WD 40 CO 10-K

Item 9A . Controls and Procedures Evaluation of Disclosure Controls and Procedures 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 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. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures as of August 31, 2022, the end of the period covered by this report (the Evaluation Date), and they have concluded that, as of the Evaluation Date, such controls and procedures were effective at ensuring that required information will be disclosed on a timely basis in the Company’s reports filed under the Exchange Act. Although management believes the Company’s existing disclosure controls and procedures are adequate to enable the Company to comply with its disclosure obligations, management continues to review and update such controls and procedures. The Company has a disclosure committee, which consists of certain members of the Company’s senior management. Management’s Report on Internal Control over Financial Reporting Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, management conducted an evaluation of the effectiveness of its internal control over financial reporting based upon the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on that evaluation, management concluded that its internal control over financial reporting is effective as of August 31, 2022. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. PricewaterhouseCoopers LLP, independent registered public accounting firm, who audited and reported on the consolidated financial statements of WD-40 Company included in Item 15 of this report, has audited the effectiveness of WD-40 Company’s internal control over financial reporting as of August 31, 2022, as stated in their report included in Item 15 of this report. Changes in Internal Control over Financial Reporting 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, 2022, that materially affected, or would be reasonably likely to materially affect, the Company’s internal control over financial reporting. Item 9B . Other Information None. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . None. ‎ 34 PART III Item 10 . Directors, Executive Officers and Corporate Governance Certain information required by this item is set forth in sections under the headings “Security Ownership of Certain Beneficial Owners and Management,” “Director Nominees,” and “Related Party Transactions Review and Oversight” in our Proxy Statement to be filed with the Securities and Exchange Commission in connection with the 2022 Annual Meeting of Stockholders on December 13, 2022 (“Proxy Statement”), which information is incorporated by reference herein. Information regarding executive officers is also incorporated by reference to the “Information Regarding our Executive Officers” section of our Proxy Statement. The Registrant has a code of ethics (as defined in Item 406 of Regulation S-K under the Exchange Act) applicable to its principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions. The code of ethics is represented by the Registrant’s Code of Conduct applicable to all employees and directors. A copy of the Code of Conduct may be found on the Registrant’s internet website on the Corporate Governance link from the Investors page at www.wd40company.com . Item 11 . Executive Compensation Information required by this item is incorporated by reference to sections of the Proxy Statement under the headings “Director Compensation” (and the table following such section), “Compensation Committee - Compensation Committee Interlocks and Insider Participation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Executive Compensation” (and the compensation tables following such section), “Supplemental Death Benefit Plans and Supplemental Insurance Benefits,” “Change of Control Severance Agreements” and “CEO Pay Ratio.” Item 12 . Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Certain information required by this item is incorporated by reference to the Proxy Statement under the heading “Security Ownership of Certain Beneficial Owners and Management.” Equity Compensation Plan Information The following table provides information regarding shares of our common stock authorized for issuance under equity compensation plans as of August 31, 2022: Number of securities remaining available for Number of securities to future issuance under be issued upon exercise Weighted-average exercise equity compensation plans of outstanding options, price of outstanding options (excluding securities warrants and rights warrants and rights reflected in column (a)) (a) (b) (c) Plan category Equity compensation plans approved by security holders 136,937 (1) $ - 384,859 Equity compensation plans not approved by security holders n/a n/a n/a 136,937 (1) $ - 384,859 (1) Includes 78,604 securities to be issued pursuant to outstanding restricted stock units; 37,201 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; 3,306 securities to be issued pursuant to outstanding deferred performance units (“DPUs”); and 17,826 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. ‎ 35 Item 13 . Certain Relationships and Related Transactions, and Director Independence Information required by this item is incorporated by reference to the Proxy Statement under the headings “Director Independence” and “Audit Committee - Related Party Transactions Review and Oversight.” Item 14 . Principal Accountant Fees and Services Information required by this item is incorporated by reference to the Proxy Statement under the heading “Ratification of Appointment of Independent Registered Public Accounting Firm.” ‎ 36 PART IV Item 15 . Exhibits, Financial Statement Schedules Page (a) Documents filed as part of this report (1) Report of Independent Registered Public Accounting Firm (PCAOB ID: 238 ) F- 1 Consolidated Balance Sheets F-3 Consolidated Statements of Operations F-4 Consolidated Statements of Comprehensive Income F-5 Consolidated Statements of Shareholders’ Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F- 8 (2) Financial statement schedules are omitted because they are not applicable or the required information is shown in the consolidated financial statements or notes thereto. (3) Exhibits Exhibit No. Description Articles of Incorporation and Bylaws. 3(a) Certificate of Incorporation, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2018, Exhibit 3(a) thereto . 3(b) Amended and Restated Bylaws of WD-40 Company, incorporated by reference from the Registrant’s Form 8-K filed August 16, 2018, Exhibit 3.1 thereto. Material Contracts. Executive Compensation Plans and Arrangements (Exhibits 10(a) through 10(s) are management contracts and compensatory plans or arrangements required to be filed as exhibits pursuant to Item 15(b)). 10(a) WD-40 Company 2016 Stock Incentive Plan, incorporated by reference from the Registrant’s Proxy Statement filed November 3, 2016, Appendix A thereto. 10(b) WD-40 Directors’ Compensation Policy and Election Plan dated October 12, 2021, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2021, Exhibit 10(b) thereto . 10(c) 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. 10(d) Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal year 2020, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(d) thereto. 10(e) Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal year 2020, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2020, Exhibit 10(e) thereto. 10(f) 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. 10(g) 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. 10(h) 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. 10(i) 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. 10(j) Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal year 2022, , incorporated by reference from the Registrant’s Form 10-K filed October 22, 2021, Exhibit 10(j) thereto. 10(k) Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal year 2022, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2021, Exhibit 10(k) thereto. ‎ 37 10(l) Form of Performance Share Unit Restricted Stock Award Agreement for grants of Performance Share Units to Executive Officers in fiscal year 2022, incorporated by reference from the Registrant’s Form 10-K filed October 22, 2021, Exhibit 10(l) thereto. 10(m) Transition and Release Agreement, dated March 11, 2022, between WD-40 Company and Garry O. Ridge, incorporated by reference from the Registrant’s Form 8-K filed March 16, 2022, Exhibit 10.1 thereto. 10(n) FY 2022 Restricted Stock Unit Award Agreement, dated March 11, 2022, between WD-40 Company and Garry O. Ridge, incorporated by reference from the Registrant’s Form 8-K filed March 16, 2022, Exhibit 10.2 thereto. 10(o) Form of Restricted Stock Unit Agreement for grants of Restricted Stock Units to Executive Officers in fiscal year 2023. 10(p) Form of Market Share Unit Award Agreement for grants of Market Share Units to Executive Officers in fiscal year 2023. 10(q) Form of Performance Share Unit Restricted Stock Award Agreement for grants of Performance Share Units to Executive Officers in fiscal year 2023. 10(r) WD-40 Company 2017 Performance Incentive Compensation Plan, incorporated by reference from the Registrant’s Proxy Statement filed November 2, 2017, Appendix A thereto. 10(s) Form of WD-40 Company Supplemental Death Benefit Plan applicable to certain executive officers of the Registrant, incorporated by reference from the Registrant’s Form 10-K filed October 24, 2016, Exhibit 10(i) thereto. 10(t) Change of Control Severance Agreement between WD-40 Company and Jay W. Rembolt dated October 16, 2008, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2014, Exhibit 10(h) thereto . 1 0(u) Change of Control Severance Agreement between WD-40 Company and Richard T. Clampitt dated October 15, 2014, incorporated by reference from the Registrant’s Form 10-K filed October 21, 2014, Exhibit 10(i) thereto. 10(v) Change of Control Severance Agreement between WD-40 Company and Garry O. Ridge dated February 14, 2006, incorporated by reference from the Registrant’s Form 10-K filed October 23, 2017, Exhibit 10(p) thereto. 10(w) Change of Control Severance Agreement between WD-40 Company and Geoffrey J. Holdsworth dated February 14, 2006, incorporated by reference from the Registrant’s Form 10-K filed October 23, 2017, Exhibit 10(r) thereto. 10(x) Change of Control Severance Agreement between WD-40 Company and William B. Noble dated February 14, 2006, incorporated by reference from the Registrant’s Form 10-K filed October 23, 2017, Exhibit 10(s) thereto. 10(y) Change of Control Severance Agreement between WD-40 Company and Steven Brass dated June 22, 2016, incorporated by reference from the Registrant’s Form 10-Q filed January 9, 2017, Exhibit 10(c) thereto . 10(z) Change of Control Severance Agreement between WD-40 Company and Patricia Q. Olsem dated October 8, 2019, incorporated by reference from the Registrant’s Form 10-Q filed January 9, 2020, Exhibit 10(a) thereto . 10(aa) 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. 10(ab) Change of Control Severance Agreement between WD-40 Company and Phenix Q. Kiamilev dated December 13, 2021, incorporated by reference from the Registrant’s Form 10-Q filed April 7, 2022, Exhibit 10(b) thereto . 10(ac) 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 . 10(ad) Form of Acknowledgement Letter Agreement dated April 8, 2020 among WD-40 Company and Bank of America, incorporated by reference from the Registrant’s Form 10-Q filed April 9, 2020, Exhibit 10(d) thereto . 10(ae) Libor Transition Agreement dated November 29, 2021 among the Company and Bank of America, N.A., incorporated by reference from the Registrant's Form 8-K filed December 1, 2021, Exhibit 10(a) thereto . 10(af) First Amendment to Credit Agreement dated September 30, 2020 among WD-40 Company and Bank of America, N.A., incorporated by reference from the Registrant’s Form 8-K filed October 6, 2020, Exhibit 10(a) thereto. 10(ag) Note Purchase and Private Shelf Agreement dated November 15, 2017 among WD-40 Company and Prudential and certain Note Purchasers, incorporated by reference from the Registrant’s Form 8-K filed November 17, 2017, Exhibit 10(a) thereto. 10(ah) First Amendment to Note Purchase Agreement dated February 23, 2018 among WD-40 Company and Prudential and certain Note Purchasers, incorporated by reference from the Registrant’s Form 8-K filed February 27, 2018, Exhibit 10(b) thereto. 38 10(ai) Second Amendment to Note Purchase and Private Shelf Agreement dated March 16, 2020 among WD-40 Company and Prudential and certain Note Purchasers, incorporated by reference from the Registrant’s Form 8-K filed March 20, 2020, Exhibit 10(b) thereto . 10(aj) Form of Limited Consent Letter Agreement dated April 8, 2020 among WD-40 Company and Prudential and certain Note Purchasers, incorporated by reference from the Registrant’s Form 10-Q filed April 9, 2020, Exhibit 10(e) thereto . 10(ak) Third Amendment to Note Purchase and Private Shelf Agreement dated September 30, 2020 among WD-40 Company and Prudential and certain Note Purchasers, incorporated by reference from the Registrant’s Form 8-K filed October 6, 2020, Exhibit 10(e) thereto . 10(al) Series B Senior Notes dated September 30, 2020, incorporated by reference from the Registrant’s Form 8-K filed October 6, 2020, Exhibit 10(f) thereto . 10(am) Series C Senior Notes dated September 30, 2020, incorporated by reference from the Registrant’s Form 8-K filed October 6, 2020, Exhibit 10(g) thereto . 21 Subsidiaries of the Registrant . 23 Consent of Independent Registered Public Accounting Firm dated October 24, 2022. 31(a) Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31(b) Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32(a) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32(b) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 101 The following materials from WD-40 Company’s Annual report on Form 10-K for the fiscal year ended August 31, 2022 formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (ii) the Consolidated Statements of Cash Flows, (iv) the Consolidated Balance Sheet, (v) the Consolidated Statements of Shareholders’ Equity, and (vi) Notes to the Consolidated Financial Statements. 104 The cover page from the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2022, formatted in iXBRL and contained in Exhibit 101. Item 16. Form 10-K S um mary Not applicable. ‎ 39 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this annual report to be signed on its behalf by the undersigned, thereunto duly authorized. WD-40 COMPANY Registrant /s/ JAY W. REMBOLT JAY W. REMBOLT Vice President, Finance Treasurer and Chief Financial Officer (Principal Financial Officer) Date: October 24, 2022 /s/ RAE ANN PARTLO RAE ANN PARTLO Vice President and Corporate Controller (Principal Accounting Officer) Date: October 24, 2022 Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ STEVEN A. BRASS STEVEN A. BRASS Chief Executive Officer and Director (Principal Executive Officer) Date: October 24, 2022 /s/ DANIEL T. CARTER /s/ GRACIELA I. MONTEAGUDO DANIEL T. CARTER, Director GRACIELA I. MONTEAGUDO, Director Date: October 24, 2022 Date: October 24, 2022 ‎ /s/ MELISSA CLAASSEN /s/ DAVID B. PENDARVIS MELISSA CLAASSEN, Director DAVID B. PENDARVIS, Director Date: October 24, 2022 Date: October 24, 2022 /s/ ERIC P. ETCHART /s/ GARRY O. RIDGE ERIC P. ETCHART, Director GARRY O. RIDGE, Director Date: October 24, 2022 Date: October 24, 2022 /s/ LARA L. LEE /s/ GREGORY A. SANDFORT LARA L. LEE, Director GREGORY A. SANDFORT, Director Date: October 24, 2022 Date: October 24, 2022 /s/ EDWARD O. MAGEE, JR. /s/ ANNE G. SAUNDERS EDWARD O. MAGEE, JR., Director ANNE G. SAUNDERS, Director Date: October 24, 2022 Date: October 24, 2022 /s/ TREVOR I. MIHALIK TREVOR I. MIHALIK, Director Date: October 24, 2022 40 Report of Independent Reg istered Public Accounting Firm To the Board of Directors and Shareholders of WD-40 Company 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 (the “Company”) as of August 31, 2022 and 2021, 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, 2022, 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, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of August 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended August 31, 2022 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of August 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO. Basis for Opinions The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions. Definition and Limitations of Internal Control over Financial Reporting A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (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. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. F- 1 Critical Audit Matters The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates. Rebates – Certain Cooperative Marketing Program Accruals As described in Notes 2 and 11 to the consolidated financial statements, sales are recorded net of allowances for damaged goods and other sales returns, sales incentives, trade promotions and cash discounts. 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. 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. The Company had an $8.7 million balance in rebate/other discount liabilities as of August 31, 2022, which are included in accrued liabilities on the Company’s consolidated balance sheets, and recorded approximately $32.8 million in rebates/other discounts as a reduction to sales during fiscal year 2022. The principal considerations for our determination that performing procedures relating to certain cooperative marketing program accruals is a critical audit matter are (i) the significant judgment by management to estimate certain 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 certain 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 certain cooperative marketing program accruals. Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to the estimation of cooperative marketing program accruals, which related to controls over the current and past trade promotion spending patterns and the status of trade promotion activities used in management’s estimate. These procedures also included, among others, (i) testing management’s process to estimate certain cooperative marketing program accruals, including evaluating the appropriateness of the expected value method, testing the completeness, accuracy and relevance of underlying data used, including the current and past trade promotion spending patterns, and evaluating the reasonableness of the status of the trade promotion activities assumption considering the overall business environment, and (ii) evaluating the completeness of offers made to customers for potential promotional activities, which may require accrual as of period end. /s/ PricewaterhouseCoopers LLP San Diego, California October 24, 2022 We have served as the Company’s auditor since at least 1972. We have not been able to determine the specific year we began serving as auditor of the Company. ‎ F- 2 WD-40 COMPANY CONSOLIDATED BALANCE SHEETS (In thousands, except share and per share amounts) August 31, August 31, 2022 2021 Assets Current assets: Cash and cash equivalents $ 37,843 $ 85,961 Trade and other accounts receivable, less allowance for doubtful accounts of $ 292 and $ 463 at August 31, 2022 and 2021, respectively 89,930 89,558 Inventories 104,101 55,752 Other current assets 17,766 9,948 Total current assets 249,640 241,219 Property and equipment, net 65,977 70,145 Goodwill 95,180 95,869 Other intangible assets, net 5,588 7,244 Operating lease right-of-use assets 7,559 8,824 Deferred tax assets, net 679 858 Other assets 9,672 6,044 Total assets $ 434,295 $ 430,203 Liabilities and Shareholders' Equity Current liabilities: Accounts payable $ 32,852 $ 33,499 Accrued liabilities 27,161 25,658 Accrued payroll and related expenses 11,583 25,662 Short-term borrowings 39,173 800 Income taxes payable 51 317 Total current liabilities 110,820 85,936 Long-term borrowings 107,139 114,940 Deferred tax liabilities, net 10,528 10,401 Long-term operating lease liabilities 5,999 7,062 Other long-term liabilities 11,185 11,482 Total liabilities 245,671 229,821 Commitments and Contingencies (Note 12) Shareholders' equity: Common stock ― authorized 36,000,000 shares, $ 0.001 par value; 19,888,807 and 19,856,865 shares issued at August 31, 2022 and 2021, respectively; and 13,602,346 and 13,708,966 shares outstanding at August 31, 2022 and 2021, respectively 20 20 Additional paid-in capital 165,973 163,737 Retained earnings 456,076 430,735 Accumulated other comprehensive income (loss) ( 36,209 ) ( 26,030 ) Common stock held in treasury, at cost ― 6,286,461 and 6,147,899 shares at August 31, 2022 and 2021, respectively ( 397,236 ) ( 368,080 ) Total shareholders' equity 188,624 200,382 Total liabilities and shareholders' equity $ 434,295 $ 430,203 See accompanying notes to consolidated financial statements. F- 3 WD-40 COMPANY CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) Fiscal Year Ended August 31, 2022 2021 2020 Net sales $ 518,820 $ 488,109 $ 408,498 Cost of products sold 264,055 224,370 185,481 Gross profit 254,765 263,739 223,017 Operating expenses: Selling, general and administrative 138,658 145,493 121,980 Advertising and sales promotion 27,343 27,956 21,606 Amortization of definite-lived intangible assets 1,434 1,449 2,211 Total operating expenses 167,435 174,898 145,797 Income from operations 87,330 88,841 77,220 Other income (expense): Interest income 102 81 93 Interest expense ( 2,742 ) ( 2,395 ) ( 2,439 ) Other (expense) income, net ( 582 ) ( 28 ) 641 Income before income taxes 84,108 86,499 75,515 Provision for income taxes 16,779 16,270 14,805 Net income $ 67,329 $ 70,229 $ 60,710 Earnings per common share: Basic $ 4.91 $ 5.11 $ 4.41 Diluted $ 4.90 $ 5.09 $ 4.40 Shares used in per share calculations: Basic 13,668 13,698 13,691 Diluted 13,696 13,733 13,719 See accompanying notes to consolidated financial statements. ‎ F- 4 WD-40 COMPANY CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands) Fiscal Year Ended August 31, 2022 2021 2020 Net income $ 67,329 $ 70,229 $ 60,710 Other comprehensive income (loss): Foreign currency translation adjustment ( 10,179 ) 2,178 4,274 Total comprehensive income $ 57,150 $ 72,407 $ 64,984 See accompanying notes to consolidated financial statements. F- 5 WD-40 COMPANY CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (In thousands, except share and per share amounts) Accumulated Additional Other Total Common Stock Paid-in Retained Comprehensive Treasury Stock Shareholders' Shares Amount Capital Earnings Income (Loss) Shares Amount Equity Balance at August 31, 2019 19,773,977 $ 20 $ 155,132 $ 374,060 $ ( 32,482 ) 6,055,316 $ ( 351,255 ) $ 145,475 Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 38,708 ( 2,640 ) ( 2,640 ) Stock-based compensation 5,358 5,358 Cash dividends ($ 2.62 per share) ( 36,039 ) ( 36,039 ) Repurchases of common stock 92,583 ( 16,825 ) ( 16,825 ) Foreign currency translation adjustment 4,274 4,274 Net income 60,710 60,710 Balance at August 31, 2020 19,812,685 $ 20 $ 157,850 $ 398,731 $ ( 28,208 ) 6,147,899 $ ( 368,080 ) $ 160,313 Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 44,180 ( 3,668 ) ( 3,668 ) Stock-based compensation 9,555 9,555 Cash dividends ($ 2.78 per share) ( 38,225 ) ( 38,225 ) Foreign currency translation adjustment 2,178 2,178 Net income 70,229 70,229 Balance at August 31, 2021 19,856,865 $ 20 $ 163,737 $ 430,735 $ ( 26,030 ) 6,147,899 $ ( 368,080 ) $ 200,382 Issuance of common stock under share-based compensation plan, net of shares withheld for taxes 31,942 ( 4,461 ) ( 4,461 ) Stock-based compensation 6,697 6,697 Cash dividends ($ 3.06 per share) ( 41,988 ) ( 41,988 ) Repurchases of common stock 138,562 ( 29,156 ) ( 29,156 ) Foreign currency translation adjustment ( 10,179 ) ( 10,179 ) Net income 67,329 67,329 Balance at August 31, 2022 19,888,807 $ 20 $ 165,973 $ 456,076 $ ( 36,209 ) 6,286,461 $ ( 397,236 ) $ 188,624 See accompanying notes to consolidated financial statements. F- 6 WD-40 COMPANY CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Fiscal Year Ended August 31, 2022 2021 2020 Operating activities: Net income $ 67,329 $ 70,229 $ 60,710 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 8,294 7,019 7,701 Net gains on sales and disposals of property and equipment ( 311 ) ( 249 ) ( 124 ) Deferred income taxes 596 ( 1,334 ) ( 509 ) Stock-based compensation 6,697 9,555 5,358 Unrealized foreign currency exchange losses (gains), net 1,035 ( 511 ) 265 Provision for bad debts 143 210 134 Changes in assets and liabilities: Trade and other accounts receivable ( 7,443 ) ( 6,595 ) ( 4,499 ) Inventories ( 52,665 ) ( 13,774 ) 555 Other assets ( 12,578 ) ( 5,343 ) 232 Operating lease assets and liabilities, net ( 32 ) 15 233 Accounts payable and accrued liabilities 5,208 15,485 2,725 Accrued payroll and related expenses ( 13,133 ) 10,702 ( 1,042 ) Other long-term liabilities and income taxes payable ( 536 ) ( 695 ) 925 Net cash provided by operating activities 2,604 84,714 72,664 Investing activities: Purchases of property and equipment ( 8,303 ) ( 15,059 ) ( 19,307 ) Proceeds from sales of property and equipment 612 599 362 Net cash used in investing activities ( 7,691 ) ( 14,460 ) ( 18,945 ) Financing activities: Treasury stock purchases ( 29,156 ) - ( 16,825 ) Dividends paid ( 41,988 ) ( 38,225 ) ( 36,039 ) Proceeds from issuance of long-term senior notes - 52,000 - Repayments of long-term senior notes ( 800 ) ( 800 ) ( 800 ) Net proceeds (repayments) from revolving credit facility 38,394 ( 50,056 ) 29,595 Shares withheld to cover taxes upon conversion of equity awards ( 4,461 ) ( 3,668 ) ( 2,640 ) Net cash used in financing activities ( 38,011 ) ( 40,749 ) ( 26,709 ) Effect of exchange rate changes on cash and cash equivalents ( 5,020 ) ( 6 ) 2,219 Net (decrease) increase in cash and cash equivalents ( 48,118 ) 29,499 29,229 Cash and cash equivalents at beginning of period 85,961 56,462 27,233 Cash and cash equivalents at end of period $ 37,843 $ 85,961 $ 56,462 Supplemental cash flow information: Accrued capital expenditures 960 1,123 1,764 Cash paid for: Interest $ 2,687 $ 2,319 $ 2,259 Income taxes, net of tax refunds received $ 18,345 $ 19,254 $ 12,569 See accompanying notes to consolidated financial statements. F- 7 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. The Company WD-40 Company (the “Company”), incorporated in Delaware and 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 owns a wide range of well-known brands that include maintenance products and homecare and cleaning products: WD-40® Multi-Use Product, WD-40 Specialist®, 3-IN-ONE®, GT85®, X-14®, 2000 Flushes®, Carpet Fresh®, no vac®, Spot Shot®, 1001®, Lava® and Solvol®. 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. Homecare and cleaning products are sold primarily in North America, the United Kingdom (“U.K.”) and Australia. The Company’s products are sold primarily through warehouse club stores, hardware stores, automotive parts outlets, industrial distributors and suppliers, mass retail and home center stores, value retailers, grocery stores, online retailers, farm supply, sport retailers, and independent bike dealers. Note 2. Basis of Presentation and Summary of Significant Accounting Policies Basis of Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. 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. Although the Company’s current estimates consider current conditions, the inputs into certain of the Company’s significant and critical accounting estimates include judgments and assumptions about the economic implications of the COVID-19 pandemic and how management expects them to change in the future, as appropriate. It is reasonably possible that actual results experienced may differ materially from the Company’s estimates in future periods, which could materially affect our results of operations and financial condition. Cash and Cash Equivalents Cash equivalents are highly liquid investments purchased with an original maturity of three months or less. Trade Accounts Receivable and Allowance for Doubtful Accounts Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in existing accounts receivable. The Company determines the allowance for doubtful accounts based on historical write-off experience and the identification of specific balances deemed uncollectible. 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 customers. Allowance for doubtful accounts related to the Company’s trade accounts receivable were not significant at August 31, 2022 and 2021. ‎ F- 8 Inventories Inventories are stated at the lower of cost or net realizable value. Cost is determined primarily based on a first-in, first-out method or, for a portion of raw materials inventory, the average cost method. When necessary, the Company adjusts the carrying value of its inventory to the lower of cost or net realizable value, including any costs to sell or dispose of such inventory. Appropriate consideration is given by the Company to obsolescence, excessive inventory levels, product deterioration and other factors when evaluating net realizable value for the purposes of determining the lower of cost or net realizable value. Included in inventories are amounts for certain raw materials and components that the Company has provided to its third-party contract manufacturers but that remain unpaid to the Company as of the balance sheet date. The Company’s contract manufacturers package products to the Company’s specifications and, upon order from the Company, ship ready-to-sell inventory to either the Company’s third-party distribution centers or directly to its customers. 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. 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 Property and equipment is stated at cost. Depreciation is computed using the straight-line method based upon estimated useful lives of ten to forty years for buildings and improvements, three to fifteen years for machinery and equipment, three to five years for vehicles, three to ten years for furniture and fixtures, three to seven years for R&D lab equipment and office equipment and three to five years for computer equipment. Depreciation expense totaled $ 6.9 million, $ 5.6 million and $ 5.5 million for fiscal years 2022, 2021 and 2020, respectively. These amounts include equipment depreciation expense which is recognized as cost of products sold and totaled $ 2.5 million in fiscal year 2022, $ 1.2 million in fiscal year 2021 and $ 1.4 million in fiscal year 2020. Internal-Use Software and Cloud Computing Arrangements The Company capitalizes costs related to computer software obtained or developed for internal use. Software obtained for internal use has generally been enterprise-level business and finance software that the Company customizes to meet its specific operational needs. Costs incurred in the application development phase are capitalized as property and equipment in the Company’s consolidated balance sheets and are depreciated using the straight-line method over their estimated useful lives. The Company also enters into certain cloud-based software hosting arrangements. In evaluating whether cloud computing arrangements include an embedded internal-use software license, management considers whether the Company has the contractual right to take possession of the software during the hosting period without significant penalty and whether it is feasible to either i) run the software on the Company’s hardware, or ii) contract with another party unrelated to the vendor to host the software. If management determines a cloud computing arrangement includes an embedded software license, the Company accounts for the software license element of the arrangement consistent with the acquisition of other internal-use software licenses. If a cloud computing arrangement does not include a software license, the Company accounts for the arrangement as a service contract. For such cloud computing service contracts, the Company capitalizes certain implementation costs such as the configuration, coding and customization of the software. Capitalizable cloud computing arrangement costs are generally consistent with those incurred during the application development stage for internal-use software, however, these costs are capitalized as “other assets” in the Company’s consolidated balance sheets. The Company amortizes these capitalized cloud computing implementation costs into selling, general and administrative expenses using the straight-line method over the fixed, non-cancellable term of the associated hosting arrangement, plus any reasonably certain renewal periods. The useful lives of the Company’s internal-use software and capitalized cloud computing implementation costs are generally three to five years . However, the useful lives of major information system installations such as implementations of enterprise resource planning (“ERP”) systems are determined on an individual basis and may exceed five years depending on the estimated period of use. The Company applies the same impairment model to both internal-use software and capitalized cloud computing implementation costs. Leases 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. In addition, the Company leases a fleet of automobiles. The Company has also identified warehouse leases within certain third-party distribution center service contracts. To determine if a contract contains a lease, the Company assesses its contracts and determines if there is an identified asset for which the Company has obtained the right to control, as defined in ASC 842. Right-of-use (“ROU”) assets and lease liabilities are recognized based on the present F- 9 value of lease payments over the lease term with lease expense recognized over the term of the lease. As the Company’s leases typically do not contain a readily determinable implicit rate, the Company determines the present value of the lease liability using its estimated secured incremental borrowing rate at the lease commencement date based on the lease term and the currency of the lease on a collateralized basis. Lease agreements may contain rent escalation clauses, renewal or termination options, and rent holidays, amongst other features. ROU assets include amounts for scheduled rent increases. The lease term includes the non-cancelable period of the lease and options to extend or terminate the lease when it is reasonably certain the Company will exercise those options, and is reviewed in subsequent periods if a triggering event occurs. 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 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 Goodwill represents the excess of the purchase price over the fair value of tangible and intangible assets acquired. The carrying value of goodwill is reviewed for possible impairment in accordance with the authoritative guidance on goodwill, intangibles and other. 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 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. When testing goodwill for impairment, the Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative goodwill impairment test. If, after assessing qualitative factors, the Company determines it is not more likely than not that the fair value of a reporting unit is less than its carrying amount, then performing a quantitative test is unnecessary. Otherwise, a quantitative test is performed to identify the potential impairment and to measure the amount of goodwill impairment, if any. The Company also performs a quantitative assessment periodically, regardless of the results of the qualitative assessments. Any required impairment losses are recorded as a reduction in the carrying amount of the related asset and charged to results of operations. No goodwill impairments were identified by the Company during fiscal years 2022, 2021 or 2020. Subsequent Measurement of Long-lived Assets The Company’s long-lived assets consist of property and equipment and definite-lived intangible assets. Long-lived assets are depreciated or amortized, as applicable, on a straight-line basis over their estimated useful lives. The Company assesses for potential impairments to its long-lived assets when there is evidence that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable and/or its remaining useful life may no longer be appropriate. Any required impairment loss would be measured as the amount by which the asset’s carrying amount exceeds its fair value, which is the amount at which the asset could be bought or sold in a current transaction between willing market participants and would be recorded as a reduction in the carrying amount of the related asset and a charge to results of operations. An impairment loss would be recognized when the sum of the expected future undiscounted net cash flows is less than the carrying amount of the asset. No impairments to its long-lived assets were identified by the Company during fiscal years 2022, 2021 or 2020. Fair Value of Financial Instruments Accounting Standards Codification (“ASC”) 820, “ Fair Value Measurements and Disclosures” , defines fair value as the exchange price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company categorizes its financial assets and liabilities measured at fair value into a hierarchy that categorizes fair value measurements into the following three levels based on the types of inputs used in measuring their fair value: Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities; Level 2: Observable market-based inputs or observable inputs that are corroborated by market data; and Level 3: Unobservable inputs reflecting the Company’s own assumptions. Under fair value accounting, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. As of August 31, 2022, the Company had no assets or liabilities that are measured at fair value in the financial statements on a recurring basis, with the exception of the foreign currency forward contracts, which are classified as Level 2 within the fair value hierarchy. The carrying values of cash equivalents and short-term borrowings are recorded at F- 10 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 $ 63.4 million as of August 31, 2022, 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 $ 68.4 million. During the fiscal years ended August 31, 2022, 2021 and 2020, the Company did no t record any significant nonrecurring fair value measurements for assets or liabilities in periods subsequent to their initial recognition. Concentration of Credit Risk 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 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. 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 and increased costs. Insurance Coverage 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. The Company does not maintain self-insurance with respect to its material risks; therefore, the Company has no t provided for self-insurance reserves as of August 31, 2022 and 2021. Revenue Recognition The Company recognizes revenue related to the sale of products when it satisfies a performance obligation in an amount reflecting the consideration to which it expects to be entitled. Sales are recorded net of allowances for damaged goods and other sales returns, sales incentives, trade promotions and cash discounts. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized which includes the following: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. In determining the transaction price, the Company 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 provided to us related to the sale and penalties/fines charged to us 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. The Company reviews its assumptions and adjusts these estimates accordingly on a quarterly basis. ‎ F- 11 Cost of Products Sold Cost of products sold primarily includes the cost of products manufactured on the Company’s behalf by its third-party contract manufacturers, net of volume and other rebates. Cost of products sold also includes the costs to manufacture WD-40 concentrate, which is done at the Company’s own facilities or at third-party contract manufacturers. When the concentrate is manufactured by the Company, cost of products sold includes direct labor, direct materials and supplies; in-bound freight costs related to purchased raw materials and finished product; and depreciation of machinery and equipment used in the manufacturing process. In addition, cost of products sold includes fees charged to the Company by its third-party distribution centers to warehouse and administer finished products once they are received from the Company’s third-party contract manufacturers. Selling, General and Administrative Expenses Selling, general and administrative expenses include costs related to selling the Company’s products, such as the cost of the sales force and broker commissions; shipping and handling costs paid to third-party companies to distribute finished goods from the Company’s third-party contract manufacturers and distribution centers to its customers; other general and administrative costs related to the Company’s business such as general overhead, legal and accounting fees, insurance, and depreciation; 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 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. Out-bound shipping and handling costs were $ 18.6 million, $ 16.5 million and $ 12.9 million for fiscal years 2022, 2021 and 2020, respectively. Advertising and Sales Promotion Expenses 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 as well as market and sales data analyses. 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. Total advertising and sales promotion expenses were $ 27.3 million, $ 28.0 million and $ 21.6 million for fiscal years 2022, 2021 and 2020, respectively. Research and Development The Company is involved in research and development efforts that include the ongoing development or innovation of new products and the improvement, extension or renovation of existing products or product lines. All research and development costs are expensed as incurred and are included in selling, general and administrative expenses. Research and development expenses were $ 5.1 million, $ 5.6 million and $ 6.0 million in fiscal years 2022, 2021 and 2020, respectively. These expenses include costs associated with general research and development activities, as well as those associated with internal staff, overhead, design testing, market research and consultants. Income Taxes Current income tax expense is the amount of income taxes expected to be payable for the current year. A deferred income tax liability or asset is established for the expected future tax consequences resulting from the differences in financial reporting and tax basis of assets and liabilities. A valuation allowance is provided if it is more likely than not that some or all of the deferred tax assets will not be realized. In addition to valuation allowances, the Company provides for uncertain tax positions when such tax positions do not meet the recognition thresholds or measurement standards prescribed by the authoritative guidance on income taxes. Amounts for uncertain tax positions are adjusted in periods when new information becomes available or when positions are effectively settled. The Company recognizes accrued interest and penalties related to uncertain tax positions as a component of income tax expense. The Company is required to make assertions on whether its foreign subsidiaries will invest their undistributed earnings indefinitely and these assertions are based on the capital needs of the foreign subsidiaries. Generally, unremitted earnings of the F- 12 Company’s foreign subsidiaries are not considered to be indefinitely reinvested. However, there is an exception regarding specific statutory remittance restrictions imposed on the Company’s China subsidiary. Costs associated with repatriating unremitted foreign earnings, including U.S. state income taxes and foreign withholding taxes, are immaterial to the Company’s consolidated financial statements. For additional information on income tax matters, see Part IV—Item 15, “Exhibits, Financial Statement Schedules” Note 13 — Income Taxes, included in this report. Foreign Currency The Company translates the assets and liabilities of its foreign subsidiaries into U.S. Dollars at current rates of exchange in effect at the end of the reporting period. Income and expense items are translated at rates that approximate the rates in effect at the transaction date. Gains and losses from translation are included in accumulated other comprehensive income or loss. 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 $ 1.1 million and $ 0.3 million in net losses, and $ 0.4 million of net gains in foreign currency transactions in fiscal years 2022, 2021 and 2020, 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 utilizes foreign currency forward contracts to limit its exposure to net asset balances held in non-functional currencies, primarily at its U.K. subsidiary. 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. Foreign currency forward contracts are carried at fair value, with net realized and unrealized gains and losses recognized in other income (expense), net in the Company’s consolidated statements of operations. Cash flows from settlements of foreign currency forward contracts are included in operating activities in the consolidated statements of cash flows. Foreign currency forward contracts in an asset position at the end of the reporting period are included in other current assets, while foreign currency forward contracts in a liability position at the end of the reporting period are included in accrued liabilities in the Company’s consolidated balance sheets. At August 31, 2022, the Company had a notional amount of $ 5.8 million outstanding in foreign currency forward contracts, which matured in September 2022 . Unrealized net gains and losses related to foreign currency forward contracts were no t significant at August 31, 2022 or 2021. Realized net losses related to foreign currency forward contracts were no t significant for the fiscal years ended August 31, 2022 and 2021. Both unrealized and realized net gains and losses are recorded in other income on the Company’s consolidated statements of operations. Earnings per Common Share Unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents, whether paid or unpaid, are participating securities that are required to be included in the computation of earnings per common share pursuant to the two-class method. Accordingly, the Company’s outstanding unvested, if any, and outstanding vested stock-based equity awards that provide such nonforfeitable rights to dividend equivalents are included as participating securities in the calculation of earnings per common share (“EPS”) pursuant to the two-class method. The Company calculates EPS using the two-class method, which provides for an allocation of net income between common stock and other participating securities based on their respective participation rights to share in dividends. Basic EPS is calculated by dividing net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period. Net income available to common shareholders for the period includes dividends paid to common shareholders during the period plus a proportionate share of undistributed net income allocable to common shareholders for the period; the proportionate share of undistributed net income allocable to common shareholders for the period is based on the proportionate share of total weighted-average common shares and participating securities outstanding during the period. Diluted EPS is calculated by dividing net income available to common shareholders for the period by the weighted-average number of common shares outstanding during the period increased by the weighted-average number of potentially dilutive common shares (dilutive securities) that were outstanding during the period if the effect is dilutive. Dilutive securities are comprised of various types of stock-based equity awards granted under the Company’s prior and current equity incentive plans. Stock-based Compensation The Company accounts for stock-based equity awards exchanged for employee and non-employee director services in accordance with the authoritative guidance for share-based payments. Stock-based equity awards are measured at the estimated grant date fair value and expensed on a straight-line basis, net of forfeitures recognized as they occur, over the requisite service period. The requisite service period of employee awards generally ranges from about one to three years, although awards of certain employees F- 13 may have shorter requisite service periods as a result of retirement, death and disability provisions. Director awards vest immediately at the grant date. 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. 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 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. The Company records any excess tax benefits or deficiencies from settlements of its stock-based equity awards within the provision for income taxes on the Company’s consolidated statements of operations in the reporting periods in which the settlement of the equity awards occur. Segment Information The Company discloses certain information about its business segments, which are determined consistent with the way the Company’s Chief Operating Decision Maker organizes and evaluates financial information internally for making operating decisions and assessing performance. In addition, the Chief Operating Decision Maker assesses and measures revenue based on product groups. Recently Adopted Accounting Standards In December 2019, the FASB issued ASU No. 2019-12, “ Simplifying the Accounting for Income Taxes ” under ASC 740, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and amended existing guidance to improve consistent application. This guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. The Company adopted this new guidance on September 1, 2021 , and the adoption of this guidance did not have a material impact on its consolidated financial statements and related disclosures Note 3. Inventories Inventories consisted of the following (in thousands): August 31, August 31, 2022 2021 Product held at third-party contract manufacturers $ 7,915 $ 9,036 Raw materials and components 13,952 8,981 Work-in-process 881 802 Finished goods 81,353 36,933 Total $ 104,101 $ 55,752 ‎ F- 14 Note 4. Property and Equipment and Capitalized Cloud-Based Software Implementation Costs Property and equipment, net, consisted of the following (in thousands): August 31, August 31, 2022 2021 Machinery, equipment and vehicles $ 44,533 $ 22,504 Buildings and improvements 27,958 29,697 Computer and office equipment 5,757 5,742 Internal-use software 9,591 10,559 Furniture and fixtures 2,669 2,794 Capital in progress 10,135 31,016 Land 4,240 4,406 Subtotal 104,883 106,718 Less: accumulated depreciation and amortization ( 38,906 ) ( 36,573 ) Total $ 65,977 $ 70,145 At August 31, 2021, capital in progress on the Company’s consolidated balance sheets included $ 30.3 million associated with capital costs related to proprietary machinery and equipment for the Company’s next generation of delivery systems for its WD-40 Smart Straw ® products. During fiscal year 2022, $ 22.1 million of this machinery and equipment was placed in service and thus the Company reclassified these amounts from capital in progress to machinery, equipment and vehicles. As of August 31, 2022 and 2021, the Company’s consolidated balance sheets included $ 6.5 million and $ 2.6 million, respectively, of capitalized cloud-based implementation costs recorded as other assets within the Company’s consolidated balance sheets. Accumulated amortization associated with these assets were $ 0.5 million as of August 31, 2022, and were no t significant as of August 31, 2021. Amortization expense associated with these assets were no t significant during the fiscal years 2022 or 2021. Note 5. Goodwill and Other Intangible Assets Goodwill The following table summarizes the changes in the carrying amounts of goodwill by segment (in thousands): Americas EMEA Asia-Pacific Total Balance as of August 31, 2020 $ 85,461 9,060 1,210 95,731 Translation adjustments 15 124 ( 1 ) 138 Balance as of August 31, 2021 85,476 9,184 1,209 95,869 Translation adjustments ( 74 ) ( 615 ) - ( 689 ) Balance as of August 31, 2022 $ 85,402 $ 8,569 $ 1,209 $ 95,180 During the second quarter of fiscal year 2022, the Company performed its annual goodwill impairment test. The annual goodwill impairment test was performed at the reporting unit level as of the Company’s most recent goodwill impairment testing date, December 1, 2021. During the fiscal year 2022 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 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 and, thus, a quantitative analysis was not required. The Company also 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, 2021 through August 31, 2022. As a result, the Company concluded that no impairment of its goodwill existed as of August 31, 2022.To date, there have been no impairment losses identified and recorded related to the Company’s goodwill . ‎ F- 15 Definite-lived Intangible Assets 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) : August 31, August 31, 2022 2021 Gross carrying amount $ 35,166 $ 36,657 Accumulated amortization ( 29,578 ) ( 29,413 ) Net carrying amount $ 5,588 $ 7,244 There has been no impairment charge for the period ended August 31, 2022 and there were no indicators of impairment identified as a result of the Company’s review of events and circumstances related to its existing definite-lived intangible assets. The Company’s review of events and circumstances included consideration of the ongoing COVID-19 pandemic. Changes in the carrying amounts of definite-lived intangible assets by segment are summarized below (in thousands): Americas EMEA Asia-Pacific Total Balance as of August 31, 2020 $ 6,553 2,080 - $ 8,633 Amortization expense ( 1,058 ) ( 391 ) - ( 1,449 ) Translation adjustments - 60 - 60 Balance as of August 31, 2021 5,495 1,749 - 7,244 Amortization expense ( 1,058 ) ( 376 ) - ( 1,434 ) Translation adjustments - ( 222 ) - ( 222 ) Balance as of August 31, 2022 $ 4,437 $ 1,151 $ - $ 5,588 The estimated amortization expense for the Company’s definite-lived intangible assets is not significant in any future individual fiscal year. ‎ F- 16 Note 6. Leases 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. In addition, the Company leases an automobile fleet in the United States. The Company has also identified warehouse leases within certain third-party distribution center service contracts. All other leases are insignificant to the Company’s consolidated financial statements. To determine if a contract contains a lease, the Company assesses its contracts and determines if there is an identified asset for which the Company has obtained the right to control, as defined in ASC 842. The Company records right-of-use assets and lease liabilities on its consolidated balance sheets for leases with an expected term greater than one year. The lease term includes the committed lease term, also taking into account early termination and renewal options that management is reasonably certain to exercise. For leases that do not have a readily determinable implicit rate, the Company uses its estimated secured incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. The Company’s estimated secured incremental borrowing rate is determined using a portfolio approach based on the rate of interest the Company would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term. The Company uses the unsecured borrowing rate and risk-adjusts that rate to approximate a collateralized rate in the currency of the lease. As of August 31, 2021 and 2022, finance leases were not significant and all leases recorded on the Company’s consolidated balances sheets were operating leases. Residual value guarantees, restrictions, covenants, sublease income, net gains or losses from sale and leaseback transactions, and transactions with related parties associated with leases are also not significant. The Company has made the accounting policy election to use certain ongoing practical expedients made available by ASC 842 to: (i) not separate lease components from nonlease components for real estate – office buildings, machinery and equipment, lab equipment, office equipment, furniture and fixtures, and IT equipment; and (ii) exclude leases with an initial term of 12 months or less (“short-term” leases) from the consolidated balance sheets and will recognize related lease payments in the consolidated statements of operations on a straight-line basis over the lease term. However, the Company had no significant short-term leases as of August 31, 2022. 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 2022. The Company recorded $ 2.0 million and $ 2.1 million in lease expense during the fiscal years ended August 31, 2022 and 2021, respectively. This lease expense was included in selling, general and administrative expenses. The Company recorded $ 0.3 million of lease expense classified within cost of products sold for the fiscal year ended August 31, 2022, and $ 0.6 million for the fiscal year ended August 31, 2021. During the fiscal year ended August 31, 2022 and 2021, the Company paid cash of $ 2.1 million and $ 2.0 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, 2022 and 2021. As of August 31, 2022, the weighted-average remaining lease term was 6.5 years and the weighted-average discount rate was 3.1 % for the Company’s operating leases. 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. The Company had approximately $ 1.2 million of leases that commenced after August 31, 2022 that created rights and obligations to the Company. These leases are not included in the following schedules. Right-of-use assets and lease liabilities consisted of the following (in thousands): August 31, August 31, 2022 2021 Assets: Operating lease right-of-use assets $ 7,559 $ 8,824 Liabilities: Current operating lease liabilities (1) 1,703 1,903 Long-term operating lease liabilities 5,999 7,062 Total operating lease liabilities $ 7,702 $ 8,965 (1) Current operating lease liabilities are classified in accrued liabilities on the Company’s consolidated balance sheets. ‎ F- 17 The Company’s maturities of its operating lease liabilities, including early termination and renewal options that management is reasonably certain to exercise, are as follows as of August 31, 2022 (in thousands): Operating Leases Fiscal year 2023 1,918 Fiscal year 2024 1,656 Fiscal year 2025 1,077 Fiscal year 2026 939 Fiscal year 2027 770 Thereafter 2,230 Total undiscounted future cash flows $ 8,590 Less: Interest ( 888 ) Present value of lease liabilities $ 7,702 Note 7. Accrued and Other Liabilities Accrued liabilities consisted of the following (in thousands): August 31, August 31, 2022 2021 Accrued advertising and sales promotion expenses $ 13,563 $ 11,796 Accrued professional services fees 1,979 2,122 Accrued sales taxes and other taxes 995 1,708 Deferred revenue 4,988 3,696 Short-term operating lease liability 1,703 1,903 Other 3,933 4,433 Total $ 27,161 $ 25,658 Accrued payroll and related expenses consisted of the following (in thousands): August 31, August 31, 2022 2021 Accrued incentive compensation $ 2,524 $ 14,068 Accrued payroll 4,001 4,746 Accrued profit sharing 2,758 3,273 Accrued payroll taxes 1,779 2,952 Other 521 623 Total $ 11,583 $ 25,662 Note 8. Debt As of August 31, 2022, the Company held borrowings under two separate agreements as detailed below. Note Purchase and Private Shelf Agreement The Company holds borrowings under its Note Purchase and Private Shelf Agreement, as amended (the “Note Agreement”) by and among the Company, PGIM, Inc. (“Prudential”), and certain affiliates and managed accounts of Prudential (the “Note Purchasers”). As of August 31, 2022, the Company had outstanding balances on its series A, B and C notes issued under this Note Agreement. Credit Agreement The Company’s Amended and Restated Credit Agreement, as amended (the “Credit Agreement”) with Bank of America, N.A., 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. F- 18 On November 29, 2021, the Company entered into its most recent amendment to the Credit Agreement (the “LIBOR Amendment”) with Bank of America, N.A. The LIBOR Amendment changed the Company’s index rates under the Credit Agreement for British Pound Sterling and U.S. Dollar borrowings from the London Interbank Offered Rate as administered by ICE Benchmark Administration to the Sterling Overnight Index Average Reference Rate and the Bloomberg Short-term Bank Yield Index rate, respectively, as well as certain definitions and clarifications within the Credit Agreement to accommodate the change in index rates. The impact of the LIBOR Amendment was insignificant to the Company’s consolidated financial statements. Short-term and long-term borrowings under the Company’s Credit Agreement and Note Agreement consisted of the following (in thousands): Maturities August 31, August 31, Issuance (calendar year) 2022 2021 Credit Agreement - revolving credit facility (1)(3) Various 9/30/2025 77,912 $ 46,540 Note Agreement Series A Notes - 3.39 % fixed rate (2) 11/15/2017 2021 -2032 16,400 17,200 Series B Notes - 2.50 % fixed rate (3) 9/30/2020 11/15/2027 26,000 26,000 Series C Notes - 2.69 % fixed rate (3) 9/30/2020 11/15/2030 26,000 26,000 Total borrowings 146,312 115,740 Short-term portion of borrowings ( 39,173 ) ( 800 ) Total long-term borrowings $ 107,139 $ 114,940 (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. As of August 31, 2022, $ 39.5 million on this facility is classified as long-term and is denominated in Euros and Pound Sterling. $ 38.4 million is classified as short-term and is denominated entirely in U.S. Dollar. Euro and Pound Sterling denominated draws will fluctuate in U.S. Dollars from period to period due to changes in foreign currency exchange rates. (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 , resulting in $ 0.8 million classified as short-term. The remaining outstanding principal in the amount of $ 8.4 million will become due on November 15, 2032 . (3) Interest on notes is payable semi-annually in May and November of each year with no principal due until the maturity date. 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 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. 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 to the other lender’s agreement. Both the Note Agreement and the Credit Agreement require the Company to adhere to the same financial covenants. For the financial covenants, the definition of consolidated EBITDA includes the add back of non-cash stock-based compensation to consolidated net income when arriving at consolidated EBITDA. The terms of the financial covenants are as follows:  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.  The consolidated interest coverage ratio cannot be less than three to one. The consolidated interest coverage ratio means, as of any date of determination, the ratio of (a) consolidated EBITDA for the most recently completed four fiscal quarters to (b) consolidated interest charges for the most recently completed four fiscal quarters As of August 31, 2022, the Company was in compliance with all debt covenants under both the Note Agreement and the Credit Agreement. F- 19 Note 9. 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 repurchase plan. Under the plan, which became 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. During fiscal year 2022, the Company repurchased 138,562 shares at an average price of $ 210.39 per share, for a total cost of $ 29.2 million under this $ 75.0 million plan. Note 10. Earnings per Common Share The table below reconciles net income to net income available to common shareholders (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Net income $ 67,329 $ 70,229 $ 60,710 Less: Net income allocated to participating securities ( 251 ) ( 277 ) ( 294 ) Net income available to common shareholders $ 67,078 $ 69,952 $ 60,416 The table below summarizes the weighted-average number of common shares outstanding included in the calculation of basic and diluted EPS (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Weighted-average common shares outstanding, basic 13,668 13,698 13,691 Weighted-average dilutive securities 28 35 28 Weighted-average common shares outstanding, diluted 13,696 13,733 13,719 For the fiscal year ended August 31, 2022, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 8,724 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, 2021. For the fiscal year ended August 31, 2020, weighted-average stock-based equity awards outstanding that are non-participating securities in the amount of 6,172 , were excluded from the calculation of diluted EPS under the treasury stock method as they were anti-dilutive. Note 11. Revenue Recognition The following paragraphs detail the Company’s revenue recognition policies and provide additional information used in its determination of net sales and contract balances under ASC 606. Disaggregation of Revenue The following table presents our revenues by segment and major source (in thousands): Fiscal Year Ended August 31, 2022: Fiscal Year Ended August 31, 2021: Americas EMEA Asia-Pacific Total Americas EMEA Asia-Pacific Total Maintenance products $ 223,470 $ 196,524 $ 65,332 $ 485,326 $ 194,295 $ 198,309 $ 56,213 $ 448,817 HCCP (1) 16,763 8,164 8,567 33,494 20,306 9,943 9,043 39,292 Total net sales $ 240,233 $ 204,688 $ 73,899 $ 518,820 $ 214,601 $ 208,252 $ 65,256 $ 488,109 (1) Homecare and cleaning products (“HCCP”) F- 20 Revenue Recognition The Company generates revenue from sales of its products to customers in its Americas, EMEA and Asia-Pacific segments. Product sales for the Company include maintenance products and homecare and cleaning products. The Company recognizes revenue related to the sale of these products when it satisfies a performance obligation in an amount reflecting the consideration to which it expects to be entitled. Sales are recorded net of allowances for damaged goods and other sales returns, sales incentives, trade promotions and cash discounts. The Company applies a five-step approach in determining the amount and timing of revenue to be recognized which includes the following: (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations in the contract and (5) recognizing revenue when the performance obligation is satisfied. Contracts with customers are renewable periodically and contain terms and conditions with respect to payment, delivery, sales incentives, warranty and supply, but do not require mandatory purchase commitments. In the absence of a specific sales agreement with a customer, the Company’s standard terms and conditions at the time of acceptance of purchase orders apply to the sales transaction. The Company’s standard terms and conditions are either included in a standalone document or on the Company’s price lists or both, and these standard terms and conditions are provided to the customer prior to the sales transaction. The Company considers the customer purchase orders, governed by specific sales agreements or the Company’s standard terms and conditions, to be the contract with the customer. The Company considers each transaction to sell products as separate and distinct, with no additional promises made, and as a result, all of the Company's sales are single performance obligation arrangements for which the transaction price is equivalent to the stated price of the product, net of any variable consideration for items such as sales returns, discounts, rebates and other sales incentives. The Company recognizes sales at a point in time upon transferring control of its product to the customer. This typically occurs when products are shipped or delivered, depending on when risks of loss and title have passed to the customer per the terms of the contract. Taxes imposed by governmental authorities on the Company's revenue, such as sales taxes and value added taxes, are excluded from net sales. Sales commissions are paid to certain third-parties based upon specific sales levels achieved during a defined time period. Since the Company’s contracts related to these sales commissions do not exceed one year, the Company has elected as a practical expedient to expense these payments as incurred. The Company also elected the practical expedient related to shipping and handling fees which allows the Company to account for freight costs as fulfillment activities instead of assessing such activities as performance obligations. The Company’s freight costs are sometimes paid by the customer, while other times, the freight costs are included in the sales price. The Company does not account for freight costs as a separate performance obligation, but rather as an activity performed to transfer the products to its customers. Variable Consideration - Sales Incentives In determining the transaction price, the Company 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 provided to us related to the sale and penalties/fines charged to us 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. The Company reviews its assumptions and adjusts these estimates accordingly on a quarterly basis. Rebates/Other Discounts — The Company offers various on-going trade promotion programs with customers and provides other discounts to customers that require management to estimate and accrue for the expected costs of such programs or discounts. These programs include cooperative marketing, volume-based discounts, shelf price reductions, consideration and allowances given to retailers for shelf space and/or favorable display positions in their stores and other promotional activities. Other discounts include items such as charges from customers for services they provide related to the sale of WD-40 Company products and penalties/fees associated with WD-40 Company failing to adhere to contractual obligations (e.g., errors on purchase orders, errors on shipment, late deliveries, etc.). 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 $ 8.7 million and $ 8.4 million balance in rebate/other discount liabilities as of August 31, 2022 and 2021, respectively, which are included in accrued liabilities on the Company ’ s consolidated balance sheets. The Company recorded approximately $ 32.8 million and $ 28.7 million in rebates/other discounts as a reduction to sales during fiscal years 2022 and 2021, respectively. Coupons — Coupon costs are based upon historical redemption rates and are recorded as a reduction to sales as incurred, which is when the coupons are circulated. Coupon redemption liabilities, which are included in accrued liabilities on the Company’s F- 21 consolidated balance sheets, were not significant at August 31, 2022 and 2021. Coupons recorded as a reduction to sales were not significant during fiscal years 2022 and 2021, respectively. Cash discounts — The Company offers certain of its customers a cash discount program to incentivize them to pay the invoice earlier than the normal payment date on the invoice. Although payment terms vary, most customers typically pay within 30 to 90 days of invoicing. The Company had a $ 0.5 million balance in the allowance for cash discounts at both August 31, 2022 and 2021. The Company recorded approximately $ 5.2 million and $ 4.9 million in cash discounts as a reduction to sales during fiscal year 2022 and 2021, respectively . 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. 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 $ 0.4 million at August 31, 2022 and was $ 0.5 million at August 31, 2021. 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, 2022 and August 31, 2021. Contract Balances Contract liabilities consist of deferred revenue related to undelivered products. Deferred revenue is recorded when payments have been received from customers for undelivered products. Revenue is subsequently recognized when revenue recognition criteria are met, generally when control of the product transfers to the customer. The Company had contract liabilities of $ 5.0 million and $ 3.7 million as of August 31, 2022 and 2021, respectively. All of the $ 3.7 million that was included in contract liabilities as of August 31, 2021 was recognized to revenue during fiscal year 2022. These contract liabilities are recorded in accrued liabilities on the Company ’ s consolidated balance sheets. The Company did no t have any contract assets as of August 31, 2022 and August 31, 2021. Note 12. Commitments and Contingencies Purchase Commitments 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 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. The amounts for inventory purchased under termination commitments have been immaterial. In addition to the commitments to purchase products from contract manufacturers described above, the Company may also enter into commitments with other manufacturers to purchase finished goods and components to support innovation and renovation initiatives and/or supply chain initiatives. As of August 31, 2022, no such commitments were outstanding. Litigation From time to time, the Company is subject to various claims, lawsuits, investigations and proceedings arising in the ordinary course of business, including but not limited to, product liability litigation and other claims and proceedings with respect to intellectual property, breach of contract, labor and employment, tax and other matters. As of August 31, 2022, there were no unasserted claims or pending proceedings for claims against the Company that the Company believes will result in a probable loss. As to claims that the Company believes may result in a reasonably possible loss, the Company believes that no reasonably F- 22 possible outcome of any such claim will have a materially adverse impact on the Company’s financial condition, results of operations or cash flows. Indemnifications As permitted under Delaware law, the Company has agreements whereby it indemnifies senior officers and directors for certain events or occurrences while the officer or director is, or was, serving at the Company’s request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company maintains Director and Officer insurance coverage that mitigates the Company’s exposure with respect to such obligations. As a result of the Company’s insurance coverage, management believes that the estimated fair value of these indemnification agreements is minimal. Thus, no liabilities have been recorded for these agreements as of August 31, 2022. From time to time, the Company enters into indemnification agreements with certain contractual parties in the ordinary course of business, including agreements with lenders, lessors, contract manufacturers, marketing distributors, customers and certain vendors. All such indemnification agreements are entered into in the context of the particular agreements and are provided in an attempt to properly allocate risk of loss in connection with the consummation of the underlying contractual arrangements. Although the maximum amount of future payments that the Company could be required to make under these indemnification agreements is unlimited, management believes that the Company maintains adequate levels of insurance coverage to protect the Company with respect to most potential claims arising from such agreements and that such agreements do not otherwise have value separate and apart from the liabilities incurred in the ordinary course of the Company’s business. Thus, no liabilities have been recorded with respect to such indemnification agreements as of August 31, 2022. Note 13. Income Taxes Income before income taxes consisted of the following (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 United States $ 47,427 $ 40,949 $ 43,000 Foreign (1) 36,681 45,550 32,515 Income before income taxes $ 84,108 $ 86,499 $ 75,515 (1) Included in these amounts are income before income taxes for the EMEA segment of $ 30.3 million, $ 38.8 million and $ 27.0 million for the fiscal years ended August 31, 2022, 2021 and 2020, respectively. The provision for income taxes consisted of the following (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Current: Federal $ 7,487 $ 5,871 $ 7,267 State 861 1,007 822 Foreign 8,114 10,944 7,139 Total current 16,462 17,822 15,228 Deferred: United States 6 ( 1,201 ) ( 619 ) Foreign 311 ( 351 ) 196 Total deferred 317 ( 1,552 ) ( 423 ) Provision for income taxes $ 16,779 $ 16,270 $ 14,805 ‎ F- 23 Deferred tax assets and deferred tax liabilities consisted of the following (in thousands): August 31, August 31, 2022 2021 Deferred tax assets: Accrued payroll and related expenses $ 881 $ 1,029 Reserves and accruals 1,178 1,115 Stock-based compensation expense 2,366 2,387 Lease Accounting 642 882 Uniform capitalization 2,657 1,558 Tax credit carryforwards 3,512 3,911 Other 2,548 1,569 Total gross deferred tax assets 13,784 12,451 Valuation allowance ( 3,628 ) ( 3,984 ) Total net deferred tax assets 10,156 8,467 Deferred tax liabilities: Property and equipment, net ( 4,122 ) ( 1,927 ) Amortization of tax goodwill and intangible assets ( 14,931 ) ( 15,109 ) Lease Accounting ( 613 ) ( 856 ) Other ( 339 ) ( 118 ) Total deferred tax liabilities ( 20,005 ) ( 18,010 ) Net deferred tax liabilities $ ( 9,849 ) $ ( 9,543 ) The Company had state net operating loss (“NOL”) carryforwards of $ 5.3 million and $ 4.5 million as of August 31, 2022 and 2021, respectively, which generated a net deferred tax asset of $ 0.4 million and $ 0.3 million as of August 31, 2022 and 2021, respectively. The state NOL carryforwards, if unused, will expire between fiscal year 2023 and 2042. The Company also had tax credit carryforwards of $ 3.5 million and $ 3.9 million as of August 31, 2022 and 2021, respectively, of which $ 3.3 million and $ 3.7 million, respectively, is attributable to U.K. tax credit carryforwards, which do not expire. Future utilization of the U.K. tax credit carryforwards and certain state credit carryforwards is uncertain and is dependent upon several factors that may not occur, including the generation of future taxable income in certain jurisdictions. At this time, management cannot conclude that it is “more likely than not” that the related deferred tax assets will be realized. 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. A reconciliation of the statutory federal income tax rate to the Company’s effective tax rate is as follows (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Amount computed at U.S. statutory federal tax rate $ 17,662 $ 18,165 $ 15,858 State income taxes, net of federal tax benefits 455 803 853 Net benefit from GILTI/FDII ( 2,002 ) ( 1,764 ) ( 1,582 ) Benefit from stock compensation ( 204 ) ( 1,736 ) ( 1,078 ) Other 868 802 754 Provision for income taxes $ 16,779 $ 16,270 $ 14,805 The provision for income taxes was 19.9 % and 18.8 % of income before income taxes for the fiscal years ended August 31, 2022 and 2021, respectively. The increase in the effective income tax rate from period to period was primarily due to an increase in nondeductible performance-based compensation expense. ‎ F- 24 Reconciliations of the beginning and ending amounts of the Company’s gross unrecognized tax benefits, excluding interest and penalties, are as follows (in thousands): Fiscal Year Ended August 31, 2022 2021 Unrecognized tax benefits - beginning of fiscal year $ 9,314 $ 9,352 Net increases (decreases) - prior period tax positions - 31 Net increases - current period tax positions 200 254 Expirations of statute of limitations for assessment ( 263 ) ( 323 ) Unrecognized tax benefits - end of fiscal year $ 9,251 $ 9,314 Gross unrecognized tax benefits totaled $ 9.3 million for both the fiscal years ended August 31, 2022 and 2021, of which $ 9.1 million in both fiscal years ended August 31, 2022 and 2021, 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 for both fiscal years ending August 31, 2022 and 2021, primarily related to the toll tax liability reserve. The total balance of accrued interest and penalties related to uncertain tax positions was $ 1.6 million and $ 1.2 million for the fiscal years ended August 31, 2022 and 2021, respectively. The Company is subject to taxation in the U.S. and in various state and foreign jurisdictions. Due to expired statutes and closed audits, the Company’s federal income tax returns for years prior to fiscal year 2018 are not subject to examination by the U.S. Internal Revenue Service . The Company is currently under audit in various state jurisdictions for fiscal years 2018 through 2019. Generally, for the majority of state and foreign jurisdictions where the Company does business, periods prior to fiscal year 2018 are no longer subject to examination. The Company has estimated that up to $ 0.2 million of unrecognized tax benefits related to income tax positions may be affected by the resolution of tax examinations or expiring statutes of limitation within the next twelve months. Audit outcomes and the timing of settlements are subject to significant uncertainty. Income taxes receivable of $ 5.0 million and $ 1.9 are recorded in the Company’s consolidated balance sheets as of August 31, 2022 and 2021, respectively. Income taxes receivable are included in other current assets, which also consists of miscellaneous prepaid expenses and deposits. Note 14. Stock-based Compensation As of August 31, 2022, the Company had one stock incentive plan, the WD-40 Company 2016 Stock Incentive Plan (“2016 Plan”), which was approved by the Company’s shareholders effective as of December 13, 2016. 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, 2022, 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, 2022, 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”). All stock-based equity awards granted under the 2016 Plan are subject to the specific terms and conditions as determined by the Committee at the time of grant of such awards in accordance with the various terms and conditions specified for each award type per the 2016 Plan. The total number of shares of common stock authorized for issuance pursuant to grants of awards under the 2016 Plan is 1,000,000 . As of August 31, 2022, 384,859 shares of common stock remained available for future issuance pursuant to grants of awards under the 2016 Plan. The shares of common stock to be issued pursuant to awards under the 2016 Plan may be authorized shares not previously issued, or treasury shares. The Company has historically issued new authorized shares not previously issued upon the settlement of the various stock-based equity awards under its equity incentive plans. Vesting of the RSUs granted to directors is immediate, with shares to be issued pursuant to the vested RSUs upon termination of each director’s service as a director of the Company. 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. ‎ F- 25 Vesting of the MSUs granted to certain high level employees follows a performance measurement period of three fiscal years commencing with the Company’s fiscal year in which the MSU awards are granted (the “Measurement Period”). Shares will be issued pursuant to the vested MSUs following the conclusion of the applicable MSU Measurement Period after the Committee’s certification of achievement of the applicable performance measure for such awards and the vesting of the MSU awards and the applicable percentage of the target number of MSU shares to be issued. 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. 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. 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 is as follows by award type (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 RSU compensation expense $ 4,153 $ 3,656 $ 3,325 MSU compensation expense 2,544 2,294 2,033 PSU compensation expense (1) - 3,605 - Total $ 6,697 $ 9,555 $ 5,358 (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 year of 2020 was deemed not probable at the end of the fiscal year. DPUs were then discontinued by the Company beginning in fiscal year 2021. PSUs pertaining to the measurement year of fiscal year 2021 vested at 100 % since the performance conditions were fully achieved. PSUs pertaining to the measurement year of fiscal year 2022 was deemed not probable at the end of the fiscal year. The Company recorded deferred tax assets related to such stock-based compensation of $ 1.5 million, $ 2.0 million and $ 1.2 million for the fiscal years ended August 31, 2022, 2021 and 2020, respectively. As of August 31, 2022, the total unamortized compensation cost related to non-vested stock-based equity awards was $ 1.4 million and $ 3.1 million for RSUs and MSUs, respectively, which the Company expects to recognize over remaining weighted-average vesting periods of 1.45 and 1.82 years for RSUs and MSUs, respectively. No unamortized compensation cost for DPUs or PSUs remained as of August 31, 2022. Restricted Stock Units The estimated fair value of each of the Company’s RSU 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 for those RSUs which are entitled to receive dividend equivalents with respect to the RSUs, or 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 those RSUs which are not entitled to receive dividend equivalents with respect to the RSUs. ‎ F- 26 A summary of the Company’s restricted stock unit activity is as follows (in thousands, except share and per share amounts): Weighted-Average Grant Date Number of Fair Value Aggregate Restricted Stock Units Shares Per Share Intrinsic Value Outstanding at August 31, 2021 69,001 $ $ 131.88 Granted 23,461 $ $ 217.03 Converted to common shares ( 13,751 ) $ $ 182.72 Forfeited ( 107 ) $ $ 224.41 Outstanding at August 31, 2022 78,604 $ $ 148.28 $ 14,869 Vested at August 31, 2022 49,620 $ $ 116.22 $ 9,386 The weighted-average grant date fair value of all RSUs granted during the fiscal years ended August 31, 2022, 2021 and 2020 was $217. 03, $ 208.29 and $ 184.43 , respectively. The total intrinsic value of all RSUs converted to common shares was $ 3.0 million, $ 8.5 million and $ 5.4 million for the fiscal years ended August 31, 2022, 2021 and 2020, respectively. The income tax benefits from RSUs converted to common shares totaled $ 0.6 million, $ 1.9 million and $ 1.2 million for the fiscal years ended August 31, 2022, 2021 and 2020 , respectively. Market Share Units 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 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 : Fiscal Year Ended August 31, 2022 2021 2020 Expected volatility 32.7 % 28.5 % 21.4 % Risk-free interest rate 0.6 % 0.2 % 1.4 % Expected dividend yield 0.0 % 0.0 % 0.0 % 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 2.89 -year period for MSUs granted during the fiscal year ended August 31, 2022 and over the most recent 2.88 and 2.90 -year periods for MSUs granted during each of the fiscal years ended August 31, 2021 and 2020, respectively, 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 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. ‎ F- 27 A summary of the Company’s market share unit activity is as follows (in thousands, except share and per share amounts) : Weighted-Average Grant Date Number of Fair Value Aggregate Market Share Units Shares Per Share Intrinsic Value Outstanding at August 31, 2021 36,594 $ 194.83 Granted 13,195 $ 232.99 Performance factor adjustments 8,890 $ 186.38 Converted to common shares ( 20,050 ) $ 182.13 Forfeited ( 1,428 ) $ 208.74 Outstanding at August 31, 2022 (1) 37,201 $ 212.66 $ 7,037 (1) This figure represents the total number of shares underlying MSU grants assuming achievement of the target number of shares at 100 %. As the ultimate number of shares that vest could be as high as 200 % of the target, the Company may be required to issue additional shares to satisfy outstanding MSU award grants. The weighted-average grant date fair value of all MSUs granted during the fiscal years ended August 31, 2022, 2021 and 2020 was $ 232.99 , $ 184.96 and $ 216.77 , respectively. The total intrinsic value of all MSUs converted to common shares was $ 4.4 million, $ 5.9 million and $ 4.4 million for the fiscal years ended August 31, 2022, 2021 and 2020, respectively. The income tax benefits from MSUs converted to common shares totaled $ 0.9 million for the fiscal year ended August 31, 2022, $ 1.3 million for the fiscal years ended August 31, 2021 and $ 0.9 million for the fiscal year ended August 31, 2020. Deferred Performance Units During fiscal year 2021, the Company discontinued the granting of new DPU awards. Although certain vested DPU awards granted in prior periods 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 2022, 2021 and 2020 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. ‎ F- 28 A summary of the Company’s performance share unit activity is as follows (in thousands, except share and per share amounts ): Weighted-Average Grant Date Number of Fair Value Aggregate Performance Share Units Shares Per Share Intrinsic Value Outstanding at August 31, 2021 18,252 $ $ 197.51 Granted 18,684 $ 227.24 Performance factor adjustments - $ - Converted to common shares ( 18,252 ) $ 197.51 Forfeited ( 858 ) $ 227.24 Outstanding at August 31, 2022 (1) 17,826 $ 227.24 $ 3,371,966 (1) PSUs pertaining to the measurement year of fiscal year 2022 were forfeited in October 2022 since performance conditions were not achieved. Performance is certified annually in October by the Company’s compensation committee subsequent to the Company’s fiscal year end and are forfeited, or vest, depending on performance achievement. The weighted-average grant date fair value of all PSUs granted during the fiscal years ended August 31, 2022 and 2021 was $ 227.24 and $ 197.51 , respectively. This form of PSU awards were granted for the first time in October 2021. The total intrinsic value of all PSUs converted to common shares was $ 4.0 million for the fiscal year ended August 31, 2022. The income tax benefits from PSUs converted to common shares totaled $ 0.8 million for the fiscal year ended August 31, 2022. There were no conversions of PSUs to common shares for the fiscal years ended August 31, 2021 and 2020. Note 15. Other Benefit Plans The Company has a WD-40 Company Profit Sharing/401(k) Plan and Trust (the “Profit Sharing/401(k) Plan”) whereby regular U.S. employees who have completed certain minimum service requirements can defer a portion of their income through contributions to a trust. The Profit Sharing/401(k) Plan provides for Company contributions to the trust, as approved by the Board of Directors, as follows: 1) matching contributions to each participant up to 50 % of the first 6.6 % of compensation contributed by the participant; 2) fixed non-elective contributions in the amount equal to 10 % of eligible compensation; and 3) a discretionary non-elective contribution in an amount to be determined by the Board of Directors up to 5 % of eligible compensation. The Company’s contributions are subject to overall employer contribution limits and may not exceed the amount deductible for income tax purposes. 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 $ 4.1 million for fiscal year 2022, $ 3.9 million for fiscal year 2021 and $ 3.6 million for fiscal year 2020. 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 $ 2.1 million for the fiscal year ended August 31, 2022, $ 1.9 million for the fiscal year ended August 31, 2021 and $ 1.6 million for the fiscal year ended August 31, 2020. ‎ F- 29 Note 16. Business Segments and Foreign Operations The Company evaluates the performance of its segments and allocates resources to them based on sales and operating income. The Company is organized on the basis of geographical area into the following three segments: the Americas; EMEA; and Asia-Pacific. Segment data does not include inter-segment revenues. Unallocated corporate expenses are general corporate overhead expenses not directly attributable to the business segments and are reported separate from the Company’s identified segments. 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. Unallocated Americas EMEA Asia-Pacific Corporate (1) Total Fiscal Year Ended August 31, 2022 Net sales $ 240,233 $ 204,688 $ 73,899 $ - $ 518,820 Income from operations $ 54,198 $ 42,058 $ 22,590 $ ( 31,516 ) $ 87,330 Depreciation and amortization expense $ 4,320 $ 3,356 $ 275 $ 343 $ 8,294 Interest income $ 2 $ - $ 100 $ - $ 102 Interest expense $ 2,165 $ 574 $ 3 $ - $ 2,742 Fiscal Year Ended August 31, 2021 Net sales $ 214,601 $ 208,252 $ 65,256 $ - $ 488,109 Income from operations $ 51,591 $ 53,003 $ 19,121 $ ( 34,874 ) $ 88,841 Depreciation and amortization expense $ 3,219 $ 3,174 $ 307 $ 319 $ 7,019 Interest income $ 1 $ 5 $ 75 $ - $ 81 Interest expense $ 1,909 $ 481 $ 5 $ - $ 2,395 Fiscal Year Ended August 31, 2020 Net sales $ 200,493 $ 156,241 $ 51,764 $ - $ 408,498 Income from operations $ 51,089 $ 37,620 $ 14,982 $ ( 26,471 ) $ 77,220 Depreciation and amortization expense $ 4,361 $ 2,855 $ 307 $ 178 $ 7,701 Interest income $ 15 $ 2 $ 76 $ - $ 93 Interest expense $ 1,867 $ 567 $ 5 $ - $ 2,439 (1) Unallocated corporate expenses are general corporate overhead expenses not directly attributable to any one of the business segments. These expenses are reported separate from the Company’s identified segments and are included in Selling, General and Administrative expenses on the Company’s consolidated statements of operations. The Company’s Chief Operating Decision Maker does not review assets by segment as part of the financial information provided and therefore, no asset information is provided in the above table. Net sales by product group are as follows (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Maintenance products $ 485,326 $ 448,817 $ 369,444 Homecare and cleaning products 33,494 39,292 39,054 Total $ 518,820 $ 488,109 $ 408,498 ‎ F- 30 Net sales and long-lived assets by geographic area are as follows (in thousands): Fiscal Year Ended August 31, 2022 2021 2020 Net Sales by Geography: United States $ 176,863 $ 164,946 $ 164,446 International 341,957 323,163 244,052 Total $ 518,820 $ 488,109 $ 408,498 Long-lived Assets by Geography (1) : United States $ 35,375 $ 37,204 $ 32,242 International 30,602 32,941 28,517 Total $ 65,977 $ 70,145 $ 60,759 (1) Includes tangible assets and property and equipment, net, attributed to the geographic location in which such assets are located. Note 17. Subsequent Event Dividend Declaration On October 11, 2022 , the Company’s Board of Directors declared a cash dividend of $ 0.78 per share payable on October 31, 2022 to shareholders of record on October 21, 2022 . F- 31