Consolidated Capital Expenditures from $ 2.5 million to $ 5.0 million.

The new maturity date for the revolving credit facility per the Credit Agreement is March 16, 2025 .

Per the terms of the Credit Agreement, the aggregate amount of the Company’s capital stock that it may repurchase may not exceed $ 150.0 million during the period from January 22, 2019 to the maturity date of the agreement so long as no default exists immediately prior and after giving effect thereto.

In addition, the Company may not declare or pay cash dividends in the current fiscal quarter that, when added to dividends paid in the prior three fiscal quarters, will exceed 75 % of the Company’s consolidated net income for the then most recently ended four quarters for which financial statements are delivered to Bank of America as required by the Credit Agreement (the “Dividend Covenant”).

The Company’s Note Agreement with Prudential also has a conforming dividend covenant with identical terms.

On April 8, 2020, the Company signed letters from Bank and America and Prudential acknowledging an agreement between the Company and both lenders to permit the Company to add back to its net income for the quarter ended August 31, 2019 a one-time, non-cash charge for an uncertain tax position associated with the Tax Cuts and Jobs Act “toll tax” in the amount of $ 8.7 million solely for the purpose of the Dividend Covenant.

The Credit Agreement also features an autoborrow agreement providing for the automatic advance of revolving loans in U.S.

Dollars to the Company’s designated account at Bank of America.

Per the terms of the Credit Agreement, the Company’s outstanding balance on the autoborrow agreement cannot exceed an aggregate amount of $ 30.0 million.

Since the autoborrow feature provides for borrowings to be made and repaid by the Company on a daily basis, any such borrowings made under an active autoborrow agreement are classified as short-term on the Company’s consolidated balance sheets.

The Company had no outstanding balance under the autoborrow agreement as of August 31, 2020.

The Company assesses its ability and intent to refinance the outstanding draws on the line of credit at the end of each reporting period in order to determine the proper balance sheet classification for amounts outstanding on the line of credit.

The Company has the ability to refinance any draw under the line of credit with successive short-term borrowings through the March 16, 2025 maturity date.

The Company’s Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America consists of a revolving commitment for borrowing by the Company up to $ 150.0 million with a sublimit of $ 100.0 million for WD-40 Company Limited, a wholly owned operating subsidiary of the Company for Europe, the Middle East, Africa and India.

On September 30, 2020, the Company entered into a First Amendment to Credit Agreement (the “First Amendment to Credit Agreement”) with Bank of America.

In addition to other non-material and technical amendments to the Credit Agreement, the First Amendment to Credit Agreement extended the maturity date from March 16, 2025 to September 30, 2025 , revised certain financial and restrictive covenants, increased the limitation amounts on other unsecured Indebtedness and Investments and adjusted the interest rates on subsequent borrowings under the Credit Agreement using a three-tier pricing approach tied to the Company’s Consolidated Leverage Ratio.

Capitalized terms not otherwise defined in this report have the meaning given to such terms in the Credit Agreement.

Short-term and long-term borrowings under the Company’s Credit Agreement and Note Agreement consisted of the following (in thousands):

(calendar year)

Credit Agreement - revolving credit facility (1)(3)

Note Agreement

Series A Notes - 3.39 % fixed rate (2)

Series B Notes - 2.50 % fixed rate (3)

Series C Notes - 2.69 % fixed rate (3)

Total borrowings

Short-term portion of borrowings

Total long-term borrowings

(1) The Company has the ability to refinance any draw under the line of credit with successive short-term borrowings through the maturity date.

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.

During the first three quarters of fiscal year 2020, the Company repaid $ 5.0 million in short-term borrowings outstanding under the line of credit and drew an additional $ 90.0 million in U.S.

Dollars, which included an $ 80.0 million draw in U.S.

Dollars in March 2020 in response to the COVID-19 pandemic.

Although the Company did not have any anticipated need for this additional liquidity, the Company decided to draw this additional amount to ensure future liquidity given the recent significant impact on global financial markets and the economy as a result of the COVID-19 pandemic.

The Company repaid $ 55.0 million of these outstanding draws in the fourth quarter of fiscal year 2020 in anticipation of the changes that it made to its debt structure in September 2020 to include more long-term debt.

See Note 18 – Subsequent Events for additional information.

The Company maintains a balance of outstanding draws in U.S.

Dollars in the Americas segment, as well as in Euros and Pound Sterling in the EMEA segment.

As of August 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.

Dollars from period to period due to changes in foreign currency exchange rates.

As of August 31, 2020, the Company had a balance of $ 95.9 million of outstanding draws on the line of credit.

Based on the Company’s ability and intent assessment as well as considerations related to debt structure changes and refinancing discussed in detail in Note 18 – Subsequent Events, the Company has classified this entire amount as long-term as of August 31, 2020.

Short-term and long-term borrowings consisted of the following (in thousands):

Short-term borrowings:

Revolving credit facility, short-term

Revolving credit facility, autoborrow feature

Series A Notes, current portion of long-term debt

Total short-term borrowings

Long-term borrowings:

Revolving credit facility

Series A Notes

Total long-term borrowings

(2) Principal payments are required semi-annually in May and November of each year in equal installments of $ 0.4 million through May 15, 2032 .

The remaining outstanding principal in the amount of $ 8.4 million will become due on November 15, 2032 .

(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 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.

These covenants include, among other things, certain limitations on the ability of the Company and its subsidiaries to incur indebtedness, create liens, dispose of assets, make investments, declare, make or incur obligations to make certain restricted payments, including the payment of dividends and payments for the repurchase shares of the Company’s capital stock and enter into certain merger or consolidation transactions.

Each agreement also includes a most favored lender provision which requires that any time any other lender has the benefit of one or more financial or operational covenants that is different than, or similar to, but more restrictive than those contained in its own agreement, those covenants shall be immediately and automatically incorporated by reference in the other lender’s agreement.

The Credit Agreement includes, among other limitations on indebtedness, a $ 35.0 million limit on other unsecured indebtedness, including indebtedness incurred under the Series A Notes and any Shelf Notes to be offered for sale under the Note Agreement.

dividends and payments for the repurchase of the Company’s capital stock and enter into certain merger or consolidation transactions.

The Credit Agreement includes, among other limitations on indebtedness, a $ 125.0 million limit on other unsecured indebtedness.

Both the Note Agreement and the Credit Agreement require the Company to adhere to the same financial covenants.

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The terms of the financial covenants are as follows:

 The consolidated leverage ratio cannot be greater than three to one.

 The consolidated leverage ratio cannot be greater than three and a half to one.

The consolidated leverage ratio means, as of any date of determination, the ratio of (a) consolidated funded indebtedness as of such date to (b) consolidated EBITDA for the most recently completed four fiscal quarters.

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

On September 30, 2020, the Company entered into the first amendment to the Credit agreement and a third amendment to the Note Agreement.

See Note 18 – Subsequent Events for additional information on these agreements.

Share Repurchase Plans

On June 19, 2018, the Company’s Board of Directors approved a share buy-back plan.

Under the plan, which became effective on September 1, 2018 and remained in effect through August 31, 2020, the Company was authorized to acquire up to $ 75.0 million of its outstanding shares on terms and conditions that were acceptable to the Company’s Chief Executive Officer and Chief Financial Officer and in compliance with all laws and regulations thereto.

During the period from September 1, 2018 through August 31, 2020, the Company repurchased 268,538 shares at a total cost of $ 46.4 million under this $ 75.0 million plan.

During fiscal year 2020, the Company repurchased 92,583 shares at an average price of $ 181.71 per share, for a total cost of $ 16.8 million under this $ 75.0 million plan.

On April 8, 2020, the Company elected to temporarily suspend repurchases under this share buy-back plan which expired on August 31, 2020.

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

Therefore, no repurchase transactions were made between April 8, 2020 and August 31, 2020.

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 continued to monitor the long-term impacts of the COVID-19 pandemic.

On October 12, 2021, the Company’s Board of Directors approved a new share buy-back plan.

Under the plan, which will become effective on November 1, 2021, the Company is authorized to acquire up to $ 75.0 million of its outstanding shares through August 31, 2023.

The timing and amount of repurchases are based on terms and conditions as may be acceptable to the Company’s Chief Executive Officer and Chief Financial Officer, subject to present loan covenants and in compliance with all laws and regulations applicable thereto.

Earnings per Common Share

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Weighted-average common shares outstanding, diluted

There were no anti-dilutive stock-based equity awards outstanding for the fiscal years ended August 31, 2021.

For the fiscal years ended August 31, 2020 and 2019,weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 6,172 and 1,082 , respectively, were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive.

There were no anti-dilutive stock-based equity awards outstanding for the fiscal year ended August 31, 2018.

Revenue Recognition

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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 $ 7.5 million balance in rebate/other discount liabilities as of both August 31, 2020 and 2019, which are included in accrued liabilities on the Company ’ s consolidated balance sheets.

The Company had a $ 8.4 million and $ 7.5 million balance in rebate/other discount liabilities as of August 31, 2021 and 2020, respectively, which are

included in accrued liabilities on the Company ’ s consolidated balance sheets.

The Company recorded approximately $ 28.7 million and $ 20.7 million in rebates/other discounts as a reduction to sales during fiscal years 2021 and 2020, respectively.

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

The Company had $ 0.5 million balance in the allowance for cash discounts at both August 31, 2020 and 2019.

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

The Company recorded approximately $ 4.9 million and $ 4.4 million in cash discounts as a reduction to sales during fiscal year 2021 and 2020, 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.

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

Although the Company typically does not have definitive sales return provisions included in the contract terms with its customers, when such provisions have been included, they have not been significant.

Under the current revenue accounting standard, ASC 606, the Company is now required to present its provision for sales returns on a gross basis as a liability.

The Company presents its provision for sales returns on a gross basis as a liability.

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 August 31, 2020 and 2019.

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

The Company’s refund liability for sales returns was $ 0.5 million at August 31, 2021 and was not significant at 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 August 31, 2021 and August 31, 2020.

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

Related Parties

On October 11, 2011, the Company’s Board of Directors elected Mr.

Sandfort as a director of WD-40 Company.

Sandfort is the Chief Executive Officer of Tractor Supply Company (“Tractor Supply”), which is a WD-40 Company customer that acquires products from the Company in the ordinary course of business, until January 13, 2020 when he retired as Chief Executive Officer.

Sandfort served as an executive officer of Tractor Supply during the Company’s first two quarters of fiscal year 2020, Tractor Supply is treated as a related party to the Company through January 13, 2020.

The consolidated financial statements include sales to Tractor Supply of $ 0.9 million and $ 1.9 million for fiscal years 2020 and 2019, respectively.

Accounts receivable from Tractor Supply were not significant at both August 31, 2020 and August 31, 2019.

Commitments and Contingencies

Purchase Commitments

The Company has ongoing relationships with various suppliers (contract manufacturers) who manufacture the Company’s products.

The Company has ongoing relationships with various suppliers (contract manufacturers) that manufacture the Company’s products and third-party distribution centers that warehouse and ship the Company’s products to customers.

The contract manufacturers maintain title and control of certain raw materials and components, materials utilized in finished products, and of the finished products themselves until shipment to the Company’s customers or third-party distribution centers in accordance with agreed upon shipment terms.

Although the Company has definitive minimum purchase obligations included in the contract terms with certain of its contract manufacturers, when such obligations have been included, they have either been immaterial or the minimum amounts have been such that they are well below the volume of goods that the Company has historically purchased.

In the ordinary course of business, supply needs are communicated by the Company to its contract manufacturers based on orders and short-term projections, ranging from two to six months .

In the ordinary course of business, supply needs are communicated by the Company to its contract manufacturers based on orders and short-term projections, ranging from two months to six months .

The Company is committed to purchase the products produced by the contract manufacturers based on the projections provided.

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.

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As of August 31, 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.

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 “Get All 40 Trademark”) .

The complaint asserts claims for damages for more than $ 25.0 million.

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 in a separate proceeding before the Commercial District Court seeking to invalidate the most recent Get All-40 Trademark registration.

In August 2021, the Commercial District Court granted WD-40 Manufacturing’s action for cancellation of the Get All-40 Trademark.

Bong initiated appeal of the cancellation decision in September 2021.

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.

Indemnifications

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Accrued payroll and related expenses

Accounts receivable

Reserves and accruals

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Net deferred tax liabilities

The Company had state net operating loss (“NOL”) carryforwards of $ 3.9 million and $ 4.8 million as of August 31, 2020 and 2019, respectively, which generated a net deferred tax asset of $ 0.3 million and $ 0.2 million as of August 31, 2020 and 2019, respectively.

The Company had state net operating loss (“NOL”) carryforwards of $ 4.5 million and $ 3.9 million as of August 31, 2021 and 2020, respectively, which generated a net deferred tax asset of $ 0.3 million as of both August 31, 2021 and 2020.

The state NOL carryforwards, if unused, will expire between fiscal year 2022 and 2041.

The Company also had tax credit carryforwards of $ 3.4 million and $ 2.8 million as of August 31, 2020 and 2019, respectively, of which $ 3.2 million and $ 2.6 million, respectively, is attributable to U.K.

The Company also had tax credit carryforwards of $ 3.9

million and $ 3.4 million as of August 31, 2021 and 2020, respectively, of which $ 3.7 million and $ 3.2 million, respectively, is attributable to U.K.

tax credit carryforwards, which do not expire.

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At this time, management cannot conclude that it is “more likely than not” that the related deferred tax assets will be realized.

Accordingly, a full valuation allowance has been recorded against the related deferred tax asset associated with the U.K.

Accordingly, a valuation allowance has been recorded against the related deferred tax asset associated with the U.K.

tax credit carryforwards and certain state carryforwards.

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Effect of foreign operations

Benefit from qualified domestic production deduction

Net benefit from GILTI/FDII

Tax Cuts and Jobs Act:

Remeasurement of deferred income taxes

Toll tax, net of foreign tax credits

2 unchanged sentences

The provision for income taxes was 18.8 % and 19.6 % of income before income taxes for the fiscal years ended August 31, 2021 and 2020, respectively.

The decrease in the effective income tax rate from period to period was primarily due to the one-time uncertain tax position in the amount of $ 8.7 million associated with the Tax Cuts and Jobs Act mandatory one-time “toll tax” on unremitted foreign earnings that was recorded in the fourth quarter of fiscal year 2019.

This resulted in a significantly higher fiscal year 2019 effective income tax rate compared to fiscal year 2020.

In the fourth quarter of fiscal year 2020, the U.S.

Treasury released regulations related to a High-Tax Exception for those jurisdictions subject to the Global Intangible Low Taxed Income (“GILTI”) tax.

These newly released regulations resulted in an immaterial favorable impact to the fiscal year 2020 tax provision.

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 increased benefits from earnings from foreign operations .

Reconciliations of the beginning and ending amounts of the Company’s gross unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands):

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Unrecognized tax benefits - end of fiscal year

Gross unrecognized tax benefits totaled $ 9.4 million for both the fiscal years ended August 31, 2020 and 2019, of which $ 9.2 million in both fiscal years would affect the Company’s effective income tax rate if recognized.

Gross unrecognized tax benefits totaled $ 9.3 million and $ 9.4 million for the fiscal years ended August 31, 2021 and 2020, respectively, of which $ 9.1 million and $ 9.2 million in fiscal years ended August 31, 2021 and 2020, respectively, would affect the Company’s effective income tax rate if recognized.

Interest and penalties related to uncertain tax positions included in tax expense was $ 0.3 million and $ 0.5 million for fiscal year ending August 31, 2021 and 2020, respectively, primarily related to the toll tax liability reserve.

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The 2016 Plan permits the granting of various stock-based equity awards, including non-qualified stock options, incentive stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares, performance units and other stock-based awards to employees, directors and consultants.

To date through August 31, 2020, the Company had granted awards of restricted stock units (“RSUs”), market share units (“MSUs”) and deferred performance units (“DPUs”) under the 2016 Plan.

Additionally, as of August 31, 2020, there were still outstanding RSUs, MSUs and DPUs which had been granted under the Company’s prior equity incentive plan.

To date through August 31, 2021, the Company had granted awards of restricted stock units (“RSUs”), market share units (“MSUs”), deferred performance units (“DPUs”) and performance share units (“PSUs”) under the 2016 Plan.

Additionally, as of August 31, 2021, there were still certain outstanding awards which had been granted under the Company’s prior equity incentive plan.

The 2016 Plan is administered by the Board of Directors (the “Board”) or the Compensation Committee or other designated committee of the Board (the “Committee”).

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Vesting of the one-time grant of RSUs granted to certain key executives of the Company in March 2008 in settlement of these key executives’ benefits under the Company’s supplemental employee retirement plan agreements was over a period of three years from the date of grant, with shares to be issued pursuant to the vested RSUs six months following the day after each executive officer’s termination of employment with the Company.

Vesting of the RSUs granted to certain high level employees is over a period of three years from the date of grant, subject to potential earlier vesting in the event of retirement of the holder of the award in accordance with the award agreement, with shares to be issued

pursuant to the vested RSUs at the time of vest.

The director RSU holders and the executive officer March 2008 grant date RSU holders are entitled to receive dividend equivalents with respect to their RSUs, payable in cash as and when dividends are declared by the Company’s Board of Directors.

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The recipient must remain employed with the Company for vesting purposes until the date on which the Committee certifies achievement of the applicable performance measure for the MSU awards, subject to potential pro-rata vesting in the event of earlier retirement of the holder of the award in accordance with the award agreement.

Vesting of the DPUs granted to certain high level employees follows a performance measurement period of one fiscal year that is the same fiscal year in which the DPU awards are granted (the “Measurement Year”).

A number of DPUs equal to the applicable percentage of the maximum number of DPUs awarded will be confirmed as vested following the conclusion of the applicable DPU Measurement Year after the Committee’s certification of achievement of the applicable performance measure for such awards (the “Vested DPUs”).

During fiscal year 2021, PSU awards were granted for the first time under the 2016 Plan in October 2021 and granting of new DPUs was discontinued by the Company.

No DPUs were granted in fiscal year 2021.

Although certain vested DPU awards granted in prior periods remain outstanding due to a deferred settlement feature contained within these award agreements, the expense associated with these awards has been fully recognized in prior periods.

Many features of the Company’s PSU award agreements are similar to the discontinued DPU awards with the exception of the timing and terms of issuances.

Vested DPUs contain a deferred settlement feature wherein the awards must be held until termination of employment, prior to which the recipients are entitled to dividend equivalents, with vested shares to be issued six months following each such recipient’s termination of employment with the Company.

Vested PSUs are issuable prior to termination of employment but contain a period of restriction, wherein the recipient cannot sell or otherwise dispose of the stock until six months following termination of employment with the Company.

Vesting of the PSUs granted to certain high level employees follows a performance measurement period of one fiscal year that is the same fiscal year in which the PSU awards are granted (the “Measurement Year”).

A number of PSUs equal to the applicable percentage of the maximum number of PSUs awarded will be confirmed as vested and issuable following the conclusion of the applicable PSU Measurement Year after the Committee’s certification of achievement of the applicable performance measure for such awards.

The recipient must remain employed with the Company for vesting purposes until August 31 of the Measurement Year, subject to potential pro-rata vesting in the event of earlier retirement of the holder of the award in accordance with the award agreement.

For recipients who are residents of the United States, the Vested DPUs must be held until termination of employment, with shares to be issued pursuant to the Vested DPUs six months following the day after each such recipient’s termination of employment with the Company.

For recipients who are not residents of the United States, the Committee has discretion to either defer settlement of each such recipient’s Vested DPUs by issuance of shares following termination of employment or settle each Vested DPU in cash by payment of an amount equal to the closing price of one share of the Company’s common stock as of the date of the Committee’s certification of the relative achievement of the applicable performance measure for the DPU awards.

Until issuance of shares in settlement of the Vested DPUs, the holders of each Vested DPU that is not settled in cash are entitled to receive dividend equivalents with respect to their Vested DPUs, payable in cash as and when dividends are declared by the Company’s Board of Directors.

Stock-based compensation expense is amortized on a straight-line basis over the requisite service period for the entire award.

Stock-based compensation expense related to the Company’s stock-based equity awards totaled $ 5.4 million, $ 4.4 million and $ 4.2 million for the fiscal years ended August 31, 2020, 2019 and 2018, respectively.

The Company recognized income tax benefits related to such stock-based compensation of $ 1.2 million, $ 1.0 million and $ 1.1 million for the fiscal years ended August 31, 2020, 2019 and 2018, respectively.

Stock-based compensation expense related to the Company’s stock-based equity awards is as follows by award type (in thousands):

Fiscal Year Ended August 31,

RSU compensation expense

MSU compensation expense

PSU compensation expense (1)

(1) PSU awards, similar to DPU awards that were replaced by PSUs in fiscal year 2021, contain performance conditions for which accrual of expense is based on the probable outcome of the performance conditions.

Vesting of DPUs related to the measurement years of both fiscal year 2020 and 2019 was deemed not probable at the end of each fiscal year.

DPUs were then discontinued by the Company prior fiscal year 2021.

PSUs pertaining to the measurement year of fiscal year 2021 vested at 100 % since the performance conditions were fully achieved.

The Company recorded deferred tax assets related to such stock-based compensation of $ 2.0 million, $ 1.2 million and $ 1.0 million for the fiscal years ended August 31, 2021, 2020 and 2019, respectively.

As of August 31, 2021, the total unamortized compensation cost related to non-vested stock-based equity awards was $ 0.5 million and $ 2.8 million for RSUs and MSUs, respectively, which the Company expects to recognize over remaining weighted-average vesting periods of 1.6 and 1.75 years for RSUs and MSUs, respectively.

No unamortized compensation cost for DPUs remained as of August 31, 2020.

No unamortized compensation cost for DPUs or PSUs remained as of August 31, 2021.

Restricted Stock Units

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Market Share Units

The MSUs are market performance-based awards that shall vest with respect to the applicable percentage of the target number of MSU shares based on relative total stockholder return (“TSR”) for the Company as compared to the total return for the Russell 2000 Index (“Index”) over the performance Measurement Period.

The MSUs are market performance-based awards that vest with respect to the applicable percentage of the target number of MSU shares based on relative total stockholder return (“TSR”) for the Company as compared to the total return for the Russell 2000 Index (“Index”) over the performance Measurement Period.

The ultimate number of MSUs that vest may range from 0% to 200% of the original target number of shares depending on the relative achievement of the TSR performance measure at the end of the Measurement Period.

The grant date fair value of MSUs are estimated using a Monte Carlo simulation model and are expensed over the requisite service period rendered.

Assumptions and estimates utilized in the model include expected volatilities of the

Company’s stock and the Index, the Company’s risk-free interest rate and expected dividends.

The probabilities of the actual number of MSUs expected to vest and resultant actual number of shares of common stock expected to be awarded are reflected in the grant date fair values of the various MSU awards;

therefore, the compensation expense for the MSU awards will be recognized assuming the requisite service period is rendered and will not be adjusted based on the actual number of such MSU awards to ultimately vest.

The estimated fair value of each of the Company’s MSU awards, which are not entitled to receive dividend equivalents with respect to the MSUs, was determined on the date of grant using the Monte Carlo simulation model, which utilizes multiple input variables to simulate a range of possible future stock prices for both the Company and the Index and estimates the probabilities of the potential payouts.

The determination of the estimated grant date fair value of the MSUs is affected by the Company’s stock price and a number of assumptions including the expected volatilities of the Company’s stock and the Index, the Company’s risk-free interest rate and expected dividends.

therefore, the compensation expense for the MSU awards is not adjusted based on the actual number of such MSU awards to ultimately vest.

The following weighted-average assumptions for MSU grants for the last three fiscal years were used in the Monte Carlo simulation model :

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Expected dividend yield

The expected volatility utilized was based on the historical volatilities of the Company’s common stock and the Index in order to model the stock price movements.

The volatility used was calculated over the most recent 2.90 -year period for MSUs granted during the fiscal year ended August 31, 2020 and over the most recent 2.90 -year and 2.89 -year periods for MSUs granted during each of the fiscal years ended August 31, 2019 and 2018, which were the remaining terms of the performance Measurement Period at the dates of grant.

The risk-free interest rates used were based on the implied yield available on a U.S.

The expected volatility utilized is based on the historical volatilities of the Company’s common stock and the Index in order to model the stock price movements.

The volatility used was calculated over the most recent 2.88 -year period for MSUs granted during the fiscal year ended August 31, 2021 and over the most recent 2.90 -year periods for MSUs granted during each of the fiscal years ended August 31, 2020 and 2019, which were the remaining terms of the performance Measurement Period at the dates of grant.

The risk-free interest rates used are based on the implied yield available on a U.S.

Treasury zero-coupon bill with a remaining term equivalent to the remaining performance Measurement Period.

The MSU awards stipulate that, for purposes of computing the relative TSR for the Company as compared to the return for the Index, dividends paid with respect to both the Company’s stock and the Index are to be treated as being reinvested into the stock of each entity as of the ex-dividend date.

Accordingly, an expected dividend yield of zero was used in the Monte Carlo simulation model, which is the mathematical equivalent to reinvesting dividends in the issuing entity over the performance Measurement Period.

The expected dividend yield of zero was used in the Monte Carlo simulation model for the purposes of computing the relative TSR of the Company compared to the Index since it is the mathematical equivalent to reinvesting dividends in each issuing entity over the performance Measurement Period.

A summary of the Company’s market share unit activity is as follows (in thousands, except share and per share amounts) :

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The total intrinsic value of all MSUs converted to common shares was $ 5.9 million, $ 4.4 million and $ 4.0 million for the fiscal years ended August 31, 2021, 2020 and 2019, respectively.

The income tax benefits from MSUs converted to common shares totaled $ 0.9 million for both the fiscal years ended August 31, 2020 and 2019 and $ 0.8 million for the fiscal years ended 2018.

The income tax benefits from MSUs converted to common shares totaled $ 1.3 million for the fiscal year ended August 31, 2021, and $ 0.9 million for the fiscal years ended August 31, 2020 and 2019.

Deferred Performance Units

The DPU awards provide for performance-based vesting over a performance measurement period of the fiscal year in which the DPU awards are granted.

The performance vesting provisions of the DPUs are based on relative achievement within an established performance measure range of the Company’s reported earnings before interest, income taxes, depreciation in operating departments, and amortization computed on a consolidated basis for the Measurement Year, before deduction of the stock-based compensation expense for the Vested DPUs and excluding other non-operating income and expense amounts (“Adjusted Global EBITDA”).

The ultimate number of DPUs that vest may range from 0 % to 100 % of the original maximum number of DPUs awarded depending on the relative achievement of the Adjusted Global EBITDA performance measure at the end of the Measurement Year.

The estimated fair value of each of the Company’s DPU awards was determined on the date of grant based on the closing market price of the Company’s common stock on the date of grant less the grant date present value of expected dividends during the vesting period for the DPUs, which are not entitled to receive dividend equivalents with respect to the unvested DPUs.

A summary of the Company’s deferred performance unit activity is as follows (in thousands, except share and per share amounts):

During fiscal year 2021, the Company discontinued the granting of new DPU awards.

Although certain vested DPU awards granted in prior period remain outstanding due to the deferred settlement feature contained within these award agreements, the expense associated with these awards has been fully recognized in prior periods.

DPU awards converted to common shares issued to recipients following termination of employment from the Company were not material to the Company’s consolidated financial statements and related disclosures during fiscal years 2021, 2020 and 2019 respectively.

Performance Share Units

The PSU awards provide for performance-based vesting over a measurement period of the fiscal year in which the PSU awards are granted.

The performance vesting provisions of the PSUs are based on relative achievement within an established performance measure range of the Company’s reported earnings before interest, income taxes, depreciation in operating departments, and amortization computed on a consolidated basis for the Measurement Year, before deduction of the stock-based compensation expense for the Vested PSUs and excluding other non-operating income and expense amounts (“Adjusted Global EBITDA”).

The ultimate number of PSUs that vest may range from 0 % to 100 % of the original maximum number of DPUs awarded depending on the relative achievement of the Adjusted Global EBITDA performance measure at the end of the Measurement Year.

The estimated fair value of each of the Company’s PSU awards was determined on the date of grant based on the closing market price of the Company’s common stock on the date of grant less the grant date present value of expected dividends during the vesting period for the PSUs, which are not entitled to receive dividend equivalents with respect to the unvested PSUs.

A summary of the Company’s performance share unit activity is as follows (in thousands, except share and per share amounts ):

Weighted-Average

Deferred Performance Units

Performance Share Units

Intrinsic Value

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Outstanding at August 31, 2021 (1)

Vested at August 31, 2020

The weighted-average grant date fair value of all DPUs granted during the fiscal years ended August 31, 2020, 2019 and 2018 was $ 183.62 , $ 160.37 and $ 110.65 , respectively.

The total intrinsic value of all DPUs converted to common shares was not significant for each of the fiscal years ended August 31, 2020, 2019 and 2018.

The income tax benefits from DPUs converted to common shares were not significant for each of the fiscal years ended August 31, 2020, 2019 and 2018.

(1) PSUs pertaining to the measurement year of fiscal year 2021 vested at 100 % since performance conditions were fully achieved at an attainment level of 100 %, which was certified subsequent to August 31, 2021 by the Company’s compensation committee.

The weighted-average grant date fair value of all PSUs granted during the fiscal years ended August 31, 2021 was $ 197.51 .

These PSU awards were granted for the first time in October 2021.

There have been no PSUs converted to common shares as of the fiscal year ended August 31, 2021.

Other Benefit Plans

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The Profit Sharing/401(k) Plan may be amended or discontinued at any time by the Company.

The Company’s contribution expense for the Profit Sharing/401(k) Plan was $ 3.6 million for fiscal year 2020 and $ 3.3 million for both fiscal years 2019 and 2018.

The Company’s contribution expense for the Profit Sharing/401(k) Plan was $ 3.9 million for fiscal year 2021, $ 3.6 million for fiscal year 2020 and $ 3.3 million for fiscal year 2019.

The Company’s international subsidiaries have similar benefit plan arrangements, dependent upon the local applicable laws and regulations.

The plans provide for Company contributions to an appropriate third-party plan, as approved by the subsidiary’s Board of Directors.

The Company’s contribution expense related to the international plans was $ 1.6 million for the fiscal years ended August 31, 2020, 2019 and 2018.

The Company’s contribution expense related to the international plans was $ 1.9 million for the fiscal year ended August 31, 2021 and $ 1.6 million for the fiscal years ended August 31, 2020 and 2019.

Business Segments and Foreign Operations

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The corporate overhead costs include expenses for the Company’s accounting and finance, information technology, human resources, research and development, quality control and executive management functions, as well as all direct costs associated with public company compliance matters including legal, audit and other professional services costs.

Also included in corporate overhead costs for fiscal year 2018 are corporate funded advertising and sales promotion expenses focused on increasing the Company’s digital presence and building brand awareness.

Corporate (1)

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On October 4, 2021 , the Company’s Board of Directors declared a cash dividend of $ 0.72 per share payable on October 29, 2021 to shareholders of record on October 15, 2021 .

First Amendment to Credit Agreement

On September 30, 2020, the Company entered into a First Amendment to Credit Agreement (the “First Amendment to Credit Agreement”) with Bank of America.

The First Amendment to Credit Agreement modifies the Company’s existing $ 150.0 million Credit Agreement dated March 16, 2020.

Capitalized terms not otherwise defined in this report have the meaning given to such terms in the Credit Agreement, as detailed in Exhibit 10(ad) in Part IV—Item 15, “Exhibits, Financial Statement Schedules” included in this report.

The First Amendment to Credit Agreement revises certain financial and restrictive covenants and adjusts the interest rates on borrowings under the Credit Agreement as described below.

The maximum Consolidated Leverage Ratio has been increased from 3.0 to 1.0 to 3.5 to 1.0.

The Restricted Payments covenant has been modified to permit the payment of dividends so long as immediately prior to and after giving effect to the payment of dividends, no Event of Default exists and the Company and its subsidiary Loan Parties are in compliance with applicable financial covenants.

In addition to other non-material and technical amendments to the Credit Agreement, the First Amendment to Credit Agreement also modifies the restrictive covenants relating to Indebtedness and Investments.

The limitation on other unsecured Indebtedness (including borrowing under the Company’s amended Note Agreement described below) has been increased from $ 35.0 million to $ 125.0 million.

With respect to the restrictions on Investments, intercompany loans, advances or capital contributions from any Loan Party to Subsidiaries that are not Loan Parties may be made in an aggregate amount of up to $ 10.0 million outstanding at any time from and after September 30, 2020.

In addition, Investments not otherwise covered by any other exception to the restriction on Investments may be made in an aggregate amount of up to $ 15.0 million outstanding at any time from and after November 15, 2017.

The First Amendment to Credit Agreement also modifies the interest rate applicable to borrowings under the Credit Agreement by changing the Applicable Rate from 0.90 % for Libor Rate Loans and 0.0 % for Prime Rate Loans to a three-tier pricing approach tied to the Company’s Consolidated Leverage Ratio.

For Libor Rate Loans and Prime Rate Loans, the Applicable Rate is a spread added to the Libor Daily Floating Rate and Prime Rate, respectively.

An increase or decrease in the Applicable Rate will apply in the event of a change in the Consolidated Leverage Ratio from and after the first Business Day after the Company delivers a Compliance Certificate to Bank of America.

Table 1 below reflects the tiered Applicable Rate.

Consolidated Leverage Ratio

Commitment Fee

Libor Rate Loans

Letter of Credit Fee

Prime Rate Loans

< 2.00 to 1.0

< 3.00 to 1.0 but ≥ 2.00 to 1.0

≥ 3.00 to 1.0

The new Maturity Date for the revolving credit facility per the Credit Agreement is September 30, 2025 .

Third Amendment to Note Purchase and Private Shelf Agreement

On September 30, 2020, the Company entered into a Third Amendment to Note Purchase and Private Shelf Agreement (the “Third Amendment to Note Agreement”) amending its existing Note Agreement.

The Third Amendment to Note Agreement amends the Note Agreement to permit the Company (inclusive of its subsidiaries) to enter into the First Amendment to Credit Agreement with Bank of America and the Third Amendment includes certain conforming amendments to the Note Agreement consistent with the First Amendment to Credit Agreement, including the revision of the financial and restrictive covenants described above.

All other material terms included in the Credit Agreement and the Note Agreement remain unchanged as a result of execution of the First Amendment to Credit Agreement and the Third Amendment to Note Agreement.

Issuance and Sale of $52.0 Million in Notes under Note Purchase and Private Shelf Agreement

On September 30, 2020, the Company issued and sold senior unsecured notes pursuant to the Note Agreement to specified Note Purchasers in the aggregate amount of $ 52.0 million.

Pursuant to the Note Agreement (as amended by the Third Amendment to Note Agreement), the Company agreed to sell $ 26.0 million aggregate principal amount of senior unsecured notes (the “Series B Notes”) to specified Note Purchasers and the Company agreed to sell $ 26.0 million aggregate principal amount of senior unsecured notes (the “Series C Notes” and together with the Series B Notes, the “Senior Notes”) to specified Note Purchasers.

The Series B Notes will bear interest at 2.5 % per annum and will mature on November 15, 2027 , unless earlier redeemed by the Company.

The Series C Notes will bear interest at 2.69 % per annum and will mature on November 15, 2030 , unless earlier redeemed by the Company.

Interest on the Senior Notes is payable semi-annually beginning on May 15, 2021.

The Company used the proceeds from the Senior Notes to pay down $ 50.0 million in borrowings under the Company’s existing $ 150.0 million Credit Agreement.

Share Repurchase Plan

On October 12, 2021, the Company’s Board of Directors approved a new share buy-back plan.

Under the plan, which will become effective on November 1, 2021, the Company is authorized to acquire up to $ 75.0 million of its outstanding shares through August 31, 2023.

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-K

Item 9A. Controls and Procedures