WMS reports fiscal fourth quarter revenues of us$ 203 million

The June 2011 quarter results include us$ 0.26 per diluted share of net charges for impairment and restructuring costs, asset write-downs and other charges that impact comparability with the prior-year period.

Total revenues in the June quarter were less than anticipated principally due to lower product sales revenues resulting from the company entering into an operating lease arrangement with the Seminole Tribe of Florida for 600 new units in lieu of prior expectations of a comparable unit-sized product sales order in the June quarter.

For fiscal 2011, total revenue was us$ 783.3 million and net income was us$ 81 million, compared with total revenue of us$ 765.1 million and net income of us$ 112.9 million.

“In fiscal 2011, WMS achieved annual revenue growth for the ninth consecutive year as product sales revenues increased by 6% driven by a 7% increase in annual average selling price that reflects the ongoing success of our Bluebird®2 and Bluebird xD gaming machines. We also increased annual cash flow from operations by 21% over the prior year, strengthened our global talent base and launched new businesses,” said Brian R. Gamache, Chairman and CEO.

“As we stated early in fiscal 2011, we intended to leverage our financial strength to aggressively invest in WMS’ future and we achieved this goal. We increased anual spending on research and development initiatives by 10% and cash expended on investing activities by us$ 48 million, primarily to update our installed participation base to new, technologically advanced products and to license or acquire intangible and other assets. We also accelerated our fiscal year share repurchases to us$ 101.5 million – more than double the amount allocated to share repurchases in each of the prior two fiscal years. Importantly, during the June quarter, we began to realize benefits from initiatives announced in April aimed at improving operating execution and the ratable launch of new products, as quarter-end compression was reduced and the flow of new product approvals improved in the June quarter.

“Given our outlook for flat near-term industry replacement demand and the industry’s current pace of new technology adoption, we recently conducted a thorough review of our business strategies and product plans,” Gamache continued. “As a result, we are refining our product plans and restructuring our organization to sharpen emphasis on WMS’ content and product development strengths. Specifically, we are streamlining our product management and product development functions, simplifying product plans and further prioritizing on-time commercialization of new game themes, products and portal gaming applications for our core product sales and gaming operations businesses. These actions are expected to better direct resources and focus on near-term revenue opportunities and will reduce our overall organizational staffing by approximately 10% to a level that better correlates with the current operating environment, while maintaining our ability to create great games that engage current players and attract new players.

 “Stemming from our strategic review, we also decided to provide operating leases to selective customers as a way to leverage WMS’ solid financial position and strong balance sheet to bring our latest cutting-edge products to customers’ gaming floors. Operating leases can provide significant financial benefits to our customers and to WMS – as such arrangements create a recurring stream of revenues and cash flows over the term of the lease, and enable WMS to earn an attractive return on capital while bringing more visibility to our revenues,” stated Gamache.

“Our new, multi-year operating lease agreement with the Seminole Tribe of Florida includes many of our most innovative new gaming entertainment products, such as the G+® Deluxe and Reel Boost® series of video games and our Networked Gaming Portal applications. We will consider similar mutually beneficial operating lease arrangements with other customers when WMS can achieve an attractive return on investment,” he continued.

Gamache noted: “While the past year continued to be challenging for slot suppliers, WMS achieved several product milestones including strong customer demand and favorable player response to our premium-featured Bluebird xD gaming cabinet; expansion of our product sales game portfolio, including the successful launch of two new series – our G+ Deluxe and Reel Boost video games; regulatory approvals for ten new participation games that have enabled us to further transition the installed base to Bluebird2 and Bluebird xD gaming machines; initiation of new long-term contracts with key strategic customers; commercialization of our WAGE-NET networked gaming system and our first Portal application, the Jackpot Explosion® theme, along with securing recent regulatory approvals for additional Portal applications; the successful launch of our online gaming business in the United Kingdom; and the introduction of Player’s Life web services – the industry’s first product that extends the entertainment excitement of our gaming content to an online casual gaming experience.

“Our product progress, recently implemented actions aimed at improving operating execution and the prioritization of product development, plus prudent capital allocation position WMS for continued revenue growth and expected margin improvements in fiscal 2012,” concluded Gamache.