WSI Industries Reports Improved Quarter on Quarter Results

As compared to the prior fiscal 2009 second quarter, the Company's sales were up 18%. The Company's bottom line also improved from a loss of $307,000 in the fiscal 2009 second quarter to its net income of $12,000 in this quarter.

Michael J. Pudil, president and chief executive officer, commented: "Our goal in our fiscal 2009 third quarter was to streamline our cost base and return the Company to profitability without affecting our ability to obtain new business. While our net income was slightly above the break-even point, we made a dramatic improvement from our fiscal 2009 second quarter loss of $307,000. In addition, we have continued to expand our search efforts in order to obtain new customers and projects." Pudil went on to say: "We anticipate that our fiscal 2009 fourth quarter will be similar to our third quarter that just ended. We will continue working to preserve our balance sheet and conserve our cash as we weather the ongoing recession. We believe that the Company is in an excellent position to capitalize on new opportunities when the country's economy starts to rebound."

WSI Industries, Inc. is a leading contract manufacturer that specializes in the machining of complex, high-precision parts for a wide range of industries, including avionics, aerospace and defense, energy, recreational vehicles, computers, small engines, marine, bioscience and instrumentation.

The statements included herein which are not historical or current facts are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1995. There are certain important factors which could cause actual results to differ materially from those anticipated by some of the statements made herein, including the Company's ability to retain current programs and obtain additional manufacturing programs, and other factors detailed in the Company's filings with the Securities and Exchange Commission.

WSI INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS        (Unaudited)
In thousands, except per share amounts
                                            Third quarter ended         Three quarters ended
                                            May 31,        May 25,      May 31,       May 25,
                                            2009           2008         2009          2008
Net Sales                                   $   4,736      $  6,703     $  14,773     $  19,099
Cost of products sold                           4,083         5,498        13,101        15,410
Gross margin                                    653           1,205        1,672         3,689
Selling and administrative expense              533           597          1,673         1,824
Interest and other income                       (5    )       (16   )      (14    )      (164   )
Interest and other expense                      106           75           316           219
Profit (loss) from operations
before income taxes                             19            549          (303   )      1810
Income taxes (benefit)                          7             192          (109   )      633
Net earnings (loss)                         $   12         $  357          ($194  )   $  1,177
Basic income (loss) per share               $   0.00       $  0.13         ($0.07 )   $  0.43
Diluted income (loss) per share             $   0.00       $  0.13         ($0.07 )   $  0.42
Weighted average number of common shares        2,793         2,764        2,789         2,741
Weighted average number of diluted shares       2,793         2,860        2,789         2,811
CONDENSED BALANCE SHEETS (Unaudited)
In thousands
                                                                        May 31,       May 25,
                                                                        2009          2008
Assets:
Total Current Assets                                                    $  7,713      $  7,962
Property, Plant, and Equipment, net                                        7,791         5,731
Intangible Assets                                                          3,035         3,051
Total Assets                                                            $  18,539     $  16,744
Liabilities and Shareholders' Equity:
Total current liabilities                                               $  3,266      $  3,806
Long-term debt                                                             6,327         4,077
Shareholders' equity                                                       8,946         8,861
Total Liabilities and Shareholders' Equity                              $  18,539     $  16,744

SOURCE: WSI Industries, Inc.

WSI Industries, Inc. 
Michael J. Pudil (CEO), 763-295-9202 
or 
Paul D. Sheely (CFO), 763-295-9202