WMS Reports Fiscal 2013 Second Quarter Results

  WMS Reports Fiscal 2013 Second Quarter Results

Business Wire

WAUKEGAN, Ill. -- February 6, 2013

WMS Industries Inc. (NYSE:WMS) today reported revenue of $157.5 million and
net income of $4.3 million, or $0.08 per diluted share, for the quarter ended
December 31, 2012, inclusive of a $2.0 million after-tax impact, or $0.04 per
diluted share, for a discrete non-U.S. tax item and $2.5 million of pre-tax
expense, or $0.03 per diluted share, for costs incurred in the process leading
to the recently announced definitive merger agreement with Scientific Games
Corporation (NASDAQ:SGMS). These results compare to revenue of $162.2 million
and net income of $16.1 million, or $0.29 per diluted share, in the December
2011 quarter, which included a benefit of $2.1 million pre-tax, or $0.02 per
diluted share, related to the settlement of litigation.

Net income and diluted earnings per share in the December 2012 quarter reflect
a year-over-year increase in research and development and online marketing
expenses to support growth in the Company’s interactive products and services
initiatives, as well as the impact of the two interactive acquisitions
completed in the June 2012 quarter. In addition, December results reflect the
ongoing development and commercialization of a greater number of new
participation and for-sale games and cabinets, including the new Blade™ and
Gamefield xD™ cabinets with WMS’ CPU-NXT®3 operating system, both of which are
on schedule to launch in the March 2013 quarter.

Recent Highlights:

  *Gaming operations revenues increased $8.0 million on a year-over-year
    basis and $1.6 million on a quarterly sequential basis to $72.7 million,
    primarily reflecting continued interactive products and services revenue
    growth, as well as growth in the installed participation base, which was
    342 gaming machines higher at December 31, 2012 than at December 31, 2011.
  *Cash flow provided by operating activities for the six months ended
    December 31, 2012, was $71.2 million, a year-over-year increase of $5.5
    million or 8%.
  *During the quarter, Jackpot Party® Social Casino, the fourth most-popular
    casino game on Facebook® as measured by number of daily active users,
    generated continued revenue growth, averaging more than $100,000 a day in
    revenues after the Facebook payment processing fee, primarily due to
    higher monetization rates and higher average daily payments by paying
    players.
  *Jackpot Party Social Casino was launched on the Apple® iOS on the iPhone®
    during December. As a native application on iOS available in the Apple
    iTunes Store®, the app quickly became among the top ten largest grossing
    casino game apps on the iPhone from Apple.
  *WMS was selected by the Western Canada Lotteries Corporation to replace
    existing VLT units throughout the province of Saskatchewan, adding to its
    previous selection by the Alberta Liquor and Gaming Commission and
    Manitoba Lotteries Corporation to participate in their VLT replacement
    initiatives.
  *In the December quarter, WMS agreed to make its library of classic slot
    gaming content available to the British Columbia Lottery Corporation for
    its online casino.
  *In the December 2012 quarter, WMS’ innovative new My Poker® video poker
    dedicated gaming machines were introduced at casinos in several regional
    locations.

“WMS’ progress with the commercialization of new innovative game content and
products is evident in the sequential quarterly growth of domestic replacement
units shipped and solid demand for our Canadian and Illinois VLT units,” said
Brian R. Gamache, Chairman and Chief Executive Officer. “Importantly, in the
current quarter we have installed our new unique Gamefield xD participation
gaming machines at casinos in New Jersey and expect initial installations in
more jurisdictions throughout the quarter. Further, following the December
2012 launch of our My Poker® video poker platform in select regional
locations, we have now launched the product at Station Casinos’ properties in
the Las Vegas area and continue to roll it out in additional casinos in
various jurisdictions. We also recently shipped our first units of the sleek,
new Blade cabinet to a casino in Detroit. Customer demand for the Blade
cabinet is running at record levels for a WMS product launch and in the March
and June quarters we expect to ship more than twice the units we shipped in
the first two quarters after launching our Bluebird2 cabinet almost five years
ago. We also have very high customer demand for the Gamefield xD product. In
its first four weeks of being orderable, we have booked more than 500 unit
placements. The early performance of our new video poker product is also very
encouraging and we have more than 750 My Poker gaming machines shipped to-date
or on order. Reflecting the commercialization of these multiple new cabinet
launches, in the current quarter WMS will go from having the oldest set of
gaming machines amongst our competitive set to offering the freshest group of
new cabinets.

“In addition, with the revenue growth achieved to date for interactive
products and services, our investment in this attractive new product
distribution channel is proving to be very prudent,” continued Gamache. “The
early success of Jackpot Party Social Casino contributed to the $12 million in
year-over-year revenue growth from interactive products and services.”

Fiscal 2013 Second Quarter Financial Review

The following table summarizes key components related to revenue generation
for the three months ended December 31, 2012, and 2011 (dollars in millions,
except unit, per unit and per day data):

                                    Three Months Ended
                                                        Increase/(Decrease)
                                    December 31,
                                    2012      2011       Amount      %
Total Revenues                      $ 157.5    $ 162.2    $ (4.7   )   (2.9  )
Product Sales Revenues:
New gaming machine sales revenues   $ 75.6     $ 79.1     $ (3.5   )   (4.4  )
Other product sales revenues         9.2       18.4      (9.2   )   (50.0 )
Total product sales revenues        $ 84.8     $ 97.5     $ (12.7  )   (13.0 )
                                                                       
Average sales price per new unit    $ 15,558   $ 16,325   $ (767   )   (4.7  )
New unit shipments to the U.S.        2,778      2,759      19         0.7
and Canada
New unit shipments to                2,080     2,087     (7     )   (0.3  )
International markets
Total new units on which revenue      4,858      4,846      12         0.2
was recognized
Used unit shipments                  924       1,575     (651   )   (41.3 )
Total unit shipments                 5,782     6,421     (639   )   (10.0 )
                                                                       
Conversion kit unit sales             1,390      5,000      (3,610 )   (72.2 )
Cost of product sales               $ 43.2     $ 48.7     $ (5.5   )   (11.3 )
                                                        
Gaming Operations Revenues:
Participation revenues              $ 54.6     $ 58.4     $ (3.8   )   (6.5  )
Interactive products and services     13.0       1.2        11.8       nm
revenues
Other gaming operations revenues     5.1       5.1       —         —
Total gaming operations revenues    $ 72.7     $ 64.7     $ 8.0       12.4
                                                                       
Installed base of participation       9,624      9,282      342        3.7
units at period end
Average installed participation       9,281      9,376      (95    )   (1.0  )
units
Average daily revenue per           $ 63.89    $ 67.62    $ (3.73  )   (5.5  )
participation unit
Cost of gaming operations           $ 13.7     $ 14.4     $ (0.7   )   (4.9  )
                                                                             

Product Sales Revenues

Total product sales revenues for the December 2012 quarter were $84.8 million
compared to $97.5 million in the prior-year period. WMS shipped 2,778 new
gaming machines to customers in the U.S. and Canada, inclusive of 1,060 VLTs
for Canada and 204 VLTs for the new Illinois VLT market. Total global
shipments increased 1,067 units on a quarterly sequential basis, and were flat
on a year-over-year basis. Lower demand in the December quarter for our
current gaming cabinets reflects heightened interest by customers in
purchasing the new Blade cabinet after seeing it at G2E®, which resulted in
some customers deferring purchases of Bluebird2 gaming machines. This purchase
behavior is not unusual for the launch of a new gaming product. Although these
deferrals impacted our total shipments, we sold 3,245 Bluebird2-style cabinets
and 1,412 Bluebird xD cabinets in the December quarter. Replacement units
shipped to U.S. and Canadian customers were 2,434 units, inclusive of the
Canadian VLT units, compared with 2,200 gaming machines in the prior-year
period, while new gaming machine sales for new casino openings and expansions
totaled 344 units compared with approximately 600 units in the December 2011
quarter. WMS shipped 2,080 new units, or 43% of total global new unit
shipments, to international customers in the December 2012 quarter, compared
to 2,087 new units, or 43% of global sales in the year-ago period. The
Company’s average sales price of $15,558 declined on a quarterly sequential
and year-over-year basis primarily reflecting the mix impact and lower average
selling prices associated with VLTs and the new Bluebird®2-lite cabinet for
select international markets, as well as the impact of the competitive
marketplace and challenges from having a five-year old cabinet just ahead of
launching the Blade cabinet.

Other product sales revenues declined by 50% to $9.2 million, reflecting lower
conversion kit sales revenue compared to the record level in the year-ago
period, and lower used gaming machine revenues as a result of a smaller number
of trade-in units accepted which, translated into a smaller number of unit
sales at slightly lower prices than the year-ago period.

Gaming Operations Revenues

Gaming operations revenues increased $8.0 million to $72.7 million in the
December 2012 quarter from $64.7 million in the year-ago period, marking the
second consecutive quarter of year-over-year growth in gaming operations
revenues. The installed participation base at December 31, 2012 increased by
342 units over the prior year and was essentially flat with the installed base
of 9,632 units at September 30, 2012. The average installed participation base
for the December 2012 quarter declined by 95 units year over year to 9,281
units primarily reflecting the impact of units that were offline during the
quarter as a result of superstorm Sandy affecting Eastern U.S. casinos,
coupled with one customer removing units at the beginning of the quarter.
Average revenue per day in the quarter of $63.89 per unit compares to average
revenue per day of $65.23 in the September 2012 quarter and $67.62 in the
December 2011 quarter.

Revenues from interactive products and services increased $3.5 million, or 37%
on a quarterly sequential basis to $13.0 million and were up from $1.2 million
in the prior-year period, primarily reflecting the growing success of the
Company’s July 2012 launch of the Jackpot Party Social Casino on Facebook.

The Jackpot Party Social Casino is now the fourth most popular social casino
on Facebook based on the number of daily active users. Revenue growth for
interactive products and services also reflects organic growth in WMS’
UK-based B2C online website and the addition of Phantom EFX retail sales and
Jadestone game server integration revenues.

Other gaming operations revenues were flat on a year-over-year basis at $5.1
million.

Costs and Expenses

The following table summarizes key components of costs and expenses for the
three months ended December 31, 2012, and 2011 ($ in millions):

                                   Three Months Ended
                                                         Increase/(Decrease)
                                   December 31,
Costs and Expenses:                2012       2011        Amount     %
Cost of product sales              $ 43.2      $ 48.7      $ (5.5  )   (11.3 )
As a percentage of product sales     50.9  %     49.9  %   100 bp      2.0
revenues
Cost of gaming operations            13.7        14.4        (0.7  )   (4.9  )
As a percentage of gaming            18.8  %     22.3  %   (350)bp     (15.7 )
operations revenues
Research and development expense     26.7        23.7        3.0       12.7
As a percentage of total             17.0  %     14.6  %   240 bp      16.4
revenues
Selling and administrative           37.9        33.2        4.7       14.2
expense
As a percentage of total             24.1  %     20.5  %   360 bp      17.6
revenues
Depreciation and amortization        29.0        21.2        7.8       36.8
expense
As a percentage of total            18.4  %    13.1  %   530 bp      40.5
revenues
Total costs and expenses           $ 150.5    $ 141.2    $ 9.3      6.6
Operating income                   $ 7.0      $ 21.0     $ (14.0 )   (66.7 )
Operating margin                     4.4   %     12.9  %   (850)bp     (65.9 )
                                                                             

Cost of product sales declined $5.5 million to $43.2 million in the December
2012 quarter primarily reflecting the lower unit cost of VLTs, lower gaming
machine unit costs due to the Company’s strategic sourcing, supply chain and
other continuous improvement initiatives, and lower sales of used gaming
machines and conversion kit units. As a percent of product sales revenues,
cost of product sales increased to 50.9% from 49.9% primarily reflecting the
lower average sales price associated with VLTs.

Cost of gaming operations declined $0.7 million primarily reflecting the low
costs associated with the revenues from interactive products and services and
a more favorable jackpot expense experience on wide-area progressive games. As
a result, cost of gaming operations as a percent of gaming operations revenues
improved 350 basis points.

Research and development expenses in the December 2012 quarter increased $3.0
million year over year to $26.7 million. The expected increase reflects the
incremental expense from two interactive acquisitions in the June 2012 quarter
and higher development costs, including an increase in staffing required for
porting WMS’ library of slot gaming content for distribution as interactive
products and services, coupled with a modest increase in spending to support
the development of the Company’s innovative new casino gaming products.

Selling and administrative expenses in the December 2012 quarter increased
$4.7 million year over year and $3.5 million on a quarterly sequential basis
to $37.9 million. The increase reflects $2.5 million of costs incurred in the
process leading up to the recently announced definitive merger agreement with
Scientific Games Corporation, the impact of the two acquisitions in the June
2012 quarter, the previously planned increase in online marketing costs to
expand the player base for interactive products, a modest increase to support
the overall growth of interactive products and services, and the incremental
expenses related to the Company’s implementation of an upgraded
enterprise-wide ERP system partially offset by ongoing cost savings
initiatives.

Depreciation and amortization expense of $29.0 million in the December 2012
quarter increased $7.8 million on a year over year basis and $1.0 million on a
quarterly sequential basis. The year-over-year increase reflects the Company’s
investment in its installed base of participation gaming machines over the
last 12 months, depreciation associated with the completion of a major new
facility, implementation of an upgraded enterprise-wide ERP system and the
amortization of finite-lived intangible assets from the two acquisitions
completed in the June 2012 quarter.

Cash Flow and Balance Sheet

Cash flow provided by operating activities for the six months ended December
31, 2012, increased $5.5 million to $71.2 million, reflecting higher
depreciation and amortization, share-based compensation, a lower negative
impact from the change in operating assets and liabilities and tax impacts,
partially offset by lower net income and other non-cash items. Total
receivables, net declined to $362.4 million at December 31, 2012, from $387.8
million at September 30, 2012, and compare with $405.1 million at June 30,
2012, and reflect a $44.0 million, or 36%, decrease in long-term notes
receivable during the last six months. Inventory was $55.7 million, or $13.4
million lower than at December 31, 2011, primarily reflecting operational
improvements and lower finished goods inventory, and was up slightly from the
$53.3 million in inventory at June 30, 2012. Total current liabilities at
December 31, 2012, declined $55.2 million from June 30, 2012, due to lower
accounts payables and lower accrued liabilities reflecting the timing of
income tax payments.

Net cash used in investing activities increased in the December 2012 six-month
period to $78.0 million compared with $73.5 million for the six months ended
December 2011, reflecting a $3.0 million increase in capital deployed for
gaming operations equipment and $1.8 million higher expenditures for property,
plant and equipment partially offset by a $0.3 million decrease in capital
deployed to acquire or license intangible and other non-current assets. For
the December 2012 quarter, capital expenditures for gaming operations
equipment and property, plant and equipment declined by $3.1 million year over
year and $20.3 million sequentially from the September 2012 quarter.

Net cash provided by financing activities was $18.5 million compared to the
use of $2.3 million of cash in the prior-year six-month period primarily due
to a $32.1 million decline in stock repurchase activity, partially offset by
$10.0 million of lower net borrowings under the Company’s line of credit.

Total cash, cash equivalents and restricted cash was $87.8 million at December
31, 2012, and long-term debt was $85.0 million.

Adjusted EBITDA, a non-GAAP financial metric (see reconciliation to net income
schedule at the end of this release), decreased to $48.5 million in the
December 2012 quarter compared with $57.7 million in the prior-year period.
The adjusted EBITDA margin for the December 2012 quarter was 30.8% compared
with 35.6% in the year-ago period.

About WMS

WMS serves the gaming industry worldwide by designing, manufacturing and
marketing games, video and mechanical reel-spinning gaming machines, video
lottery terminals and in gaming operations, which consists of the placement of
leased participation gaming machines in legal gaming venues. The Company also
develops and markets digital gaming content, products, services and end-to-end
solutions that address global online wagering and play-for-fun social, casual
and mobile gaming opportunities. WMS also addresses customers’ gaming floor
evolution with its WAGE-NET® networked gaming solution, a suite of systems
technologies and applications designed to increase customers’ revenue
generating capabilities and operational efficiency. More information on WMS
can be found at www.wms.com or visit the Company on Facebook®, Twitter® or
YouTube®.

MONOPOLY is a trademark of Hasbro. Used with permission. ©2013 Hasbro. All
rights reserved.

THE WIZARD OF OZ and all related characters and elements are trademarks of and
© Turner Entertainment Co. (s13)

This press release contains forward-looking statements concerning our future
business performance, strategy, outlook, plans, products and liquidity.
Forward-looking statements may be typically identified by such words as “may,”
“will,” “should,” “expect,” “anticipate,” “plan,” “likely,” “believe,”
“estimate,” “continue,” “project,” and “intend,” among others. These
forward-looking statements are subject to risks and uncertainties that could
cause our actual results to differ materially from the expectations expressed
in the forward-looking statements. Although we believe that the expectations
reflected in our forward-looking statements are reasonable, any or all of our
forward-looking statements may prove to be incorrect. Consequently, no
forward-looking statements may be guaranteed. We undertake no obligation to
update such forward looking statements, all of which are made only as of this
date, February 6, 2013. Factors which could cause our actual results to differ
from those projected or contemplated in any such forward-looking statements
include, but are not limited to, the following factors: (1) there is a risk
that the acquisition of WMS (“the acquisition”) pursuant to the recently
announced merger agreement with Scientific Games may not be consummated, on a
timely basis or otherwise; (2) our business may be disrupted while the
acquisition by Scientific Games is pending or if the acquisition is not
consummated as our ability to transact business with customers, suppliers and
other business partners may be adversely affected; (3) it may be difficult for
us to retain and recruit employees in vital areas while the acquisition is
pending or if it fails; (4) in the event our recently announced acquisition by
Scientific Games is not consummated, the price of our stock may be affected;
(5) there could be unexpected costs, charges or expenses resulting from the
pending acquisition; (6) in connection with the recent implementation of our
enterprise resource planning system, there is the risk of inaccurate data or
reporting and significant design errors that could have a negative effect on
our operating results and impact our ability to manage our business which
could constitute significant deficiencies; (7) delay or refusal by regulators
to approve our new gaming platforms, cabinet designs, game themes and related
hardware and software; (8) changes in regulations or regulatory
interpretations that may adversely affect existing product placements or
future placements; (9) an inability to introduce in a timely manner new games
and gaming machines that achieve and maintain market acceptance; (10) a
decrease in the desire of casino customers to upgrade gaming machines or allot
floor space to leased or participation games, resulting in reduced demand for
our products; (11) a reduction in capital spending or interruption in payments
by casino customers associated with business weakness or economic uncertainty
that adversely affects our customers' ability to make purchases or pay; (12) a
greater-than-expected demand for operating leases by customers over outright
product sales or sales financing leases that shift revenue recognition from a
single period to the term of such operating leases; (13) a reduction in play
levels of our participation games by casino patrons, whether due to economic
conditions or increased placements of competitive product; (14) inability of
suppliers of key components to timely meet our requirements to fulfill
customer orders; (15) increased pricing or promotional competitive activity
that adversely affects our average selling price or product revenues; (16) a
failure to obtain and maintain our gaming licenses and regulatory approvals;
(17) failure of customers or players to adapt to the new technologies that we
introduce in new product concepts; (18) a software anomaly or fraudulent
manipulation of our gaming machines and software; (19) a failure to obtain the
right to use or an inability to adapt to rapid development of new
technologies; (20) an infringement claim seeking to restrict our use of
material technologies; (21) risks of doing business in international markets,
including political and economic instability, terrorist activity, changes in
importation and repatriation regulations such as currently experienced in
Argentina, and foreign currency fluctuations; and (22) the unfavorable outcome
of any legal proceedings in which we may be involved from time to time. These
factors and other factors that could cause actual results to differ from
expectations are more fully described under “Item 1. Business”, “Item 1A. Risk
Factors” and “Legal Proceedings” in our Annual Report on Form 10-K for the
year ended June 30, 2012, and our more recent reports filed with the U.S.
Securities and Exchange Commission.

WMS INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in millions of U.S. dollars and millions of shares, except per share amounts)

(unaudited)
                                                  
                      Three Months Ended              Six Months Ended
                      December 31,                    December 31,
REVENUES:             2012           2011            2012          2011
                                                                     
Product sales         $  84.8         $  97.5         $  172.8       $ 184.6
Gaming operations       72.7          64.7          143.8       133.2 
Total revenues           157.5           162.2           316.6         317.8
                                                                     
COSTS AND
EXPENSES:
Cost of product          43.2            48.7            84.5          91.5
sales (1)
Cost of gaming           13.7            14.4            28.9          28.7
operations (1)
Research and             26.7            23.7            54.3          48.1
development
Selling and              37.9            33.2            72.3          71.5
administrative
Depreciation and         29.0            21.2            57.0          43.8
amortization (1)
Impairment and
restructuring           —             —             —           9.7   
charges
Total costs and         150.5         141.2         297.0       293.3 
expenses
                                                                             
OPERATING INCOME         7.0             21.0            19.6          24.5
Interest expense         (1.0   )        (0.4   )        (1.7   )      (0.8  )
Interest income
and other income        3.9           4.2           6.3         6.9   
and expense, net
Income before            9.9             24.8            24.2          30.6
income taxes
Provision for           5.6           8.7           10.6        10.7  
income taxes
NET INCOME            $  4.3         $  16.1        $  13.6       $ 19.9  
                                                                     
Earnings per
share:
Basic                 $  0.08        $  0.29        $  0.25       $ 0.36  
Diluted               $  0.08        $  0.29        $  0.25       $ 0.35  
Weighted-average
common shares:
Basic common stock      54.5          55.6          54.5        55.9  
outstanding
Diluted common
stock and common        54.6          55.8          54.6        56.2  
stock equivalents
                                                                     
1) Depreciation and amortization includes the following amounts attributable
to cost of product sales and cost of gaming operations:
Cost of product       $  2.1          $  1.4          $  4.1         $ 2.8
sales
Cost of gaming        $  17.8         $  13.1         $  35.4        $ 27.2
operations
                                                                             

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in millions of U.S. dollars)

(unaudited)
                                                          
                                        Three Months Ended   Six Months Ended
                                        December 31,         December 31,
                                        2012     2011      2012    2011
                                                                      
Net income                              $  4.3    $ 16.1     $ 13.6   $ 19.9
Foreign currency translation              1.2     (2.3 )    4.1     (5.4 )
adjustment, net of taxes
Total comprehensive income              $  5.5    $ 13.8    $ 17.7   $ 14.5 
                                                                             

WMS INDUSTRIES INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions of U.S. dollars and millions of shares)
                                                                
ASSETS                                              December 31,   June 30,
                                                    2012           2012
CURRENT ASSETS:                                     (unaudited)    (audited)
Cash and cash equivalents                           $  72.8        $ 62.3
Restricted cash and cash equivalents                  15.0        13.8    
Total cash, cash equivalents and restricted cash       87.8          76.1
Accounts and notes receivable, net of allowances       284.1         282.8
of $8.2 and $6.9, respectively
Inventories                                            55.7          53.3
Other current assets                                  46.4        40.1    
Total current assets                                   474.0         452.3
                                                                   
NON-CURRENT ASSETS:
Long-term notes receivable, net                        78.3          122.3
Gaming operations equipment, net of accumulated
depreciation and amortization of $250.6 and            122.1         115.7
$227.1, respectively
Property, plant and equipment, net of accumulated
depreciation and amortization of $159.1 and            236.6         226.7
$142.0, respectively
Intangible assets, net                                 175.4         178.9
Deferred income tax assets                             40.6          39.3
Other assets, net                                     19.7        18.9    
Total non-current assets                              672.7       701.8   
TOTAL ASSETS                                        $  1,146.7    $ 1,154.1 
                                                                   
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable                                    $  59.3        $ 84.8
Accrued compensation and related benefits              7.9           9.5
Other accrued liabilities                             48.4        76.5    
Total current liabilities                              115.6         170.8
                                                                   
NON-CURRENT LIABILITIES:
Long-term debt                                         85.0          60.0
Deferred income tax liabilities                        22.7          22.7
Other non-current liabilities                         25.1        23.3    
Total non-current liabilities                          132.8         106.0
Commitments, contingencies and indemnifications        —             —
                                                                   
STOCKHOLDERS’ EQUITY:
Preferred stock (5.0 shares authorized, none           —             —
issued)
Common stock (200.0 shares authorized and 59.7         29.8          29.8
shares issued)
Additional paid-in capital                             446.9         443.5
Treasury stock, at cost (5.1 and 4.9 shares,           (144.2  )     (144.1  )
respectively)
Retained earnings                                      568.5         554.9
Accumulated other comprehensive loss                  (2.7    )    (6.8    )
Total stockholders’ equity                            898.3       877.3   
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY          $  1,146.7    $ 1,154.1 
                                                                             

WMS INDUSTRIES INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions of U.S. dollars)

(unaudited)
                                                       
                                                         Six Months Ended
                                                         December 31,
                                                         2012       2011
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                               $ 13.6      $ 19.9
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation                                               47.2        37.1
Amortization of intangible and other assets                17.9        14.2
Share-based compensation                                   8.0         7.6
Other non-cash items                                       2.4         10.2
Deferred income taxes                                      (1.3  )     (2.0  )
Tax benefit from exercise of stock options                 —           (0.2  )
Change in operating assets and liabilities                (16.6 )    (21.1 )
Net cash provided by operating activities                  71.2        65.7
                                                                     
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to gaming operations equipment                   (38.6 )     (35.6 )
Additions to property, plant and equipment                 (32.9 )     (31.1 )
Payments to acquire or license intangible and other       (6.5  )    (6.8  )
non-current assets
Net cash used in investing activities                      (78.0 )     (73.5 )
                                                                     
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings under revolving credit facility                 63.0        35.0
Repayments of borrowings under revolving credit            (38.0 )     —
facility
Purchases of treasury stock                                (5.0  )     (37.1 )
Additional consideration related to acquisitions           (2.6  )     —
Cash received from exercise of stock options and           1.1         2.1
employee stock purchase plan
Debt issuance costs                                        —           (2.5  )
Tax benefit from exercise of stock options                —         0.2   
Net cash provided (used) by financing activities           18.5        (2.3  )
Effect of exchange rates on cash and cash equivalents     (1.2  )    (1.3  )
                                                                     
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS           10.5        (11.4 )
CASH AND CASH EQUIVALENTS, beginning of period            62.3      90.7  
CASH AND CASH EQUIVALENTS, end of period                 $ 72.8     $ 79.3  
                                                                             

WMS INDUSTRIES INC.

Supplemental Data – Earnings per Share

(in millions of U.S. dollars and millions of shares, except per share amounts)

(unaudited)
                                                  
                       Three Months Ended December   Six Months Ended December
                       31,                           31,
                     2012            2011        2012          2011
                                    
Net income             $    4.3         $   16.1     $   13.6       $   19.9
                                                                    
Basic weighted
average common              54.5            55.6         54.5           55.9
shares outstanding
Dilutive effect of          0.0             0.1          0.0            0.2
stock options
Dilutive effect of
restricted common          0.1            0.1         0.1           0.1
stock and warrants
Diluted weighted
average common stock       54.6           55.8        54.6          56.2
and common stock
equivalents
Basic earnings per
share of common        $    0.08        $   0.29     $   0.25       $   0.36
stock
Diluted earnings per
share of common        $    0.08        $   0.29     $   0.25       $   0.35
stock and common
stock equivalents
                                                                        

Supplemental Data – Reconciliation of Net Income to Adjusted EBITDA

(in millions of U.S. dollars)

(unaudited)
                                               
                    Three Months Ended December   Six Months Ended December
                    31,                           31,
                  2012           2011         2012           2011
                                 
Net income          $   4.3        $  16.1      $  13.6        $  19.9   
                                                                  
Net income          $   4.3         $  16.1       $  13.6         $  19.9
Depreciation            24.2           17.8          47.2            37.1
Amortization of
intangible and          8.9            7.6           17.9            14.2
other assets
Provision for           5.6            8.7           10.6            10.7
income taxes
Interest expense        1.0            0.4           1.7             0.8
Share-based             3.6            5.0           8.0             7.6
compensation
Other non-cash         0.9          2.1         2.4           10.2   
items
Adjusted EBITDA     $   48.5       $  57.7      $  101.4       $  100.5  
Adjusted EBITDA        30.8  %       35.6  %      32.0   %       31.6   %
margin
                                                                            

Adjusted EBITDA (earnings before interest, taxes, depreciation, amortization,
share-based compensation and other non-cash items, including non-cash
impairment and restructuring charges) and adjusted EBITDA margin are
supplemental non-GAAP financial metrics used by our management and commonly
used by industry analysts to evaluate our financial performance. Adjusted
EBITDA and adjusted EBITDA margin provide additional useful information to
investors regarding our ability to service debt and are commonly used
financial analysis metrics for measuring and comparing gaming companies in
areas of liquidity, operating performance, valuation and leverage. Adjusted
EBITDA and adjusted EBITDA margin should not be construed as an alternative to
operating income (as an indicator of our operating performance) or net cash
provided by operating activities (as a measure of liquidity) as determined in
accordance with U.S. generally accepted accounting principles. All companies
do not calculate adjusted EBITDA and adjusted EBITDA margin in necessarily the
same manner, and WMS’ presentation may not be comparable to those presented by
other companies.

Contact:

WMS Industries Inc.
William Pfund, 847-785-3167
Vice President, Investor Relations
bpfund@wms.com
or
JCIR
Joseph Jaffoni or Richard Land, 212-835-8500
wms@jcir.com
 
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