Welcome to the WMS Industries Q3 conference call. (Operator Instructions) It is my pleasure to introduce William Pfund, Vice President, Investor Relations.

Good morning everyone and welcome to WMS Industries’ fiscal 2008 third quarter conference call to discuss the announcements last evening regarding our third quarter results and our board and our board and executive management changes and promotions. With me this morning are Brian Gamache, President and Chief Executive Officer, Orrin Edidin, Executive Vice President and Chief Operating Officer, and Scott Schweinfurth, Executive Vice President and Chief Financial Officer and Treasurer. Before we start let me quickly 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 involves certain risks and uncertainty. 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 ending June 30, 2007 and in our more recent reports filed with the SEC. The forward-looking statements made on this call and webcast, and the archived version of the web cast and in any transcripts of this call are only made as of this date, May 7, 2008. Now, let me turn the call over to Brian.

Last evening we announced results for our fiscal 2008 third quarter including a 27% increase in total revenues to a record $173 million and a 46% increase in net income to a record $19 million or $0.32 per fully diluted share. Revenues exceeded the high end of our guidance by $7 million, highlighting the strength of WMS’ innovation capability to lead the industry with high performing differentiated products. In addition we generated a quarterly record of $57 million of operating cash flow and our total cash balance exceeded $112 million at quarter end. In the face of a weak economy and the ongoing challenge of the domestic replacement cycle, these are outstanding accomplishments by almost any standard. These results were not achieved by happenstance, but are the direct results of our forward thinking project and technology planning and continuous improvement in operational execution. While proud of the significant achievements of last quarter, I am even more pleased with the evolution that has occurred throughout our entire business over the past few years. The foundation supporting our top line revenue growth is the company’s strong culture of innovation and industry leading focus on players and the long term project and technology plan that began to take shape back in 2001 and 2002. Our most recent focus on continuous improvement in manufacturing, distribution and business processes is resulting in consistent improvement in margins and is also reflected in our earnings through an enhanced cash flow. This improved operating execution is leading directly to better flow-through in profitability. For the first nine months of fiscal 2008 total revenues are up $83 million and our gross profit is up $61 million. WMS is now acknowledged worldwide as an industry leader with a legacy of providing innovative high return products. As significant as our accomplishments…

Our strong performance is a direct result of our disciplined focus on five key strategic operating priorities. One, maintaining the growth of our gaming operations business while more efficiently investing our capital deployed in that business. Two, growing our North American market share. Three, expanding the breadth and profitability of our international business. Four, improving margins. Five, elevating our operating cash flow in overall capital returns. These five priorities share a common strategic focus on creating and leveraging investments in intellectual property and innovative advancements in gaming technology to deliver high value propositions for players and our customers. In the March quarter revenues and profitability in our gaming operations business once again improved over the prior year period. The average daily revenue increased 15% over a year ago, an increase of more than $8.00 per day and also rose 6% on a quarterly sequential basis. In light of any impact on the present economy, this quarter’s results clearly demonstrate the player attraction and earnings power of our games. The significant increase in daily revenue reflects the popularity and success of our newest products on our community gaming, sensory merging gaming and transmissive reels gaming platforms, coupled with our strategy to provide a controlled rollout for these games to optimize return on investor capital. Additionally, the longevity of our games in the field continues to improve which also enhances the profitability and the returns on capital deployed. I should point out that the Wizard of Oz game which was introduced in the December 2007 quarter is continuing to deliver and exceptional level of performance and is the highest performing game in our history. We are introducing three new participation games in the June quarter. Already out in the market is our Bigger Bang Big Event game; our first game to combine…

Touching on some of the financial highlights for the March, 2008 quarter, our total revenue has increased 27%, by $36 million year-over-year to a quarterly record of $173 million. Total revenues exceeded the high end of our revenue guidance range, largely due to higher than expected performance in our participation business, international market sales and global market share gains. New unit sales revenues rose $18 million or 22% year-over-year with the primary contributors being better than anticipated growth in international new unit shipments which were up 52% and an 8% increase in North American unit shipments, reflecting our continued strength in market share growth and sales to the Native American casinos expanding in California. Other product sales revenue increased $2 million year-over-year, primarily from sales of POP boxes and game conversion kits. Conversion kit sales rose to nearly 2300 units compared to 2100 one year ago and used unit revenue also increase at a higher average selling price more than offset a lower number of units. As Orrin noted, gaming operations revenues rose 39%, reflecting a 15% increase in average daily revenue and a 21% year-over-year increase in the average installed participation footprint. The average install base increased by 2% on a quarterly sequential basis over the December quarter. We can now launch any significant new participation products during the March, 2008 quarter and this is reflected in the install participation footprint at March 31, 2008, which at 9,027 units declined 159 units from December 31, 2007. The March quarter end figure reflects the transition of 100 Class 2 gaming machines that were removed from a tribal customer’s gaming floors in Florida before the replacement Class 3 units have been placed on the floor. These replacements are scheduled for installation at the end of this quarter. We set a new…

As discussed in our press release we increased our total revenue guidance for the fiscal fourth quarter in full year fiscal 2008. This new guidance reflects the ongoing momentum in our gaming operations business, the strength of our international sales, and a better than expected North American product sales revenues achieved in the March quarter. Thanks to the high performing results of our games drive by the innovative game development teams led by Larry Pacey and Phil Gelber, WMS’ products teams remain strong and amongst the most popular high performing newest additions to our customer’s gaming floors. As a result our revised guidance for fiscal 2008 is for total revenues of $640 million to $645 million, which implies a revenue range of $175 million to $180 million for our June, 2008 quarter. This high level of performance and breadth of our differentiated products offering have also WMS to recently be awarded two significant orders. An initial order from the Seminole tribe in Florida for their facilities totaling 800 gaming machines plus an additional 100 participation games and 1800 new VLP units by a major domestic lottery. The shipments for these orders will begin in our fiscal fourth quarter with the majority expected to the shipped in the first half of fiscal 2009. We continue to believe that is unlikely that there will be any substantial changes in replacement cycle before the end of calendar 2008. However, during the December, 2008 quarter we plan to introduce our new fully server ready Bluebird2 gaming machine. We believe this will position is well to take advantage of customers’ capital allocations in calendar 2009 and has the potential to begin to generate an uptick in the overall replacement demand later in calendar 2009. In addition as already discussed, we fully expect to provide our…

(Operator Instructions) Your first question comes from Joseph Greff - Bear Stearns.

Brian, what was your domestic ship share in the March Quarter?

We believe that we are taking share, but albeit until the other competitors announce their results Joe, it is just an educated guess. We do know that we shipped 75% of the units in North America that our largest competitor announced recently. That is the highest percentage we have achieved. So yes we do believe our content is gaining traction and positive income and we expect that trend would continue; so until our other competitors announce their results shortly we’re not sure exactly what that market share is.

When I look at your 4Q revenue guide and it’s up a little bit, where is that incremental revenue coming from? Are you changing any metrics sold ASP, average installed base?

I believe it is the continuum of the international success we are achieving; the participation games really taking hold and also the margin improvement things we have going on internally. So that is really the continued growth that we are seeing on additional revenue. By the way Joe, we do have a seasonality, where the fourth quarter is traditionally our busiest quarter of the year, so that is not unusual for us to see an uptake in the fourth quarter.

And then can you just remind us how many original Bluebird cabinets are out in North America right now?

We actually are just approaching the hundred in North America. Worldwide I know we are just approaching the 100,000 unit number. That will go out this quarter.

You could be, at this point right now we’re certainly I would think by the end of this quarter, having more cash than debt in the net cash position, so how do you view your balance sheet? How do you view this increasing free cash flow and what you do with it?

Well, I think we have an exceptionally strong balance sheet and as we’ve stated in the past there is three things that we really focus on when we look for uses for that cash. The first is increasing intellectual property and technologies that we will be able to provide in future products which you know I think we’ve got a track record in proving that we’re fairly efficient at using those technologies to create differentiated product. This quarter I think our R&D expenses were up by about $5 million. We also invested $5 million in licenses for intellectual property that we will be using in future products. We continued to look at M&A activity. Over the last two years we’ve done a couple of small deals and will continue to look at tuck in acquisitions from both a geographic standpoint and from an intellectual property and technology standpoint, and lastly we do have a buy back program in place and so far this year we have bought back $15 million worth of stock and we’ve got $35 million remaining on the authorization. A point to that, Joe, an interesting note. Q3 revenue is about all the revenue we did in fiscal ’02 and ’03 and for the nine months to date we achieved a higher revenue level and all of fiscal ’06; so Scott’s point about investing in the business – we’re seeing a return that is pretty immediate , so I think we will continue to look along those lines.

Your next question comes from Steven Wieczynski - Stifel Nicolaus & Company, Inc.

First, in terms of the operating environment out there, what are you guys seeing in terms of your customers and their spending patterns at this point? Are you seeing a slowdown because of the current economic environment or are they basically not out buying because they don’t want to be out buying in front of the next major replacement cycle?

I think there is some truth to that Steve that they want to make sure that what they are buying is going to be extendable into the server-based world, but this is nothing new. The environment, although challenging, has been challenging for the past 2- 2.5 years, but you know we’ve continued to increase our revenue. The guidance that we are giving today shows that our revenue is increasing 19% so we believe that people are willing to pay money for content that is performing, so this bodes well for us that when the replacement cycle does go to a more normal 5-6 year replacement cycle, this is going to be a terrific opportunity for our company and our shareholders. So we believe even with the headwinds if we are able to draw our business in the worst of times we are going to be very well positioned when the tide turns.

Margin and product sales, they basically have been somewhere between 47% and 48.5% for the last four quarters. We kind of reached a level here or do you still there is room to kind of expand those going forward?

We’ve got internal goals to expand those quite dramatically in the coming years. I think when you look at the job we did in Q3, if it weren’t for that international shipment that Scott described in his comments, we would have been significantly higher; but it was a business decision to actively get rid of some legacy inventory that we thought made business sense for the company and we were willing to do that. But you will see our continued focus on that execution. We believe with our supply chain, better purchasing, better forecasting that we will be significantly growing at margin going forward.

Your next question comes from Bill Lerner - Deutsche Bank.

What are you hearing on the reinstatement of the R&D tax credit, ultimately maybe say a calendar ’09 event or end of ’08 and can you help quantify that? As I recall you got paid in one quarter for that last year, maybe it was $0.04 when they reinstated it but if you can put some color around that then I’ve got two follow-ups.

What’s called the expenditure legislation has been introduced, I believe it’s in the House but it’s not been introduced in the Senate. At this point the advice that we are getting is given we are in an election year, it is unlikely that any action will take place before the election takes place and it’s likely to be similar to what happened two years ago where in the session between the election and new people coming on, that there stands a better chance for passage and you can see that our effective tax rate went up about 3% March ’08 versus March ’07, and probably 2% of that is solely do to the lapse of the legislation at the end of December.

On the participation yield front, obviously the high class problem now is new launches have to do well north of $300 per day for you to add incremental placements. I just want to get your thoughts on that. Maybe it’s silly when you think of how strong the yields probably are for something like Wizard of Oz. Scott if you could add some color to that it would be helpful.

One of our goals this year was to have a better return on invested capital in our gaming operations area and I think we’ve proven we can do that by selectively placing games and not just blowing them out all over the four corners, and by doing that we’ve increased the popularity in the o-rings and coin end of our games, enough the churn is reduced dramatically. And again when you look at the fact our footprint quarter over quarter, our average footprint increase 2%; that’s the average of a Q2 - Q3 because those takeaways came at the end of Q3. Our revenues were up 9% sequentially for over a quarter so our yield and strategy and our asset allocation strategy is working, Now, going forward we can continue to believe that’s the right thing for us to do. The fact that we were back of 153 units or whatever in Q3 was planned. That’s not a surprise to use because we didn’t have any new product launches coming out in Q3, whereas we have a variety of them, three new product launches coming in Q4 and we have a backlog of 2200 units for those particular units. So we are going to be very prudent in placing footprint out there. We are going to continue to prune off the low performing assets and replenish them with refurbishment and new opportunities, but we continue to believe that there is opportunity for us to leverage up this rate and have a greater return on the assets. And Bill I would add that obviously we believe that longevity is the key to driving the yield and return on invested capital, and when you are relying on certain form factors as opposed to themes in the old days, new themes would drive the turnover of the machinery. Now with the form factor, whether it be adaptive gaming or sensory immersion, we can replace the themes on existing hardware that remains in the field for far longer periods of time.

That’s great, the 200 unit backlog for participation, can you give me a sense of timeframe? Is that 9 months or something like that and how many?

That’s typically a two quarter type of placement, Bill, but again as you know we churn the footprint. We take off all our low performing games and we have cycles of certain series coming off and certain series being launched. Our backlog has been consistent the last several quarters so we expect that you will see an uptake in that business going forward.

Can you maybe give us a sense of your experience at City Center with that server based gaming order that was announced? My understanding is that you participated at the very least with an account based wagering deal. I’d love to hear you talk about that.

We haven’t disclosed anything specifically on that other than to say we are working very closely with MGM to be at the City Center opening with server enabled applications and products for the casino floor.

Brian as I look at your press release from last night and listen to your commentary, it strikes me as you being quite conservative with your higher guidance. You just talk about where as you think of your budget, if that’s true, where you’re being conservative and why.

I wouldn’t use the word conservative Bill, I would use the word realistic and as we said in the release that we are juggling a lot of things here. We have an uncertain economy. We have the operators that are reporting less than desirable results, but we are also seeing great anticipation for our products, so we are trying to meld those into a realistic guidance that we believe makes sense for all of us and we’ve believe we’ve done that in this case and this is the best visibility we have ever had. Going into our Q4 we’ve got a significant number of these games that have been shipped and built and ordered already, so we are very confident in our guidance given for Q4 and we see continued positive events, so I think when you look at the industry itself we have a little different story than the others do. We are continuing to see great demand for our products and although maybe people aren’t ordering them in the 300 and 400 lots they used to, although we dumped two big orders today, they are finding capital to put games like Wraparound Reels and Rotating Wilds and Money Bursts on their floor because that’s what’s working. The innovation series that we’re announcing, there is no question that people will always find capital to put games on their floors when there’s games that are working, so we’ve been very fortunate in that manner.

Your next question comes from David Katz - Oppenheimer.

Could we talk a little bit about your participation games and one of the questions that come up a number of times and we took a wild swing at it a few weeks ago. When we look at your installed base of participation games here in the United States, trying to figure out what your exposure is, what the proportion of your gross margin or earnings comes out of variable participation games; you know, the question being driven by potential economic weakness that you cite in your guidance.

But again, what we’re seeing David is you see a 15% increase in our yield year-over-year is not an unimpressive number and we’re seeing our coin in numbers going up, so what we’re seeing is a customer that is playing just patient games perhaps for a different reason. Maybe it’s an economic reason, maybe it’s a life changing event reason, but we have no reason to believe this patience is going to diminish because of the economy. We believe that money may shift to participation from the regular games but we haven’t seen any trends that would dictate that and we watch this very closely. That being said, Scott, do you want to?

I think what you’re asking David is what percentage of these games are on sort of a percentage of coin in or percentage of net win and how many are sort of fixed straight leases. Is that what you’re asking?

Well yes. I mean of that game ops revenue and/or gross profit, how much of that is on a flat fee versus some kind of a variable…

It’s about 75% variable and 25% fixed.

Of the game ops revenue and profit margin?

Of the participation installed footprint

So is that on a unit basis at 75% of the unit?

Yes.

Sort of a revenue or profit basis that’s a figure that you’re not disclosing or you don’t have?

It’s a figure that we’re not disclosing.

But just focusing on the international unit sales that were I think $2800 and change in the quarter. Can we talk about the concentration of that? I mean are we talking about 29 units to 100 different places? That’s sort of my impression and it may be an exaggeration, but whatever color you can give us and, again where is that growth going forward, going to come from? Where are we shipping these to?

We have had some great success throughout South America, Latin America in more recent quarters but we continue to show progress throughout Asia and Europe, but I would say that those three regions are the primary contributors for our international business. We continue to see solid growth in our international markets and specifically I will highlight South America. We are doing very very well in markets like Chile, Colombia and other regions through that area.

It sounds like there aren’t any lumps of several hundred units in that 2883 for the quarter, right?

Those are mostly, again 12, 15, 20 games that are ordered, David, and certainly well distributed.

Your next question comes from Steve Kent - Goldman Sachs.

Just a quick question on the way you view a central server role out. Do you think that IGT has to get the ball rolling and really figure placement out there before you really can see some action on some of your products that target , you know, similar services? I just wondering of there is some sort of strategy there?

You know we really don’t have a dependency on IGT’s rollout schedule because our strategy is unique in that we are looking at commercializing server enabling products. In other words we’re not selling technology, we’re selling technology enabled games, applications, products and we will continue in a sequence to commercialize these products in the not to distant future, irregardless of the area rollout or IGT’s plans or anything else that may happen out there.

Mr. Nicastro’s exit is there any special charge or extraordinary associated with that?

No there’s not Steve. At this point there’s not.

Your next question comes from Steve [Altebrando] from Sidoti and Company. Steven [Altebrando]: How are you as far as capacity goes heading into what could be some accelerated replacements?

As you know we almost doubled the size of our Waukegan facility here last year and we built this in anticipation of the next replacement cycle, so we’ve got plenty of capacity and we are operating very efficiently today and can handle probably double the line we are producing today. Steven [Altebrando]: What percentage or numbers of games are now on the new platforms, transmissive, community, sensory?

That’s about 45% at this point.

Mr. Gamache, I’ll turn the call back to you sir, for closing remarks.

Thank you for joining us this morning. We look forward to reporting our additional progress next call when we will discuss our June quarter fiscal year end results and fiscal ’09 outlook. Thank you and have a great day.