Welcome to the WMS Industries third quarter results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded Tuesday, April 21, 2009. I would now like to turn the conference over to Mr. Bill Pfund, Vice President of Investor Relations for WMS Industries. Please go ahead, sir.

Thank you, operator. Good afternoon and welcome to WMS Industries conference call to discuss our fiscal 2009 third quarter financial results and operating trends. Thank you for being patient. We were having a bit of technical difficulty in getting some of these phone lines connected. With me today are Brian Gamache, Chairman and Chief Executive Officer; Orrin Edidin, President of WMS; and Scott Schweinfurth, Executive Vice President, Chief Financial Officer, and Treasurer. Before we start, let me review our Safe Harbor language. Our call today contains forward-looking statements concerning the outlook for WMS and future business conditions. These statements are based on currently available information and involve certain risks and uncertainties. The company’s actual results may differ materially from those anticipated in the forward-looking statements depending on the factors described under Item 1, Business Risk Factors, in the company’s annual report on Form 10-K for the year-ended June 30, 2008 and in our more recent filings with the SEC. The forward-looking statements made on this call and webcast, the archived version of the webcast, and in any transcripts of this call, are only made as of this date, April 21, 2009. Now, let me turn the call over to Brian.

Thank you, Bill. Good afternoon, everyone. This afternoon, WMS reported financial results for the March 2009 quarter, reflecting the achievement of record company performance in many of our most important revenue and margin metrics, including average selling price, participation revenue per day, total gaming operations revenue, product sales, gaming operations and total gross margin, operating income, net income and quarterly earnings per share. The quality of these earnings is something we are all tremendously proud of. This performance is clear evidence of our ongoing success in creating products that deliver high entertainment value, resulting in superior time on device, coin in revenue per day and return on investment for our customers. These factors combined with our ongoing achievement of incremental operating efficiencies in development, manufacturing, and selling and administrative processes, are recipe that will generate success in any market environment. However, these were consistent with our guidance range and mark our 12th consecutive quarter of meeting or exceeding our revenue targets. On our last call, we indicated that we believe the March quarter would be the most challenging quarter of the year and the quarter certainly lived up to expectations. Our team took this challenge to heart and executed once again at a high level on both the revenue and margin front, and our results clearly demonstrate the success of their efforts and the leverage inherent in our business model, even with more modest revenue growth. Our balanced operating execution resulted in our 17th consecutive quarter of double-digit earnings growth. Our record third quarter revenues of a 181 million and substantial margin improvement led to a 30% increase in net income to an all-time quarterly record of 24 million or $0.43 per fully diluted share, achieving record revenue and profitability, despite the well headline economic and industry challenges illustrates once…

Thank you, Brian and good afternoon. Achievement of record financial performance once again, is directly attributable to ongoing operating execution against our five key priorities. As we; one, continue to grow our North American market share by innovating differentiated products; two, continue to grow our gaming operations business while investing our capital deployed in that business in a manner that optimizes return on investment; three, continue expanding our international business; four, further improve gross profit and operating margins; and five, increase cash flow. In today’s ever more demanding environment where some casinos are challenged with credit and capital constraints, our customers require differentiated high earning products to protect and strengthen their core center of profitability, the Casino Gaming Floor. Simply put, with our portfolio of top performing products, WMS is more effective than ever in competing for customer’s available capital and the current environment plays right to our strengths. Importantly, our focus on the player and on understanding player’s expectations is not some newly emitted sound by the new action plan in response to economic conditions, but over the years has been deeply embedded in our culture. In fact, for network gaming to proliferate, we believe it has to establish player benefits and for over two years, we’ve demonstrated the benefits of network gaming to casino operators and their players through industry-leading, player-focused innovation. Recently, an industry publication, The Casino Journal, announced the winners of its top 20 most innovative gaming technology awards for 2008 which recognized the most innovative offerings in the industry. WMS with our focus on high value player appealing products placed four player focused products, either a game or game or cabinet that customers will see on the casino floor in that top 20. Third party recognition that are product-by-product, bank-by-bank strategy is achieving success. Our…

Thanks, Orrin, and good afternoon, everyone. I want to call your attention to certain trends that might help provide some perspective on our outlook. Overall, because some of our customers’ credit and capital issues, the environment remains one of conservatism; however, despite their challenged budgets, customers do have strong preference for replacing low performing products with high earning differentiated gains, such as WMS’ products. Interestingly, in contrast to those who believe that there are fewer customers willing to purchase products, over a 135 casinos in North America alone purchased new units in the March quarter, which was about 5% higher than last year. The average unit order size for those customers did decline 25% from a year ago, not surprising given that in the prior year period there were an aggregate of approximately 1000 units shipped to four tribal casinos once the California referendum passed. Excluding the sales to those four tribal casinos, the average unit order was about 10% lower this quarter. In addition, in analyzing past quarterly seasonal trends, our quarterly revenue performance in March was fully consistent with past quarterly revenue patterns and the quarterly progression provided that in August 2008. We have a very solid balance sheet. Even as we continue to strengthen it quarter-by-quarter, we are also using it to our competitive advantage and to enhance shareholder value. During the March 2009 quarter, we generated solid growth in our gaming operations business, while earning better returns on the capital deployed in that business. We invested approximately 9 million in capital for additions to gaming operations equipment, about 35% less than the depreciation attributed to the gaming operations business, this despite the 10% year-over-year increase in the average installed base. Our $20 million investment in property, plant, and equipment, in the quarter was higher than typical,…

Thanks Scott. I think it’s evident from our comments today that we’re sharply focused on closing fiscal 2009 on a high note with record level revenues and profits. Our ongoing conversations of customers around globe continue to provide solid evidence that our products are in demand. Importantly improvements in our operating execution, the disciplined allocation of capital and vigilant expense management are clearly taking effect. Additionally as we have fairly demonstrated over the past several years, our ongoing focused investments in high return R&D activities have lead to substantial organic growth revenue opportunities. As such we believe WMS’ productive balance of revenue growth and margin expansion will continue to contribute to our ongoing success for the years to come. Consistent with our past practice we expect to provide our guidance for fiscal 2010 when we announce the fiscal fourth quarters results in early August. While our budget process is still underway, I want to further elaborate today in our strategic efforts that we will provide additional insight behind our long-term vision and support our expectations that WMS will again exhibit a similar annual rate of revenue growth in fiscal 2010 as in fiscal 2009. In addition to the launch in the June quarter of two new Bluebird cabinet styles, we recently announced two other important initiatives to further diversify our revenue streams and leverage our channels of distribution. First is WMS’ direct entry into the central determinant base gaming following the expiration of our previous licensing agreements for those markets. Through an alliance with Bluebird Gaming Technologies, a Canadian-based technology firms over time, we will combine our existing library over 200 great for sale games with their proven systems capability. With this arrangement, we can significantly expand and leverage our creative content and our customer focus sales of marketing channel…

(Operator Instructions). Your first question comes from the line Joe Greff – JP Morgan.

A question for you on the margins. Obviously, you did a phenomenal job in the quarter on the margins side, and if I could just look at on the product sales side, margins were up significantly. How much of that is mix? How much of that is fixed cost coming out? Maybe you can help us understand that a little bit better? And then sort of the same question on the game ops margin side of things. How much of that was related to the higher average revenue per day? How much of that was related to what you put in the press release as favorable jackpot expense?

Well, I guess on the product sales side, Joe, I’d say, 80% plus of the costs of our product is raw materials, which is obviously variable, and the balance is overhead and labor which for the most part is fixed. This quarter as you know, the number of units that we actually did declined from what we did in the prior quarter. So, we are seeing a nice improvement with the Bluebird2 product as we continue. We are just in the infancy of the launch of that product, but the margins on that product and our ability to turn orders on that product have increased dramatically, and that more than offset the impact of lower unit volume, overhead and labor costs. Then on the gaming operations piece, there is really sort of two pieces that impacted that. The first obviously is with doing so many plus dollars a day, and in revenue those incremental dollars for the most part are helping to generate incremental gross profit for us. That’s coupled with some favorable WAP jackpot expense experience that we realized in the March quarter, which that’s sort of subject to what buckles on with the jackpot sitting throughout the cycle.

And to further expand on that Joe, we had about close to 50% of our gains for Bluebird2 in Q3 and we are expecting about 58% in Q4, and the ASP is significantly higher on those. So it is all bit of mix of business as well.

Great and Scott, you touched on this earlier about the D&A coming down despite the CapEx. Can you just explain that? Again, I don’t know if you have really talked about it but is essentially what you are doing there is elongating the useful lives of the newer games and is rationale just because of where we are in the replacement cycle?

We haven’t elongated the depreciable lives. What has happened is that there is not as much churn that’s occurring on the casino floor, and that’s causing us not to incur as much capital. Every time we go out and convert a game or touch a game, we generally are spending capital on that. So to the extent the churn is reduced, that’s having a positive impact on the overall depreciation and with gains staying out longer, we’re seeing a favorable impact on a year-over-year basis with the actual base gains.

Okay. Then my final question. I’ll let you guys go to the next guy. Scott, you mentioned sort of discounting or competitive pricing, and you kind of said look at the margins that speak for itself. So, that would basically, supposedly saying the market is not experiencing price discounting that’s any different than say volume discounting that we’ve seen historically. Are you experiencing any other pressure that might not be price-related but that are in effect some sort of discount or some more other competitive way to secure orders?

Joe, this is Brian, we haven’t really seen that kind of pressure. I think in this marketplace I would say that actually might be a little bit different, a little more price sensitive but I think that this market still values the quality of our content and as such price is not in the top six or seven reasons why they buy our products. So we have not seen any significant price discounting going on and we believe there is further leverage here as time goes on.

Your next question comes from the line of David Katz - Oppenheimer & Company.

Hi. I wanted to just follow-up on one of Joe’s questions which is we saw some very good product sale gross margins in the quarter and I just want to be clear about whether 53.2 is a sustainable level and in that context as I assume whatever number of domestic units you sell evolves. Will the changing mix of those or I assume the mix of Bluebird2s is going to increase overtime within those and what does that do to pricing? Right. Is this kind of a unit price a sustainable level also?

The answer to your question, I believe yes it is sustainable. This is something that we’ve targeting for quite sometime internally here. I think what you’re seeing now is years of heavy lifting and we’re getting paid for the fruits of our labor. When you look at the Bluebird2 design it was designed for manufacture ability with engineering and manufacturing, working collaboratively to design a product that could be more efficient with similar parts and I think when you look at the ability for us to continue to drive improvement here with volume, the margins going to get very exciting. So, yes I do believe 53% is sustainable, obviously we’re going to give you further guidance on the August call we expect in ‘010. But our continuous improvement efforts are such where we think that we are still in the early innings of our Lean Sigma initiatives and where we can really take these margins going forward. So, I’m very excited about the progress we made and could not be more proud of this kind of progress, particularly the fact that we’ve take our inventory down $20 million year-over-year. And when you bring out four new platforms like we have, we’ve extended our platforms to include the Bluebird2 Video, the Bluebird2 Mechanical, Twinstar and the Bluebird’s flat wide-screen. So, typically your margins don’t go up when you bring out new platforms, but our guys have done a terrific job in wrestling this to ground, so.

I think David you’ll remember our objective was to launch the Bluebird2 at the product sales gross margin that we were achieving for Bluebird1 because, we knew if we were able to achieve that, that as the volumes for Bluebird1 picked up and as are working with manufacturing the product, we expected that there would be improvement in the margin going forward.

Okay and just one more. As I look in the game ops side of the business and I’m not sure if you talked about this, but there is an amount of least games that was down sequentially. Am I reading that correctly, was it 666 games?

Yes, the hybrid games. These are games where we sell the base gaming device to the casino and charge them a lower daily fee for the game and the top box and yes, that number moves depending upon the products that we have available for that particular category of games.

And so, I’m sorry, why was it down?

It’s a timing issue I think is what Scott saying. We’ve got certain products we’ve launched in these categories, and we’re kind of in between the cycle right now and we’ll expect that uptick at some point in the future when the product launches match up.

Your next question comes from the line of Ralph Schackart - William Blair and Co.

Couple of questions if I could, first sort of end market bigger picture. Just any material changes in sort of the buying pattern the end market from the operators since the last call, I think you referenced maybe a larger number of operators, but smaller number of units being purchased. Just curious if there’s been any significant shift since last time we spoke?

I think that we’ve said last time that the customers were being more conservative in releasing their capital that was in January. We saw that loosen up in February. I think most of the regional operators had a terrific February and March. So we are seeing some loosening of the poor springs, particularly outside Nevada and New Jersey. So that has improved. But again, I think people are being more what I would say conservative in releasing their capital, either month-to-month or quarter-to-quarter as oppose to letting it all go at once. So, that trend continues, but we are seeing more optimistic -- certainly more optimism from the operators as of late.

Great and then the $70 plus participation win per day, a lot higher than we were modeling and likely some others as well. Just trying to understand the strength there was it one game in particular, was it pretty broad based focused on one geographic area, just trying to understand what?

I think we had a couple of things. We had 1,100 refreshes during the quarter, which is a record for us. We had 1100 of our footprint upgraded and anytime we do an upgrade at our expense it is typically a 25% to 35% uptick in the win per day. So the fact that we were able to generate that kind of volume upgrades in one quarter, speaks very well and in addition our WAP performance is doing extraordinary well. In this quarter we have two very anticipated launches and that’s Time Machine and Reel Em In Compete to Win. We’ve already got significant backlogs for those and I would look for our Q4 rate to continue to accelerate. So, we are definitely hitting on all strides on our gaming operations business and we think going into fiscal ‘010 that we will have a very solid base to build off from there.

Great stuff, Brian and then one last and I’ll turn it over. Just, I wanted to clarify this point. So going forward we’re not going to talk about open orders, just so I understand, is this due solely because your making the units faster, your able to get them off the door quicker, so?

Right now we have a two to four week delivery time on our orders, which is we think in this industry best standard and as such, we were able for instance in Q3 because those relates to these capital, we were able to respond much more aggressively to the customer’s needs and desires during the month of March. So, our backlog, as Scott said, is very similar. But we believe that for competitive reasons it doesn’t make sense for us, particularly given the fact that we had 16 quarters in a row, pardon me, 12 quarters in a row of revenue that we’ve hit our guidance on and 17 quarters in row of double-digit earnings growth. So, we think we’ve kind of proven ourselves.

Your next question comes from the line of Steve Wieczynski - Stifel Nicolaus.

First Brian, I guess in terms of your 2010 quasi guidance that you put out there in terms of revenue growth, does that stem more from your confidence in your products or is it more optimism from operators at this point?

I think it’s a little bit of both and fall up with that with some new openings that got pushed in from fiscal ‘09 into ‘10. I think we’ve got some new products that we are going to be launching. They are going to add to that as well and we’ve got some new markets internationally that we are pursuing for the first time. So I think there are a variety of things. As we said on the call, we are not as reliant our North American sales as we used to be. I think that our worldwide levers are such where we have built in risk mitigation against any concentric area of revenue streams. So, I think going forward we have great visibility. We have great products. We have great cockpits in the pipeline that we are bringing out in fiscal ‘10. We are going to start to deliver some of the applications for the server-based initiatives. So, I think we have a lot of things that are going on internally here. They are going to allow us to have sale our organic growth for several years.

Then second question is going back to the product margins. Is a long-term goal of a 60% product margin completely out of the question at this point?

You must be reading my mind. I certainly wouldn’t want to get ahead of that, but we certainly are going to be pursuing further margin enhancements and we’ll give you more color on the August call. But, we are not going to stop here. We’ve had tremendous success in pushing the company to get to where we are and we are not satisfied yet.

Then finally, Scott, I doubt you’re going to answer this question, but when you talk about…

He’s in a good mood Steve. He might be surprised you.

Yes, we’ll see. I think the answer is going to be no, though. In terms of the units that you placed this quarter, how many of those were actually aided by your balance sheet?

Are you talking about participation here, Steve?

No, he’s talking about the receivables. You’re right. I’m probably not going to disclose that.

Okay. That’s fine.

I mean you can sort of back into it if you wish, right?

Right.

Assuming that average selling price and the dollar amount that I talked about.

Okay.

One thing that I want to clarify is it’s not like if we hadn’t have done that, we wouldn’t necessarily have gotten the order. It’s just another component of the overall commercialization process that we were using. I think another thing to state is, I want to make clear to investors that when we do something like this, we generally are reducing the discount of list price. If it’s financing over a 12-month term, there is interest that’s involved in that. So those orders tend to be more profitable to the company as a result of that.

Also, we use this as an opportunity Steve to build a further relationship with that customer and perhaps get something more in return as it relates to participation footprint or whatever else it is we are trying to build up with that customer. So it’s worked very well for us. We’re doing it very selectively, not in a wholesale basis and we do have buckets with caps on them. So, we’ve been very successful here and we’ll share more results going forward.

Your next question comes from the line of Steve Altebrando - Sidoti & Company.

Just back to the financing part, because I know there is going to be a lot of interest in this. But, are you seeing this industry-wide or is it just you offering it?

Quite frankly, I don’t want to speak for anybody else, but we’ve heard about other competitors offering it, but we’re just doing this one-on-one with our customers. As I said it, we’re not doing it at a wholesale basis. It’s a very significant process that we have in place to make sure that no deals are off before they run up to flag pole to Scott and myself who sit on the credit committee. So this is not something that we haven’t done before. We have always had notes out there and we have always financed games. I think to use our balance sheet to gain market share is probably a pretty good thing at this point and as I stated earlier we are only doing it for highly credit worthy customers. So that’s the key.

Okay and did you mention is there any one customer that say a big portion of the note?

It’s not. Its spread out pretty much evenly over a few customers.

Okay. I know, you guys are the first to report here but any sense made from your sales people about the market share in the quarter?

Again we don’t want to comment because we just don’t have any other information but the internal feeling is that we have done pretty well and that perhaps we might have gained a few points during Q3, because it was a difficult quarter as I indicated.

Your next question comes from the line of David Bain - Sterne Agee.

Thanks. Just as a follow-up to the gaming up margins question, 85% versus last quarter, 82%, went per day at $70, if you were to couple it out with the normalized WAP jackpot expense. Where do you think margins would have landed somewhere between those two quarters?

Yes. That’s probably a good assessment, David.

Okay and then back on the financing, can you give us an idea of some of the process that you used to determine credit worthiness?

Scott.

Yes, sure, we looked at the…

I mean is it a scientific line or more of is there some relation, yes?

We look at certainly past payment experience with individual customers because we don’t to be loaning to someone whose has traditionally been difficult to collect from. We obtain DMV reports for each of the customers to give us, we’ll say, a third party view of what’s out there. We’re obviously constantly watching what goes on in the trade publications both daily and monthly there. In addition the credit managers of the gaming suppliers are part of an association and they have a subgroup that meets to talk about issues of common interest that we obviously get feedback on. All of that sort of leads up to bubbled up in a report to the credit committee and the credit committee makes a determination as to whether its something that we want to approve or not. There’s other things we look at, I don’t know if you are familiar with what ACH payments are, but customers are willing to give us back that’s something that we look at also.

I think when you look back at the history of our credit as a company, we’ve had less than one-half or 1% of our revenues in the nine years I have been here, have been credit issues. We would expect to have the same kind of history going forward here with this experience. So we’ve been in the credit business for a long time. We’ve never had a problem, we don’t expect to have problems, again we have great relationships with people that we are granting credit to and we have the processes in place to ensure that we’re granting proper privilege.

Okay. Thanks and then just last question, you noted that outside of the trivial order for the same period last year there was a time next to Bluebird2, which resulted in lower unit sales as customers trade up to Bluebird2 within the constrains of limited budgets?

Yes.

Are you speaking more to the replacement cycle in general or are we speaking to maybe a little bigger shock from some operators?

No, no what I’m talking about is generally casino’s have a set capital budget and just for number purposes. If that budget is $1 million and they were planning on paying $10,000 per unit, they could buy a certain number of units, but if you increase that to, let’s say $20,000, the number of units that are going to able to purchase for those same dollars are going to be lower.

Your next question comes from the line of Todd Eilers - Roth Capital Partners.

Hi, guys. Thanks for taking my question. On the product sales side, I don’t know if you guys gave it, but can you give the mix between Video Mechanical Reel shipments?

We didn’t give that. I actually have that, if you give me just one second here. It was a little bit lower than what it’s been over the last couple of quarters and we think that’s primarily attributable to the fact that we are – we were coming out with the Bluebird2 Mechanical Reel at the end of the quarter, and so we think customers were holding back. So it was 20% in the quarter and it had been averaging about 25%. So now that we have that product the new Bluebird2 Mechanical Reel and we see what the demand for that is, we think that the number will trend back up.

Okay, that’s helpful and then on the product sales other revenue, I think you guys showed nice increase there and I think in the release you highlighted some increased converging kits. I mean is this a trend that we should continue to see going forward, as certain operators might looking to go with a few more converging kits on a limited capital budget?

I believe that’s correct and I think that people are seeing value in our content, and keeping the games fresh and again, if you look at our year-to-date conversion activity, we are ahead in year-over-year and I think that trend would continue.

Okay. Great, and then last question. The decision to enter the Class II Central Determinant markets directly. Can you maybe just hit some highlights in terms of how that maybe impacts your financials? I’m assuming that you guys might be looking to put a lot of these games on the rev share basis or maybe the units that you place would start to show up on your gaming ops segment, but maybe just kind of at a high level, kind of walk us through how you expect that to impact your financials over the next year?

Well, I think we’re going to look at a couple of different pricing paradigms, Todd depending upon the customer base. Yes, for those that we do decide to do a placement, we will have those down in our gaming operations business, but I would tell you that because these are games that we would otherwise sell outright, I don’t know that we will include them in our participation install base. But if it gets big enough maybe we have to start disclosing separate install base of numbers there and obviously, games that we’re selling outright are going to be in our product sales business and I think obviously, we’ve learned a big lesson with -- in our gaming operations business over the last couple of years in looking at the return on the capital being invested in that business. So I think that’s going to somewhat direct, where we’re going down, a more of apart to -- daily lease or participation route rather than a direct outright sale route.

I think we’re going to have different models for different customers.

We have a follow-up question from the line of David Katz - Oppenheimer & Company. Please proceed with your question.

Actually, I am all set. I’m perfect, thank you.

(Operator Instructions). Your final question comes from Steve Kent - Goldman Sachs.

Hi. I doubt you guys can hear me or not, but I just wanted to ask about the magnitude of revenues with respect to networking initiatives. You talked about just about everything else, but maybe you could just give us a little bit more color on how big that could be? When do you think it’s meaningful? Just give us a little bit of guidance there?

Orrin, you want to take this one?

Sure. I’ll just like to also point out there, Steve that, we are very happy with the schedule for our network gaming initiatives are completely on track, maybe even a bit ahead of schedule. Obviously, the first roll out from our network application base will be at City Center, that’s could be later in calendar ‘09, probably closer to December. So, obviously not a material contributor in this fiscal year, but, we begin to roll out these various applications. Starting with Ultra Hit Progressive and some of our other portal applications, we would expect to see more meaningful contribution as we get deeper into fiscal 2010 and beyond.

There are no further questions at this time. I now turn the call back over to you.

Well, thank you for joining us this afternoon. We look forward to reporting our additional progress on our next call after our fiscal year end in early August to discuss our June 2009 quarterly and fiscal 2009 annual results. Thank you and have a great day.

Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.