EXHIBIT 99.1
[WMS INDUSTRIES INC. LOGO]
FOR IMMEDIATE RELEASE
CONTACT:
Scott D. Schweinfurth Joseph N. Jaffoni, Richard Land
Chief Financial Officer Jaffoni & Collins Incorporated
WMS Industries Inc. 212/835-8500 or wms@jcir.com
847/785-3760 or sschweinfurth@wmsgaming.com
WMS INDUSTRIES REPORTS FOURTH QUARTER RESULTS
- FIRST APPROVAL FOR CPU-NXT(TM)OPERATING SYSTEM EXPECTED IN SEPTEMBER -
Waukegan, Illinois, August 12, 2003 --- WMS Industries Inc. (NYSE:WMS) today
reported a net loss of $5.2 million, or $0.17 per diluted share, for the
Company's fiscal fourth quarter ended June 30, 2003. The loss includes
previously announced charges of $3.5 million pre-tax related to the purchase of
rights to restricted stock at a discount from market value, and $3.4 million
pre-tax to write-off inventory and distribution rights for the RAPID
ROULETTE(TM) product line in order to focus on the Company's core products and
re-emergence plan. Additionally, the Company recorded an inventory write down of
$1.1 million pre-tax related to the SURVIVOR(TM) product and after-tax charges
of $0.6 million for tax adjustments resulting from finalizing prior year
returns. In the June 2002 quarter, WMS reported diluted net income per share of
$0.02.
Revenues in the June 2003 quarter increased 18% to $50.9 million compared with
$43.2 million in the June 2002 quarter. The increase was due to $9.2 million in
higher gaming machine sales mostly to customers outside of North America,
coupled with a $3.1 million increase in parts, used games, OEM and conversion
revenues, partially offset by a $4.6 million reduction in gaming operations
revenues. Revenues from parts, used games and conversions grew 66% compared to
the prior year quarter primarily due to a greater level of game conversions than
in the prior year quarter following a higher level of new game approvals.
The average installed base of participation gaming devices decreased to 5,062
units in the June 2003 quarter from 5,808 units in the June 2002 quarter, and
the net revenue per day decreased 3% from the prior year quarter to $41.44.
However, following new participation game approvals in the March and June 2003
quarters, WMS was able to refresh its installed base of participation games in
the June 2003 quarter, resulting in both a 12%, or $4.34, improvement in net
revenue per day from the March 2003 quarter and the relative stabilization of
the installed base of games by quarter's end. The Company currently has a
backlog of over 700 game conversions to new participation themes.
WMS INDUSTRIES INC., 8/12/03 page 2
The following table summarizes the key components related to revenue generation:
<Table>
<Caption>
Three Months Ended Year Ended
June 30, June 30,
--------- --------
2003 2002 2003 2002
---- ---- ---- ----
Product Sales Revenues $28,639,000 $16,350,000 $85,721,000 $75,558,000
Total Units Sold 2,461 1,312 6,867 6,916
Average Sales Price Per Unit $ 8,464 $ 8,867 $ 8,318 $ 8,419
Parts, Used Games, OEM and
Conversions (Included in Product Sales
Revenues) $ 7,809,000 $ 4,716,000 $28,601,000 $17,332,000
Gaming Operations Revenues $22,270,000 $26,861,000 $93,005,000 $99,136,000
Average Installed Participation Base 5,062 5,808 5,509 5,790
Participation Base at Period End 5,086 6,162 5,086 6,162
Net Revenue Per Day Per Machine $ 41.44 $ 42.64 $ 39.19 $ 40.05
</Table>
Total gross profit increased to $27.1 million in the June 2003 quarter from
$25.8 million in the June 2002 quarter. Gross profit margin on product sales for
the June 2003 quarter was 41%, up from 20% in the prior year quarter. The gross
profit margin increase is attributable to a lower average cost per unit
reflecting higher production volumes and higher margin products representing a
greater percentage of product sales revenues, partially offset by a decrease in
the average sales price per unit. The gross profit margin on gaming operations
revenues decreased in the quarter ended June 30, 2003 to 70% from 84% in the
prior year quarter due to a $1.1 million pre-tax write down of SURVIVOR
inventory, a $0.9 million pre-tax write down of RAPID ROULETTE inventory upon
the expiration of the distribution agreement, higher royalty rates payable to
licensors and the decrease in the average net revenue per day for participation
games.
Research and development expenses increased $2.9 million, or 35%, to $11.0
million in the June 2003 quarter compared to $8.1 million in the June 2002
quarter due to the ongoing execution of the Company's technology improvement
initiatives and planned product line expansion. WMS expects sequential quarterly
increases in research and development expenses in upcoming periods after which
such expenses should stabilize.
Selling and administrative expenses increased $8.2 million from the prior year
quarter, due to the previously announced charges of $3.5 million pre-tax to
purchase the rights to restricted stock at a discount from market value, a $2.5
million pre-tax write-off of the RAPID ROULETTE distribution
WMS INDUSTRIES INC., 8/12/03 page 3
rights, costs incurred in preparation for new product introductions, and ongoing
expenses incurred to implement a new Enterprise Resource Planning system.
WMS had an operating loss of $9.6 million in the June 2003 quarter, compared to
operating income of $635,000 in the June 2002 quarter. The decrease in operating
results was due to the increases of $2.9 million in research and development
expenses, $8.2 million in selling and administrative expenses and $0.4 million
in depreciation expense, partially offset by the $1.3 million increase in gross
profit. The effective income tax rate for the quarter includes a net provision
of $0.6 million stemming from the settlement of prior year income tax returns
with the Internal Revenue Service and the resulting impact on various tax
agreements between WMS and its former subsidiary Midway Games (NYSE: MWY). The
Company has now fully reserved its tax advance receivables from Midway due to
the uncertainty of the timing of the payback period. In addition, due to the
increase in international business and research and development spending, the
effective tax rate was favorably impacted by larger benefits from increased
export sales and research and development tax credits.
"The entire WMS team has positioned the Company for what we believe will be an
impressive re-emergence starting next month at the Global Gaming Expo, or G2E,
trade show in Las Vegas," stated Brian R. Gamache, President and CEO. "We are
approaching the final stages of the second phase of the technology improvement
plan that we launched in January 2002. To date, the Company has accomplished the
goals that we established on time and at the highest levels of quality. We
continue to expect the first approval on our new CPU-NXT operating system from
GLI in September and, highlighting recent progress, we hope to have initial new
game theme approvals on CPU-NXT in September from GLI. Approvals in other
jurisdictions for CPU-NXT and new game themes are expected within six months
after the first approval and the first approval for our new Bluebird(TM) cabinet
is still expected in November. We are very encouraged by our overall progress in
the regulatory approval process, and fully expect to complete - on time - the
remaining steps necessary to obtain new product approvals.
"Our sales team has been very active in preparing to sell our library of new
themes and broadened product lines," continued Gamache. "The immediate sales
focus is the installed base of over 50,000 WMS video gaming devices that can be
addressed with either a CPU-NXT upgrade kit or by replacing these units with new
Bluebird devices. Our products are already achieving market acceptance as we
recently received commitments for two sizable orders for new units. Our sales
WMS INDUSTRIES INC., 8/12/03 page 4
team is aggressively pursuing additional agreements and they will be selling the
new products at the upcoming G2E trade show. We believe that pent-up demand
exists for our products, and, with great new game content, our goal is to build
market share later in fiscal 2004 when we will be able to compete in other
segments of the casino floor with mechanical-reel spinning games, poker games
and our proprietary wide-area progressive system.
"Our booth at G2E will showcase a `new' WMS and our expanded line of products,"
Gamache continued. "We'll feature over forty new game themes at the show --
almost twice as many themes as last year -- including a couple of classics
reborn on the CPU-NXT system. We expect that most of these games will be
available for sale during fiscal 2004. Our long-term strategy has always been to
move beyond our role as a niche player by providing gaming devices that meet all
of our customers' needs. These new game themes address all of the product lines
including: multi-line, multi-coin video reel, mechanical reel, poker and
participation offerings. We also look forward to demonstrating our new wide-area
progressive system at G2E. With high quality technology, a full product line and
a library of great themes, we expect to finally compete on equal footing with
other industry leaders.
"With all of the success we have had in reaching our technology upgrade goals,
we have reached the point where we can focus more effort on the longer-term
vision for WMS," Gamache concluded. "With the net proceeds of the recent
convertible note offering, we have the capital available to further grow our
business and expand our intellectual property portfolio. As we move forward, we
are approaching the third phase of the technology improvement plan with the same
passion and tenacity demonstrated in the first two phases of the plan, and
expect to report on our progress in this area in the future. With the re-launch
of the Company starting next month, we expect a steady improvement in financial
results through fiscal 2004, after which, we expect fiscal 2005 will reflect
attractive returns on our investments in people, process and technology."
WMS Industries Inc. is hosting a conference call and web cast at 4:30 p.m. EDT
today, Tuesday August 12, 2003. The conference call numbers are 212/346-6398 or
415/537-1881. To access the live call on the Internet, log on to
http://wmsgaming.com (select "Co. Info," then "Investor Relations"). Following
its completion, a replay of the call can be accessed for sixty days on the
Internet via http://wmsgaming.com.
WMS INDUSTRIES INC., 8/12/03 page 5
SURVIVOR(TM) is a trademark of Survivor Productions LLC.
RAPID ROULETTE(TM) is a trademark of Stargames Corporation Limited and Crown
Limited.
CPU-NXT(TM)and Bluebird(TM)are trademarks of WMS Gaming Inc. All rights
reserved.(C)2003 WMS Industries Inc.
This press release contains forward-looking statements concerning future
business conditions and the outlook for the Company based on currently available
information that involves risks and uncertainties as more fully described under
"Item 1. Business - Risk Factors" in the Company's Annual Report on Form 10-K.
The Company's actual results could differ materially from those anticipated in
the forward-looking statements depending on factors, including, but not limited
to: the expansion of legalized gaming into new markets; the development,
introduction and success of new games and new technologies; the ability to
maintain the scheduling of these introductions; the occurrence of software
anomalies that affect the Company's games; the ability of the Company to
implement its technology improvement plan; and the ability of the Company to
qualify for and maintain gaming licenses and approvals. The forward-looking
statements made herein are only made as of the date of this press release, and
the Company undertakes no obligation to publicly update the forward-looking
statements to reflect subsequent events or circumstances, except as required by
law.
WMS Industries Inc. is engaged in the design, manufacture and sale and lease of
gaming machines and video lottery terminals.
WMS INDUSTRIES INC., 8/12/03 page 6
WMS INDUSTRIES INC.
consolidated Statement of Operations
(In thousands, except per share amounts)
<Table>
<Caption>
Three Months Twelve Months
Ended Ended
June 30, June 30,
------------------------ ------------------------
2003 2002 2003 2002
--------- --------- --------- ---------
Revenues: (Unaudited) (Unaudited) (Unaudited)
Product Sales $ 28,639 $ 16,350 $ 85,721 $ 75,558
Gaming Operations 22,270 26,861 93,005 99,136
--------- --------- --------- ---------
Total Revenues 50,909 43,211 178,726 174,694
--------- --------- --------- ---------
Costs and Expenses:
Cost of Product Sales 16,979 13,159 52,108 50,020
Cost of Gaming Operations 6,792 4,251 21,026 15,108
Research and Development 10,961 8,097 40,300 25,977
Selling and Administrative 19,773 11,541 56,225 47,088
Depreciation and Amortization 5,973 5,528 26,677 23,892
--------- --------- --------- ---------
Total Costs and Expenses 60,478 42,576 196,336 162,085
--------- --------- --------- ---------
Operating Income (Loss) (9,569) 635 (17,610) 12,609
Interest and Other Income and Expense, Net 755 323 2,579 2,841
--------- --------- --------- ---------
Income (Loss) Before Income Taxes (8,814) 958 (15,031) 15,450
Provision (Benefit) for Income Taxes (3,652) 251 (6,744) 5,596
--------- --------- --------- ---------
Net Income (Loss) $ (5,162) $ 707 $ (8,287) $ 9,854
========= ========= ========= =========
Basic Earnings (Loss) Per Share of Common Stock $ (0.17) $ 0.02 $ (0.27) $ 0.31
========= ========= ========= =========
Diluted Earnings (Loss) Per Share of Common Stock: $ (0.17) $ 0.02 $ (0.27) $ 0.30
========= ========= ========= =========
Average Number of Shares Outstanding
Basic 29,775 31,817 30,382 32,054
========= ========= ========= =========
Diluted 29,775 32,119 30,382 32,542
========= ========= ========= =========
</Table>
-balance sheet data follows-
WMS INDUSTRIES INC., 8/12/03 page 7
WMS INDUSTRIES INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<Table>
<Caption>
June 30, 2003 June 30, 2002
------------- -------------
ASSETS (Unaudited)
- ------
Cash and Short-Term Investments, Including
$2,326 and $1,250 of Restricted Amounts for
Progressive Jackpots, Respectively $ 160,307 $ 105,580
Receivables, net 37,106 36,409
Inventories 29,806 29,673
Income Tax Receivable 7,722 9,491
Other Current Assets 16,396 11,532
--------- ---------
Total Current Assets 251,337 192,685
--------- ---------
Participation Gaming Machines, net 27,590 31,514
Property, Plant and Equipment, net 50,213 41,546
Other Assets 21,836 15,420
--------- ---------
Total Assets $ 350,976 $ 281,165
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Accounts Payable $ 14,717 $ 7,646
Accrued Liabilities 15,074 13,991
--------- ---------
Total Current Liabilities 29,791 21,637
--------- ---------
2.75% Convertible Subordinated Notes Due 2010 100,000 -
Stockholders' Equity:
Common Stock 16,179 16,173
Additional Paid-in Capital 197,009 198,347
Retained Earnings 43,958 52,245
Unearned Restricted Stock (298) (1,960)
Accumulated Other Comprehensive Income 1,107 67
Treasury Stock (36,770) (5,344)
--------- ---------
Total Stockholders' Equity 221,185 259,528
--------- ---------
Total Liabilities and Stockholders' Equity $ 350,976 $ 281,165
========= =========
</Table>
# # #