Ladies and gentlemen, thank you for standing by. And welcometo the WMS Industries' 2008 First Quarter Results Conference Call. During thepresentation, all participants will be in a listen-only mode. Afterwards, wewill conduct a question-and-answer session. (Operator Instructions) As areminder, this conference is being recorded today, Monday, November 5, 2007. It is now my pleasure to turn the conference over to BillPfund, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Dave. Welcome everyone to WMS' first quarterfiscal 2008 conference call. With me today are Brian Gamache, President andChief Executive Officer, Orrin Edidin, Executive Vice President and ChiefOperating Officer, and Scott Schweinfurth, Executive Vice President, ChiefFinancial Officer and Treasurer. Before we start, I would like to review our Safe Harborlanguage. Our call today contains forward-looking statements concerning theoutlook for WMS and future business conditions. These statements are based oncurrently available information and involve certain risks and uncertainties.The Company's actual results could differ materially from those anticipated inthe forward-looking statements depending on the factors described under itemone, Business Risk Factors in the Company's Annual Report on Form 10-K for theyear ended June 30, 2007, and in our more recent reports filed with the SEC. The forward-looking statements made on this call andwebcast, the archived version of the webcast and in any transcripts of thiscall are only made as of this date, November 5, 2007. Now, let me turn the call over to Brian.

Thank you, Bill, and good afternoon, everyone. Today WMSreported net income $11.1 million or $0.19 per diluted share on record firstquarter revenue of $132.5 million which [shall] be seen in the revenue guidancewe had provided. These results again demonstrate the excellence of operatingleverage in our business, as 20% year-over-year revenue growth led to a 56%increase in net income. Additionally, cash flow from operations improved 51% overlast year to $39 million, a record than our first quarter record. This improvein cash flow and the $26 million quarterly sequential increase in our endingcash balance, highlights another key achievement in the continued evolution ofWMS and our ability to consistently to generate long-term shareholder value. We are delighted that this consistent revenue of [Technical Difficulty] growing companies. With marketplacedynamics in fiscal 2008, echoing much of what the industry experienced in theprior year. We remain focused on the five key strategic priorities that weexecuted against so successfully in fiscal 2007, and we are pleased to reporttoday the continued success in our track against these five priorities. One first priority is to continue to purse the managedexpansion of our high margin gaming operations business by simultaneouslyworking to achieve the balance between aggressive growth of our total installedfootprint and proactive management of that footprint to achieve a greater mixof higher revenue producing products on the slide 4 and particularly a greaternumber of high revenue producing WAP products. During the September 2007 quarter, our average install baseof participation gaming machines increased 19% over last year, and at quarterend our total installed participation footprints stood at 8,694 units.Importantly, WAP units comprised 19% of the average footprint for Septemberquarter, up from 17% in the June 2007 quarter. This growth along with the improvementin the average daily revenue produced a 23% year-over-year increase than revenuefrom our gaming operations business. Our second…

Thanks Brian and good afternoon everyone.Our key component in growing our gaming operations revenues is the success ofour sensory immersion platform with Top Gun and our Transmissive Reels platformwith Monopoly Super Money Grab both wider and progressive games. Additionally,our install base of standalone participation gaming machines continue to growwith additional placements of our Monopoly Big Event and Monopoly Super GrandHotel offerings. The continued success of MonopolyBig Event, our first community gaming product, is an excellent example of thevalue we create by using next generation technology to enable new gamingfeatures and great content to build new product platforms and categories. As ofSeptember 30, 2007we have more than 1,800 Big Event units installed and in the year or so sincethe game launched, very few units have come off the floor. Building on the innovative gamingplatforms and foundational technologies using Community Gaming, SensoryImmersion gaming and Transmissive Reels gaming, we are launching the nextinstallments for each of these categories this quarter, which we believe we'llcontribute to additional revenue growth. In October, we began installing PressYour Luck Big Event a standalone community gaming participation game. We alsobegan to install The Wizard of Oz, a Sensory Immersion game and we'll soonlaunch John Wayne a Transmissive Reels game both of which are wider andprogressive machines in Nevadaand GLI jurisdictions. Reflecting the initial successand improved return on invested capital from our controlled rollout strategyfor Transmissive Reels and Sensory Immersion gaming platforms we will maintainour focus on carefully managing the selective rollout for both The Wizard of Ozand John Wayne games. With the large install base ofMonopoly Big Event games and it's longevity on the slot floor we expect thatthe rollout of Press Your Luck Big Event will largely refresh and maintain thatbase with some incremental increases in the install base during the course ofthe next few quarters. In…

Thanks, Orrin and good afternoon everyone. For the fiscal2008 first quarter, total revenues increased $22 million year-over-year or 20%to a $132.5 million, and were just above the high end of the range of therevenue guidance we provided in August. Product sales revenues rose $12 million or 18%year-over-year, and we are particularly pleased with this growth in the face ofthe tough challenges of the current domestic replacement market and the factthat the September 2006 results included a strong contribution from Oklahoma,which was a new market for us at that time. The primary contributor to the product sales revenue growthwas a 19% increase in international unit shipments. The average selling pricewas up 5% over the prior year to $12,840, principally reflecting the benefit ofa higher percentage of premium price products in the overall product mix. Other product revenues were a significant contributor byincreasing $6.8 million year-over-year, reflecting strong sales of game andCPU-NXT conversion kits, parts and used games. Conversion kit sales grew to over 2500 units, compared tothe 910 units in the prior year quarter, due to the positive response to ournew video and Mechanical Reel Games. Gaming operations revenues in theSeptember quarter increased 23% or $10 million year-over-year on an averageinstalled base of 8,351 units and average daily revenue of $60.28. At September 30, 2007, the total installed base was 8,694 units, an increase of22% year-over-year and a strong 5%, or 418 units of quarterly sequential gains.Year-over-year the number of WAP units in the installed base was lower thanlast year, reflecting our selective and gradual rollout of the SensoryImmersion and Transmissive Reel platforms this year, compared with the rapidramp of the POWERBALL installed base last year, which reached to [venus] in theSeptember 2006 period before attaining a more right-sized footprint. The success of our controlled WAP rollout strategy combinedwith the higher…

Thank you, Scott. The fact that we continue to achieverecord quarterly revenues, gross profit, operating margin and net income at atime when our largest market, North Americaexperiences a source replacement demand in recent memory is a testament to thehigh earning power of our products, which of course drives market share gains. I am very pleased with theprogress, again demonstrated in achieving the strong first quarter results andwould like to acknowledge the continued excellent performance of our entireteam. Based upon the continued strong earnings performance of our new productsand the innovation and differentiation experiences they offer, today we arereiterating the fiscal 2008 annual guidance supervised in August. As we look at the second quarter,we expect revenues to be in the range of $143 million to $148 million, even aswe face the challenging comparison with last year, we benefited from theinitial shipments to two new Florida Racinos, and three new PennsylvaniaRacinos. This anticipated revenue range for the December 2007 quarter equatesto approximately 24% to 25% of our annual revenue guidance, which is consistentwith the percentage of revenues achieved in the December quarter in the lasttwo most fiscal both recent years. Our growth will continue to be poweredlargely by the ongoing success of our participation games and the growth in ourinternational business. As we look ahead, while number ofgame jurisdictions continue to offer substantial potential for the expansion ofgaming. California, Kansas,Indiana, Florida,Maryland, Massachusetts and in our home City ofIllinois, all have opportunities that can provide significant slight expansion.But with the give and take that exists prior to new markets of casinos opening,we believe it is prudent to not include this new potential markets in ourrevenue expectations for fiscal 2008 at this time. Overall, we believe these opportunitiescan be categories as to when rather than if they happen, but the resultinggrowth potential be more…

Thank you, sir. (OperatorInstructions). And the first question comes from the line of Joe Greff of BearStearns. Please proceed

Hey guys, how are you?

Hi, Joe.

Question for you. On looking backat this past quarter, and looking at the gross profit margin on product saleswhich was up a lot more than we forecasted, if you were to sort of allocatethat 510 bips of improvement year-over-year, how much of that relates toproduct mix, and how much of that relates to things that you are doing on LeanSigma from the strategic sourcing initiatives?

I think it is probably a third dueto the Prog next meeting more videos and mechanical real show. I think it’s athird due to the ASP and premium-priced to sell during the quarter, and a thirdis due to the Lean Sigma initiatives including our procurement initiatives.

I got you. And then, Orrin, you mentionedabout going to field trials in early calendar '08 for some of the server-based gaming,or the server-centric stuff. How many field trials do you think you are on beforeyou actually add that kind of launch in the second half of fiscal '09?

There will be two primary field trials.As we said, this is a phased submission with the first getting ready to beginin just right at the beginning of the 2008, and our second field trial to occurprobably later in the summer, which will be more feature rich and enhanced. Sowe would probably expect two primary field trials for our first commercializedproduct roll out.

Great. Thanks, guys.

And our next question comes fromthe line of Harry Curtis of JP Morgan. Please proceed.

Hi, guys. I have got three reallyquick questions. The first is, that it looks like you had a very successfulquarter on the conversion kits, and the first question is, do you think thatthat is sustainable?

Yes, I do, Harry. I think thereis always content continues to perform. As it is today, there will be a strongdemand for the refreshing of the boxes our there. So, yes, I believe that’ssustainable.

Okay. And then just turning togame ops for a second. Typically, or at least last year, sequentially you see adecline in the win-per-unit going from the June quarter to the Septemberquarter, and yet it was pretty stable in this September quarter, which isgreat, and I am wondering what you attribute that too?

As you know, we have aseasonality issue Harry with the win-per-day, going from the June quarter tothe September quarter, and it's strictly due to the success we have in one ofthe WAP placements.

Okay. So, I guess specificallymaybe you could point to either the two or three games that are really drivingthe higher than expected win-per-unit from a seasonally adjusted basis?

I think it's the SensoryImmersion, the Top Gun game and also the Transmissive Reels and Monopoly game.

Okay. And then the last question,we are in the betting business, and I am wondering if you would share with usyour views of the over/under on any sort of gaming legislation being passed inthe great State of Illinois?

Well, I believe that we finallyhave - it's an opportunity here, sort of, unfortunately a crisis with the transportation,that I believe this could probably get to the finish line, and I have beensaying this for a while, but I think Illinois is the most underserved market inthe country today, and I believe that this transportation crisis has causedpeople to think differently about the gaming industry. So, one would hope inthe next 7 to 10 days that this would be enacted, but in the worst casescenario, I would see it happening after the first year when they don't needsuch a vote to get there.

I know there are three componentsto it: the expansion of the existing gaming floor, a new casino in Chicago, as well as two in the Eastern suburbs of Chicago?

That's our understanding.

Okay. Very good, I appreciate it.Thank you.

Right.

And our next question comes fromthe line of Bill Lerner of Deutsche Bank. Please proceed.

Thanks. Brian, can you hear,Brian?

Yes, I can, Bill.

Okay, thanks. Yeah, twoquestions. One, as you're starting to pushing expansion and replacement volume,so much more volume through the manufacturing process, where do you think--maybethis for Scott--but where do you think product sales, gross margins went up,inc margins, and then have a follow-up for Orrin?

I didn’t quite hear the question.But I think what you asked is, why is the margin up so much in gross productsales?

No, no, I’m saying, where do youthink margin is going? I'm contemplating the benefit of expansion andreplacement on volume and factoring both product sales and OpEx volumes?

We have a bad connection, Bill,but I believe the answer to your question is, I think that we will continue to growour product margins throughout the year, and you will see us, as we stated,really have a high 40s margin throughout the year. I think toward the end ofthe year, primarily heading into fiscal ’09, you will see a five handle infront of that gross product margin.

Okay. And operating margin, where do you think that goes ultimately?

Again, we talked about a 15% to16% for this year, for the blended average of the year. I think that's going toramp up sequentially from 13% the first quarter throughout the year. But wewould again, as Scott and I’ve said for last several years, we would expect the20% operating margin here to get back to our former run rates back in the olddays.

Okay, that's great. And then forOrrin--Orrin, you mentioned, reciprocal interoperability, and we saw that lastyear at G2E and then ICE, but that I think has more to do with like WMS beingable to communicate with the YGT server, for example, so your [stopped] server,potential server communicating that. What's different about interoperabilitythis year? Could you just elaborate a little bit?

Yeah, we wanted to demonstratereciprocal interoperability with all the manufacturers, all the majormanufacturers include [Bailey] and Aristocrat. I mean it's important for WMS aswe begin to roll out these specific applications, that they are supported bythe various manufacturer systems, and reciprocally that other manufacturer'sapplications are supported by our system. And having the first GSA compliantsubmission puts us on the road to get there. Our strategy, Bill, as we'vetalked about is, WMS sees ourselves from getting into the most profitable ofthe application businesses, along the lines of what they've been able toachieve in the internet space. The internet infrastructure is great, if you'reenabling infrastructure. But the real returns are made on the applicationsside, and WMS' strategy is to exploit those various applications both in notjust content game enablement, but also remote configuration download,account-based wagering environments, patron and casino services etcetera.

Okay. Thanks, guys.

And our next question comes fromlines of Celeste Brown of Morgan Stanley.Please proceed.

Hi guys, Good afternoon.

Hi Celeste.

First, an easy one; can you givethe mechanical reels as a percentage of your domestic products sales or totalproducts sales?

Yes. It was 27% in the Septemberquarter.

And then in terms of yourguidance, it sounded like you were more bullish in the terms of the demand foryour participation units, which is consistent with what we have been hearingout in the field. Is there something that you are less excited about or moreworried about that wouldn’t need you to increase your guidance at this point?

Well, again we've given guidancenow, but we met or achieved the guidance five quarters in a row, and I believethe guidance that we have in a table today, Celeste, is a realistic. That being said, over the comingquarters, if one of these events were to transpire, such as a Illinois, or aCalifornia, or a Florida, or one of these other opportunities, we wouldobviously come back and adjust our guidance accordingly. So the answer to yourquestion, I would say one of those events would be, if we continue to see thestickiness of our participation products. We are having great success, as youheard us talk about today that the three new platforms are gaining traction. Ifwe continue to see these products through the second evolution, have the similartraction, we would probably look at upgrading our guidance down the road.

Are you more worried about thedomestic replacement cycle than you were, when you reported in August or aboutthe same?

It's about the same. I think thatwe have been pleasantly surprised that our demand seems to be upticking goinginto the show, usually, typically going into the G2E, people are a little bitreluctant to buy products for Q2, and we have seen an uptick in our demand. Ithink it has to do with lot of the pre G2E meetings we had, and the visibilitywe have for Q2 is excellent right now, and we are very excited to increase thatfor Q3 and beyond at G2E. So, I think it is similar, but I would say it’s alittle bit more optimistic heading into G2E.

Okay, thank you.

And our next question comes fromline of Todd Eilers of Roth Capital Partners. Please proceed.

Hi guys, how are you.

Hi, Todd.

Hi.

Couple of questions. First, afollow-up to an earlier question on your other product sales revenue line item,I heard you guys say that you expect game conversions or converging kits to maintainthis level going forward. How about the rest of that, the line item, it seemsto be doing very well over the last couple of quarters, should we expectsimilar levels for the remaining pieces of what's included in that line item?

Yeah, I think we have done a goodjob at expanding the parts business. We have also seen a bit of an uptick inthe used game business where -- this quarter we actually sold a greater numberof unit at a higher average selling price, and as we move down the road here,we will get to selling more used Bluebird units which will have an even higheraverage selling price than certainly what our legacy units are commanding thesedays.

Okay. Also, could you maybeupdate us on your activities in Oklahomaright now? How you are doing in terms of sales and then also on participationplacements?

As you know Todd, we've got twodistribution arms there. We go directly to some of the customers and we haveMGAM representing us to other customers. So, we continue to sell into themarket. It’s a very great market for us in the last, call it 15 months, we haveteam zero participation, and they are not in our backlog number or ourfootprint number. So the market continues to perform well for us and we thinkthere is tremendous upside.

Okay. And then also kind of aregional question. You had a lot of wild fires out here in the west coastrecently, a number of tribal Casinos shut down for a period time. Have you guysseen an impact at all on your gaming ops business at all over that period oftime?

I just asked that question thismorning, Todd. The answer is it's diminished, it's not even a rounding error.So, it’s a very small number.

Okay. And then one finalquestion. In your non-operating income line it looks like you had a positivenumber, and they are a little bit higher than normal. Can you maybe help usunderstand what’s going on there? What’s driving that?

Yeah. I think there is really twopieces for that. One is, as we have expanded our cash balance, we are investingthat, and so that's created a little bit of additional income. And I alsobelieve that foreign currency was higher at this period as a result of movementof dollar and the Euro primarily.

Okay. Can you maybe -- I don'tknow if you know it's top of your head maybe we can touch base offline but doyou know how much maybe each of those contributed to?

You know, I don't have that infront of me Todd, so I'll give you a call afterwards.

Okay, that's fine. Thanks guys.

And our next question comes fromthe line of Steve Wieczynski of Stifel Nicolaus. Please proceed.

Hi, good afternoon, guys.

Hi, there.

One question for you, and I amnot sure, if you will answer or won't answer it, but on the international sideof business, can you just give kind of a high broad view of where you areseeing demand for the WMS products at this point?

It's really all over the map,Steve, I think that South America has been very good to the company, I thinkEurope has starting to pick up and I think Asiahas kicked in nicely as well. So I think that all things being equal we arereally giving on a broad universe.

Okay. Great, thanks guys.

And our next question comes fromthe line of Steve Altebrando of Sidoti and Company. Please proceed.

Hi, guys, I see the install baseis already above the average what you guys got it for the year. But also youmaintain your guidance, do you anticipate the install base trending downsomewhat or I guess I am just trying to figure out?

With the lot of the backlog isfor the refresh, Steve, of these three platforms that we launched them last yearand so we are waiting to see the stickiness of those refreshes if we can have acreative footprint then we probably would in the next call look at adjustingguidance but at this point we weren't comfortable given the visibility we havebased on the fact that two of the launch refreshes have just hit the market inthe last week or two. We wanted to give some traction there, but we are doingvery well on the gaming ops business. And we continue to look at that as a hugefocal point of our growth story.

Okay. Do you have a roughbreakdown as far as open orders on the participation side of what's well?

It's about a 50%--it's a two forone deal.

And it's not, I sorry.

Of the 23,000 open orders, abouttwo-thirds are wider about one-third is standalone,.

And it's about two-for-one slot.

Right, accretive versus --

Okay. Anything meaningful as faras timings of installation in the quarters is it waited towards the end of thequarter or?

This particular one is, it'spretty much evenly spread, because the launches are happening throughout thequarter. But I typically, they do tend to happen at the end of the quarter. Butin this particular case in Q2, it's fairly consistent throughout.

Okay. Thank you, guys.

Ladies and gentlemen, thank youfor your questions. Mr. Gamache Iwill now turn the call back to you. Please continue with your presentation orclosing remarks.

Thank you for joining us thisafternoon. We look forward to reporting our additional progress on the nextcall. We will discuss our fiscal second quarter results and look forward toseeing many of you in the next week at G2E in Las Vegas.

Ladies and gentlemen, that doesconclude the conference call for today. We thank you very much for yourparticipation. And I say, you please disconnect your line. Thank you once againfor participating and have a great day.